9911796707
TMI Blog2010 (1) TMI 562X X X X Extracts X X X X X X X X Extracts X X X X ..... ndent-M/s. Kalyanpur Cement Ltd. (hereinafter referred to as, "the Company"), is a public sector company incorporated in the year 1937 as a lime-producing company. It is engaged in the business of cement manufacturing and marketing operations since 1946. It had commenced production with a capacity of 46,000 metric tonnes. It underwent a series of expansion in 1958, 1968 and 1980. Nowadays, the company is operating a one-million tonne cement plant. In view of the changes in technology worldwide, it has set up a brand new state of the art "dry process" plant in 1994 at a capital cost of Rs. 250-260 crores. This was made possible with financial assistance of the World Bank and the All India Financial Institutions. Its advisor and financial collaborator is Holder Bank (HOLCIM) at Switzerland. The company claims to be one of the very few large scale surviving industrial units in the State of Bihar. It is the only large scale industry in the central part of the State. Over 2000 persons are in the employment of the company. The company claims that due to circumstances beyond its control such as recession in the cement industry as well as Government related problems, delayed decision in gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndustrial Policy, 1995 ought to have been issued within one month of the release/publication of the Policy in September, 1995. Voluminous record was produced before the High Court in support of the submission that the company is entitled to exemption under the 1995 Policy. The State of Bihar contested the writ petition by filing a counter-affidavit. Supplementary counter-affidavit was filed on behalf of the Government through the Secretary-cum-Commissioner, Department of Commercial Taxes (respondent No. 4 in the writ petition) on December 5, 2000. In paragraph 5 of the aforesaid affidavit it is stated as under: "5. That the honourable Minister, Department of Commercial Taxes has approved the proposal along with draft notification regarding extension of sales tax related incentives to sick industrial units." In paragraph 8 of the affidavit it is averred "That the deponent states that it shall be possible to issue necessary notification after approval of the proposal of the relevant notification by the honourable Chief (Finance) Minister of the Cabinet". It is also stated in the affidavit "That the deponent has further requested the Secretary-cum-Commissioner, Department of Finance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... court that the decision taken on January 6, 2001 was considered by the cabinet in its meeting held on March 5, 2001 wherein it was decided not to issue any notification for granting any concession/facility to sick industrial units in the State. This decision was duly conveyed by letter dated March 5, 2001 to the IDC Bihar, Patna. In view of the aforesaid decision, the Secretary, Industries Department, rejected the company's application and communicated the decision to the company on May 14, 2001. Both the decisions were sought to be justified by the State Government. The High Court considered the entire issue. The company as well as the State made detailed reference to the documents which were placed on the record. Ultimately, the writ petition has been allowed. The decisions dated January 6, 2001 and March 5, 2001 have been quashed. Further directions issued to the State Government are as follows: "The concerned Departments and organizations are hereby directed to issue follow up notification to give effect to the provisions of the policy within one month from today. After the notification is issued a committee headed by the Industrial Development Commissioner would be constitut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gistered. (c) M/s. Kalyanpur Cement Ltd., shall submit the details regarding amount of payment in the bank account as mentioned in para (a) above along with brief abstract each month." Thereafter the appellant requested the company to comply with the directions of this court. The company, however, informed the appellant that it was unable to comply with the directions because of its "sickness". Since the company failed to comply with the aforesaid order, a prayer was made for recalling the same. The company in its reply elaborately explained the efforts being made by the financial institutions to ensure the survival of the company. It reiterated that the company had acted honestly and in good faith on assurances/ approval given by the appellant at various stages. The company continued with its operation in anticipation of receiving the appellant's approval at some point of time. Had the appellant not given the assurances, the company could have suspended its operation. The Government gave assurances and granted approval on January 7, 1998, January 23, 1998, March 12, 1998, January 21, 1999, July 12, 1999, October 29, 1999, December 2, 1999, December 17, 1999, January 25, 2000, M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed. According to Dr. Dhawan the High Court has wrongly quashed the order dated January 6, 2001 