TaxTMI 
TaxTMI 
2017 (12) TMI 638
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....stice. This common Judgment disposes of four Writ Petitions filed by Sun Pharma Laboratory Ltd., the common Petitioner in all the said Writ Petitions, as common issues are raised therein. It is the case of the Petitioner that the promised policy declared by the Central Government (Respondent No. 1) of 100% excise duty exemption which had persuaded the Petitioner to alter its position and invest huge amount of money has now been indiscriminately curtailed giving rise to the present cause of action to challenge the impugned notifications whittling down the exemption benefits and resulting in the passing of a series of impugned show cause notices and impugned orders by the Central Excise Commissionerate confirming demands of Central Excise duties, interest and penalties thereon. W.P.(C) No. 41/2015 2. W.P. (C) No. 41/2015 impugns Notification No. 21/2008-C.E. dated 27.03.2008 (impugned Notification No.21/2008) and Notification No. 36/2008-C.E dated 10.06.2008 (impugned Notification No.36/2008) and seeks a prayer for the Petitioner units to be permitted to avail the benefit of exemption of payment of excise duty as provided in terms of Notification No. 56/2003-C.E dated 25.06.200....
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....6/2003 as amended by impugned Notification No. 21/2008 along with appropriate interest on the amounts confirmed in terms of Section 11 AB (now 11 AA) of the Central Excise Act, 1944 and the penalty amount of Rs. 13,76,59,868.00 (Rupees thirteen crore seventy six lakhs fifty nine thousand eight hundred sixty eight) (Rs. 5,31,41,422+ Rs. 8,45,18,446) on the Petitioner in terms of Section 11 AC (1) (c) of the Central Excise Act, 1944. However, the Petitioner was given the offer to pay only 25% of such amount as penalty on fulfilment of the conditions as prescribed under Section 11 AC (1) (e) of the Central Excise Act, 1944. By the said order the Commissioner also ordered the forfeiture of self credit facility as available to the Petitioner under the said Notification No. 56/2003 as amended by the impugned Notification No. 21/2008 in terms of the provision of sub- paragraph 2C (f) of the said notification. (iii) OIO No.22/COMM/CE/SLG/15-16 dated 08.01.2016 of the Commissioner by which he confirmed the demand of central excise duty (i) amounting to Rs. 2,27,27,200.00 pertaining to the month of February 2014 on the Petitioner under the provision of Section 11 A (1) of the Centra....
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....ation. (iii) C.No.V(15)19/ADJ/CE/COMM/SLG/2016/20697 dated 19.10.2016, issued by the office of the Commissioner of Customs, Central Excise & Service Tax, Siliguri directing the Petitioner to show cause as to why the amount of Rs. 82,84,25,639/- erroneously refunded in contravention to the condition as laid down in clause 3 (i) and (ii) of the said notification read with clause 2B (b) of the said notification should not be deposited forthwith as undertaken by the Petitioner to do so in the undertaking submitted to the department at the time of submitting its refund claim. The said show cause notice also required the Petitioner to show cause as to why the said amount, erroneously refunded to the Petitioner, if not deposited forthwith as per the undertaking, should not be demanded in terms of Section 11A of the Central Excise Act, 1944. It further required to show cause as to why the interest in terms of Section 11AA of Central Excise Act, 1944, should not be demanded. (iv) C.No.V(18)58/CE/Refund/Sun-754/GTK-Divn./2016-17/605 dated 20.02.2017, issued by the Deputy Commissioner, directing the Petitioner to show cause as to why the refund of Rs. 4,49,82,808/-, Rs. 5,19....
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.... 2016 should not be disallowed for being irregular and in violation of the provisions of Notification No.56/2003-CE dt. 25.06.2003, as amended, in as much as, the same should be disallowed for not having fulfilled the condition as stipulated in Clause 3(i) & (ii) of Notification No.56/2003-CE dt. 25.06.2003, as amended. The said show cause notice also required the Petitioner to show cause as to why the irregular re-credit availed and utilised by the Petitioner, amounting to Rs. 43,98,61,414.00 should not be demanded and recovered in terms of Section 11A of the Central Excise Act, 1994, as amended, for violating the provisions of Clause 2C(g) of Notification No.56/2003-CE dt.25.06.2003, as amended, read with Rule 8 (3) of the Central Excise Rules, 2002. The said show cause notice further required the Petitioner to show cause as to why the Interest in terms of Section 11AA of the Central Excise Act, 1944, as amended should not be demanded and recovered till the date of deposit of the said amount and Penalty in terms of Section 11 AC 1(a) of the Central Excise Act, 1944, as amended, should not be imposed on them for having contravened the provisions of the Central Excise Act, 1944 as ....
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....itioner had already, in terms of the promise made, invested huge amounts of money between 2005 to 2008 much prior to the commencement of commercial production of Petitioner‟s first unit on 20.04.2009. It is the contention of the Petitioner that this has been done by the Respondents solely on the ground that the Petitioner had not opted for the same. The Petitioner contends that based on the Industrial Policy of 2003 which also exempted from so much of the duty of excise leviable thereon as is equivalent to the amount of duty paid by the manufacturer of the goods other than the amount of duty paid by utilisation of CENVAT credit under the CENVAT Credit Rules, 2002 for a period of 10 years from the date of commencement of commercial production, the Petitioner in the year 2005 and thereafter commenced the process of establishing a new unit for manufacture of P & P Medicaments, falling under Sl. No. 11 of the schedule to the Notification No. 56/2003 including leasing of the land for establishing the said unit, generating employment in the State etc. It is the contention of the Petitioner, in the meanwhile, Office Memorandum dated 01.04.2007 was issued notifying the Industrial Pol....
