TaxTMI 
TaxTMI 
1996 (7) TMI 506
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....r it was dismissed by the High Court on July 6, 1995 with liberty to file a fresh petition. Thereupon a fresh writ petition (S.B.C.W. Petition No. 3676 of 1995) was filed which was dismissed by the High Court on August 28, 1995, on the ground that the alternate remedy available under the RST Act was not availed of. Aggrieved by this a special appeal was filed (D.B. Special Appeal No. 83 of 1995) in which on December 13, 1995, the following order was passed by the Division Bench: "After making submissions, the learned counsel appearing for the appellant made a prayer to allow him to withdraw this appeal as well as the writ petition as the appellant would like to seek remedy in some other forum, including the Sales Tax Tribunal (sic), which has been constituted under the Rajasthan Taxation Tribunal Act, 1995. He is permitted to do so. It is also made clear that the order of learned single Judge will not come in way of seeking remedy by the applicant in accordance with law. The appeal stands disposed of as indicated above." 3.. It is in this context that the application under section 5 of the Limitation Act has been made stating further that the impugned orders were wi....
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....ublic interest, by notification in the Official Gazette, and subject to such conditions as may be specified therein, direct,- Here italicised. (a) that no tax under this Act shall be payable by any dealer having his place of business in the State in respect of the sales by him, in the course of inter-State trade or commerce, from any such place of business of any such goods or classes of goods as may be specified in the notification, or that the tax on such sales shall be calculated at such lower rates.........as may be mentioned in the notification; (b) that in respect of all sales of goods or sales of such classes of goods as may be specified in the notification, which are made, in the course of interState trade or commerce, by any dealer having his place of business in the State or by any class of such dealers as may be specified in the notification to any person or to such class of persons as may be specified in the notification, no tax under this Act shall be payable or the tax on such sales shall be calculated at such lower rates.........as may be mentioned in the notification......................." 9.. In exercise of these powers the State Government on M....
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....e as per annexure 'C'." 14.. As per annexure "C" the quantum of sales tax exemption was 100 per cent of fixed capital investment and the period of eligibility was seven years for the unit in question as it was a new industrial unit in the small-scale sector. The EC bears witness to this and carries the endorsement "Rs. 76,26,300 or seven years whichever is earlier". Rs. 76,26,300 is admittedly the fixed capital investment of the applicant in the unit in question of which Rs. 41,62,000 is admittedly on plant and machinery. 15.. It is not disputed that on September 11, 1989, the only category of cement plants ineligible as per item 10 of annexure B was large scale cement units except new units in the tribal sub-plan areas. 16.. By a notification dated January 11, 1990 the 1987 Incentive Schemes were amended with effect from August 6, 1988 to substitute item No. 10 of annexure "B" and insert a proviso to sub-clause (a) of clause 4. 16.1. Item No. 10 of annexure "B" now read: "All cement plants (including white cement plants) except,- (a) those in the small-scale sector; (b) mini-cement plants of the capacity limited to 200 tonnes per day or 66,000 tonnes per annum....
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.... was issued an audit memo on October 21, 1994, saying that the proviso to sub-clause (a) of clause 4 of the 1987 Incentive Schemes had come into effect from August 6, 1988 and therefore 50 per cent of the tax liability for the year 1990-91 and preceding years be recovered with interest from the applicant. 19.. In compliance thereof, it would appear that the CTO issued notices on January 18, 1995 for 1989-90, 1990-91 and 1991-92 and framed assessment orders holding the applicant to be covered by the first proviso to sub-clause (a) of clause 4 of the 1987 Incentive Schemes. 20.. The case of the applicant is twofold. The learned counsel for the applicant contends that the amendment cannot be given retrospective effect and if it is, the applicant's cement plant being in the small-scale sector is not a mini cement plant and therefore does not come within the ambit of the first proviso to sub-clause (a) of clause 4 of the 1987 Incentive Schemes. The learned counsel for the applicant asserted that the doctrine of promissory estoppel applied and cited case law in support. The following reports are relied upon [1984] 56 STC 162 (Raj) (Dispensing Chemist v. State of Rajasthan), [1995] ....
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....y estoppel apply in the facts and circumstances of this case, so as to prevent the amendments from even having prospective effect in the case of the present applicant? (iii) Is the cement plant in question a small-scale unit to which the proviso to sub-clause (a) of clause 4 of the 1987 Incentive Schemes does not apply or is it a mini cement plant to which the proviso applies? 24.. Obviously in the present case the third question would arise only if the first two questions are answered in the affirmative. The third question is however a question of fact which cannot be determined on the basis of the material on record in this case. Mini cement plants are not defined in the RST Act or the CST Act or the Schemes. Suffice it to say that to come within the mischief of the first proviso to sub-clause (a) of clause 4 of the 1987 Incentive Schemes the quantum of investment in plant and machinery is not a relevant consideration. The only relevant considerations are the type of kiln used and the production per day/annum. It can therefore be said that if a cement plant, even in the smallscale sector, uses either the vertical shaft kiln and is licensed to produce 200 tonnes per d....