on the basis that it was an arbitrary somersault after December 5, 2000. This conclusion is erroneous as the aforesaid order had given four cogent reasons in support of the decisions which have been duly noticed by the High Court. The aforesaid reasons could not be said to be extraneous to the decision dated January 6, 2001. Thereafter, it is submitted that the relevant rule/clauses 22 and 24 were wrongly interpreted because it stated "clause 22.2 of the Policy would come into force after a notification under clause 24 is issued". The High Court has wrongly held that the precondition of revival under clause 22 came into effect after the final decision under clause 24. According to the learned senior counsel the High Court failed to notice that clause 22.2 was about revival of the company and not just granting sales tax exemptions. Furthermore, clause 22.3 barred exemption/deferment to be given to such sick and closed industrial units which have once availed of such facilities in the past. This company has availed of the deferment in the past and had not paid the sums due. It is th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... [1995] 1 SCC 274, Sales Tax Officer v. Shree Durga Oil Mills [1998] 1 SCC 572 [1998] 108 STC 274 (SC)., Bakul Cashew Co. v. Sales Tax Officer [1986] 2 SCC 365 [1986] 62 STC 122 (SC)., Sharma Transport v. Government of A.P. [2002] 2 SCC 188, Bannari Amman Sugars Ltd. v. Commercial Tax Officer [2005] 1 SCC 625 [2005] 139 STC 86 (SC). at 637, Shri Bakul Oil Industries v. State of Gujarat [1987] 1 SCC 31 [1987] 64 STC 304 (SC)., Motilal Padampat Sugar Mills Co. Ltd. v. State of U.P. [1979] 2 SCC 409 [1979] 44 STC 42 (SC)., D.C.M. Ltd. v. Union of India [1996] 5 SCC 468 [1997] 104 STC 590 (SC)., Shrijee Sales Corporation v. Union of India [1997] 3 SCC 398 and Pawan Alloys & Castings (P) Ltd. v. U.P. State Electricity Board [1997] 7 SCC 251. Mr. Dinesh Dwivedi, senior advocate, submitted that there are two categories of cases, where incentive is given: (i) to set up or start an industry; (ii) benefits to improve the industry. The incentive in the second category can be withdrawn as it is only an enabling provision. In such circumstances, the executive is permitted to resile. Referring to the detailed provisions of the 1995 Policy, he submitted that that clause 16(1) and 16(2) relates ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its that the Industrial Policy, 1995 was only a temporary scheme, therefore, no benefit could be given after expiry. He relied on State of U.P. v. Dinkar Sinha [2007] 10 SCC 548, Velji Lakhamsi and Co. v. Benett Coleman and Co. [1977] 3 SCC 160 and District Mining Officer v. Tata Iron and Steel Co. [2001] 7 SCC 358. Mr. Ravi Shankar Prashad, senior advocate appearing for the respondent No. 1, submitted that the company is the only large scale industry left in the State of Bihar. In the 1990s, the cement industry was in a bad state, as the expectations of the Government of increase in demand did not fructify. The company is a viable unit. It has been made sick by the inaction of the Government. He further submitted that the exemption has been duly recommended by the committee under clause 22.2(i). It cannot be denied the benefit on the basis of clause 22(3). At the time when earlier benefits were given the company was not sick. It would be entitled to the benefit in view of clause 22(1)(vi). According to the learned senior counsel, the company has gone into a whirlpool as the rehabilitation package has not been given as the Government has not issued the exemption notification unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dustries Co. Ltd. v. Electricity Inspector & ETIO [2007] 5 SCC 447, MRF Ltd., Kottayam v. Assistant Commissioner (Assessment), Sales Tax [2006] 8 SCC 702 [2006] 148 STC 225 (SC). and Amrit Banaspati Co. Ltd. v. State of Punjab [1992] 2 SCC 411 [1992] 85 STC 493 (SC).. Relying on the aforesaid judgments, it is submitted that the High Court has estopped the appellant-State Government from hiding behind the technicality and denying the sales tax exemption to respondent No. 1 under the Industrial Policy, 1995. It is further submitted that during the pendency of appeal before this court the company had submitted a modified package to the State Government in October, 2006. This was rejected by the Government vide order dated 12th March, 2007, the proposal was rejected only on the ground that the company has huge liability amounting to Rs. 314.12 crores. According to Mr. Ranjit Singh, the aforesaid figure is not a correct present figure of the financial status of the company making detailed figures to certain facts and figures. He further submitted that the total amount due from the company is Rs. 46.81 crores out of which it is eligible to a relief of Rs. 30.04 crores under Notification ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n specific externalities. It is submitted that the viability studies conducted by the specialized agencies have confirmed the company's viability and ability to convert its net worth into positive and repay back Government due another term loan within eight to 10 years. It is further