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....at it further became aware of the decision of the High Court of Jammu & Kashmir in re: Reckitt Benckiser v. Union of India 2011 (269) E.L.T 194, wherein the High Court of Jammu and Kashmir had quashed the amending notifications seeking to reduce and restrict the 100% duty exemption provided pursuant to an incentive scheme for Jammu and Kashmir. Thereafter, on 22.10.2011, the Petitioner informed the authorities that it would avail 100% self- credit of the excise duty paid placing reliance on the aforesaid Judgments of this Court and the High Court of Jammu and Kashmir. For the period June, 2012 to February, 2014 the authorities denied self-credit on monthly basis on the ground that the Petitioner was not eligible to claim the benefit @ 100% of the amount paid in cash but was eligible for refund @ 56% on account of the amendment vide impugned Notification No. 21/2008 which reduced the benefit from 100%. It is the case of the Petitioner that it has invested an amount of Rs. 186.08 crores up to March 2014 and being a large project investment continued thereafter and an amount of Rs. 337.51 crores have been invested up to March 2016. 8. Mr. Vikram Nankani, learned Senior Advocate for....
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....rned Additional Solicitor General for the Respondents would place two separate calculations of re-credit / refund under area based exemption notification as under:- "CALCULATION OF RE-CREDIT/REFUND UNDER AREA BASED EXEMPTION NOTIFICATION 100% re-credit/ refund case (Not No. 20/2007): Value of the finished goods Duty @ 6% Input cost Input credit @ 12% Duty payment from PLA/account current 100% re-credit/refund Rs. 100 Rs. 6 Rs. 22 Rs. 2.64 Rs. 6-Rs. 2.64 = Rs. 3.36 Rs. 3.36 Re-credit/Refund as per value addition (Not no. 20/2008):- Value of the finished goods Duty @ 6% Input cost Input credit @ 12% Duty payment from PLA/account current Value addition @ 56% on total duty 100% recredit/ refund Rs. 100 Rs. 6 Rs. 22 Rs. 2.64 Rs. 6-Rs. 2.64= Rs. 3.36 Rs. 3.36 Rs. 3.36 10. The Respondents would admit that the Petitioner started industrial production w.e.f. 20.04.2009 but would contest the assertion of the Petitioner that the new unit of the Petitioner was started within the period 2005-2008. The Respondents submits that the Petitioner fell within category (a) of paragraph 3 of Not....
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....t out by the learned Additional Solicitor General for the Respondents is flawed because whereas the previous notification provided 100% exemption from Excise Duty the offending notifications sought to curtail the same by limiting the exemption to 56% only to the duty payable on value addition undertaken in the manufacture of the goods and not on the entire excise duty payable as promised. The attention of the Court was drawn to the explanation to clause 3(4) of the impugned Notification No. 20/2008 which provides: ".................. Explanation: For the purpose of this paragraph, the actual value addition in respect of said goods shall be calculated on the basis of the financial records of the preceding financial year, taking into account the following: (i) Sale value of the said goods excluding excise duty, Value Added Tax and other indirect taxes, if any, paid on the goods; (ii) Less: Cost of raw materials and packing material consumed in the said goods; (iii) Less: Cost of fuel consumed if eligible for input credit under CENVAT Credit Rules, 2004; (iv) Plus : Value of said goods available as inventory in the unit but not cle....
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....ing environment for industrial development, improve availability of capital and increase market access to provide a fillip to the private investment in the State. The relevant paragraph 3.1 read thus:- "3.1 Fiscal incentives to new Industrial Units and substantial expansion of existing units: i. i.) New industrial units and existing industrial units on their substantial expansion as defined, set up in Growth Center, Industrial Infrastructure Development Centers (IIDCs) and other locations like Industrial Estates, Export Processing Zones, Food Parks, IT Parks, etc. as notified by the Central Government are entitled to 100% (hundred percent) income tax and excise duty exemption for a period of 10 years from the date of commencement of commercial production. Thrust Sector Industries as mentioned in Annexure-II are entitled to similar concessions in the entire State of Sikkim without area restrictions." [Emphasis supplied] 16. Notification No. 56/2003 was issued by the Respondent No.1 by which the 100% excise duty exemption under Industrial Policy, 2003 was operationalized. The relevant preamble of the said Notification No.56/2003 was as under:- "....
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....acity by not less than twenty five per cent on or after the 23rd day of December 2002, but have commenced commercial production from such expanded capacity, not later than the 31st day of March, 2007." 19. The Respondent No.1 vide the said Notification No. 27/2004 thus restricted the date of commencement of commercial production which was open ended earlier to the period 23.12.2002 till 31.03.2007. 20. On 01.04.2007 vide an office memorandum the Respondent No.1 notified the Industrial Policy, 2007. The Industrial Policy, 2003 was discontinued on and from 01.04.2007. This Industrial Policy, 2007 covered the State of Sikkim as well. In the said Industrial Policy, 2007 it was provided:- "(ii) Duration: all new units as well as existing units which go in for substantial expansion, unless otherwise specified and which commence commercial production within the 10 year period from the date of notification of NEIIPP, 2007 will be eligible for incentives for a period of ten years from the date of commencement of commercial production. ..................... .................... (v) Excise Duty Exemption: 100% Excise Duty exemption w....
