TaxTMI 
TaxTMI 
2019 (12) TMI 61
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....ion 5, and to grant a rebate of 25% in respect of the goods having fly ash contents between 10 to 30% by weight and a rebate of 50% in respect of the goods having fly ash contents exceeding 30% by weight on the tax levied under the Act in the districts notified thereunder. In due course, the feedback received by the Government was that neither any new industrial unit was established within the State nor the consumption of the fly ash had increased by the existing units. Resultantly, there was no extra disposal/consumption of fly ash which was being produced by the thermal power stations situated within the State of Uttar Pradesh. In other words, the avowed objective for issuing the notification to extend rebate did not fructify. In light of such feedback, the appropriate authority issued fresh notification dated 27th February, 1998 bearing No.T.I.F2592/ XI9( 226)94U. P.Act1548Order98 to rescind the earlier notification and instead to grant a rebate of 25% in respect of the goods having fly ash contents between 10% to 30% by weight and a rebate of 50% in respect of the goods having fly ash contents exceeding 30% by weight on the tax levied under the Act in the districts mentioned th....
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....Tehri Garhwal, Udham Singh Nagar, Uttar Kashi and Growth Centre. Twelve years 3. (i) The District of Azamgarh, AmbedkarNagar, Behraich, Ballia, Barabanki, Basti, Badaun, Bulandshahr, Deoria, Etah, Etawah, Faizabad, Farrukhabad, Ghazipur, Gonda, Hardoi, Mainpuri, Mathura, Mau, Moradabad, Padrauna, Pillibhit, Pratapgarh, Raibareilli, Rampur, Shahjahanpur, Sidharath Nagar, Sitapur, Unnao, Kaushambhi, JyotibaPhule Nagar, Mahamaya Nagar and Shravasti. Ten Years (ii) The area of Allahabad District in South of the river Jamuna and confluent Ganga (Excluding the area included under Municipal Corporation, Allahabad). Ten Years (iii) The Taj Trapezium Area Ten Years (iv) Greater Noida Industrial Development Area Ten Years The Districts of Agra (excluding Taj Trapezium area), Aligarh (excluding Taj Trapezium area), Allahabad (excluding the area in south of rivers Jamuna and confluent Ganga but including the area included under Municipal Corporation Allahabad), Bareilly, Bhadohi, Bijnor, Firozabad (excluding Taj Trapezium area), Ghaziabad (excluding Greater Noida Industrial Development Area), Gorakhpur, Haridwar, Kanpur (Nagar), Lakhimpu....
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.... Industries established in certain districts have been granted exemption on tax levied under the Act for eight, ten, twelve years vide Govt. Notification No.vya.ka./592/gyarah9( 226)/94, dated 27 February 1997, under Section 5 of the Trade Tax Act on the following grounds: (a) Where the content of fly ash is 10% to 30% of the total weight of goods - 25% rebate on tax. (b) Where the content of fly ash is more than 30% of the total weight of goods 50% rebate on the tax. 2. Accordingly under Section 8 (5) of the Central Sales Tax Act, by the Govt. Notification No.vya.ka/2593/ gyaraha9 (226)94, dated 27th February 1998, similar rebate has been allowed. A condition was prescribed in the above notifications that such goods shall be manufactured within the units established in the area mentioned in column No.2 of the annexure and such goods shall be manufactured from Fly Ash purchased from or received from the thermal power stations situated in Uttar Pradesh. Above notifications were challenged before the Hon'ble High Court by the writ petition. 3. Commissioner, Trade Tax has informed that in the writ petitions No.957/99M/sBela Cement Ltd. Vs. State....
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.... The appropriate authority of the State eventually took decision on the said proposal, as a result of which a notification dated 14th October, 2004 came to be issued rescinding the earlier notification dated 27th February, 1998. The said notification reads thus : " NOTIFICATION No.KA.NI.22996/ XI9( 63)/2001Act, 7456 Order - (38) 2004 Dated Lucknow : : October 14, 2004 WHEREAS, the State Government is satisfied that it is expedient so to do in public interest. Now, therefore, in exercise of the powers subsection (5) of Section 8 of the Central Sales Tax Act, 1956 (Act No.74 of 1956) read with Section 21 of the General Clauses Act, 1897 (Act No.10 of 1897) the Governor is pleased to rescind, with effect from October 14, 2004, the government notification No.T.I.F - 2593/ X9( 226)/94Act7456Order98, dated February 27, 1998." (emphasis supplied) 6. This notification is the subject matter of challenge in the present proceedings. 7. The respondents in the respective appeals preferred separate writ petitions asserting that because of the representation made to the stake holders vide notification dated 27th February, 1998, they had commenced producti....
