TMI Blog1988 (3) TMI 443X X X X Extracts X X X X X X X X Extracts X X X X ..... are relevant to that writ petition and then decide the points arising in that case. Thereafter we shall refer to the two later writ petitions which are of recent origin and deal with them separately. W.P. No. 1861 of 1982: The petitioner in this writ petition is Sree Rayalaseema Paper Mills Limited, Kurnool. The writ petition was filed on March 15, 1982, seeking for the issue of a writ of mandamus directing the respondents to disburse "Interest-free sales tax loans" (IFST) of an amount of Rs. 279.47 lakhs. The Government of Andhra Pradesh issued G.O. Ms. No. 224, Industries and Commerce, on March 9, 1976, proposing to revise the scheme of incentives for new industries to be set up in Andhra Pradesh. This Government Order makes reference to G.O. Ms. No. 1225, Industries and Commerce dated December 31, 1968 and also to G.O. Ms. No. 455, Industries and Commerce, dated May 3, 1971, and proceeds to state that in the light of the subsequent developments and situation obtaining in 1976, the Government proposed to revise these incentives so as to more effectively serve the purpose of bringing about rapid industrial growth in the State and also serve the purpose of bringing about su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , confirmed that in terms of the incentive scheme, the paper project of the petitioner-company will be entitled to interest-free sales tax loan. The material portion of the abovesaid letter dated February 28, 1977 reads as follows: "In terms of the incentive scheme, the paper project of M/s. Sree Rayalaseema Paper Mills Limited will be entitled to interest-free sales tax loan on sales tax paid on construction materials, raw materials, finished goods, etc. It is understood that the sales tax so payable will be of the order of Rs. 400 lakhs in the next 2-3 years by the company. In view of this, the State Government hereby confirm, that subject to formalities and verification, an amount of Rs. 100 lakhs will be made available to the company as interest-free sales tax loan. I am to request that the term loan may be released to the company expeditiously on the basis of this letter of confirmation." Copies of the abovesaid letter of the State Government were also marked to the Andhra Pradesh Industrial Development Corporation as well as the petitioner-company. It is on the basis of this letter that the petitioner has been claiming that the State Government was bound to give an IFST ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , it was, however, submitted that the question of the grant of IFST loan was placed before the State Level Committee at its meeting held on November 8, 1980 and December 30, 1981, for consideration and that the matter was deferred. It was pointed out that during 1979-80, 124 industrial units in the State were granted IFST loan in a total sum of Rs. 55 lakhs while for the year 1980-81, 154 units were granted Rs. 100 lakhs and likewise in 1981-82, 85 units were given such loan totalling Rs. 75 lakhs. It was stated that no industrial unit in the State was paid more than Rs. 10 lakhs of IFST loan and that having regard to "the meagre budget allocation for IFST loan and the increased number of industrial units in the State claiming eligibility for such loan, "it was not possible for the Government to disburse the loan amount to the petitioner". It was admitted that IFST loan was advanced to the Nagarjuna Steels and the Andhra Scooters Limited but only at the rate of Rs. 10 lakhs each. No amount was allotted to the petitioner inasmuch as the petitioner's claim was for a huge amount of loan. There was, therefore, no discrimination. Coming to the question of promissory estoppel, it was con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1988. Each year's loan is repayable in full at the end of the tenth year from the date of drawing the loan. It was stated that inasmuch as the said company had agreed to withdraw the court cases the comprehensive settlement on the lines mentioned in the G.O. was accepted by the Government. Appropriate instructions are to be issued to the Industries and Commerce Department and the Forest and Animal Husbandry Department as well as the Revenue Department. Similarly G.O. Ms. No. 483, Industries and Commerce, was issued on September 9, 1986, in respect of IFST loan and other concessions granted in favour of M/s. A.P. Rayons Limited, Hyderabad. It is stated therein that the total quantum of IFST loan eligible under G.O. Ms. No. 224 dated March 9, 1976, would be limited to a figure of Rs. 100 lakhs and this amount would be allowed to be retained by the Company in a period of two years, by retaining the sales tax payable by them, subject to the condition that the amount retained towards IFST loan does not exceed Rs. 50 lakhs in each year. Each year loan is repayable in full at the end of the 10th year from the date of drawing the loan. It is further stated that in the light of the