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.... liability up to a ceiling of 100 per cent of fixed capital investment of Rs. 76,26,300 or seven years whichever was earlier. Could a subsequent amendment reduce this exemption to 50 per cent of sales tax liability? 28.. 1. The following dates are important: 1.. May 23, 1987-Date of notification of Schemes. 2.. March 5, 1987-Date from which Scheme became effective. 3.. September 11, 1989-Date of grant of EC. 4.. January 11, 1990-Date of amendments. 5.. February 22, 1990-Date of amendments. 6.. August 6, 1988-Date from which amendments are sought to be made effective. 7.. September 11, 1990-Date of expiry of validity of EC. 28.2. It has already been held that whether the cement plant in question was a mini cement plant for purposes of these amendments is a question of fact. The question then is whether a mini cement plant granted an EC under the 1987 Incentive Schemes as a new industrial unit in the small-scale sector on September 11, 1989, would become ineligible to claim exemption in excess of 50 per cent of its tax liability by virtue of these amendments from September 11, 1989 or January 11, 1990 or February 22, 1990 or September 12, 1990 or not at all....
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....of the proposition that tax exemption can be withdrawn with retrospective effect if it can be extended with retrospective effect. 29.2. The granting of an exemption and the withdrawal of an exemption cannot be viewed as the same process in reverse. It is not a two-way street and the fact that section 4(2) of the RST Act authorises the grant of exemptions with retrospective effect cannot be said to authorise their withdrawal with retrospective effect. Neither the RST Act nor the CST Act, in terms, provide for withdrawal of exemptions. 30.. The case law cited by the learned counsel for the applicant is discussed in the paragraphs that follow. 30.1. In Dispensing Chemist v. State of Rajasthan [1984] 56 STC 162 a Division Bench of the Rajasthan High Court had before it a reference made to it under the RST Act (at the time to which the facts of the case related the RST Act as it then stood provided for such references). The assessee was a registered dealer in allopathic medicine. The State Government by a notification dated April 14, 1955, exempted from payment of sales tax such dealers in allopathic medicines who obtained an exemption certificate by paying the requisite fee. T....
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....a matter under the 1987 Incentive Schemes. The petitioner held an EC under these Schemes. The assessing authority was of opinion that the petitioner was not entitled to benefits under these Schemes and had been wrongly issued the EC and issued notice to the petitioner to show cause why the EC should not be cancelled. It was held that the EC was issued pursuant to a decision of the appropriate Screening Committee and that the assessing authority could not question or sit in judgment over decisions of the Screening Committee and the correct course for the assessing authority to have adopted was to approach the Screening Committee. Clause 9 of the 1987 Incentive Schemes which provided for the Screening Committee to amend, suspend, restore or cancel the sanction of EC for breach of conditions did not apply to the case before it and the notice issued by the assessing authority was therefore not under the clause which provided for notices by the assessing authority preparatory to a reference to the Screening Committee. 30.2.1. The facts of the present case are not squarely covered by this ruling. As already noted the validity of the EC is not in question. No one contests the eligibili....
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....the large scale sector covered under the 1985 Dispensation Scheme in cases of expansion/diversification. This was challenged on grounds of promissory estoppel as the petitioner claimed to have spent considerable sums on expansion. 30.3.2. The High Court held that the amendment to clause 2(e)(iii) by notification dated September 10, 1987 could not be given retrospective effect and struck down the offending provisions of the notification holding that "In matters of taxation, it is only expected that amendments/changes in the existing schemes/laws/rules, which are detrimental to those whom they are made applicable, shall not be made applicable with retrospective effect". 30.3.3. As regards the notification of August 6, 1988, the High Court took note of clause 11 of the 1987 Incentive Schemes which provided for the review and amendment of the Schemes and of the fact that the petitioner had not applied for eligibility under these Schemes for expansion/diversification that doctrine of promissory estoppel did not apply. 30.3.4. On this basis the writ petition was partly allowed to the extent of striking down of the offending provision in the notification of September 10, 1....