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.... dated 27th February, 1998, in vogue, became entitled to avail rebate facility for a period of ten years, i.e., up to 17th September, 2014. However, because of the intervening notification dated 14th October, 2004, the said respondent (JPAL) has been denied of that facility even though it had invested almost over Rs. 100 crores to set up a new factory within the notified area in the State of Uttar Pradesh. 10. In this background, both the respondents filed separate writ petitions before the High Court asserting that the State could not have resiled from the promise or representation it had made in terms of notification dated 27th February, 1998, and the impugned notification dated 14th October, 2004, therefore, suffered from the vice of being violative of promissory estoppel. It was asserted that the State, in exercise of its executive power, cannot resile from the promise it had made by inviting setting up of industry within the designated areas in the State of Uttar Pradesh and in the process, withdraw the rebate facility with retrospective effect. That could be done only by the legislature by enacting a law in that behalf or by issuing ordinance as was suggested in the note s....
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....de impugned judgment, in the first place held that the State had given assurance about the rebate on the specified goods produced in the designated areas within the State on complying with other conditions specified in notification dated 27th February, 1998. It then proceeded to hold that the State Government in the Indian context and the Indian jurisprudence was amenable to the doctrine of promissory estoppel like any other private party or individual. On that finding, the High Court concluded that the notification issued on 14th October, 2004 cannot stand the test of judicial scrutiny qua the claim of the industrial units which were already established within the designated area in the State and had commenced commercial production of the stated goods before 14th October, 2004. It also rejected the stand taken by the State Government that it was justified in doing so because of supervening public interest and resultantly allowed the writ petitions preferred by the concerned respondents herein. The conclusion recorded by the High Court reads thus: " SUMMARY 121. Supervening public interest may not be established merely by pleading in the counter affidavit. It shal....
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....ngly. ORDER 125. The writ petition is allowed in part to the extent petitioner's entitlement for tax exemption for the period available under the original notification dated 27.2.1998. Accordingly, a writ in the nature of mandamus is issued directing the opposite parties to provide tax exemption to the petitioner industry from the date of production for the period of entitlement under original notification dated 27.2.1998. Writ petition is allowed in part. Cost easy." 14. The State of Uttar Pradesh has assailed the decision of the High Court. The argument canvassed on behalf of the State concedes the legal position that even if the State Government is bestowed with the executive power to withdraw the rebate facility, it is obliged to justify before the court of law that the circumstances were so overwhelming that it will be inequitable to hold the Government bound by the promise. In other words, the intent behind the impugned notification dated 14th October, 2004 was replete with supervening public interest. To buttress that, the State has relied upon following reasons, stated to be supervening public interest: "i). The judgment dated 29.01.20....
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....f Jammu & Kashmir vs. Trikuta Roller Flour Mills Pvt. Ltd. & Anr. (2018) 11 SCC 260; Sales Tax Officer & Anr. vs. Shree Durga Oil Mills & Anr. (1998) 1 SCC 572; and Shree Digvijay Cement Co. Ltd. & Anr. vs. Union of India & Anr. (2003) 2 SCC 614. 17. Per contra, the respondents would adopt the reasons given by the High Court for sustaining their challenge to notification dated 14th October, 2004. It is urged that the notification dated 14th October, 2004 cannot be construed as having retrospective or retroactive effect and apply to the units which had already been set up and commenced commercial production prior to 14th October, 2004. Section 5 of the 1948 Act does not confer any power on the executive to rescind the existing notification with retrospective or retroactive effect. In absence of express power invested in that behalf, it is not open to the executive to do so either in terms of Section 5 of the 1948 Act or Section 21 of the General Clauses Act, 1897 (for short, "the 1897 Act") or Section 21 of the Uttar Pradesh General Clauses Act, 1904 (for short, "the 1904 Act"). Section 5(2) of the 1948 Act reinforces the submission of the respondents that the legislature has not....
