Exemption can be withdrawn with retrospective effect only by Parliament/State Legislature :
Exemption given by notification can be withdrawn only with prospective effect by another notification. Parliament can withdraw exemption even with retrospective effect also, but it should be for valid reasons.
Withdrawal of exemption by notification can be prospective only – Exemption cannot be withdrawn and duty cannot be enhanced with retrospective effect. – Jitender Roller Flour Mills v. CTO (2002) 125 STC 383 (AP HC DB) * Ganduri Eswaraiah v. DCTO (2002) 125 STC 406 (AP HC DB) * Honest
Corporation v. State of Tamilnadu (1999) 113 STC 26 (Mad HC DB) * State of Tamilnadu v. Kannapiran Steel (1999) 112 STC 161 (Mad HC DB) * Wipro Ltd. v. State of Maharashtra (2004) 135 STC 503 (Bom HC DB). Exemption notification cannot be amended with retrospective effect to curtail exemption – J K Udaipur Udyog v. State of Rajasthan (2003) 131 STC 176 (Raj HC DB).
Exemption can be withdrawn by Parliament with retrospective effect – Exemption given by a notification can be withdrawn by Parliament even with retrospective effect if it is against policy of legislature, as Parliament is supreme- RC Tobacco P Ltd. v. UOI 2005 (188) ELT 129 (SC).