TaxTMI 
TaxTMI 
2020 (8) TMI 606
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....tioner herein. The brief facts of the case 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 pa....
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.... 7 8 Sl.No. Month Amount of Tax admitted under VATA*/CSTA*/BETA* Amount paid against the amount admitted under BVATA*/CS TA*/BETA* 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 cl....
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....ent that without consideration of the aforesaid three Annexures, the policy document will not only become vague but shall also be rendered non-functional and non-workable, thus every provision and every part of the policy document are equally important and mandatory 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 ....
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....at the term 'Bihar VAT' or 'admitted VAT' has been taken from the provisions of the Bihar VAT Act, 2005 and the rules framed thereunder. Since the entry tax legislation had come into force earlier to the Bihar VAT Act, 2005, therefore, when the Bihar VAT Act, 2005 was drafted, 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 o....
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.... is not possible to accept the rival contentions in a case of this nature where the Court is concerned with an Industrial Incentive Policy. Such policy decisions are not drafted with the same skill as is required while enacting a legislation. The precision and accuracy expected in a legislation is not expected when 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 t....
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....by the issuance of the Notification dated 4.4.1994. The Commissioner was bound to issue a notification with a view to give effect to the policy decision of the Government, and not to deprive the old industrial units of the limited facility granted under the new scheme under the Policy of 1993. 14. In course of his submission 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 t....
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....ts, such as subsidy of different types, financial assistance in many matters as also facility of sales tax exemption and deferment on finished products. These facilities/benefits were not extended to other units. However, in paragraph 10.4 where the policy dealt with the grant of sales tax exemption on the purchase of raw material, this facility was 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....
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....iew to avail of such facility. Counsel for the petitioners explained that otherwise it could have been beneficial for such industrial units to make purchases outside the State of Bihar so as to avoid the incidence of local taxes. The petitioners have also asserted, which is not denied by the State, that they have purchased more raw materials with a view to 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. ....
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....s have indicated different heads of the benefit dealing with subsidy, financial assistance, exemption in sales tax/deferment facility so on and so forth. Clause (10) deals with facility of sales tax deferment. Clause 10.4 deals with the heading 'Sales tax exemption on the purchase of raw material'. It would be appropriate to extract Clause 10.4 in extenso since the interpretation 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....
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....of the Bihar Finance Act, it is true that issuance of such notifications entitles the industrial units to avail of the incentives and benefits declared by the State Government in its own industrial incentive policy. But in exercise of such power it would not be permissible for the State Government to deny any benefit which is otherwise available to an industrial unit under the Incentive Policy itself. The Industrial Incentive 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 ha....
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....refore, agree with the that by these notifications the Board had clearly held out a promise to these new industries and as these new industries had admittedly got established in the region where the Board was operating, acting on such promise, the same in equity would bind the Board. Such a promise was not contrary to any statutory provision but on the contrary was in compliance with the directions issued under Section 78A of the Act. These new industries 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 p....
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....g legitimate expectation which is based on Article 14 and the rule of fairness has been re-stated by this Court in Bannari Amman Sugars Ltd. Vs. Commercial Tax Officer, 2005 (1) SCC 625. It was observed in paras 8 & 9: "8. A person may have a 'legitimate expectation' of being treated in a certain way by an administrative authority even though he has no legal right in private law to receive such treatment. The expectation may arise either from a representation or promise made by the 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 he....
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....ector of Bombay Vs. Municipal Corporation of the City of Bombay[2], the principle built upon in Union of India Vs. Anglo Afghan Agencies[3] and the superstructure of the doctrine, with its pre-conditions, strengths and limitations outlined in the decision in Motilal Padampat Sugar Mills Co. Ltd. Vs. State of UP[4]. This Court then dealt with the discordant note in Jit Ram Vs. State of Haryana[5] and how that was firmly disapproved in Union of India Vs. Godfrey Philips India Ltd.[6] by a bench of three judges. We deem 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 ....