submitted that any change in the sales tax exemption would adversely affect the implementation of the proposed scheme. However, the modified revival package which was given to the Government has been arbitrarily rejected. We have considered the submissions made by the learned counsel for the parties. We have considered the detailed facts and relevant documents which are on the record. However, in our opinion, before we consider the submissions made on the factual situation of this case, it would be appropriate to consider the primary issue as to whether the company could have invoked the principle of "promissory estoppel" in support of its claim. It is well-known that the doctrine of promissory estoppel has been recognized and enforced in the courts in England for a considerable period of time. The principle of "promissory estoppel" was stated by Denning J. in the oft-quoted judgment in Centr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isfied that the promise was understood by all parties only to apply in the conditions prevailing at the time of the flats being partially let, and the promise did not extend any further than that. . ." The doctrine of promissory estoppel as developed in the administrative law of this country has been eloquently explained in Kasinka Trading v. Union of India [1995] 1 SCC 274 by Dr. A.S. Anand J., in the following words: "11. The doctrine of promissory estoppel or equitable estoppel is well established in the administrative law of the country. To put it simply, the doctrine represents a principle evolved by equity to avoid injustice. The basis of the doctrine is that where any party has by his word or conduct made to the other party an unequivocal promise or representation by word or conduct, which is intended to create legal relations or effect a legal relationship to arise in the future, knowing as well as intending that the representation, assurance or the promise would be acted upon by the other party to whom it has been made and has in fact been so acted upon by the other party, the promise, assurance or representation should be binding on the party making it and that party sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... position relying on the promise, (e) it is possible for the Government to resile from its promise when public interest would be prejudiced if the Government were required to carry out the promise, (f) the court will not apply the doctrine in abstract. However, since the judgments have been cited, we may notice the law laid down therein. In Sales Tax Officer v. Shree Durga Oil Mills [1998] 1 SCC 572 [1998] 108 STC 274 at page 283.it was held that: "Moreover, as it has been noted earlier that the I.P.R. itself had not granted any exemption but had indicated that orders will be issued by various Departments for granting the exemptions. The exemption order under sales tax could only be issued under section 6 which could be amended or withdrawn altogether. This is expressly provided by section 6. If the respondent acted on the basis of a notification issued under section 6 it should have known that such notification was liable to be amended or rescinded at any point of time, if the Government felt that it was necessary to do so in public interest. . ." In Bakul Cashew Co. v. Sales Tax Officer [1986] 2 SCC 365 [1986] 62 STC 122 at page 127.: ". . . In cases of this nature th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... romisee, acting in reliance on the promise, should suffer any detriment. What is necessary is only that the promisee should have altered his position in reliance on the promise. . . But it is necessary to point out that since the doctrine of promissory estoppel is an equitable doctrine, it must yield when the equity so requires. If it can be shown by the Government that, having regard to the facts as they have subsequent transpired, it would be inequitable to hold the Government to the promise made by it, the court would not raise an equity in favour of the promisee and enforce the promise against the Government. The doctrine of promissory estoppel would be displaced in such a case because, on the facts, equity would not require that the Government should be held bound by the promise made by it. When the Government is able to show that, in view of the facts which have transpired since the making of the promise, public interest would be prejudiced if the Government were required to carry out the promise, the court would have to balance the public interest in the Government carrying out a promise made to a citizen which has induced the citizen to act upon it and alter his position a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is further held that See page 76 of 44 STC.: ". . . Lastly, a proper reading of the observation of the court clearly shows that what the court intended to say was that where the Government owes a duty to the public to act differently, promissory estoppel cannot be invoked to prevent the Government from doing so. This proposition is unexceptionable, because where the Government owes a duty to the public to act in a particular manner, and here obviously duty means a course of conduct