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.... (1) of Section 5A of the Central Excise Act, 1944, read with sub-section (3) of Section 3 of the Additional Duties of Excise (Goods of Special Importance) Act, 1957 and sub-section (3) of Section 3 of the Additional Duties of Excise (Textile and Textile Articles) Act, 1978 made further amendments to Notification No.56/2003. The Preamble was amended. In the Preamble, for the words and figures, "to the amount of duty paid by the manufacturer of goods other than the amount of duty paid by utilisation of CENVAT credit under the CENVAT Credit Rules, 2002", the words "to the duty payable on value addition undertaken in the manufacture of the said goods by the said unit" were substituted. Paragraphs 1A, 2 and 2A of Notification No. 56/2003 was substituted with new paragraphs 2, 2A, 2B, 2C and 2.1. 24. The Respondent No.1 vide impugned in exercise of the powers conferred by sub-section (1) of Section 5A of the Central Excise Act, 1944, amended Notification No.20/2007. In the Preamble, for the words and figures, "to the amount of duty paid by the manufacturer of goods other than the amount of duty paid by utilisation of CENVAT credit under the CENVAT Credit Rules, 2004", the words "to t....
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....e. For the said purpose, the manufacturer may, within sixty days from the beginning of a financial year, make an application in writing to the Commissioner of Central Excise or the Commissioner of Customs and Central Excise, as the case may be, for determination of such special rate, stating all relevant facts including the proportion in which the materials or components are used in the production or manufacture of goods: Provided that the Commissioner of Central Excise or the Commissioner of Customs and Central Excise may, if he is satisfied that the manufacturer was prevented by sufficient cause from making the application within the aforesaid time, allow such manufacturer to make the application within a further period of thirty days : Provided further that the manufacturer supports his claim for a special rate with a certificate from his statutory auditor containing an estimate of value addition in the case of goods for which a claim is made, based on the audited balance sheet of the unit, for the preceding financial year; (2) On receipt of the application referred to in sub-paragraph (1), the Commissioner of Central Excise or Commissioner of Customs ....
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....e sale value of the said goods excluding excise duty, Value Added Tax and other indirect taxes, if any, paid on the goods. (5) The manufacturer shall be entitled to refund at the special rate fixed under sub-paragraph (2) in respect of all clearances of excisable goods manufactured and cleared under this notification with effect from the date on which the application referred to at sub-paragraph (1) was filed with the Commissioner of Central Excise or Commissioner of Central Excise and Customs, as the case may be. (6) Where a special rate is fixed under sub-paragraph (2), the refund payable in a month shall be equivalent to the amount calculated as a percentage of the total duty payable on such excisable goods, at the rate so fixed: Provided that the refund shall not exceed the amount of duty paid on such goods, other than by utilization of CENVAT credit. 2. This notification shall come into force with effect from the 1st day of April, 2008." 26. The Respondent No.1 vide impugned Notification No. 36/2008 in exercise of the powers conferred by sub-section (1) of Section 5A of the Central Excise Act, 1944, read with sub-section (3) of Section 3 ....
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....her amended paragraph 3 of the Notification No. 20/2007 as amended by impugned Notification No.20/2008 and substituted sub-paragraph (1) of the said paragraph 3 with the following:- "(1) Notwithstanding anything contained in paragraph 2A, the manufacturer shall have the option not to avail the rates specified in the said Table and apply to the Commissioner of Central Excise or the Commissioner of Customs and Central Excise, as the case may be, having jurisdiction over the manufacturing unit of the manufacturer for fixation of a special rate representing the actual value addition in respect of any goods manufactured and cleared under this notification, if the manufacturer finds that the actual value addition in the production or manufacture of the said goods is at least 115 percent of the rate specified in the said Table and for the said purpose, the manufacturer may make an application in writing to the Commissioner of Central Excise or the Commissioner of Customs and Central Excise, as the case may be, not later than the 30th day of September in a financial year for determination of such special rate, stating all relevant facts including the proportion in which the materi....
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....the Central Excise Rules, 2002, with a clear intent to evade payment of duty, should not be imposed. The said show cause notice also required Petitioner to show cause as to why re-credited facility available under Notification No.56/2003 should not be disallowed. Although personal hearing was granted to the Petitioner on three dates the Petitioner‟s consultant having another pre-schedule hearing could not attend the hearing or submit the defence reply pursuant to which the Commissioner adjudicated the show cause notice dated 31.03.2013 and passed the impugned OIO No.10/COMM/CE/SLG/13-14 dated 26.03.2014 issued on 27.03.2014. Being aggrieved by the said impugned order dated 26.03.2014 the Petitioner preferred an appeal before the CESTAT, along with an miscellaneous application for the waiver of pre-deposit and stay of the operations of the said order. The CESTAT vide order dated 21.11.2014 granted an unconditional stay to the Petitioner against the recovery duty demanded, interest and penalty imposed relying upon the judgment of this Court in the matter of Unicorn Industries (supra). While the appeal was pending final adjudication and notwithstanding the stay granted, the Depa....
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.... No.20/2007. 35. W.P. (C) No. 8 of 2017 was preferred on 20.02.2017 by the Petitioner seeking a writ of certiorari to quash and set aside the impugned order of the CESTAT dated 14.12.2016 as detailed above. 36. W.P. (C) No. 27/2017 was preferred on 18.04.2017 by the Petitioner to challenge four show cause notices issued by the Assistant Commissioner seeking to reject their refund claims of the Petitioner for the months of July 2016 to January 2017 pursuant to the order passed by the CESTAT dated 14.12.2016 and the impugned notifications as detailed above. 37. On 19.04.2017 the Petitioner wrote a letter to the Assistant Commissioner to keep the adjudication of the four notices in abeyance until the disposal of W.P. (C) No.27 of 2017. 38. On 12.05.2017 the Assistant Commissioner confirmed the demand in respect of show cause notice dated 26.08.2016. The Petitioner therefore filed I.A. No. 1 of 2017 in W.P. (C) No. 27 of 2017 on 13.06.2017 seeking to amend and bring on record the order dated 12.05.2017 passed by the Assistant Commissioner. 39. On 02.12.2016 and 13.01.2017 two show cause notices were issued for the period January 2015-March 2016 in respect on second unit ....