declar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... subject-matter of IFST loans was under consideration by the Government and that the Government was considering action either to withdraw G.O. 224 or to take appropriate legislative measures and that, therefore, no further orders need be passed. The operative portion of the order of the Division Bench in the Writ Appeal No. 1088 of 1986 reads as follows: "In view of the representation by the learned Advocate-General, we consider the State Government may be enabled in eight weeks from today either to pass on executive order or issue an ordinance. If none of the courses is adopted in the period prescribed, the company to submit claims indicating the amount of IFST loan under what conditions of G.O. 224 or in virtue of any other scheme. The Government is obliged after receipt of such a claim within three months to pass appropriate orders. If the schemes in G.O. 224 and G.O. 375 are abrogated or modified, the affected can choose to seek remedies provided in law." The next important event to be noted is the issue of Ordinance 1 of 1987, on February 9, 1987, called the A.P. Interest-free sales Tax Loans for Industries (Imposition of Ceiling) Ordinance, 1987 with retrospective effec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the legality of Act 20 of 1987 as contravening principles of natural justice, promissory estoppel, fair play and as being unreasonable and discriminatory and violative of articles 14 and 19(1)(g) of the Constitution. The writ petitioner also made a reference to the new scheme of State incentives made in G.O. Ms. No. 375 dated August 23, 1985, in which a maximum of Rs. 1 crore was allowed as payable towards IFST loan and contended that the plea of "financial stringency" made by the State Government was false and baseless. It was stated that the said new scheme, IFST loan up to one crore was applicable to all new industrial units even though Act 20 of 1987 had taken away the incentives granted in G.O. Ms. No. 224 dated March 9, 1976. On this ground also, it was stated that Act 20 of 1987 was discriminatory and violative of articles 14 and 19(1)(g) of the Constitution. It was also stated that no reasons were given for fixing the maximum limit of IFST loans to Rs. 10 lakhs in respect of industries which have gone into regular production on or after January 1, 1976, while fixing a limit of one crore under G.O. Ms. No. 375, dated August 23, 1985. Principles of promissory estoppel are ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been implemented in view of the enactment of the Act. (vide Act 20 of 1987). In respect of M/s. Volroho, orders were issued in G.O. Ms. No. 542 dated October 16, 1986, pertaining to sales tax loan with interest and the concession does not come under the purview of the orders issued in G.O. Ms. No. 224 dated March 9, 1976. Hence no discrimination has been shown to any industry by the Government." Thereafter, the present batch of writ petitions came up for hearing before this Court on December 7, 1987. After hearing the counsel on both sides for considerable time we passed an order directing the Government to clarify the following facts: (1) In what circumstances were the said two G.Os. 482 and 483 issued; (2) Whether the aforesaid G.O. Ms. Nos. 482 and 483 dated September 9, 1986, have been rescinded, modified or revoked after they were issued; (3) Whether the said G.Os. were acted upon by the Government and whether the Government released the loans mentioned in the said G.Os.; (4) Whether the said two companies, acting upon the said G.Os., have been withholding the sales tax and, if so, to what extent each of them have withheld; (5) Whether, after the issuance of the Ordinance an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order on December 14, 1987, stating that the court wanted information only with regard to IFST loan and not with respect to other sales tax concessions. The question was whether G.O. Ms. Nos. 482 and 483 were implemented in respect of M/s. Bhadrachalam Paper Boards Ltd. and M/s. A.P. Rayons Ltd. or not. Pursuant to the further directions given on December 14, 1987, by this Court, the Government filed a further affidavit dated December 18, 1987. It was stated that so far as Bhadrachalam Paper Boards Limited was concerned, notwithstanding Act 20 of 1987 having superseded G.O. Ms. No. 482 dated September 9, 1986, the said company, viz., Bhadrachalam Paper Boards had unilaterally withheld a sum of Rs. 77,92,877 towards amounts payable under the Andhra Pradesh General Sales Tax Act and the Central Sales Tax Act for the period from April, 1987 to October, 1987. It was added in the said counter that "action is being pursued for recovering the sales tax difference from the company in excess of Rs. 10 lakhs". Again, in respect of M/s. A.P. Rayons it was stated in the said counter that the said company had also unilaterally withheld a sum of Rs. 53,13,099.74 for the years 1986-87, from Ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 