TaxTMI 
TaxTMI 
2004 (5) TMI 65
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....eneral Sales Tax Act, 1948, the respondents had been and are at present paying purchase tax on milk in terms of section 4B of the State Act. However, for one year, i.e., for the period April 1, 1996, to June 4,1997, none of the respondents paid the purchase tax. They did not do so because they say that the Government had decided to abolish purchase tax on milk for the period in question and was estopped from contending to the contrary. On the basis that the State had wrongly raised demands for purchase tax on milk on the respondents for the period 1996-97, the respondents filed separate writ petitions before the High Court. The High Court allowed the writ petitions and quashed the demands raised. Aggrieved by the decision of the High Court, these appeals have been preferred by the State Government. The circumstances under which the respondents had approached the court chronologically commenced with an announcement made by the then Chief Minister of Punjab on February 26,1996, while addressing dairy farmers at a State level function, that the State Government had abolished purchase tax on milk and milk products in the State. This announcement was given wide publicity in several ne....
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.... 8 per cent, to 2 per cent, and on bullion from 2 per cent, to 0.5 per cent. All these exceptions/reductions will be effective from April 1, 1996. 2. To implement these decisions, necessary notifications are under process and likely to be issued shortly. 3. This position may be brought to the notice of all the officers/officials for information and necessary action. 4. The receipt of this communication may please be acknowledged." It is averred in the writ petitions and not disputed by the appellants that the representatives of the respondents-companies were informed about the instructions contained in the above circular dated May 18, 1996 by the concerned officials of the department. The fact of exempting milk and milk products from purchase tax was also recorded in a letter written by the Excise and Taxation Commissioner to the Financial Commissioner in which it is also said that in compliance with the directions of the Government, instructions had been circulated to the field officers to charge the tax as per the decision of the Government. The issuance of the necessary notification to implement the decision of the Government was urged, to avoid any "legal complications or au....
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....the Council of Ministers held a meeting to consider various items on the agenda. One of the items related to the abolishing of purchase tax on milk. The minutes cryptically record that the decision to abolish purchase tax on milk was not accepted. Consequently on July 3,1977, the Excise and Taxation Officer issued notices to the respondents requiring them to pay the amount of purchase tax for the whole of the year 1996-97. In this background, the High Court held that the State Government was bound by its promise/representation made to the respondents to abolish purchase tax. According to the High Court, "the absence of a formal notification was no more than a ministerial act" which remained to be performed. The respondents had acted on the representation made and could not be asked to pay the purchase tax with effect from April 1, 1996, but would be liable after the decision of the Government for the subsequent period, i.e., from June 4, 1997. The appellants have not seriously questioned the fact that the Government had by a series of actions on its part, in effect, made representations regarding the non-levy of purchase tax with effect from April 1, 1996, nor is it denied that t....
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.... within the meaning of the definition of the word under section 2(d) of the Act. Every dealer is required to pay tax in the manner prescribed under section 10 which requires furnishing of returns/declarations by the dealer together with the receipt showing that the full amount of tax due from the dealer under the Act according to such returns had been paid in the prescribed manner. If there is failure to pay the tax in the manner prescribed, the dealer may be liable to pay penalty of a sum up to one and a half times the tax payable under sub-section (6) of section 10. The substance of section 10 has been detailed in rules 20 to 25 of the Rules. Rule 20 provides for the furnishing of returns either quarterly or monthly. Rule 24 provides for the form in which such returns are to be filed. Rule 25 provides that all returns which are required to be furnished under the Rules "shall be signed by the registered dealer or the agent, and shall be sent to the appropriate assessing authority ... together with the treasury or bank receipt in proof of payment of the tax due". The assessing authority then passes an order of assessment on such return under section 11 unless he is satisfied that t....
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....s required by the applicable statute. Acting on the resolution, the Corporation spent considerable sums of money in building and improving the market and was in possession for 70 years during which period no revenue had been paid to or claimed by the Government. At this stage, a demand was sought to be raised on account of rent under the Bombay City Land Revenue Act, 1876. The Corporation impugned the demand by filing a suit. The suit was dismissed. An appeal was preferred before the High Court. The High Court reversed the decision of the trial court and held that the Corporation was entitled to hold the land forever without payment of any rent and the Government had no right to assess the premises. The Collector preferred an appeal before this court. There was no dispute that by reason of non-compliance with the statutory formalities, the Government resolution of 1865 was not a factual grant passing title in the land to the Corporation. There was also no dispute that there was no enforceable contract between the State Government and the Municipal Corporation. Of the three judges, Das J., held that the possession of the Corporation not being referable to any legal title was adverse....
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....igation has arisen". However, the superstructure of the doctrine with its pre-conditions, strengths and limitations has been outlined in the decision of Motilal Padampat Sugar Mills Co. Ltd. v. State of Uttar Pradesh [1979] 118 ITR 326 (SC); [1979] 44 STC 42 (SC); [1979] 2 SCC 409. Briefly stated-the case related to a representation made by the State Government that the petitioners 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 4A, 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 estoppel against the State Government so as to inhi....