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....or incentives for a period of 10 years from the date of commencement of commercial production i.e., from 20.04.2009 till 20.04.2019. 44. The Industrial Policy, 2007 had declared that 100% excise duty exemption will be continued on finished products made in the North Eastern Region as was available under the Industrial Policy, 1997. However, in cases, where the CENVAT paid on the new materials and intermediate products going into the production of finished goods (other than the products which are otherwise exempt or subject to nil rate of duty) is higher than the excise duties payable on the finished products, ways and means to refund such overflow of CENVAT credit will be separately notified by the Respondent No.1. 45. Notification No. 20/2007 provided for exemption of goods cleared from unit located in the State of Sikkim from so much of the duty of excise leviable thereon under the Central Excise Act, 1944 as is equivalent to the amount of duty paid by the manufacturer of goods other than the amount of duty paid by utilisation of CENVAT Credit Rules, 2004. 46. It is quite clear that when the Industrial Policy, 2007 was declared on 01.04.2007 which was followed by the iss....
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....paragraph 6 and 7 of the counter-affidavit filed by the Respondents to W. P. (C) No. 41 of 2015 it is pleaded:- "6. That with reference to paragraph 4 of the writ petition, the Respondents state that the facts and figures stated therein are within the exclusive knowledge of the petitioner and the petitioner is put to strict proof thereof. However, the Respondents state that new unit of the petitioner was not started within the period 2005 to 2008 and the Respondents vehemently deny and oppose the said claim of the petitioner. The Respondents further state that the total investment claim of the Petitioner is within the exclusive knowledge of the Petitioner and the Petitioner is put to strict proof thereof. 7. That with reference to paragraph 5 & 6 of the writ petition, the Respondent state that the claim of the Petitioner that he started industrial production w.e.f. 20.04.2009 and that the Petitioner is manufacturing P & P medicaments falling under Sr. No. 11 of the schedule to Not No. 56/2003-CE dt. 25.06.2003 is a matter of record which the Petitioner may establish during the course of the hearing of this instant writ petition. The Respondents state that referenc....
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....ed herewith as Annexure-P7. (v) In line with the aforesaid Industrial Policy, 2007, the Respondent No. 1 issued Notification 20/2007 dated 25.04.2007 whereby goods specified under the First Schedule to the Central Excise Tariff Act, 1985 other than those mentioned in the annexure to the aforesaid Notification and cleared in the State of Sikkim were exempted from so much of the duty of excise leviable thereon under the said Act as is equivalent to the amount of duty paid by the manufacturer of goods other than the amount of duty paid by utilization of CENVAT credit. A copy of the Notification No.20/2007 dated 25/4/2007 is annexed herewith as Annexure-P8. (vi) In short, the 100% excise duty exemption provided under Industrial Policy, 2007 read with Notification 20/2007 were the same as that provided under the 2003 Notification. (vii) Given the legislative intent behind the continuation of the 100% excise duty benefits for goods cleared in State of Sikkim (including those manufactured by the Petitioner), the Petitioner continued to make its investments in Sikkim for the setting up of Unit. The Petitioner did everything necessary under law so as to allow it t....
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....utory guarantee of 100% excise duty exemption, the process for establishing a Unit for the manufacture of P & P medicaments, falling under Serial No. 11 of the Schedule to the 2003 Notification was commenced. An area of 1.57 50 hectares (i.e. location of the present Sikkim Unit) was taken on lease. Right from the project stage, nearly 100 direct / indirect workmen were engaged by the Petitioner for the construction of the Unit. The Petitioner had also been taking the requisite insurance cover for the workmen required to be engaged for the project work. Further, in total, the Petitioner had invested an amount of Rs. 20,41,97,593/- between the period from 2005 to March 2008 in various Fixed Assets for establishing said manufacturing unit." 54. In paragraph 8 of the counter-affidavit filed by the Respondents to W. P. (C) No.27 of 2017 it is pleaded:- "8. That with reference to the statements made at paragraph 8 no comments." 55. In paragraph 7 of W.P. (C) No.40 of 2017 it is pleaded by the Petitioner that:- "7. Based on the aforesaid statutory guarantee of 100% excise duty exemption, the Petitioner, in 2005 and thereafter, the process for establishing a New Unit ("Un....
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....paragraph 3(vii) of W.P. (C) No.08 of 2017 to which the Respondent No.1 had no comment to offer in the counter-affidavit, it is seen that the Petitioner had made substantial investments between the period of issuance of impugned Notification No. 20/2007 and the issuance of the impugned Notification No. 20/2008. The Petitioner asserts that "Given the legislative intent behind the continuation of the 100% excise duty benefits for goods cleared in the State of Sikkim (including those manufactured by the petitioner), the petitioner continued to make investment in Sikkim for setting up for unit. The Petitioner did everything necessary under law so as to allow it to engage people of Sikkim in employment at their plant. Consequently a large number of people from Sikkim are in employment of the Petitioner working at the unit for the manufacture of the goods." The Petitioner further asserts that the total net investment in fixed assets and capital work in progress from the year 2005 till the year 2014 is 21433.15 lakhs. The Respondents in its counter affidavit states that they have no comment to make. Thus the investments made by the Petitioner as detailed in the investment chart must be ac....
