TaxTMI 
TaxTMI 
2011 (2) TMI 7
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.... are as follows:-The State enacted the Haryana General Sales Tax Act, 1973 (for short "the Act"). Section 64 of the Act provides for rule-making power. The said provision was amended by inserting sub-section (2-A) therein which reads as under: "64. (2-A) The power to make rules under sub-sections (1) and (2) with respect to clauses (ff) and (oo) of sub-section (2) shall include the power to give retrospective effect to such rules i.e. from the date on which policy for incentives to industry is announced by the State and for this purpose Rules 28-A, 28-B and 28-C of the Haryana General Sales Tax Rules, 1975, shall have retrospective effect i.e. with effect from 1st April, 1988, 1st August, 1997 and 15th November, 1999 respectively, but such retrospective operation shall not prejudicially affect the interest of any person to whom such rules may be applicable." 4. Clause (ff) of sub-section (2) of Section 64 of the Act provides for the class of industries, period of exemption and conditions of such exemption, under Section 13-B; whereas clause (oo) thereof provides for class of industries, period of deferment and the conditions to be imposed for such deferment under Section 25-A....
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....to 25% of the anticipated cost of the project and which have been included in the above list for the first time shall be entitled to the sales tax benefits related to the extent of investment made up to 3-1-1996. Only those assets will be included in the fixed capital investment which have been installed or erected at site and have been paid for. The anticipated cost of the project will be taken on the basis of documents furnished to a financial institution or banks for drawing a loan and which have been accepted by the financial institution or bank concerned for sanction of loan." 9. On or about 28-5-1997 the said Rules were amended inter alia by omitting Note 2 deeming to have always been omitted. 10. Yet again on 3-6-1997 in clause (a) of sub-rule (2) of Rule 28-A of the Rules instead and in place of "31-3-1997" the words "date on which new policy for incentive to industry is announced by the Government of Haryana in Industries Department" was substituted. 11. On 26-6-2001 in Section 13-B after the words "for such period", the words "either prospectively or retrospectively" were inserted. 12. It is only after the notice dated 3.1.1996 that the respondent Mahabir Vege....
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....tive list should be available to the unit for sales tax exemption/deferment. Though the Higher Level Screening Committee broadly agreed with this view, yet in view of the fact that such cases were not covered in the existing notification of the Commercial Taxation Department, it was decided to reject the claim of the party." And the writ petition filed by the Respondent before the High Court was dismissed holding:- "(i) The power to grant exemption from the payment of sales tax is an exercise of the powers conferred by the statute on the State Government and is, thus, a delegated legislative function. The delegated legislation can be struck down if it is established that there is manifest arbitrariness. It must be shown that it was not reasonable or manifestly arbitrary. (ii) As per the records made available, a Standing Committee was constituted by the State of Haryana for revising the negative list periodically keeping in view the industrial scheme of the State and its neighbourhood. Such Standing Committee considered the revision of negative list in its meeting held on 15-9-1995 wherein it was decided to include highly polluting industries, power-intensive industries, c....
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.... Court, at that stage, did not interfere with the issue of the quantum of exemption which can be granted to the Respondent and the said issue was kept open and the matter was remanded to the Director Industries for fresh adjudication. The Writ Petition filed by the Respondent under Article 32 was also disposed off. The relevant portion of the said judgment is as follows:- "38. The promises/representations made by way of a statute, therefore, continued to operate in the field. It may be true that the appellants altered their position only from August 1996 but it has neither been denied nor disputed that during the relevant period, namely, August 1996 to 16-12-1996 not only have they invested huge amounts but also the authorities of the State sanctioned benefits, granted permissions. Parties had also taken other steps which could be taken only for the purpose of setting up of a new industrial unit. An entrepreneur who sets up an industry in a backward area unless otherwise prohibited, is entitled to alter his position pursuant to or in furtherance of the promises or representations made by the State. The State accepted that equity operated in favour of the entrepreneurs by issuing....