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....ainst the statute is concerned, we may make it clear that there is no question of estoppel against statute. In the facts and circumstances of the present cases, the question is of estoppel against the conduct of the respondents and law of equitable and promissory estoppel is the law of evidence. The essence of the impugned notification dated May 7, 1990, is the conduct of the respondents in withdrawing exemption which had been granted............ It is a plain and simple question of estoppel against conduct reflected through the impugned notification.........." (Emphasis* added) 30.5.2. This ruling has an important bearing on the matter in hand. 30.6. In S.B.P. Chem Pvt. Ltd. v. State of Rajasthan [1993] 90 STC 382, a single Bench of the Rajasthan High Court had before it a matter arising out of the 1987 Incentive Schemes. The petitioner was entitled to avail of exemption up to 85 per cent of the fixed capital investment. It had been issued an EC which was renewed from time to time. The petitioner claimed a fixed capital investment of Rs. 19,80,983.54 and supported it with a certificate from his chartered accountant. Apparently, the Screening Committee considered only Rs. 13.....
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....owed and it was held in para 4 at page 155 of the report that "........It is now well-settled that the exemption granted under the Sales Tax Act, which the State Government was entitled to grant under the statute, constitutes a promise to the entrepreneurs to avail of the benefits on fulfilling their part of the terms of securing benefit under such scheme. It is well established that though the Government is entitled to withdraw benefits under such scheme but that authority is operative only prospectively and does not affect the rights already vested in the entrepreneurs to claim the benefit of the scheme and that right remaining unaffected, for such benefits as envisaged under the scheme, they are entitled to claim................." (Emphasis* added). The petitioner was allowed to avail to the full extent of the benefits as available under the scheme at the time when he was found eligible and admitted to avail of benefits under the scheme. 30.9. In T.F. Jose v. General Manager, District Industries Centre [1995] 97 STC 484 the Kerala High Court had a matter arising out of incentives given to small-scale industries under the Kerala General Sales Tax Act. The petitioners had oil m....
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....the doctrine of promissory estoppel would not be attracted as the respondent failed to act on it. The Supreme Court took the view that only those industries were entitled to the rebate who fulfilled the requirements during the period the rebate was operative. 31.1.1. In the case before this Tribunal the applicant admittedly was found eligible for benefits under the 1987 Incentive Schemes before they were modified. The above ruling, therefore does not apply in the facts and circumstances of this case. 31.2. As for Amrit Banaspati Co. Ltd. v. State of Punjab [1992] 85 STC 493 (SC) cited by the learned counsel for the non-applicant the facts were that the appellant established his unit in response to a package of incentives, including the refund of sales tax published by the State Government in a brochure and after being reassured by various high ranking functionaries at meetings and in exchange of correspondence that this concession would be available to him. The appellant accordingly made considerable investment in his project. By the time he did the Government's policy underwent a change and refund of tax collected by the appellant was refused. A single Bench of the Punjab an....
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....asic purpose of which is to promote justice founded on fairness and relieve a promisee of any injustice perpetrated due to promisor's going back on its promise, is incapable of being enforced in a court of law if the promise which furnishes the cause of action or the agreement, express or implied giving rise to binding contract is statutorily prohibited or is against public policy." (Emphasis* added) 31.2.5. Refund was distinguished from exemption. The latter was legitimate. The two were different and distinct legal concepts. Refund of tax was permissible only in cases of excess recovery or recovery which was illegal or contrary to the provisions of law. It was laid down: "....................A provision or agreement to refund tax due or realised in accordance with law cannot be comprehended. No law can be made to refund tax to a manufacturer realised under a statute. It would be invalid and ultra vires. Here italicised. The Punjab General Sales Tax Act, 1948, provided for refund of sales tax and grant of exemption in circumstances specified in sections 12 and 30, respectively, neither empowered the Government to refund sales tax realised by a manufacturer on sal....
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....ions dated April 29, 1970 and November 11, 1970, granted some tax reliefs to certain industries on certain conditions. By a notification dated July 17, 1971, solvent extraction units were declared ineligible. Two cases came before the Supreme Court. In one case the solvent extraction unit came into production on December 3, 1970. The unit could not be said to have acted on the assurance if any contained in a notification issued three weeks earlier. The notification itself held out no assurance or promise that it would not be modified. It was a routine notification. The solvent extraction plant's location was also not covered by the notification of November 11, 1970. In the other case the unit had been established prior to November 11, 1970. Clearly no factual basis existed for promissory estoppel to be invoked. The same cannot be said of the case in hand. The 1987 Incentive Schemes were designed specifically to attract and encourage the establishment of industries. They came into effect on March 5, 1987 and the applicant's unit was a new industrial unit which came into production on June 22, 1989 and was granted EC as such on September 11, 1989. 32.. Admittedly, the 1987 Incenti....