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....der any contract, but on his own title deeds or under statute. (SCC p.425, para 8) * * * Whatever be the nature of the function which the Government is discharging, the Government is subject to the rule of promissory estoppel [pic]and if the essential ingredients of this rule are satisfied, the Government can be compelled to carry out the promise made by it." (SCC p. 453, para 33) 34. The discordant note struck by Jit Ramcase was firmly disapproved by a Bench of three Judges in Union of India v. Godfrey Philips India Ltd. It was affirmed that: (SCC p. 387, para 12) "12. There can therefore 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 pro....
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....e project of the appellants was greatly hampered as a result of major earth quake in the State on 26.01.2001 and large scale communal riots in the State in February 2002. The State Level Committee was satisfied that the commencement and continuation of the project was so affected as a result of these major difficulties and had granted initial extension of six months but the appellants had benefit of only few days out of such extension. The subsequent request for further extension which was backed with relevant certificate from the Chartered Accountant certainly persuaded the State Level Committee to find that the facts justified grant 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....
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....ondents that the Industrial Incentive Policy, 2006 envisages reimbursement of no other tax except VAT and luxury tax. It has been further submitted that the 2006 Industrial Policy was reviewed and the State Government came out with the 2011 Industrial Policy, wherein grant of subsidy/incentive was also extended on the payment of Entry Tax, however, there is nothing to suggest that the said subsidy/incentive qua the Entry Tax amount was also extended to the 2006 Industrial Policy. The learned counsel for the respondent-State has also submitted that under the 2006 Industrial Policy, certain benefits were decided to be extended, which were specified 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. Pr....
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....said Article and was then communicated to the party concerned. The court observed that business of State is a complicated one and has necessarily to be conducted through the agency of a large number of officials and authorities. Before an action is taken by the authority concerned in the name of the Rajpramukh, which formality is a constitutional necessity, nothing done would amount to an order creating rights or casting liabilities to third parties. It is possible, observed the Court, that after expressing one opinion about a particular matter at a particular stage a Minister or the Council of Ministers may express quite a different opinion which may be opposed to the 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 con....
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....ince the generality of the expressions which may be found there are not intended to be expositions of the whole law, but are governed and qualified by the particular facts of the case in which such expressions are to be found. The other is that a case is only an authority for what it actually decides. I entirely deny that it can be quoted for a proposition that may seem to follow logically from it. Such a mode of reasoning assumes that the law is necessarily a logical Code, whereas every lawyer must acknowledge that the law is not always logical at all." We entirely agree with the above observations. 15. In Ambica Quarry Works vs. State of Gujarat & others (1987) 1 SCC 213 (vide paragraph 18) this 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 ....
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....posal of cases by blindly placing reliance on a decision is not proper. 12. The following words of Lord Denning in the matter of applying precedents have become locus classicus: "Each case depends on its own facts and a close similarity between one case and another is not enough because even a single significant detail may alter the entire aspect, in deciding such cases, one should avoid the temptation to decide cases (as said by Cardozo, J.) by matching the colour of one case against the colour of another. To decide therefore, on which side of the line a case falls, the broad resemblance to another case is not at all decisive." *** *** *** "Precedent should be followed only so far as it marks the path of justice, but you must cut the dead wood and trim off the side branches else 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....
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....t always determinative in the matter of interpretation of the policy and the language of the provision coupled with the policy as a whole must be looked into and if the language employed is clear, unambiguous and unequivocal, it must be given effect to, notwithstanding the fact that certain portion of the heading may be inconsistent with the substantive provision. Thus, upon a wholesome reading of the entire Industrial Incentive Policy, 2006 along with its Annexures, this court finds that the provisions contained in the Industrial Incentive Policy, 2006 regarding grant of subsidy/incentive on VAT/Entry Tax is clear, unambiguous as also unequivocal and the only meaning and effect thereof is that subsidy/incentive is to be granted on payment made towards admitted Tax on account of Bihar VAT Act, Bihar Entry Tax Act as 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 ....