enjoined by law, the doctrine of promissory estoppel cannot be invoked for preventing the Government from acting in discharge of its duty under the law. This doctrine of promissory estoppel cannot be applied in teeth of an obligation or liability imposed by law." In D.C.M. Ltd. v. Union of India [1996] 5 SCC 468, this court reiterated that: ". . . It is well-settled that the doctrine of promissory estoppel represents a principle evolved by equity to avoid injustice and, though commonly named promissory estoppel, it is neither in the realm of contract nor in the realm of estoppel. The basis of this doctrine is the inter-position of equity which has always, proved to its form, stepped in to mitigat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... overriding public interest, if it is shown that by such premature withdrawal the appellant-promisees would be restored to status quo ante and would be placed in the same position in which they were prior to the grant of such rebate by earlier notifications the appellants would not be entitled to succeed. . ." In Shrijee Sales Corporation [1997] 3 SCC 398, it is also held that: "However, in the present case, there is a supervening public interest and hence it should not be mandatory for the Government to give a notice before withdrawing the exemption." In Bannari Amman Sugars Ltd. v. Commercial Tax Officer [2005] 1 SCC 625 [2005] 139 STC 86 at page 100. it is observed that: ". . . We find no substance in the plea that before a policy decision is taken to amend or alter the promise indicated in any particular notification, the beneficiary was to be granted an opportunity of hearing. Such a plea is clearly unsustainable. While taking policy decision, the Government is not required to hear the persons who have been granted the benefit which is sought to be withdrawn." In Rom Industries Ltd. v. State of Jammu and Kashmir [2006] 147 STC 575 at page 578., this court held that: "We ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9 STC 74 at page 84., in support of his submission that promissory estoppel applies only where a person is eligible consistent with the purpose for which the policy was made. In that case, it was held that: "In our view, the conditions prescribed by the authorities for grant of exemption are mandatory for availing of the exemption and the High Court exercising jurisdiction under article 226 of the Constitution cannot direct the grant of exemption in favour of the respondent overlooking the statutory conditions prescribed for such grant and that too in the absence of any challenge to the validity of such conditions." In addition Mr. Dwivedi, learned senior counsel relied on a number of other decisions which we may notice. In M.P. Mathur [2006] 13 SCC 706, wherein this court reiterated that in order to invoke the doctrine of promissory estoppel clear, sound and positive foundation must be made in the petition itself by the party invoking the doctrine and bald expressions without any supporting material would not be sufficient. In Excise Commissioner v. Ram Kumar [1976] 3 SCC 540 this court reiterated that: ". . . It is now well-settled by a catena of decisions that there can be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder may not arise. . ." In Benett Coleman [1977] 3 SCC 160, this court held that: "This pivotal point canvassed by the learned counsel for the appellants though it looks attractive at first sight cannot stand a close scrutiny. It is true that the offences committed against a temporary statute have, as a general rule, to be prosecuted and punished before the statute expires and in the absence of a special provision to the contrary, the criminal proceedings which are being taken against a person under the temporary statute will ipso facto terminate as soon as the statute expires. But the analogy of criminal proceedings or physical constraint cannot, in our opinion, be extended to rights and liabilities of the kind with which we are concerned here for it is equally well-settled that transactions which are concluded and completed under the temporary statute while the same was in force often endure and continue in being despite the expiry of the statute and so do the rights or obligations acquired or incurred thereunder depending upon the provisions of the statute and nature and character of the rights and liabilities." In District Mining Officer [2001] 7 SCC 358, this court observe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case in the meeting of the High Empowered Committee under the chairmanship of the Chief Secretary for final decision." In a meeting held on January 23, 1998 it was noticed that the company has been provided the facility of deferment of commercial taxes on two earlier occasions. The deferred amount is being repaid even though payment of the unit is not up to date. It was also accepted that the benefits under the Industrial Policy, 1995 which are to be given to the new units are also to be given to sick and closed units. However, it was observed that the opinion of the Advocate-General should be taken as to whether any amendment is required in the sales tax rules. In an another meeting