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Rules can be framed only within main Act: SC

Written by: Staff

New Delhi, Mar 17: The Supreme Court has held that rules can be framed only within four corners of the main Act.

A bench comprising Mr. Justice S B Sinha and Mr. Justice P K Balasubramanyan vide judgment announced last week laid down the law while allowing the appeal of M/s Mahabir Vegetable Oils Pvt.

Ltd. and another against the amendment made by the state of Haryana withdrawing tax exemption granted to those setting up industries in backward areas of the state.

The court also held that it was a fundamental rule of law that no statute should be construed to have a retrospective operation unless such a construction appears very clearly in terms of the Act or arises by necessary and distinct implication.

The state of Haryana had announced Industrial policy for the period April 1,1988 to March 31,1997 wherein inter alia incentive by way of sales tax exemption was to be given for the industries set up in backward areas in the state.

The appellants set up manufacturing unit and placed an order for plant and machinery worth Rs.78.30 lakhs.

The state government amended rule 28A vide its amendment dated Dec. 16,1996 and withdrew the tax exemption with retrospective effect.

The apex court observed,"It is beyond any cavil that a subordinate legislation can be given a retrospective and retroactive operation if any power in this behalf is contained in the main Act. Rule making power is a species of delegated legislation. A delegatee therefore can make rules only within four-corners thereof." The court also ruled that amendments carried out in 1996 as also the subsequent amendments made prior to 2001 could not thus have taken away the right of the appellant with retrospective effect.

The apex court directed the Director of Industries to consider the matter afresh after setting aside the impugned judgment of the Punjab and Haryana high court dismissing the writ petitions of the appellants against the withdrawal of the tax exemptions with retrospective effect.


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