TaxTMI 
TaxTMI 
2020 (8) TMI 606
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....e according to the petitioner is that it is engaged in the business of manufacturing M.S. Billets TMT Steel Bars & Industrial Oxygen Gas. The petitioner is stated to have commenced commercial production at Bihta Unit with effect from 11.01.2009, as per the certificate issued by the Director, Technical Department, Bihar, Patna vide letter dated 22.10.2009. It is the further case of the petitioner that the respondent State of Bihar had announced Industrial Policy, 2006 wherein various incentives were promised for the purposes of attracting investment in the State of Bihar. The said Industrial Incentive Policy, 2006 was published in the official gazette of the State Government on 25.07.2006. The learned senior counsel appearing for the petitioner has drawn the attention of this Court to the relevant clauses of the Industrial Incentive Policy, 2006, which are reproduced herein below:- 2. POST-PRODUCTION INCENTIVES "(vi) subsidy/Incentive on VAT: This facility will be available to small / large / medium industries. The industrial unit will get a passbook from the State Government in which the details of the tax paid under Bihar VAT would be entered and verified by the commercial ....
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.... Main/Subsidiary headings under which admitted amount deposited Challan no. & date with Name of Treasury Name & Designation of certifying officer Signature with date & seal Total *BVATA = Bihar Value Added Tax Act 2005 *CSTA = Central Sales Tax Act *BETA = Bihar Entry Tax Act Note : The passbook entries must be certified by the concerned Commercial Taxes Officer in charge of the circle. It is the submission of the learned senior counsel for the petitioner that the clarification to clause 2 (vi) of the Industrial Incentive Policy, 2006 read with Annexure-III of the said Incentive Policy makes it amply clear that the subsidy/ incentive is to be granted both on VAT as also on Bihar Entry Tax. It is stated that the said Industrial Incentive Policy, 2006 was notified in the official gazette on 25.07.2006 and Annexure-III to the same is similar to the Industrial Incen....
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.... for drawing any conclusion. The learned senior counsel for the petitioner has next contended that what is most important in the policy document for extending the benefit by way of subsidy against the amount of tax is "Admitted Tax/Admitted VAT". The term "admitted VAT" or the use of the word 'tax paid under Bihar VAT' or admitted VAT have been mentioned in Clause 2(vi) of the policy document and further the taxes under the Bihar VAT Act, Central Sales Tax Act, 1956 and Bihar Entry Tax Act, 1993 have also been referred to in the policy document. The meaning is further amplified by Annexure-III of the policy document where amount of Admitted Tax/Admitted VAT has been clarified as the taxes admitted in all the three statutes, mentioned herein above. Therefore, it cannot be said that in the Industrial Policy no promise was made for making reimbursement of the amount of tax admitted under the Bihar Entry Tax Act, 1993 and paid to be adjusted with VAT Act. The learned senior counsel for the petitioner has further relied upon the form of return under the Bihar VAT Act bearing Form R.T.-III wherein also in the payment details Entry Tax is specified which is considered under the head "ad....
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....ed, it had taken into account the existence of Bihar Entry Tax Act, 1993, covering the field of indirect tax in Bihar. The provisions of admitted VAT Tax, i.e. tax payable by a dealer is very clear in the Bihar Value Added Tax Act, 2005 wherein T=A-B Wherein T means Tax Payable by a Dealer A means Output Tax under the Act & B means the Total amount of Input Tax credit allowable to the dealer under Section 16 or Section 17 The Bihar VAT Rules, 2005 has prescribed the forms. The RT-I Form is the form of Quarterly Return which is required to be filed by a dealer and in this form when the calculation of tax is made, the set-off is to be given as admitted tax on the amount of entry tax, as well. It finds place in Part-V, Serial 26(1) of Form RT-I. Similarly, in the Annual Return in Form- RT-III similar provision is there. Thus, in the calculation of admitted VAT for the purpose of grant of set-off, entry tax is mentioned. Therefore, the State Government while framing the policy document loosely used VAT/Admitted VAT. It appears to have not thought that it may give rise to some confusion or may give rise to any dispute. However, since the dispute arose and many dealers started m....
