TaxTMI 
TaxTMI 
TaxTMI 
2019 (12) TMI 61
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....spect 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 thereunder, subject to certain conditions. ....
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....un, 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), Lakhimpur Kheri, Lucknow, Maharajganj, Meerut, Muzaffarnagar, Saharanpur, Varanasi, Gautam Budh Nagar, Chandauli, Mirzapur and Sonbhadra Explanation: The verification of percentage of fl....
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....der 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 and writ petition No.958/99 M/s Jai Prakash Industries Vs State, Bench of the Hon'ble High Court has by the order dated 29.1.2004 declared the above conditions mentioned in the notification as unconstitutional. It has also been mentioned th....
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..../ 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 production of the specified goods and complied with the requisite conditions provided under the said notification entitling them to avail rebate of the Uttar Pradesh Tax facility. They had commenced commercial production before coming into effect of the impugned notification on 14th October, 2004. However, due to coming into eff....
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....rores 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 submitted to the Council of Ministers referred to above. It was also asserted that, in fact, the notification, as issued on 14th October, 2004, specified that the same would come into effect from the date it is issued. There is no indication whatsoever that the intention behind issuing the said notification was to withdraw t....
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....text 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 shall not be sufficient to meet out the requirement of law. The supervening public interest should be adjudged on the basis of material placed by the State Government during the course of judicial review. Nothing has been brought on record to establish as to what prompted the government to revoke earlier notification more so when the situation....
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....r 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 29.01.2004 of Allahabad High Court in the earlier round of litigation by the same petitioners and others had quashed condition No.1 of notification dated 27.02.1998, by which Units situated outside the State of U.P. were also made entitled to the tax rebate. This judgment was subsequently affirmed by this Hon'ble Court vide its judgment dated 12.04.2004 reported in (2014) 4 SCC 720 titled a....
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....ed 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 invested any authority in the State or executive to give retrospective or retroactive effect to its notification, rescinding the existing notification unlike subsection (2), which expressly provides for allowing rebate with effect from a date prior to the notification. There is no express, much less, implicit or tacit authority in the executive to issue a notification having retrospective or retroactive effe....
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.... 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 and utilization of the fly ash in manufacture of goods to be produced by the industry set up in the designated areas mentioned in the said notification. That was done to address the environmental issues confronting the State in the concerned areas and also to provide employment and job opportunities to the locals due to setting up of industries in the designated areas within the State of Uttar Pradesh. Admittedl....
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....ly 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 and hit by Article 14 of the Constitution of India. Reliance has been placed on the decision in Lok Prahari Through Its General Secretary vs. State of Uttar Pradesh & Others (2018) 6 SCC 1. Lastly, it is contended that the argument of unjust enrichment has been raised for the first time before this Court and ought not to be countenanced. That would be a matter for consideration in the refund proceedings which are s....
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....ing" 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 or byelaws so issued." 27. Section 21 of the 1904 Act, is pari materia to the above provision and will be of no avail for withdrawing the rebate from a date prior to the date of the notification. In the present case, it is not necessary to dilate further on this aspect as the plain language of the notification dated 14th October, 2004, reproduced above in paragraph 5, itself expressly rescinds notification dated 27th February, 1998 with effect from 14th October, 2....
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....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 indisputable that the industrial units set up in furtherance of the promise or representation made in the notification dated 27th February, 1998 which had commenced commercial production in respect of specified goods before 14th October, 2004, would continue to achieve the same objective as is specified in the notification dated 27th February, 1998. In that, the concerned manufacturing units continue to manufacture specified goods by using fly ash purchased or produced ....
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....ed 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 14th October, 2004 can have no application to the settled enforceable right accrued to industrial units who fulfill all other conditions specified in the notification dated 27th February, 1998, having commenced commercial production of the specified goods before 14th October, 2004. In other words, we reject the stand of the State Government about the supervening public interest qua the respondents herein and similarly placed persons. The notification dated 14th October, 200....