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..... To buttress that submission, our attention was invited to the relevant portion of the pleadings before the High Court in the form of writ petition and affidavits of both sides. Relying on the dictum in the cases of M/s. Motilal Padampat Sugar Mills Co. Ltd. vs. State of Uttar Pradesh & Others (1979) 2 SCC 409 and Manuelsons Hotels Pvt. Ltd. vs. State of Kerala & Others (2016) 6 SCC 766, it is urged that there is heavy burden on the State to show that the public interest is so supervening and so overwhelming that it would be inequitable to hold the Government bound by the promise. It is urged that facade has been created by the State Government for the first time before this Court about supervening public interest. In any case, the reasons stated in support thereof cannot stand the test of judicial scrutiny, inasmuch as, the notification dated 27th February, 1998 and the stand taken by the State Government on affidavits filed before the High Court in support of the said notification in the first round of litigation, clearly, were founded on the assertion that the object for grant of rebate was to promote use of fly ash generated from thermal power stations in Uttar Pradesh a....
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.... that the writ petitioners had not given essential foundational facts nor had challenged the vires of the relevant notification for grant of any relief as claimed by them. The Court also noted that the concerned notification did not grant exemption but it merely promised that orders will be issued laying down the mode of administering the concessions and incentives by the departments concerned and more importantly that, before the unit of the writ petitioner started production on 19th March, 1980, the earlier notification was already abrogated on 20th May, 1977. It is submitted that in the facts of that case, no relief could be granted to the writ petitioner nor it could be allowed to challenge the authority of the executive for having abrogated the earlier notification. 21. In addition, the respondents would rely on the exposition in State of Bihar & Others vs. Kalyanpur Cement Limited (2010) 3 SCC 274 to urge that the doctrine of promissory estoppel applies to notifications such as the impugned notification dated 14th October, 2004. It is further urged that the notification dated 14th October, 2004 violates not only the principle of promissory estoppel but also is arbitrary an....
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....ied in the said notification. (2) The rebate under subsection (1) may be allowed with effect from a date prior to the date of the notification." 25. On a bare reading of this provision, it is evident that there is no express authority given to the Executive to issue notification for "withdrawing or rescinding the rebate facility" from a date prior to the date of notification. Section 5(2) merely constrict that power only for "allowing" rebate with effect from a date prior to the date of notification. That does not include, by necessary implication or otherwise, power to "withdraw" or "rescind" the rebate from a date prior to the date of the notification. 26. Section 21 of the 1897 Act also will be of no avail. The same reads thus : " 21. Power to issue, to include power to add to, amend, vary or rescind notifications, orders, rules or byelaws- Where, by any Central Act or Regulations a power to issue notifications, orders, rules or byelaws is conferred, then that power includes a power, exercisable in the like manner and subject to the like sanction and conditions (if any), to add to, amend, vary or rescind any notifications, orders, rules ....
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....ncial implications for the future State Revenue. For proper analysis of the plea so taken by the State, we must go back to the intent behind notification dated 27th February, 1998. The dominant intent was to invite the investors to set up industrial unit in the designated areas within the State of Uttar Pradesh which were known to be underdeveloped or backward areas and more importantly to address the environmental issue because of the fly ash generated by the thermal power stations situated in Uttar Pradesh and incidentally to generate job opportunities and employment to the locals. It is one thing to argue that because of the interpretation given to the notification dated 27th February, 1998 by the High Court and affirmed by this Court, the industrial units situated in the neighbouring States may not be able to fulfill the underlying intent behind the notification dated 27th February, 1998 in its letter and spirit. That is not the plea of the State. Furthermore, it is undeniable that the thermal power stations in the State of Uttar Pradesh are still operational and are generating fly ash in the same manner and quantity as was happening in February, 1998, if not more. It is also i....
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....vail of the rebate because of rescinding the earlier notification. Suffice it to observe that the argument about future revenue loss cannot be invoked against the industrial units who had already established and commenced production after 27th February, 1998 and before 14th October, 2004. For, it can be safely presumed that the policy makers were fully conscious about the so-called loss of future revenue due to rebate to those units when they had issued notification dated 27th February, 1998. That ground cannot be set up against the industrial units who qualify in all other respect under the notification dated 27th February, 1998 and have made substantial investment running into crores much less as being supervening public interest, as is being placated by the State in these proceedings. This is clearly an afterthought plea, which by no standards can stand the test of judicial scrutiny. It is well established that the Court is obliged to insist for a highly rigorous standard of proof in the discharge of the burden and onus upon the State to justify its action as supervening public interest. 31. Having said this, it must necessarily follow that the impugned notification dated 14t....