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....n such policy decisions are announced by the Government, and therefore, it would not be appropriate to interpret a policy decision in the same manner as a law enacted by the legislature is interpreted, in the sense that the technical rules of interpretation may not be applied with equal rigour. The policy decision must be read as a whole. If the language employed is clear and unequivocal, it must be given meaning and effect. No doubt, in the opening paragraphs of the Policy it has been stated that the Industrial Incentive Policy shall be applicable to those industrial units, which would come into production from 1.4.1993 to 31.3.1998. This is obviously so because the main emphasis in the Policy was to provide incentives to industries which went into production or even came into existence after 1.4.1993. But, this does not mean that it was not open to the State Government to confer some small benefits on older units as well, while considering the grant of larger incentives and benefits to new units. I have, therefore, no hesitation in coming to the conclusion that the Industrial Incentive Policy of 1993 must be read as a whole with a view to understand its scope and import. If on a ....
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....the learned Advocate-General submitted that the Notification of 4th April, 1994 amounted to a change of policy by the Government. This was objected to by the petitioners, and they challenged the State to produce material to show that the Government had consciously changed its policy by incorporating such a condition. However, ultimately the learned Advocate General did not proceed on the basis that the Government had changed its policy, and submitted that the Notification dated 4th April, 1994 was not inconsistent with the policy decision. 15. I have considerable difficulty in accepting the submission urged by the learned Advocate General that sub-paragraph (b) which refers to old industrial units must mean old industrial units which were established before 1.4.1993, but had not gone into production before that date. He, therefore, submitted that the old industrial units, to which sub-paragraph (b) refers, are such old industrial units which, though established before 1.4.93 went into production later. It is not disputed that those industries which went into production between 1.4.1993 and 31.3.1998 are entitled to all the facilities and incentives under the Policy of 1993. It is....
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....s extended to the industrial units coming into production between 1.4.1993 and 31.3.1998, and also such old industrial units whose investment on plant and machinery did not exceed Rs. 15 crores on 1.4.1993. To the extent of this facility alone a facility was sought to be conferred even on old industrial units. So far as the policy goes, there is no other condition attached to the grant of this facility except that the investment on plant and machinery as on 1.4.1993 must not exceed Rs. 15 crores. The clear and unequivocal words employed in the said paragraph of the policy decision permit no other meaning being given to the policy. 17. If I am right in coming to the conclusion that the facility of sales tax exemption on the purchase of raw material was extended to old industrial units also fulfilling the condition laid down in the policy, the Notification of 4th April, 1994 imposing the condition that such old industrial units must not have taken advantage or benefit under any other industrial policy, appears to deprive the old industrial units of the benefits under the Industrial Incentive Policy of 1993. As has been urged on behalf of the petitioners, industrial units which had ....
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....o increase their production and take advantage of the incentives announced by the Government. They have also made heavy investment on the basis of the promise held in the Industrial Incentive Policy, 1993, that they shall be given that facility of sales tax exemption on the purchase of raw material. Having done all these, they cannot be deprived of the facility which they were promised under the Industrial Incentive Policy, 1993 and that too by the issuance of notification which is inconsistent with the policy decision, and seeks to modify the same without authority of law. In exercise of his power under the Bihar Finance Act, the Commissioner should have issued appropriate notification granting exemption in the matter of payment of sales tax consistent with the Industrial Incentive Policy decision of 1993, which bound the State. 18. The learned Advocate General did not urge that the principle of estoppel does not apply in the instant case, and in my view, rightly. The impugned notification has been issued with a view to give effect to the policy announced. It does not proceed on the basis that old industrial units which came into production before 1.4.1993 are not entitled to an....
