Summary
The State sought to withdraw a time-bound fly-ash tax rebate from industrial units which had already commenced production under the incentive notification. The Supreme Court held that the rescinding notification operated prospectively and could not truncate their accrued eligibility. The asserted administrative difficulties and future revenue loss did not establish overwhelming public interest against those units. Actual refunds nevertheless required verification, including proof that the tax burden had not been passed to consumers.
Issues
- Whether the 2004 rescission could curtail rebate eligibility already accrued under the 1998 notification.
- Whether the State demonstrated supervening public interest justifying withdrawal from qualifying existing units.
- Whether rebate entitlement automatically required payment of claimed refunds.
Provisions considered
- Section 5, Uttar Pradesh Trade Tax Act, 1948The express power to allow rebate from an earlier date did not confer power to withdraw it retrospectively. The rescission could not truncate accrued eligibility of qualifying units. (¶¶ 24, 25, 27, 28)
- Section 21, General Clauses Act, 1897The power to amend or rescind notifications did not support retrospective withdrawal of the accrued rebate in these circumstances. (¶¶ 26, 27)
Held
- Units established and commencing commercial production during the relevant incentive period before 14 October 2004 retained eligibility for the specified term, subject to all other conditions. The rescission did not operate retrospectively or retroactively against them. (¶¶ 27, 28, 31, 34)
- Administrative difficulties and future revenue loss did not establish overwhelming public interest against these units while the environmental and development purposes remained operative. The State had to meet a rigorous evidentiary burden. (¶¶ 23, 29, 30, 31, 32, 33)
- Refund required verification and remained subject to unjust enrichment. The claimants had to establish that the claimed burden had not been passed to consumers; the authority would decide amounts and interest according to law. (¶¶ 34, 35)
Result
State appeals dismissed without costs. Rebate eligibility continued for Birla Corporation until 13 December 2008 and Jai Prakash Associates until 17 September 2014, subject to qualifying conditions. Competent authorities were to verify refund claims, unjust enrichment and applicable interest according to law; no unconditional refund amount was decreed.