held on the same date, i.e., on March 12, 1998 the reconstruction proposal of the company was again considered in a meeting of the High Level Authorisation Committee (HLAC) held under the chairmanship of the Chief Secretary. In this meeting, it was noticed that the company is running in losses. The main reason for the present position of the company is sluggishness in the cement market. The company had, therefore, made an application for sales tax exemption from January 1, 1998 to December 31, 2002 u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctober 29, 1999. Reference was made, in this meeting, to the deliberations at the previous meeting held on July 12, 1999, when it was decided to undertake revised restructuring exercise in respect of the company. Accordingly, a revised restructuring proposal was formulated by the Industrial Finance Corporation of India Ltd. (hereinafter referred to as, "IFCI"). In this meeting of the representative of the State Government mentioned that the legal opinion of the Advocate-General, Bihar has been obtained. However, decision of the sales tax exemption proposal had been held up due to the election. It was now expected to be taken up in December, 1999. The financial institutions stated that they would consider granting reliefs only after grant of sales tax exemptions by the State Government of Bihar. Thereafter by letter dated October 2, 1999, the State Government informed the financial institutions as under: "The State Government has since decided to notify the provisions of providing sales tax benefits to 'sick units' and potentially viable non-BIFR sick units in the meeting of the economic sub-committee held on November 30, 1999. We shall forward a copy of the notification as soon a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re taken in the aforesaid meeting. Decision No. 4 was that "State Government will ensure that the notification regarding sales tax exemption is issued by the second week of January, 2000". On January 25, 2000, the State Government informed the lead institution (IFCI) that the matter was discussed in the cabinet sub-committee and draft notification was approved therein. It was further pointed out that due to ensuing assembly elections, it was being examined whether it was a violation of model code of conduct or not. Once it is sorted out, action will be taken in this regard. Again vide letter dated March 31, 2000, the State Government informed the IFCI that the matter was delayed due to election and the necessary notification shall be issued soon. There was another meeting held on May 29, 2000 under the chairmanship of the Minister of Industries on problems faced by the company. The meeting recorded as follows: "After intense discussion in the meeting, the following decisions were taken: 1. Under the Industrial Policy, 1995 the Commercial Tax Department shall immediately issue the matching notification to provide the facility of exemption/deferment from sales tax to potentially s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ort of the plea that the action of the State Government in issuing orders dated January 6, 2001 and March 5, 2001 is wholly arbitrary and unjust. In reply, it was contended that the decision dated January 6, 2001 had been taken for the four reasons stated earlier. It was further stated that the decisions taken in the meeting of the cabinet held on March 5, 2001 was upon thoughtful and due consideration of all the relevant factors. Taking into consideration the totality of the circumstance, a policy decisions had been taken that notification relating to the sales tax incentive be not issued. Therefore, the company was not entitled to any relief. It was on consideration of the entire matter that the High Court concluded as follows: "When the State Government gives an assurance and undertaking, in form of a policy then in fact it allures person/industries to enter into the individual ventures, invest money on the assurances contained in the policy, would it be justified on the part of the State Government to say later on that on a second thought they were withdrawing the policy and the benefits flowing from that policy. We are unable to agree to this argument." We are of the opinio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld attract a penalty ranging from 1½ per cent to 2½ per cent per month from the date it fell due. That penalty, in the facts of this case, would be very much more than the amounts of refund. 11.. What emerges from the undisputed facts is that the appellant was entitled to the benefit of these adjustments in the respective years. It had done and carried out all that was necessary for it to do and carry out in that behalf. The grant of permission remained pending on account of certain outstanding inter-departmental issues as to which of the departments-the Department of Sales Tax or the Department of Industries-should absorb the financial impact of these concessions. Correspondence indicates that on account of these questions, internal to administration, the request for permission to adjust was not processed. . . . 