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....rpretation of this Clause is involved in these appeals. "10.4. Sales Tax exemption on the purchase of raw material: (i) This facility will be admissible to the industrial units mentioned in Annexure-V in the following manner: (a) Industrial Units coming into production between 1.4.93 to 31.3.98 whose investment on plant & machinery does not exceed Rs. 15.00 Crores shall be entitled for this facility for a period of seven years from the date of production. (b) Such old industrial units whose investment on plant & machinery do not exceed Rs. 15.00 Crores on 1.4.93 shall be entitled for this facility for a period of seven years from 1.4.93. (ii) All other industrial units shall continue to enjoy the existing facility of purchase of raw material on concessional rate of tax as announced and made applicable by the Sales Tax Department as before." 6. A bare look at the aforesaid Clause makes it crystal clear that under sub-clause (a), while the industrial units coming into production between 1.4.93 to 31.3.98 whose investment on plant & machinery does not exceed Rs. 15 Crores would be entitled to the facility of exemption on the purchase of raw material for a period of seven y....
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.... policy is issued by the State Government after such Policy is approved by the Cabinet itself. The issuance of the notification under Section 7 of the Bihar Finance Act is by the State Government in the Finance Department which notification is issued to carry out the objectives and the policy decisions taken in the Industrial Policy itself. In this view of the matter, any notification issued by the Government Order in exercise of power under Section 7 of the Bihar Finance Act, if is found to be repugnant to the Industrial Policy declared in a government resolution, then the said notification must be held to be bad to that extent. In the case in hand, the notification issued by the State Government on 4th of April, 1994 has been examined by the High Court and has been found, rightly, to be contrary to the Industrial Incentive Policy, more particularly the Policy engrafted in Clause 10.4(i)(b). Consequently, the High Court was fully justified in striking down that part of the notification which is repugnant to sub-clause (b) of Clause 10.4(i) and we do not find any error committed by the High Court in striking down the said notification. We are not persuaded to accept the contention ....
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.... which got attracted to this region relying upon the promise had altered their position irretrievably. They had spent "large amounts of money for establishing the infrastructure, had entered into agreements with the Board for supply of electricity and, therefore, had necessarily altered their position relying on these representations thinking that they would be assured of at least three years' period guaranteeing rebate of 10% on the total bill of electricity to be consumed by them as infancy benefit so that they could effectively compete with the old industries operating in the field and their products could effectively compete with their products. On these well-established facts the Board can certainly be pinned down to its promise on the doctrine of promissory estoppel." [Emphasis supplied] 33. In a recent judgment in the case of Mahabir Vegetable Oils (P) Ltd. Vs. State of Haryana, 2006 (3) SCC 620, this Court in para 25 observed that "it is beyond any cavil that the doctrine of promissory estoppel operates even in the legislative field." This was in connection with a statutory notification under the Haryana General sales Tax Act. 34. In Kasinka Trading's case (sup....
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.... authority, including an implied representation, or from consistent past practice. The doctrine of legitimate expectation has an important place in the developing law of judicial review. It is, however, not necessary to explore the doctrine in this case, it is enough merely to note that a legitimate expectation can provide a sufficient interest to enable one who cannot point to the existence of a substantive right to obtain the leave of the court to apply for judicial review. It is generally agreed that 'legitimate expectation' gives the applicant sufficient locus standi for judicial review and that the doctrine of legitimate expectation to be confined mostly to right of a fair hearing before a decision which results in negativing a promise or withdrawing an undertaking is taken. The doctrine does not give scope to claim relief straightway from the administrative authorities as no crystallized right as such is involved. The protection of such legitimate expectation does not require the fulfillment of the expectation where an overriding public interest requires otherwise. In other words, where a person's legitimate expectation is not fulfilled by taking a particular deci....
