Appeal concerning a tax exemption dispute between the State of Maharashtra and Prism Cement Limited. The core issue revolves around whether a subsequent amendment to Section 8(5) of the Central Sales Tax Act (CST Act), requiring specific declarations (Form ‘C’ or ‘D’) for tax exemptions, could retrospectively invalidate a previously granted absolute exemption under the Package Scheme of Incentives 1993 (PSI 1993). The court ultimately affirms the High Court’s decision, ruling that the amendment applies prospectively, meaning the original, unconditional exemption granted to Prism Cement Limited remains valid for the period it was initially accorded. This decision emphasizes the principle that accrued substantive rights are not generally affected by subsequent legislative changes unless explicitly stated to be retrospective.
Bombay Sales Tax Act, 1959, Section 38 – Central Sales Tax Act, 1956, Section 8(4),8(5) – Central Sales Tax Rules, 1956, Rule 12 – Package Scheme of Incentives 1993 – General Clauses Act, 1897, Section 6 – Industrial Incentive – Withdrawal of Tax Exemption – Amendment of statute – Substantive right of exemption from payment of tax – Withdrawal by the subsequent amendment – Whether the exemption from tax granted under the PSI 1993 issued under Section 8(5) of the CST Act as it existed at the relevant time read with eligibility & entitlement certificate could be withdrawn by the subsequent amendment to Section 8(5) of the CST Act by the Finance Act of 2002 with effect from 11.05.2002 as the assessee- respondent failed to fulfil the requirements of Section 8(4) of the CST Act which mandated for submission of declaration in Form ‘C’ or ‘D’? – Assessee-respondent was held eligible for absolute exemption under the PSI 1993 issued in exercise of power under Section 8(5) of the CST Act as per Eligibility certificate dated 20.02.1998 and Entitlement certificate dated 24.03.1998 granting exemption to it from payment of tax under the BST Act and CST Act to the extent of Rs. 273.54 crore or up till 2012, whichever is earlier – The said exemption granted to the assessee-respondent was much prior to the enforcement of the Finance Act, 2002 with effect from 11.05.2002 – Held that by virtue of the unamended Section 8(5) and the Notification issued thereunder as well as under the aforesaid Eligibility and Entitlement certificates, a substantive right of exemption from payment of tax had accrued to the assessee-respondent – The amended Act nowhere stipulates that rights previously accrued stand nullified or all previous exemptions stand cancelled or revoked – The requirement for fulfilling the condition of Section 8(4) of the CST Act for getting the benefit of tax exemption came subsequently after the amendment of Section 8(5) with effect from 11.05.2002 and would apply prospectively to transactions in respect of which eligibility and entitlement certificates are issued subsequently – Held that State Government while applying the aforesaid amended Section 8(5) was not justified in taking away such a right accrued to the assessee-respondent on mere prospective amendment of Section 8(5) without revoking the Entitlement Certificate dated 24.03.1998 without notice or opportunity of hearing.
(Para 21, 25, 28 and 30)
State Of Maharashtra & Ors. V. Prism Cement Limited & Anr.
Supreme Court: 2025 INSC 199: (DoJ 12-02-2025)