50 pages of material to show that notices have already been issued by the concerned Commercial Tax Officers for recovering the arrears of sales tax due from Bhadrachalam Paper Boards Limited and A.P. Rayons Limited, during February, 1988. He also contended that so far as G.O. Ms. No. 375 dated August 23, 1985 was concerned it was applicable only to the three backward districts of the State and that it was open to the State Government to make special provision for development of industries in backward areas and that the petitioners cannot challenge that such treatment to backward areas was illegal. We shall first deal with the first and fourth contentions relating to the validity of the provisions of sections 2 and 3 of the A.P. Interest-free Sales Tax Loans for Industries (Imposition of Ceiling) Act, 1987, and the attack on G.O. Ms. No. 375, dated August 23, 1985. In the Statement of Objects and Reasons of the Act, it is stated that the Act is intended to fix the maximum amount of interest-free sales tax loan to certain industries in the State of Andhra Pradesh. After referring to G.O. Ms. No. 224 dated March 9, 1976, under which the State incentive scheme was brought into force ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oduction on or after January 1, 1976 and also in respect of other industrial units going in for substantial expansion, situated, in "all the areas" of the State of Andhra Pradesh (except in the Municipal Corporation limits of Hyderabad, Vijayawada and Vishakapatnam) notwithstanding the limits specified in G.O. Ms. No. 224 dated March 9, 1976 as subsequently modified from time to time. Under section 3, it is stated that the maximum amount of IFST loan "granted" as per G.O. Ms. No. 224 dated March 9, 1976 (as extended from time to time up to March 31, 1984) shall not exceed a maximum sum of Rs. 10 lakhs in respect of each industry with a fixed capital cost of Rs. 1 crore or above. This is notwithstanding anything in any judgment, decree or order of any court, tribunal or other authority or any order to the contrary. From the aforesaid provisions, it is clear that the Act purports to limit, with retrospective effect from January 1, 1976, the IFST loan mentioned in G.O. Ms. No. 224, dated March 9, 1976, to a maximum amount of Rs. 10 lakhs in respect of the industries mentioned in the said G.O., with a fixed capital cost of Rs. 1 crore or above, notwithstanding the provisions of G.O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it was realised subsequently, that the financial commitment would go up to Rs. 46 crores if the 10 per cent principle is applied. It has been stated by the learned Advocate-General that the budget allocation in this behalf is only six crores. In the earliest counter of April, 1982 itself, the Government stated that during 1979-80, 124 industrial units in the State were granted a sum of Rs. 55 lakhs, that in 1980-81, a sum of Rs. 100 lakhs for 154 units was granted and that in 1981-82, a sum of Rs. 75 lakhs was granted for 85 units. It was stated that "having regard to meagre budget provision" made in the plan outlay approved by the Planning Commission for disbursement of IFST loan, the State had to limit the grant of IFST loan to Rs. 10 lakhs per unit. We may also state that it is not as if, the decision was taken without consideration of all the aspects of the matter. The expert committee, namely, the State Level Committee, which was constituted under G.O. Ms. No. 224, dated March 9, 1976 itself, had recommended on December 5, 1978 that the limitation of Rs. 10 lakhs per unit should be imposed. It is, therefore, not possible to characterise the limitation of Rs. 10 lakhs as being ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntation of the provisions in the said two G.Os. in respect of IFST loan either by payment of cash or by deferment to the two companies." In the last counter dated December 18, 1987, it is again stated by the Government that Bhadrachalam Paper Boards Ltd. had unilaterally withheld Rs. 77,92,877 of IFST loan and that "action is being pursued for recovering the sales tax difference from the company in excess of Rs. 10,00,000." In this context, we may also refer to G.O. Rt. No. 390 (Rev)(S) Dept. dated March 24, 1987 which reads as follows: "Government have examined the matter in detail. Recently an Ordinance (Andhra Pradesh Ordinance No.1 of 1987) was promulgated on February 9, 1987, fixing a limit under interest-free sales tax loan up to Rs. 10 lakhs only with retrospective effect. Government, therefore, direct that the orders in G.O. Ms. No. 482, Industries and Commerce, dated September 9, 1986, in respect of sales tax concession to M/s. Bhadrachalam Paper Boards Limited be implemented subject to the limit of Rs. 10 lakhs prescribed in Andhra Pradesh Interest-free Sales Tax Loan for Industries (Imposition of Ceiling) Ordinance, 1987 (A.P. Ordinance No. 1 of 1987)." So far as A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies for specified backward areas and if it feels that, in the interests of development of specified backward areas, in the State, such concessions are a necessity even in times of "financial stringency", the said policy of the State cannot be characterised as unreasonable or unrealistic. We, therefore, reject this contention also. In the result, we hold that the provisions of the Act in sections 2, 3 and in section 1(2) are reasonable and valid and are based on objective criteria and are not liable to be struck down either under article. 