22.. . . . There is no dispute that the appellant had satisfied these conditions. Yet the permission was withheld-not for any valid and substantial reason but owing to certain extraneous things concerning some inter-departmental issues. The appellant had nothing to do with those issues. The appellant is now told, 'We are sorry. We should have given ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urts must do justice by the promotion of honesty and good faith, as far as it lies in their power.' 25.. In other words, promissory estoppel long recognised as a legitimate defence in equity was held to be found a cause of action against the Government, even when, and this needs to be emphasised, the representation sought to be enforced was legally invalid in the sense that it was made in a manner which was not in conformity with the procedure prescribed by statute. 26.. This principle was built upon in Union of India v. Anglo Afghan Agencies Ltd. [1968] 2 SCR 366 where it was said (SCR at page 385): (AIR page 728, para 23) '23. Under our jurisprudence the Government is not exempt from liability to carry out the representation made by it as to its future conduct and it cannot on some undefined and undisclosed ground of necessity or expediency fail to carry out the promise solemnly made by it, nor claim to be the judge of its own obligation to the citizen on an ex parte appraisement of the circumstances in which the obligation has arisen.' 44.. Of course, the Government cannot rely on a representation made without complying with the procedure prescribed by the relevant statute, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion from) payment of tax in respect of sale/consumption of electrical energy in relation to the cogenerating power plants. 122.. Unlike an ordinary estoppel, promissory estoppel gives rise to a cause of action. It indisputably creates a right. It also acts on equity. However, its application against constitutional or statutory provisions is impermissible in law. . . . 130.. We, therefore, are of the opinion that doctrine of promissory estoppel also preserves a right. A right would be preserved when it is not expressly taken away but in fact has expressly been preserved." This court in MRF Ltd., Kottayam [2006] 8 SCC 702 [2006] 148 STC 225 (SC)., considered the legality of a notification withdrawing the exemption granted by an earlier notification. Relying on the representations contained in the earlier notification, MRF had altered its position. Whilst setting aside the subsequent notification withdrawing the exemptions, this court held that the whole actions of the State including exercise of executive power has to be tested on the touchstone of article 14 of the Constitution of India. It was held that the action of the State must be fair. In this context we may notice the obs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the requirement of every State action qualifying for its validity on this touchstone irrespective of the field of activity of the State is an accepted tenet. The basic requirement of article 14 is fairness in action by the State, and non-arbitrariness in essence and substance is the heartbeat of fair play. Actions are amenable, in the panorama of judicial, review only to the extent that the State must act validly for discernible reasons, not whimsically for any ulterior purpose. The meaning and true import and concept of arbitrariness is more easily visualised than precisely defined. A question whether the impugned action is arbitrary or not is to be ultimately answered on the facts and circumstances of a given case. A basic and obvious test to apply in such cases is to see whether there is any discernible principle emerging from the impugned action and if so, does it really satisfy the test of reasonableness.' (emphasis supplied) 39.. MRF made a huge investment in the State of Kerala under a promise held to it that it would be granted exemption from payment of sales tax for a period of seven years . . . The action of the State cannot be permitted to operate if it is arbitrary or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ard to the discontinuance of the sales tax exemptions from January 1, 2000 could not have affected the rights of the company under the Industrial Policy, 1995. Necessary application was made to the Government seeking exemption on November 21, 1997. For more than three years, the company and the financial institutions had been assured by the Government that the notification will be issued forthwith. However, it was not issued. We are of the opinion that the action of the appellants is arbitrary and indefensible. The learned senior counsel for the appellants had also submitted that it was not necessary to issue the notification within one month as stipulated in clause 24 of the Industrial Policy, 1995. In order to appreciate the aforesaid submission, it would be necessary to make a reference to the relevant clauses of the Industrial Policy, 1995. Clauses 22, 23 and 24 are as under: "Revival of sick units The continuing problem of industrial sickness is a matter of great concern for the Government. Closure of units leads to unemployment and locking up of capital deployed in such ventures. The