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.... be held to a high "standard of rectangular rectitude while dealing with its citizens'? There was a time when the doctrine of executive necessity was regarded as sufficient justification for the Government to repudiate even its contractual obligations; but, let it be said to the eternal glory of this Court, this doctrine was emphatically negatived in Anglo-Afghan Agencies case [Union of India v. Anglo-Afghan Agencies, AIR 1968 SC 718] and the supremacy of the rule of law was established. It was laid down by this Court that the Government cannot claim to be immune from the applicability of the rule of promissory estoppel and repudiate a promise made by it on the ground that such promise may fetter its future executive action. If the Government does not want its freedom of executive action to be hampered or restricted, the Government need not make a promise knowing or intending that it would be acted on by the promisee and the promisee would alter his position relying upon it. But if the Government makes such a promise and the promisee acts in reliance upon it and alters his position, there is no reason why the Government should not be compelled to make good such promise like any oth....
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....pt from the liability and it would be for the court to decide whether those facts and circumstances are such as to render it inequitable to enforce the liability against the Government. Mere claim of change of policy would not be sufficient to exonerate the Government from the liability: the Government would have to show what precisely is the changed policy and also its reason and justification so that the court can judge for itself which way the public interest lies and what the equity of the case demands. It is only if the court is satisfied, on proper and adequate material placed by the Government, that overriding public interest requires that the Government should not be held bound by the promise but should be free to act unfettered by it, that the court would refuse to enforce the promise against the Government. The court would not act on the mere ipse dixit of the Government, for it is the court which has to decide and not the Government whether the Government should be held exempt from liability. This is the essence of the rule of law. The burden would be upon the Government to show that the public interest in the Government acting otherwise than in accordance with the promi....
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....nister to the concerned persons and there was no clear material also in support of the stand that the parties had altered their position by acting upon the representations and suffered any prejudice. On facts, therefore, no case for raising the plea of estoppel was held to have been made out. This Court proceeded on the footing that the notification granting exemption retrospectively was not in accordance with Section 10 of the State Sales Tax Act as it then stood, as there was no power to grant exemption retrospectively. By an amendment that power has been subsequently conferred. In these appeals there is no question of retrospective exemption. We also find that no reference was made by the High Court to the decision in M.P. Sugar Mills' case [Motilal Padampat Sugar Mills Co. Ltd. v. State of U.P., (1979) 2 SCC 409 : 1979 SCC (Tax) 144] . In our view, to the facts of the present case, the ratio of M.P. Sugar Mills' case [Motilal Padampat Sugar Mills Co. Ltd. v. State of U.P., (1979) 2 SCC 409: 1979 SCC (Tax) 144] directly applies and the plea of estoppel is unanswerable. 8. It is not disputed that the first order namely, the one dated April 11, 1979 gave more of t....
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....wer to grant exemption having itself being taken away no such exemption could be granted to the Appellant. Thereafter, the Authority required the Appellant to submit a statutory return which was also challenged and ultimately the High Court allowed the Original Petition and directed the Committee to consider the matter afresh in the light of the judgment of the Apex Court in re: Motilal Padampat Sugar Mills Co. Ltd. (supra). The Authorities however once again rejected the application seeking exemption from property tax which led the filing of another Writ Petition in the High Court which, however, rejected it holding that no exemption notification had, in fact, been issued under Section 3A when it was in existence and therefore no claim for exemption from payment of building tax would be allowed. The High Court also held that mere promise to amend the law does not hold out the promise of exemption from payment of building tax and further that since Section 3A itself had been omitted the question of exempting the Appellants from building tax would not arise. After examining its authorities as well as various English authorities, the Apex Court would hold:- "14. It is import....
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....f the Kerala Building Tax Act, 1975 (which would be sufficient to deny the appellants relief) is, therefore, clearly incorrect in law." Then again "36. In the present case, it is clear that no writ of mandamus is being issued to the executive to frame a body of rules or regulations which would be subordinate legislation in the nature of primary legislation (being general rules of conduct which would apply to those bound by them). On the facts of the present case, a discretionary power has to be exercised on facts under Section 3-A of the Kerala Building Tax Act, 1975. The non-exercise of such discretionary power is clearly vitiated on account of the application of the doctrine of promissory estoppel in terms of this Court's judgments in Motilal Padampat [Motilal Padampat Sugar Mills Co. Ltd. v. State of U.P., (1979) 2 SCC 409 : 1979 SCC (Tax) 144 : (1979) 2 SCR 641] and Nestle [State of Punjab v. Nestle India Ltd., (2004) 6 SCC 465] . This is for the reason that non-exercise of such power is itself an arbitrary act which is vitiated by non- application of mind to relevant facts, namely, the fact that a G.O. dated 11-7- 1986 specifically provided for exemption from b....
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....t no building tax can be levied or collected from the appellants in the facts of the present case. Consequently, we allow the appeal to the extent indicated above and set aside the judgment of the High Court." 61. The Industrial Policy, 2003 of the Respondent No.1 had clearly declared that the State of Sikkim lags behind in industrial development and need had been felt for structured interventionist strategies to accelerate industrial development of the State and boost investor confidence. The new initiatives declared by the Industrial Policy, 2003 would provide the required incentives as well as an enabling environment for industrial development, improve availability of capital and increase market access to provide a fillip to the private investment in the State. Fiscal incentives to new industrial units and substantial expansion of existing units was declared to be 100% income tax and excise duty exemption for a period of 10 years from the date of commencement of commercial production. The Industrial Policy, 2003 admitted that Sikkim is one of the least industrially developed States in India, heavily dependent on the Respondent No.1 for grants and there was a need to undertake....