14 or article 19(1)(g) of the Constitution of India. The second plea of the petitioner in the additional affidavit is that in view of the principles of promissory estoppel laid down by the Supreme Court, the State must be directed to discharge its obligations arising out of the said promise. This contention cannot be accepted. It is now well-settled by several decisions of the Supreme Court that the principles of promissory estoppel laid down in Century Spinning Manufacturing Co. Ltd. v. Ulhasnagar Municipality Council AIR 1971 SC 1021, Motilal Padampat Sugar Mills v. State of Uttar Pradesh [1979] 44 STC 42 (SC); AIR 1979 SC 621, Jit Ram Shiv Kum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g with the first contention based on article 14 and article 19(1)(g) of the Constitution. We would, however, like to say again that it is not proper for us to express any opinion in regard to the inaction on the part of the State to recover the arrears of sales tax from these two companies inasmuch as these two companies are not parties to these writ petitions. We should not be understood as considering the right of these companies to withhold these sums of sales tax. But we are only referring to the factual aspects of the matter as reflected in the counter-affidavits filed by the State on December 3, 1987, December 13, 1987 and December 18, 1987. Those counter-affidavits make it clear that after the Act 20 of 1987 came into force, the said companies are not entitled to the IFST loan or concessional sales tax envisaged in G.O. Ms. Nos. 482 and 483, dated September 9, 1986 and that steps are being taken to recover the arrears which were unilaterally withheld by those companies. In fact, at the last date of hearing, the State has filed fifty pages of documents disclosing the steps taken by the concerned Commercial Tax Officers recently in February, 1988, to recover the arrears of sal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Ms. No. 224 was reduced to Rs. 10 lakhs, so far as IFST loan is concerned the sales tax incentive granted in G.O. Ms. No. 375, dated August 23, 1985, was not reduced. It is contended that Act 20 of 1987 offends the provisions of article 14 and article 19(1)(g) of the Constitution. We do not think that the petitioner has raised any new points which are not covered by W.P. No. 1861 of 1982. We may also add that the learned counsel for the petitioner did not address any separate arguments in this writ petition. For the reasons given while dealing with W.P. No. 1861 of 1982 this writ petition is dismissed, but in the circumstances, without costs. W.P. No. 17406 of 1987: This writ petition is preferred by Sri Ambuja Petro-chemicals Limited for the issue of a writ of mandamus declaring sections 2 and 3 of Act 20 of 1987 as ultra vires of the Constitution and for directing the respondents to consider the claim of the petitioner for grant of IFST loan or deferment in payment of sales tax as per G.O. Ms. No. 224, dated March 9, 1976. In the writ petition after referring to the provisions of G.O. Ms. No. 224, dated March 9, 1976, it is stated that the petitioner submitted an appl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion as to the actual facts. Though in the later G.O. it was stated that the earlier G.O. was superseded, inasmuch as the later G.O. was referable to backward areas covered by G.O. Ms. No. 224, it must be treated that G.O. 224 was primarily superseded so far as the backward areas covered by G.O. Ms. No. 375 were concerned. Alternatively, it has to be noted that though the G.O. No. 224 might have been superseded, by August 29, 1983, rights flowing from prior applications for IFST loans could be considered beyond August 29, 1983, provided they were relatable to the period January 1, 1976 to August 29, 1983 covered by the said G.O. It cannot, therefore, be taken for granted that once G.O. Ms. No. 375, dated August 23, 1985 was passed, the benefits granted in G.O. Ms. No. 224, dated March 9, 1976, stood superseded. In fact, if the said argument is to be accepted the petitioner cannot claim any benefits under G.O. Ms. No. 224. The earlier writ petition No. 12008 of 1985 filed by the petitioner in 1985 was for grant of benefits of this very G.O. and the petitioner succeeded in that writ petition on June 25, 1986. Even in the present writ petition, the petitioner is seeking the benefits of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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