State Government is determined to take effective measures and to render all possibl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rehabilitation prepared by the Board for Industrial and Financial Reconstruction (BIFR) or by Inter-Institutional Committee of IRBI, BICICO/ BSFC and bank would be placed before the committee headed by the Industrial Development Commissioner for consideration and recommendation to Government through SLEC for approval. (iii) Rehabilitation measures for sick but potentially viable industrial units may, inter alia, include reliefs and concessions or sacrifice from various Government Departments/organizations and/or additional facilities including allocation of power from BSEB/DVC and any other agency/statutory body/local authority. 22.3 Such closed and sick industrial units which have once availed of the facility of sales tax exemption/deferment under a rehabilitation package prepared by BIFR shall not get the same facility again if they turn sick or are closed again. This will also apply to other facilities given to such sick and closed industrial units which have once availed of such facilities in the past. However, the State Government may consider extending such facilities on case to case basis as required. 23.. Definition(s) given in the annexure form(s) part of the policy. 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on under clause 24 of the Industrial Policy, 1995 within the stipulated period of one month. Even if we are to accept the submissions of Dr. Dhawan and Mr. Dwivedi that the provisions contained in clause 24 was mandatory the time of one month for issuing the notification could only have been extended for a reasonable period. It is inconceivable that it could have taken the Government three years to issue the follow up notification. We are of the considered opinion that failure of the appellants to issue the necessary notification within a reasonable period of the enforcement of the Industrial Policy, 1995 has rendered the decisions dated January 6, 2001 and March 5, 2001 wholly arbitrary. The appellant cannot be permitted to rely on its own lapses in implementing its Policy to defeat the just and valid claim of the company. For the same reason we are unable to accept the submissions of the learned senior counsel for the appellant that no relief can be granted to the company as the Policy has lapsed on August 31, 2000. Accepting such a submission would be to put a premium and accord a justification to the wholly arbitrary action of the appellant, in not issuing the notification in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2002, this court passed the following order: "As an interim arrangement during the pendency of this appeal, with a view to protect the interests of either side, we direct the respondent to deposit an amount equivalent to the sales tax payable by it as and when it becomes due in an interest hearing account in a nationalized bank. This amount and the amount accrued during the pendency of the appeal, shall not be withdrawn by other side. The amount so kept in deposit shall become payable to the party which ultimately succeeds in this appeal. The appellants are directed to issue the exemption orders and on receipt of such order, the abovesaid amount shall be deposited. The issuance of the exemption order is without prejudice to the case of the parties in this appeal. The I.A. is disposed of." It is not in dispute for us that pursuant to the aforesaid directions the appellant has issued the Notification No. SO-174 dated October 18, 2004 granting exemption to the company. The notification was to have effect for five years from the date of publication in the official gazette or till the disposal of Special Leave Petition No. 5181 of 2002, whichever is earlier. The notification was is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of amount equivalent to the tax due, Mr. Parshad reiterated that the company had made bona fide efforts, but was unable to deposit the amount due to its "sickness". On the one hand the revised rehabilitation package is kept under consideration, on the other the appellants seeks the vacation of the order dated November 18, 2002. The application, according to the learned senior counsel, deserves outright dismissal. We have considered the submissions made by the learned counsel. It would be not possible to accept the submissions of Mr. Parshad that in view of the financial condition of the company it may be permitted to retain the amount collected under the orders of this court. The amount was collected from the consumer to offset the tax liability. Such amount cannot be permitted to be retained by the company. In Amrit Banaspati's case [1992] 2 SCC 411 it has been held that exemption and refund of tax are two different legal and distinct concepts. The objective of the exemption is to grant incentive to encourage industrialization. It is to enable the industry to compete in the market. On the other hand, refund of tax is made only when it has been realized illegally or contrary to t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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