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.... 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. (2) No representation can be enforced which is prohibited by law in the sense that the person or authority making the representation or promise must have the power to carry out the promise. If the power is there, then subject to the preconditions and limitations noted earlier, it must be exercised. Thus, if the statute does not contain a provision enabling the Government to grant exemption, it would not be possible to enforce the representation against the Government, because the Government cannot be compelled to act contrary to the statute. But if the statute confers power on the Government to grant the exemption, the Government can legitimately be held bound by its promise to exempt the promisee from payment of sales tax. The remaining decisions are illustrative of various aspects of the framework set up by the court in the decision in Motilal Padampat Sugar Mills [1979] 118 ITR 326 (SC); [1979] 44 STC 42 (SC); [1979] 2 SCC 409. For example Century Spinning and Manufacturing Co. Ltd. v. Ulhasnagar Municipal Co....
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....ranting the same exemption, because it could legitimately be said that, having regard to the representation made by the Cigarette Manufacturers' Association, there were circumstances of an exceptional nature which required the exercise of the power under sub-rule (2) of rule 8. The Central Government and the Central Board of Excise and Customs were therefore clearly bound by promissory estoppel to exclude the cost of corrugated fibre board containers from the value of the goods for the purpose of assessment of excise duty for the period May 24, 1976, to November 2,1982." The limitations to the doctrine delineated in M. P. Sugar Mills [1979] 118 ITR 326 (SC); [1979] 44 STC 42; [1979] 2 SCC 409, however, were also reaffirmed when it was said: " . . . that there can be no promissory estoppel against the Legislature in the exercise of its legislative functions nor can the Government or public authority be debarred by promissory estoppel from enforcing a statutory prohibition. It is equally true that promissory estoppel cannot be used to compel the Government or a public authority to carry out a representation or promise which is contrary to law or which was outside the authority or p....
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....v. Bihar State Electricity Board [1985] 3 SCC 38, it was found as a fact that the Bihar State Electricity Board had made representations that graduates who would be taken as training engineers would be regularised against appropriate posts and the submission that such appointments would be contrary to statutory rules of the Board was brushed aside and the court directed the Board, following Chandrasekhara Aiyar J.'s opinion in Collector of Bombay v. Municipal Corporation [1952] 3 SCR 43 as well as the decisions in Union of India v. Indo-Afghan Agencies Ltd. [1968] 2 SCR 366 and Century Spinning and Manufacturing Co. Ltd. v. Ulhasnagar Municipal Council [1970] 3 SCR 854 and Motilal Padampat Sugar Mill Co. Ltd. v. State of U. P. [1979] 118 ITR 326 (SC); [1979] 44 STC 42 (SC); [1979] 2 SCC 409, to act in terms of the representation made. Indeed the principles of promissory estoppel have been applied time and again by this court and it is unnecessary to burden our decision by referring to all the cases except to note that the view expressed by Chandrasekhara Aiyar J., in 1952 still holds good. The case of Kasinka Trading v. Union of India [1995] 1 SCC 274, cited by the appellants is a....
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....f the Andhra Pradesh Non-Agricultural Lands Assessment Act, 1963. Section 11 of that Act provided for exemption to be made by an order of the State Government which was required to be published in the Andhra Pradesh Gazette prior to which the order had to be laid on the table of the legislative assembly. The court construed the provisions of the State Act and came to the conclusion that the nature of the power under section 11 did not amount to delegated legislation but conditional legislation. It was held that: "If the statute requires that a particular act should be done in a particular manner and if it is found, as we have found hereinbefore, that the act done by the Government is invalid and ineffective for non-compliance with the mandatory requirements of law, it would be rather curious if it is held that notwithstanding such non-compliance, it yet constitutes a 'promise' or a 'representation' for the purpose of invoking the rule of promissory/equitable estoppel. Accepting such a plea would amount to nullifying the mandatory requirements of law besides providing a licence to the Government or other body to act ignoring the binding provisions of law. Such a course would render....
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.... of the principles of promissory estoppel even though rule 8 of the Central Excise Rules, 1944 required exemption to be granted by notification. Of course, the Government cannot rely on a representation made without complying with the procedure prescribed by the relevant statute, but a citizen may and can compel the Government to do so if the factors necessary for founding a plea of promissory estoppel are established. Such a proposition would not "fall foul of our constitutional scheme and public interest". On the other hand, as was observed in Motilal Sugar Mills' case [1979] 118 ITR 326 (SC); [1979] 44 STC 42, 72 (SC); [1979] 2 SCC 409 and approved in the subsequent decisions: "It is indeed the pride of constitutional democracy and rule of law that the Government stands on the same footing as a private individual so far as the obligation of the law is concerned: the former is equally bound as the latter. It is indeed difficult to see on what principle can a Government, committed to the rule of law, claim immunity from the doctrine of promissory estoppel." None of these decisions have been considered in I. T. C. Bhadrachalam Paperboards v. Mandal Revenue Officer [1998] 110 STC....