M.M. Kumar, J. - (1.) THE question of law raised in the instant petition filed under Article 226 of the Constitution is 'whether a notification (like Annexure P -9, dated 30.11.2005) reducing the rate of sales tax can be issued with retrospective effect, especially when tax at higher rate has been paid and also credited by the seller to the manufacturer'. The petitioner has prayed for quashing notification dated 30.11.2005 (P -9) issued by respondent No. 1, purportedly in exercise of powers conferred by Sub -section (1) of Section 5 of the Punjab General Sales Tax Act, 1948 (for brevity, 'the Act'), as amended by the Punjab General Sales Tax (Second Amendment and Validation) Act, 2000 (Punjab Act No. 7 of 2000), as applicable to the Union Territory, Chandigarh, directing that notification bearing No. 3153 -FII(8) -2004/1375, dated 25.2.2005 (P -8), issued earlier was to operate retrospectively with effect from 13.7.2000. It has further been prayed that impugned notification dated 30.11.2005 (P -9) be declared as ultra vires of Section 5(1) of the Act because retrospective effect given to the notification dated 25.2.2005 (P -8) is without any express or implied power conferred by Section 5(1) of the Act.
(2.) BRIEF facts of the case are that the petitioner is a limited company engaged in the business of sale and purchase of medicines, surgical and disposable goods. The petitioner is registered with the Assessing Authority, Union Territory, Chandigarh, under the Act as well as under the provisions of the Central Sales Tax Act, 1956 since the year 1980. The petitioner is also registered under the new Act, namely, the Punjab General Sales Tax Act, 2005, as applicable to Union Territory, Chandigarh, and obtained licence for the sale of drugs on retail and wholesale basis under the Drugs and Cosmetic Act, 1940. On 23.7.2002, the bid of the petitioner for supply of medicines/drugs in pursuance to tender floated by the Post Graduate Institute of Medical Education and Research, Chandigarh -respondent No. 3 (for brevity 'PGI'), was accepted and a letter of acceptance, dated 22.8.2002 was issued to it by respondent No. 3 (P -1). The petitioner was awarded contract at 21% discount on Maximum Retail Price (MRP), for supply of medicines for a period of two years from 23.8.2002 to 22.8.2004. On the basis of letter of acceptance the petitioner deposited required security and then a contract was executed between the petitioner and the PGI (P -2). The petitioner started supply of medicine as per contract and charged sales tax at the rate of 8.8%. According to the stipulation in the agreement (P -2) it was provided that any tax to be charged was to be clearly mentioned. However, the PGI raised the issue of charging sales tax at the rate of 4.4% against D -Forms to be issued by it. In that regard instructions were issued by its Purchase Department.
(3.) ACCORDINGLY , the petitioner sent a letter dated 8.10.2002 (P -5) to the PGI asserting that the medicines are taxed a,t the first stage and every retailer is purchasing medicines from distributor/whole seller after paying sales tax as applicable, which is to be recovered from the customer. A reference has been made to the stipulation made in the agreement that the local purchase were to be made on retail price less the agreed discount. The petitioner expressed its helplessness to supply on local purchase to the PGI unless the issue of D -Form/sales tax was resolved amicably by keeping in view the terms and conditions of the tender. The petitioner has claimed that the PGI was suffering under a wrong impression and belief that although it was an autonomous body but considered itself entitled to be treated at par with Government of India or State Government. On that analogy PGI thought that the rate of tax applicable for the sales made to the Government of India or State Government should be levied. The aforementioned belief had emanated from a notification dated 30.6.1966. which was further amended vide notification dated 31.10.1970 (P -6) and the autonomous bodies like the PGI were included in the list of such institutions, who were entitled to the benefits in addition to Government of India and State Government. The situation changed because the notification dated 31.10.1970 (P -6) was repealed by subsequent notification dated 13.7.2000 (P -3) as the PGI was not included in the Schedule like Government of India and State Government. The petitioner has claimed that on account of the aforementioned fact, the PGI could not have claimed that it should be subjected to rate of tax @ 4.4% by accepting D -Forms and moreover the goods being sold by the petitioner are taxed at the first stage on which the petitioner had already paid tax and, therefore, the benefit could not be extended in the second sale.;