Sennar Paper Boards Private Ltd Vs State of Tamil Nadu (Madras High Court)
The Madras High Court considered a batch of writ petitions challenging Notification No. II(1)/CTR/75(b-2)/2007 dated 19.12.2007, issued through G.O.Ms.No.198, Commercial Taxes and Registration (B2), which imposed additional conditions affecting tax exemptions. Both sides acknowledged that the core issue had already been conclusively decided by a Division Bench of the Madras High Court in VG Paper and Boards Ltd. v. Government of Tamil Nadu (judgment dated 21.12.2022), in favour of assessees.
The earlier Division Bench had held that while exemption notifications must be strictly construed and any ambiguity resolved in favour of the Revenue, the State cannot add, curtail, or modify the scope of an exemption by importing new conditions based on supposed legislative intent. The Court ruled that neither the Government nor tax authorities are permitted to correct or supplement defective phrasing of an exemption notification by retrospectively inserting conditions that diminish the benefit originally granted.
The Division Bench further examined whether the impugned notification could be sustained under the powers conferred by Section 17(3) of the Tamil Nadu General Sales Tax Act, 1959, or Section 30(3) of the Tamil Nadu Value Added Tax Act, 2006, especially after the repeal of the TNGST Act and the introduction of the TNVAT Act. It held that these provisions do not authorise the State to withdraw exemptions or impose new disqualifications retrospectively. The notification was found to travel beyond the scope of delegated legislative power and was therefore ultra vires the relevant statutory provisions, particularly insofar as it retrospectively curtailed the exemption granted under an earlier notification dated 28.12.2006.
