V. Rengasamy, J. (Vice Chairman) -
(1.) PETITION on being called today upon hearing both sides the Tribunal ordered as follows :
These two transferred petitions have been filed challenging the validity of the publication of two erratas and also with regard to the rate of tax. T.P. No. 2240 of 1997 relates to the validity of the errata Lr. No. 8773/B1/89 -13 dated July 6, 1990 published on July 25, 1990 which will be hereinafter called as first errata and errata by Lr. No. 8773/B1/89 -18 dated April 30, 1991 published on May 29, 1991 which will be hereinafter called as second errata. In the other transferred petition, withdrawing of the concessional tax from 8 per cent to 4 per cent is challenged. The circumstances under which these T.Ps are filed ought to be narrated. The petitioner is a manufacturer of drugs, especially of penicillin derivatives and certain other formulations. The penicillin derivatives in the brand name are pressmox -P, pressmox -500, Amoxillin Dihydrate, etc. The Government of Tamil Nadu wanted to give certain concessions in the matter of tax, to certain important drugs. So in exercise of the powers under Section 17(1) of the Tamil Nadu General Sales Tax Act, 1959, issued a notification dated May 9, 1988 granting reduction in the rate of tax from 8 per cent to 4 per cent on 33 items of medicines of which item 9 is penicillin and streptomycin including dihydro streptomycin in their pure form or as salt or as derivatives and intended for oral or parenteral use. The petitioner being a manufacturer of penicillin derivatives mentioned above, filed his return for 1989 -90 and paid tax on the concessional rate at 4 per cent. His assessment was completed on December 14, 1990. In the meanwhile the Government published the first errata to the Notification on July 25, 1990 and this errata to notification relates to item 9 and to certain other items. We are now concerned only with the errata to item No. 9, Though the concessional rate was given under the original notification to penicillin, streptomycin including the derivatives of penicillin, under the so called first errata mentioned above, the concessional rate applicable to penicillin, streptomycin, and its derivatives was confined to penicillin, streptomycin alone. By Letter dated 8773/B3, dated April 30, 1991, a second errata was published on May 29, 1991 by which the spelling mistake in the first errata has been corrected, but repeating the entire matter mentioned in the first errata. In other words second errata also confined the concessional rate of tax to penicillin and streptomycin alone. As the petitioner is a manufacturer of penicillin derivatives, he challenges in T.P. No. 2240 of 1997, the withdrawal of the drugs, namely, the derivatives of penicillin from the list of medicines found in the notification dated May 9, 1988 and as the rate of tax was raised from 4 per cent to 8 per cent by the errata, by withdrawal of the concession to penicillin derivatives, the T.P. No. 2241 of 1997, has been filed.
(2.) THE learned counsel appearing for the petitioner Mr. K. Venkata -subramaniam raised two points in these T.Ps. and they are (1) exemptions and reduction of tax notified under Section 17(1) of the Act can be withdrawn or taken away only by another notification under Section 17(3) of the Act. But the publication of errata cannot affect the concessions enjoyed by the assessee, as such errata on notifications cannot have any statutory effect, of taking away the benefits conferred under Section 17(1) of the Tamil Nadu General Sales Tax Act. The second contention is that the concession granted under Section 17(1) of the Act cannot be cancelled by any notification with retrospective effect. As rightly contended by the learned counsel for the petitioner the notification in G.O. P. No. 724 dated May 9, 1988 was issued in exercise of the powers under Section 17(1) of the Tamil Nadu General Sales Tax Act giving concession of tax at 4 per cent for 33 drugs including for the penicillin derivatives and streptomycin derivatives. Therefore naturally it has the statutory force and if the Government thought that in the interest of public, such concession or exemption was not proper, the concession can be withdrawn or cancelled by another notification under Section 17(3) of the Act, as this provision is intended for the purpose of cancellation or varying of the original notification issued under Section 17(1). Therefore when the Government had felt that penicillin derivatives should not be given the concession in the matter of the tax, they could have easily published, notification under Section 17(3) confining the concession to penicillin and streptomycin alone and deleted the word penicillin and streptomycin derivatives. But without doing that, by a letter of CT&RE dated July 6, 1990, errata to item No. 9 found in the original notification was published on July 25, 1990 (first errata) restricting the concession only to penicillin and streptomycin. As the word penicillin was wrongly spelled as "pencilline" the second errata to notification by letter of the CT&RE dated April 30, 1991 was published on May 29, 1991, correcting the spelling mistake and repeating that the concession was only to penicillin and streptomycin. The learned counsel for the petitioner would contend that, errata is meant that correction of the typographical mistakes, but it cannot have the effect of law to take away the vested rights of a citizen and therefore except for the purpose of correcting the typographical errors like spelling mistakes, it cannot have the effect of nullifying the concession given under the original notification dated May 9, 1988. The learned counsel argues that had the Government thought it fit to withdraw the concession there should have been another notification under Section 17(3) of the Act, as this provision is intended for cancelling the exemptions and deductions granted under Section 17(1) of the Act but the publication of errata had not affected the petitioners right. The learned counsel relies upon the decision of the Madras High Court in Sun Paper Mills Ltd. v. Union of India  80 STC 1 wherein the Madras High Court has held that when power is given