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....eem it appropriate to quote paras 27, 28, 29, 34, 35 and 36 from the decision in State of Punjab Vs. Nestle India Ltd. (Supra):- "27. However, the superstructure of the doctrine with its preconditions, strengths and limitations has been outlined in the decision of Motilal Padampat Sugar Mills Co. Ltd. v. State of U.P.3 Briefly stated: the case related to a representation made by the State Government that the petitioners' [pic]factory would be exempted from payment of sales tax for a period of three years from the date of commencement of production. It was proved that the petitioners had, as a consequence of the representation, set up the factory in the State. But the State Government refused to honour its representation. It claimed sales tax for the period it had said that it would not. When the petitioners went to court, the State Government took the pleas: (1) in the absence of notification under Section 4-A, the State Government could not be prevented from enforcing the liability to sales tax imposed on the petitioners under the provisions of the Sales Tax Act; (2) that the petitioners had waived their right to claim exemption; and (3) that there could be no promissory e....
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....refore be no doubt that the doctrine of promissory estoppel is applicable against the Government in the exercise of its governmental, public or executive functions and the doctrine of executive necessity or freedom of future executive action cannot be invoked to defeat the applicability of the doctrine of promissory estoppel." 35. It was held that irrespective of the nature of power wielded the Government is bound to wield that power provided it possessed such power and has promised to do so knowing and intending that the promisee would act on such promise and the promisee has done so: (SCC p. 389, para 14) "We think that the Central Government had power under Rule 8 sub-rule (1) of the Rules to issue a notification excluding the cost of corrugated fibre board containers from the value of the cigarettes and thereby exempting the cigarettes from that part of the excise duty which would be attributable to the cost of corrugated fibre board containers. So also the Central Board of Excise and Customs had power under Rule 8 sub-rule (2) to make a special order in the case of each of the respondents granting the same exemption, because it could legitimately be said that, having regard ....
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....rant of further extension but it felt it had lost the power to grant such extension because of G. R. dated 28.06.2000. In the light of the view that we have taken, the State Level Committee was still competent to consider the request for grant of extension. 26. In the circumstances, we allow the appeal and set aside the decision of the High Court in so far as it held that the operative period of the Scheme came to an end on 30.11.2000 and that there could be no further extension of time limit. Since the appellants have already commenced commercial operations, it now needs to be assessed by the State Level Committee whether in the facts of the case the appellants could justifiably have claimed extension under Clause 10 of the Scheme. We direct the State Level Committee to make such assessment in accordance with Clause 10, in three months of the receipt of this decision. Needless to say, if such assessment is found in favour of the appellants, they shall be entitled to the incentives and benefits under the Scheme." Per contra, the learned counsel appearing for the respondent-State has submitted that the petitioner had filed an application for reimbursement under the Industrial Inc....
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....ecified and specifically incorporated in the Industrial Policy, 2006 itself and the benefits of tax reimbursement pertaining to the Bihar Entry Tax, was apparently never specified nor promised by the State Government under the 2006 Industrial Policy, hence, the case of the petitioner is required to be rejected as far as its claim to subsidy/incentive regarding Entry Tax is concerned. The learned counsel for the respondent-State has relied on a judgment rendered by the Hon'ble Apex Court in the case of Securities & Exchange Board of India vs. Prebon Yamani (India) Limited reported in (2015) 16 SCC 89, paragraphs no. 10 & 16 whereof are reproduced herein below:- "10. Reliance has also been placed on letter dated 4.4.1999 issued by the Appellant to the Respondent, by which a certificate of registration was issued to the Respondent subject, inter alia, to condition (d) which provides that the Respondent and similarly situated entities shall pay the amount of fees for registration in the manner provided in SEBI (Brokers and Sub Brokers) Regulations, 1992. This letter also requested the Respondent to study the Rules and Regulations carefully. Learned Senior Counsel for the Appellant c....
