2020 (3) TMI 253 - HC - VAT and Sales Tax

Government's Exclusion of Diesel Bunks from Tax Exemption Upheld

The court upheld the government's decision to exclude private diesel bunks from sales tax exemption on high-speed diesel oil for fishermen. The exclusion ... Issuance of allotment to the petitioner's bunk towards supply of sales tax exempted diesel - validity of Government Order in G.O.(Ms).No.238 of 2017 and the Notification dated 19.02.2018 - HELD THAT:- It is only appropriate that they are granted exemption from sales tax. The Private Diesel Bunk operators have not offered to participate in such implementation of Government schemes. All that is said is, they would not sell diesel to private parties. However, it has been made very clear, in the Government order that there is no such restriction. The Government order impugned and the consequential Notification do not suffer from any infirmity. Petition dismissed. Issues Involved:1. Legitimacy of the exclusion of private diesel bunks from sales tax exemption.2. Allegations of discrimination and arbitrary action by the government.3. Applicability of the principles of natural justice and promissory estoppel.4. Public interest versus private rights.Issue-wise Detailed Analysis:1. Legitimacy of the exclusion of private diesel bunks from sales tax exemption:The petitioners, who are private diesel bunk operators, challenged the amendment in G.O.(Ms) No.238 dated 11.12.2017, which excluded private diesel bunks from the sales tax exemption on high-speed diesel oil for fishermen. The respondents justified this exclusion by stating that diesel bunks operated by TNFDC and TAFCOFED are located inside the Jetty/Port area, exclusively cater to the needs of fishermen, and are easier to monitor and control. The amendment aimed to prevent potential black market supply of diesel and ensure the exemption benefits reached the intended beneficiaries.2. Allegations of discrimination and arbitrary action by the government:The petitioners argued that the exclusion was discriminatory and arbitrary, violating the principles laid down by the Division Bench in W.A.Nos.1798, 1799, and 1800 of 2011. The Division Bench had previously ruled that the government could not impose restrictions not contemplated in the original government orders and that any modification must be brought about in the government orders if done in public interest. The petitioners contended that the exclusion contradicted this ruling and was not based on any reported misuse of the exemption by private dealers.3. Applicability of the principles of natural justice and promissory estoppel:The petitioners claimed that the exclusion violated their legitimate expectation and the principles of promissory estoppel, as they had been previously granted the exemption. They argued that the government’s decision to exclude them was not based on any concrete evidence of misuse and that they only supplied diesel to fishermen, not to third parties. The respondents countered that the exemption was a policy decision made in public interest and that the government had the right to amend the exemption to better serve public interest.4. Public interest versus private rights:The court examined whether the exclusion served public interest and whether the petitioners’ rights were unjustly infringed. The respondents emphasized that TNFDC and TAFCOFED's operations included various government schemes benefiting fishermen, such as constructing fishing boats, providing cold storage facilities, and supplying fish at reasonable prices. The court found that the government’s decision to grant the exemption exclusively to these entities was justified in public interest, as they were better equipped to implement and monitor the schemes effectively.Conclusion:The court concluded that the government order and the consequential notification did not suffer from any infirmity. The reasons for the exclusion of private diesel bunks were cogent and acceptable, focusing on public interest and effective implementation of government schemes. The petitioners' claims of discrimination and violation of natural justice were dismissed, and the writ petitions were rejected with no order as to costs. Consequently, the connected writ miscellaneous petitions were also closed.