to the State Government to withdraw a notification, such power should be exercised in the like manner and subject to the like sanction and conditions as govern the exercise of power to issue the notification. When the power to grant exemption from payment of sales tax empowers the Government to do so in the public interest by notification, the power to withdraw the exemption also is to be exercised in the like manner and method. As rightly contended by the learned counsel when Section 17(1) of the Act deals with the grant of exemptions and deductions and also cancellation of such exemptions and deductions, the State should exercise its power only under this provision, either for giving concession or withdrawing the concession. The State has no other way to exercise this power. But in this case, though the original notification dated May 9, 1988 was made under Section 17(1) of the Act giving the list of medicines, entitled to the reduced rate of tax, thereafter without publishing by another notification invoking the powers under Section 17(3) of the Act, the Government had published the errata by the letter of CT&RE to delete some medicines from the list. No doubt the errata published on July 25, 1990 and May 29, 199.1 may have the effect only with regard to mistake in the spelling. Beyond that, it, has no effect of withdrawing the concession granted in the original notification. Therefore abridging the drugs mentioned in item 9 of the list, including dihydro streptomycin in their pure form or as salt, the derivatives of penicillin and streptomycin which the State intended to remove from the list could not be deemed to have been removed from the list. The Government realising this mistakes, have later on notified by exercising the powers under Section 17(3), G.O.P. No. 390 dated September 4, 1991. The learned counsel would submit that from the date of this notification dated September 4, 1991 his client cannot claim the exemption or concession of tax, as this notification has the statutory effect of cancelling the concession, given under the original notification dated May 9, 1988. In view of these reasons we hold that the two erratas to the notifications, are illegal in so far as they affect the vested right of the petitioner in having certain drugs in the list of medicines eligible for concessional rate.
(3.) THE second limb of argument is also worthy of consideration. It is pertinent to mention that the two erratas were issued after the assessment year 1989 -90 and the assessment order was passed on December 14, 1990. But the pre -revision notice was issued under Section 16 on September 2, 1992 by the Commercial Tax Officer suggesting the tax at 8 per cent on the ground that the derivatives of penicillin manufactured by the petitioner, did not find a place in the list of drugs as those drugs have been removed by the publication of the erratas. The petitioner filed objections to this notice on August 18, 1992, but the assessing officer did not give weight to his objection but passed the assessment order on October 7, 1992. The appeal before the Appellate Assistant Commissioner also was dismissed by observing that the errata issued by the CT&RE has taken away the concession granted in the original notification. Rather the view of the assessing authorities was that the errata published on July 25, 1990 and May 29, 1991 have the retrospective effect from May 9, 1988 and therefore the petitioner is liable to pay tax at 8 per cent for the assessment year 1989 -90 also. The learned counsel Mr. Venkatasubramaniam contended that Section 17(1) no doubt empowers the Government to issue notification giving either prospective or retrospective effect, that Section 17(1) refers to such notifications only for exemption or reduction in rate in respect of tax and therefore the retrospective effect can be given only to the concession given to the assessee, but similar power is not found in Section 17(3) to cancel such concessions with retrospective effect and therefore any cancellation of vested right will have only the prospective effect. In support of this argument the learned counsel cited a series of decisions. In M.M. Nagalingam Nadar Sons v. State of Kerala  91 STC 61, the Kerala High Court has held that when the Government acting under the power conferred on it, may issue notification granting exemptions, but in the absence of such a specified conferment of power, cannot issue notifications affecting the vested right or imposing an obligation to act retrospectively. The High Court of Rajasthan in Union of India v. State of Rajasthan  91 STC 284, has held that the State Government can issue notification granting exemption retrospectively with any condition it likes, but when the said section does not contemplate withdrawal of exemption retrospectively by putting any condition, the withdrawal of exemption with retrospective effect is illegal. Section 17(1) specifically mentions that an exemption or deduction in respect of tax can be notified by the Government with retrospective or prospective effect. But Section 17(3) of the Tamil Nadu General Sales Tax Act merely permits any notification cancelling or varying, the notification issued under Section 17(1). This sub -clause does not empower the State to give retrospective effect to take away the vested right. Therefore errata notified can have only the prospective effect even if it is taken that it has the effect of cancellation. In G. Packirisamy & Co. v. State of Tamil Nadu  99 STC 21, the Madras High Court has held that the languages employed under Section 17(3) of the Tamil Nadu General Sales Tax Act makes it clear that power is not given in its fold to cancel or vary any notification with retrospective effect and therefore this power under Section 17(3) can be exercised only prospectively. This Tribunal also considered this aspect in a recent decision in T.P. No. 413 of 1997, Chemi Boilers v. State of Tamil Nadu, dated November 13, 1998 (reported in  114 STC 381) and has taken the view that the executive authority cannot issue a notification retrospectively affecting the concession enjoyed by the assessee unless the power is specifically conferred on the authority.;