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....ned judgment passed by this Court made a recommendation for grant of eligibility certificate to the extent of Rs.94,48,911/- for a period of nine years i.e. from 29.03.1997 to 28.03.2006. The said amount was calculated with reference to the investment made by the petitioner up to 16.12.1996 i.e. date of amendment, putting the unit in the negative list. On appeal, the Appellate Authority affirmed the said view with the following observations:- ".....The Committee examined the judgment relied upon and observed that the Hon'ble Supreme Court has not found fault with the amendment dated 16.12.1996 whereby the solvent extraction plant have been put into negative list (schedule III). The effect of enlargement of the negative list is that the unit has ceased to be eligible for exemption/deferment with effect from 16.12.1996. Besides, it is further observed that tax concessions, as repeatedly held by the Hon'ble Supreme Court, are a defeasible, not an indefeasible, right but the withdrawal is always prospective." 17. The respondent challenged the said order and judgment before the High Court of Punjab and Haryana by filling a writ petition. The High Court by the impugned judgment all....
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....he benefit of exemption has been granted on the investment made up till 16.12.1996 the question of retrospective effect also does not arise. 20. On the other hand, it was submitted by the Learned Senior Counsel appearing for the Respondent that the respondent has taken a decision to establish its industrial unit in the said area of the State of Haryana, only on the basis and footing that the respondent would be entitled to the benefit of sales tax exemption @ 150% on the total capital investment made in that industrial unit. In order to supplement the said submission, the learned Senior Counsel placed strong reliance on the doctrine of promissory estoppel and submitted that once the Respondent, based on the representation of the State has initiated the steps to establish the unit and has made substantial investment in that regard, the State now cannot turn around and deny the said benefit of exemption. 21. We have considered the submission made by the learned senior counsel for the parties and have also perused the relevant provision, as amended from time to time and the documents placed on record. 22. The judgment of this Court dated 10-3-2006 in Civil Appeal 1635 of 2006....
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....as a result of this decision, that where the Government makes a promise knowing or intending that it would be acted on by the promisee and, in fact, the promisee, acting in reliance on it, alters his position, the Government would be held bound by the promise and the promise would be enforceable against the Government at the instance of the promisee, notwithstanding that there is no consideration for the promise and the promise is not recorded in the form of a formal contract as required by Article 299 of the Constitution. It is elementary that in a republic governed by the rule of law, no one, howsoever high or low, is above the law. Everyone is subject to the law as fully and completely as any other and the Government is no exception. It is indeed the pride of constitutional democracy and rule of law that the Government stands on the same footing as a private individual so far as the obligation of the law is concerned: the former is equally bound as the latter. It is indeed difficult to see on what principle can a Government, committed to the rule of law, claim immunity from the doctrine of promissory estoppel. Can the Government say that it is under no obligation to act in a man....
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.... making of the promise, public interest would be prejudiced if the Government were required to carry out the promise, the Court would have to balance the public interest in the Government carrying out a promise made to a citizen which has induced the citizen to act upon it and alter his position and the public interest likely to suffer if the promise were required to be carried out by the Government and determine which way the equity lies. It would not be enough for the Government just to say that public interest requires that the Government should not be compelled to carry out the promise or that the public interest would suffer if the Government were required to honour it. The Government cannot, as Shah, J., pointed out in the Indo-Afghan Agencies case, claim to be exempt from the liability to carry out the promise "on some indefinite and undisclosed ground of necessity or expediency", nor can the Government claim to be the sole Judge of its liability and repudiate it "on an ex parte appraisement of the circumstances". If the Government wants to resist the liability, it will have to disclose to the Court what are the facts and circumstances on account of which the Government clai....
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.... in the instant case as the decision to put the Solvent Extraction Plant in the negative list was taken in public interest since the industry is in the category of polluting industry. It has never been the case of the Respondent that the Solvent Extraction Plant is a non polluting industry. There is also no allegation that the decision to put the Solvent Extraction Plant in the negative list was actuated by fraud or that the said decision was not bona fide. In cases where the Government on the basis of material available before it, bona fide, is satisfied that public interest would be served by granting, withdrawing, modifying or rescinding an exemption already granted, it should be allowed a free hand to do so. The withdrawal of exemption "in public interest" is a matter of policy and the Courts should not bind the government in its policy decision. The Courts should not normally interfere with fiscal policy of the government more so when such decisions are taken in public interest and where no fraud nor lack of bona fide is alleged much less established. 26. An exemption is nothing but a freedom from an obligation which an assessee is otherwise liable to discharge. In a fiscal....