EUROTEX INDUSTRIES AND EXPORTS LIMITED & ANR. versus STATE OF MAHARASHTRA & ANR.

Citation: [2017] 4 S.C.R. 392 · Decided: 08-05-2017 · Supreme Court of India · Bench: A.K. SIKRI · Disposal: Dismissed

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Judgment (excerpt)

[2017] 4 S.C.R. 392 
A 
EUROTEX INDUSTRIES AND EXPORTS LIMITED & ANR. 
B 
v. 
STATE OF MAHARASHTRA & ANR. 
(Civil Appeal No. 4491 of 2016) 
MAYOS,2017 
[A. K. SIKRI AND ABHAY MANOHAR SAPRE, JJ.] 
Maharashtra Value Added Tax Act. 2002: 
ss.93(1), (lA) and (1 B) - Retrospective operation of - By 
C Maharashtra Value Added Tax (Levy, Amendment and Validation) 
Act, 2009 - Constitutional validity - Package Scheme of incentives 
in the year 1993 - Granting proportionate incentives to the 
industries on acquisition of new fixed assets outside the project 
scheme - The word 'proportionate' deleted from the scheme - Despite 
0 
deletion of the word 'proportionate', Trade Circular issued by Sales 
Tax Authorities stipulating that under the 1993 Scheme. incentives 
would be given in proportion to the expansion capacity- The circular 
was held not validly issued because administrative circulm; contrary 
to the 1993 scheme (which was statutory in nature), could not have 
been issued -: Therefore, legislature amended Bombay Sales Tax 
E Act, 1959 (the preceding Act to Value Added Tax Act, 2002) inserting 
s.41 BB providing for proportionate incentives as prescribed by State 
Government by.framing rules in this beha?f - However, no rules 
framed - Enactment of 2002 Act by replacing the 1959 Act - Section 
93 of 2002 Act amended retrospectively by 2009 Act·- Challenged 
F as arbitrary, unreasonable, oppressive violative of fundamental 
rights u!Arts.14 and 19(1)(g) of Constitution - High Court held 
that retrospective operation was permissible - On appeal, plea that 
grant of proportionate incentive by 2009 amendment amounted to 
fresh levy of VAT with retr().lpective effect - Held: From the very 
beginning, the statutory scheme (uls.41BB of 1959 Act as well as 
G 
u!s. 93(1) of 2002 Act) itse?f provided for proportionate incentives 
and this legislative intent was manifest even ,fi-om the Objects and 
Reasons - By giving retrospective effect to s.93(1) was to rectify the 
earlier error committed by the executive in not implementing the 
legislative intent in the form of subordinate legislation i.e. statutory 
Rules and trying to achieve the same by administrative action i.e .. 
H 
392 
• 
EUROTEX fNDUSTRIES AND EXPORTS LIMITED & ANR. v. 
393 
STATE OF MAHARASHTRA & ANR. 
by issuance of Circular - Therefore, it cannot be said that new levy 
A 
was imposed with retrospective effect - Thus, retrospective operation 
of ss.93(1), (IA) and (JB) is upheld. 
Dismissing the appeals, the Court 
HELD: 1. Section 41BB of the Bombay Sales Tax Act, 1959 
was not an enabling provision, but contained a legislative mandate 
B 
in the form of restrictions to the effect that notwithstan:ling 
anything contained in any Package Scheme of Incentives, an 
eligible unit holding an eligibility certificate, shall be eligible to 
draw benefits only on that part of its turnover of sales and 
purchases as would be arrived at by applying the ratio which was c 
to be prescribed by the State Government. Therefore, legislative 
intent behind the aforesaid provision was clearly manifest i.e. to 
allow the benefit only on proportional basis. However, at the 
same time, it was left to the Government to prescribe the ratio 
on the basis of which only a part of the turnover of the sales and 
purchases would qualify for incentives. [Para 22)(409-E-G] 
2. Likewise, when Maharashtra Value Added Tax Act, 2002 
(MVAT Act) was enacted, identical provision as contained in 
Section 41BB of the Sales Tax Act, was incorporated in the form 
of Section 93(1). It is the implementation of this statutory 
provision where the Government erred. 
Though, the 
Government carried out that intention by issuing Circular dated 
January 17, 1998 which provided for benefits only on that part of 
the turnover of sales or purchases of eligible unit by prescribing 
the ratio, the manner of doing the same was faulty. Instead of 
prescribing the same by way of Rules, which was the proper 
procedure, the purpose was sought to be accomplished by wi~y of 
an administrative circular in imposing a ceiling on the utilization 
D 
E 
F 
of incentives under the 1993 scheme in proportion to the 
production attributable to the newly acquired fixed assets. 
Because of this legal infirmity this circular was set aside by the 
High Court. According to the High Court, it is this defect which G 
was sought to be cured by amending the statutory provision itself 
by makiag the said amendment retrospectively. On the 

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