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.... be used in the manufacture of medicines, cosmetics and aromatic products. The climate is ideal for the development of mulberry trees and hence, the establishment of a sericulture industry. 5. The absence of profitable marketing network and the lack of appropriate processing facilities for manufacturing quality finished products has resulted in most of the produce being sold at uncompetitive prices to other states as raw materials, and their true potential has not been exploited. Therefore, due attention needs to be given for the development of agro-based, food processing and forest based units. 6. There are good prospects for setting up dairy and animals husbandry units on a commercial basis. The milk production offers opportunities for developing processed food-products like cheese, butter, etc. The population being predominantly non-vegetarian, meat-processing and packaging units offer promise in the State. 7. The State has a good resource base of minerals like zinc, lead, copper, dolomite, coal, quartzite, graphite, talc etc. Commercial exploitation of some of these minerals is being carried out by the Sikkim Mining Corporation. 8. The tradit....
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....e of Sikkim from so much of the duty of excise leviable thereon as is equivalent to the amount of duty paid by the manufacturer of goods other than the amount of duty paid by utilisation of CENVAT credit under the CENVAT Credit Rules, 2002. This incentive continued even when the Industrial Policy, 2007 was declared by the Respondent No.1 on 01.04.2007 approving a package of fiscal incentives and other concessions for the North East Region naming it advisedly the „North East Industrial and Investment Promotion Policy (NEIIPP), 2007‟. The coverage of the Industrial Policy, 2007 was declared to be the States of the North East Region of India including Sikkim. In the said Industrial Policy, 2007 all new units as well as existing units which go in for substantial expansion, unless otherwise specified and which commences commercial production within the 10 year period from the date of notification declaring the Industrial Policy, 2007 will be eligible for incentives for a period of 10 years from the date of commencement of commercial production. As per the said Industrial Policy, 2007 the Petitioner who admittedly commenced commercial production on and from 20.04.2009 for the....
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.... in India. 100% exemption of both income tax as well as excise duty is a definite attractive fiscal incentive strategy which would lure investors to set up units in Sikkim without which, considering the under development of industries and the geographical terrain of the region, industrialist may not find feasible to invest in. Having thus declared such attractive incentives and lured the Petitioner to invest in Sikkim any alteration in the incentive package to the detriment of the investor would definitely attract the doctrine of promissory estoppel. The Respondent No. 1 cannot be allowed the unconscionable departure from the subject matter of the assumptions which has, as seen hereinabove, been adopted by the Petitioner as the basis of the course of conduct which would affect the Petitioner adversely. 64. As the Petitioner had failed to commence commercial production within the period 23.12.2002 to 31.03.2017 as specified by Notification No. 56/2003 as amended by Notification No.27/2004 it was not entitled to claim exemption under the aforesaid notification as held above. Consequently, we shall refrain from examining the challenge to the impugned Notification Nos. 27/2004, 21/2....
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....ugely reduced to only 56% that too only on the value addition undertaken in the manufacture of the said goods. Simply put value addition is the amount by which the value of any good is increased at each stage of its production, exclusive of initial cost. Whereas in the original Notification No. 20/2007, the exemption on payment of excise duty was referable to the excise duty payable on the finished goods in the impugned Notification No. 20/2008 the excise duty was restricted to the quantum of value addition only. This surely was something not promised vide the Industrial Policy, 2007 and Notification No. 20/2007. 68. The learned Additional Solicitor General relying on the amended paragraph 3 of the Notification No.20/2007 as amended by impugned Notification No.20/2008 would argue that the option given to the manufacturer not to avail the rates specified in paragraph 2A and instant applying to the commissioner for fixation of a special rate would ensure that in genuine cases manufacturers could avail 100% duty exemption. A perusal of paragraph 3 makes it clear that the said fixation of special rate must be representing the actual value addition in respect of any goods if the manu....
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....in the impugned Notification No. 20/2008. Thus the intent and purport of whittling down the 100% exemption of excise duty promised, declared and granted vide Notification No. 20/2007 continued vide the impugned Notification No. 38/2008. 69. The learned Additional Solicitor General would also argue that the impugned notification stating clearly that the said notification had been issued in public interest it is for the Court to presume that in fact the impugned notification was issued in public interest and the onus would lie on the Petitioner to show otherwise. The impugned Notification No. 20/2008 was a notification amending the original Notification No. 20/2007 issued in public interest granting exemption of payment of excise duty. In such situation it was incumbent upon the Respondent No.1 to have shown larger public interest for curtailing/modifying/withdrawing exemption so granted. 70. In re: Pawan Alloys & Casting (P) Ltd. v. U.P. SEB (1997) 7 SCC 251. "10. It is now well settled by a series of decisions of this Court that the State authorities as well as its limbs like the Board covered by the sweep of Article 12 of the Constitution of India being treated as "....