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.... earlier opinion. In such cases, which of the two opinions can be regarded as the "order" of the State Government? It was held that opinion becomes a decision of the Government only when it is communicated to the person concerned. 16. To the like effect are the observations of this Court in Laxminarayan R. Bhattad and Ors. v. State of Maharashtra and Anr. 2003 (3) SCR 409, wherein it was said that a right created under an order of a statutory authority must be communicated to the person concerned so as to confer an enforceable right." 16. After considering the submissions of the learned Senior Counsel for both parties and appreciating the facts of the case, it is evident to us that as per Clause 4 of Schedule III, the Respondent was not an 'entity' as envisaged in the Regulations as would be entitled to "fee continuity" or exemption from payment of fees. The Regulation 4 clearly refers to a newly formed entity through conversion from either a sole proprietorship or a partnership to a limited Company, which alone has been bestowed the benefit of continuity. Given that the Respondent is barred by the provisions, the Appellant's internal file notings are of no consequence and the ....
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....is Court observed:- "18. The ratio of any decision must be understood in the background of the facts of that case. It has been said a long time ago that a case is only an authority for what it actually decides, and not what logically follows from it." 16. In Bhavnagar University vs. Palitana Sugar Mills Pvt. Ltd (2003) 2 SCC 111 (vide paragraph 59), this Court observed:- "It is well settled that a little difference in facts or additional facts may make a lot of difference in the precedential value of a decision." 17. As held in Bharat Petroleum Corporation Ltd. & another vs. N.R.Vairamani & another (AIR 2004 SC 4778), a decision cannot be relied on without disclosing the factual situation. In the same Judgment this Court also observed:- "9. Courts should not place reliance on decisions without discussing as to how the factual situation fits in with the fact situation of the decision on which reliance is placed. Observations of Courts are neither to be read as Euclid`s theorems nor as provisions of the statute and that too taken out of the context. These observations must be read in the context in which they appear to have been stated. Judgments of Courts are not to be con....
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....e you will find yourself lost in thickets and branches. My plea is to keep the path of justice clear of obstructions which could impede it." I have heard the learned counsel for the parties and perused the materials on record and I find from a bare perusal of the Industrial Incentive Policy, 2006 and the Annexures thereto that the said Policy, as notified in the gazette on 25.07.2006, under clause-2(vi) provides for availing 80% reimbursement by the new units, against the admitted VAT amount deposited in the account of the Government, for a period of ten years and the clarification thereof admittedly postulates that incentive would not be payable on the amount imposed as penalty and the difference of amount between tax assessed and accepted under the Central Sales Tax/Bihar Value Added Tax Act, 2005 and Bihar Entry Tax Act, meaning thereby that the incentive would be payable on the rest of the amount under the aforesaid three types of taxes i.e. Central Sales Tax, Bihar Value Added Tax and the Bihar Entry Tax. Moreover, Annexure-III to the Industrial Incentive Policy, 2006 contains the format of pass-book to be maintained for the purposes of claiming the incentive under clause-2(v....
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....s well as the Central Sales tax Act. This Court is of the further view that once the State Government has made a clear and unequivocal promise regarding grant of subsidy/incentive, as aforesaid, knowing and intending that it would be acted upon by the promisee and the promisee, acting in reliance on it, alters his position, the Government would be held bound by the promise and the promise would be enforceable against the Government at the instance of the promisee. It is a well settled law that the doctrine of promissory estoppel is applicable against the government in exercise of its governmental, public or executive functions and the doctrine of executive necessity on the freedom of future executive action cannot be invoked to defeat the applicability of the doctrine of promissory estoppel. This Court is of the further view that reliance of the respondent-State on the heading of clause-2(vi) of the Industrial Incentive Policy, 2006, to contend that subsidy/incentive is available only on VAT, is a clear misinterpretation of the policy as also a myopic view arising out of constricted and circumscribed reading of the Industrial Incentive Policy, 2006. The reliance of the learned co....