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....pted in Shri Bakul Oil Industries v. State of Gujarat [(1987) 1 SCC 31 : 1987 SCC (Tax) 74] and Pournami Oil Mills v. State of Kerala [1986 Supp SCC 728 : 1987 SCC (Tax) 134] is another instance. The fact that the recent decision in Kasinka Trading v. Union of India [(1995) 1 SCC 274] is being reconsidered by larger Bench is yet another affirmation of the need stressed by Lord Hailsham for enunciating "a coherent body of doctrine by the courts'. An aspect needing a clear exposition - and which is of immediate relevance herein - is what is the precise meaning of the words "the promisee ... alters his position', in the statement of the doctrine. The doctrine has been formulated in the following words in Motilal Padampat Sugar Mills Co. Ltd. [(1979) 2 SCC 409 : 1979 SCC (Tax) 144] : (SCC p. 442, para 24) "The law may, therefore, now be taken to be settled 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....
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....dges of this Court consisting of M.N. Venkatachaliah, C.J. and Dr. A.S. Anand, J., had to consider the question whether a notification issued under Section 25 of the Customs Act, 1962 granting complete exemption from payment of customs duty to PVC resin imported into India by manufacturers of certain products requiring the said resin as one of the raw materials, which was issued in public interest and which had stated that it would remain in force up to and inclusive of 31-3-1981 could be withdrawn before the expiry of the said period by fresh notification issued by the Government in exercise of the very same power under Section 25 of the Customs Act. This Court speaking through Dr Anand, J., took the view that as the said notification was issued in public interest it could be withdrawn even before the time fixed therein for its operation also in public interest and while issuing such a notification no promise can be said to have been held out or any representation made to the importers in general on the basis of which they could insist on the doctrine of promissory estoppel that the customs duty exemption granted earlier by the first notification could not be reduced by the second....
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....esent to the mind of the court, while considering the applicability of the doctrine. The doctrine must yield when the equity so demands if it can be shown having regard to the facts and circumstances of the case that it would be inequitable to hold the Government or the public authority to its promise, assurance or representation. It may, however, be mentioned that in para 21 of the Report the Court has observed that the notification which was impugned before it was not designed or issued to induce the appellants to import PVC resin. Admittedly, the said notification was not even intended as an incentive for import. The notification on the plain language of it was conceived and issued by the Central Government "being satisfied that it was necessary in the public interest so to do". Strictly speaking, therefore, the notification could not be said to have extended any "representation" much less a "promise" to a party getting the benefit of it to enable it to invoke the doctrine of promissory estoppel against the State. It must, therefore, be held that the aforesaid decision had clearly proceeded on the basis that by issuing the earlier notification under Section 25 of the Cu....
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....tries as consumers of high-power electricity would be attracted to the region and would be paying higher electricity rates/charges to the Board." Then again "31. In the light of this settled legal position we, therefore, hold that even though the appellants have succeeded in convincing us that the earlier three notifications dated 29-10-1982, 13-7-1984 and 28-1-1986 did contain a clear promise and representation by the Board to the prospective new industrialists that once they established their industries in the region within the territorial limits of the operation of the Board, they would be assured 10% rebate on the total bills regarding consumption of electricity by their industries for a period of three years from the initial supply of electric power to their concerns, the appellants will not be able to enforce the equity by way of promissory estoppel against the Board if it is shown by the Board that public interest required it to withdraw this incentive rebate even prior to the expiry of three years as available to the appellants concerned. It has also to be held that even if such withdrawal of development rebate prior to three years is not based on any overriding....
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....- "47. The appellant has been unable to establish any overriding public interest which would make it inequitable to enforce the estoppel against the State Government. The representation was made by the highest authorities including the Finance Minister in his Budget speech after considering the financial implications of the grant of the exemption to milk. It was found that the overall benefit to the State's economy and the public would be greater if the exemption were allowed. The respondents have passed on the benefit of that exemption by providing various facilities and concessions for the upliftment of the milk producers. This has not been denied. It would, in the circumstances, be inequitable to allow the State Government now to resile from its decision to exempt milk and demand the purchase tax with retrospective effect from 1-4-1996 so that the respondents cannot in any event readjust the expenditure already made. The High Court was also right when it held that the operation of the estoppel would come to an end with the 1997 decision of the Cabinet." 72. In re: Sal Steel Limited (supra) a similar situation had arisen in the State of Gujarat. In the wake of mas....
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....ted 14.06.2002 the Respondent no. 1 declared new incentives to new industrial units as well as existing units engaged in substantial expansion. The Respondent no. 1 approved conversion of growth centre into total tax free zone for a period of ten years from the date of commencement of commercial production entitling 100% excise duty exemption. Pursuant thereto, Notification no. 56/2002 was issued granting such exemption in exercise of the powers under Section 5A of the Central Excise Act, 1944. The said notification exempted goods from so much of the duty of excise or additional duty of excise, as the case may be, leviable thereon, as is equivalent to the amount of duty paid by the manufacturer of goods, other than the amount of duty paid by utilisation of CENVAT credit under the CENVAT Credit Rules, 2002. The exemption contained in the said notification was to apply to those units who had commenced their commercial production on or after 14.06.2002 as well as those industrial units existing before 14.06.2002, but have undertaken substantial expansion by way of increase installed capacity by not less than 25% on or before the above date. It was also provided that the exemption cont....
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.... was further held that there was no supervening public interest in withdrawing the exemption by way of the notifications impugned. Consequently, the Writ Petitions were allowed and the notifications impugned therein quashed. 74. In re: Unicorn Industries (supra) this Court would examine the legality of Notification No.23/2008 dated 27.03.2008 and Notification No.37/2008 dated 10.06.2008 withdrawing the exemption granted in the payment of duty for utilisation towards the CENVAT credit/cash conferred upon the Petitioner therein by Notification No.71/2003 dated 09.09.2003 issued by the Respondent No.1 exercising the powers under Section 5A of the Central Excise Act, 1944. Notification No.71/2003 provided for exempting the goods from so much of the duty of excise or additional duty of excise as was leviable thereon as is equivalent to the amount of duty paid by the manufacturer of the said goods, other than the amount of duty paid by utilisation of CENVAT credit. Both the Industrial Policy, 2003 as well as Industrial Policy, 2007 fell for consideration before this Court. It was not in dispute that based on the statutory guarantee for exemption of excise duty, the Petitioner therein ....
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.... 75. We are in agreement with the aforestated views expressed by the High Court of Gujarat in re: Sal Steel Ltd. (supra), the High Court of Jammu and Kashmir in re: Reckit Benckiser (supra) and this Court in re: Unicorn Industries (supra) which follows the principles of law laid down by the Apex Court in re: M/s. Motilal Padampat Sugar Mills Co. Ltd. (supra) and in re: Pawan Alloys & Casting (P) Ltd. (supra). 76. In re: Modipon Ltd. (supra) the Delhi High Court would hold that the Courts have consistently taken the view that the public interest is inherent in issuance of the withdrawal of the notifications. The public interest is the dominant factor in issuance and withdrawal of the notifications what is given in public interest can also be taken away in public interest. Every action of the Government is presumed to be in public interest unless contrary is proved. The Petitioner have failed to demonstrate that the notification dated 21.10.1982 was not issued in public interest. Holding thus, the High Court dismissed the Writ Petition preferred. While holding so the Delhi High Court would rely upon Kasinka Trading & Anr. v. Union of India (1995) 1 SCC 274. The distinction draw....
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....industrial growth in the area with enduring benefits not only to the local populace by way of employment opportunities but also to the economic welfare of the State. It was found that none of the industrial units manufacturing cigarettes were prepared to contribute to that object and their investment in the manufacture of cigarette was co-extensive with the period of the exemption. In the light of the aforesaid facts it was held by the Apex Court that therefore, the Government could contend that the words should have been used in the exemption so as to provide for sufficient safeguards to ensure that the benefit of exemption was granted only to those industries which would in turn permanently invest in the State and by the retrospective enactment that defective expression of the object of the policy, was rectified. 80. The facts of the present set of Writ Petitions are entirely different than the facts in re: R.C. Tobacco (P) Ltd. (supra). The Petitioner does not question the competence of Parliament and the State Legislature to repeal, amend or supersede an exemption notification nor is it a case of challenge to a law operating retrospectively. It is nobody‟s case that th....
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....ons were issued to curb misuse. On such finding of facts it was held by the Apex Court that the purport behind notification were bonafide which was actuated with the conditions of public interest in mind. 82. The facts and circumstances in the present case is distinctly different from the facts and circumstances in re: Kothari Industrial Corpn. Ltd. (supra). In the present case no material whatsoever has been placed by the Respondent No.1 to show that the withdrawal was in public interest save stating that the notification itself states that it is in public interest leave alone showing a superior public interest to resile from the promise held out clearly vide Industrial Policy, 2007 and 100% exemption granted pursuant thereto vide Notification No. 20/2007. 83. Coming now to the point raised by Mr. Vikram Nankani, learned Senior Advocate that the Petitioner having inadvertently sought exemption under Notification No. 56/2003 whereas the Petitioner was in fact eligible for exemption under the Industrial Policy, 2007 and the Notification No.20/2007 the benefit which the Petitioner was otherwise eligible to avail of could not be prohibited from claiming the same. 84. In re: U....
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....t Petition in the High Court which was dismissed and the matter travelled to the Apex Court. The Apex Court would hold:- "12. In CCE v. Indian Petro Chemicals [(1997) 11 SCC 318] this Court held that if two exemption notifications are applicable in a given case, the assessee may claim benefit of the more beneficial one. Similarly, in H.C.L. Limited v. Collector of Customs [(2001) 9 SCC 83 : (2001) 130 ELT 405] this Court relying upon Indian Petro Chemicals [(1997) 11 SCC 318] held that where there are two exemption notifications that cover the case in question, the assessee is entitled to the benefit of that exemption notification which may give him greater or larger relief. In Unichem Laboratories Ltd. v. CCE [(2002) 7 SCC 145 : JT (2002) 6 SC 547] the appellant was a manufacturer of bulk drugs. Exemption was granted to him under one item. He, thereafter, filed a revised classification list categorising its bulk drugs under the other head claiming more benefit. The claim was rejected on the ground that the appellant had not claimed the benefit of exemption at the time of filing the classification list and subsequently it could not be done. The appellant approached this Co....
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....ety." (Emphasis supplied) 15. From the above decisions, it is clear that even if an applicant does not claim benefit under a particular notification at the initial stage, he is not debarred, prohibited or estopped from claiming such benefit at a later stage." 86. In view of the above, it is held that the Petitioner which was entitled to exemption benefit under Notification no. 20/2007 but sought benefit under Industrial Policy, 2003 and Notification No. 56/2003 would be entitled for the benefit under the Industrial Policy, 2007 as put into operation vide impugned Notification No. 20/2007. 87. We find that the Respondent No.1, right from the year 2003, had declared a clear policy of 100% excise duty exemption to those new industrial units who would set up industry in Sikkim as well as to those industries who went in for substantial expansion. This policy was put into operation vide Notification No.56/2003. The Respondent No.1 had vide impugned Notification No. 24/2004 limited the period within which new industrial units were required to commence commercial production. The Petitioner started the process of investment in the year 2005 only and could not start commercial....