TMI Blog2010 (8) TMI 825X X X X Extracts X X X X X X X X Extracts X X X X ..... t the case of the State-respondents that the representation was made outside the authority or power of its officials to make. Under the circumstances, I have no alternative but to hold that the State-respondents are barred by the doctrine of promissory estoppel from issuing the impugned notification, which, ex facie, is bad in law. The petitioner has, therefore, made out a clear case for the application of the doctrine of promissory estoppel to the facts of this case warranting the interference of this court. Resultantly, this writ petition succeeds. The impugned notification dated September 5, 2005 (annexure G), the assessment order dated February 15, 2007 (annexure E) and the notice of demand dated February 20, 2007 (annexure F) emanating therefrom cannot stand and are hereby quashed. Let a writ of mandamus issue forbearing the State-respondents from recovering a sum of ₹ 98,085 from the petitioner in terms of the impugned demand notice. - W.P. (C) Nos. 111,113(SH) of 2007 - - - Dated:- 13-8-2010 - VAIPHEI T. , J. T. VAIPHEI J. A batch of two writ petitions has been filed by two petitioners questioning the legality of the notification dated September 15, 2005 is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a, in furtherance of this promise/declaration, in exercise of the powers conferred by subsection (1) of section 3(b) of the Meghalaya Sales Tax Act and sub-section (1) of section 3(b) of the Meghalaya Finance (Sales Tax) Act and under section 8(5) of the Central Sales Tax Act, 1956, issued the notification dated April 12, 2001 notifying the Meghalaya Industries (Sales Tax Exemption) Scheme 2001 ( the Scheme , for short). Under the Scheme, it was provided that all eligible units, would be entitled to sales tax exemption, on sales of finished products manufactured by such eligible units within the State of Meghalaya and in the course of inter-State trade and commerce in conformity with the provisions of the Industrial Policy. The Scheme defined the criteria of eligibility for availing of the benefits. Clause 3(1) of the Scheme defines any unit to mean industrial or tourism unit which had taken all initial effective steps on or after August 15, 1997. Clause 2(3)(i) of the scheme defines initial effective steps as follows: Units would be deemed to have completed initial effective steps if all of the following have been achieved: (a) Effective possession of land. (b) Registra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Taxes with the prior approval of the Taxation Department in respect of sale of goods manufactured by such units in the course of inter-State trading during the period subject to the condition that such sale to any person outside the State of Meghalaya is supported by proper documents of sale. This notification came into force with effect from August 12, 1997. This notification, it may be noted, is a part of the Meghalaya Industries (Sales Tax Exemption) Scheme, 2001, which was issued in conformity with the said Industrial Policy. It is the case of the petitioner that, encouraged by and acting upon the aforesaid promise made in the said Industrial Policy and the Scheme issued thereunder, it set up a plant for production of bitumen emulsion and allied modified bituminous products at 9th Mile, Baridua, Byrnihat, Ri-bhoi District, Meghalaya. For this purpose, the petitioner claimed to have undertaken the following activities: (a) For the purpose of setting up its industry it acquired a plot of land measuring 6926.90 sq. mtrs. at 9th Mile, Baridua, Byrnihat, Ri-Bhoi District. After taking effective possession of this plot it had set up its industry. (b) It thereafter registe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 268.71 It is the further case of the petitioner that respondent No. 4 had issued the eligibility certificate under the Meghalaya Industrial Policy, 1997, in which it was stated that the petitioner-company was eligible for acquiring the incentives as per the new Industrial Policy which came into effect from August 15, 1997 and that the date of commercial production of the unit of the petitioner-company was March 25, 2005. The petitioner was also granted a certificate of authorization by the assessing officer in accordance with the Meghalaya Industrial (Sales Tax Exemption) Scheme, 2001, only after passing the assessment order for that particular period. The assessing officer (respondent No. 5) by assessment order dated February 15, 2007 assessed the turnover aggregate of the sale price in respect of the sale of goods in course of inter-State trade or commerce for the period from September 5, 2005 to September 30, 2005 at Rs. 24,52,116 and accordingly determined the tax payable at Rs. 98,085. However, for the period from April 1, 2005 to September 4, 2005, the tax payable for the same was assessed as nil. Following the assessment order dated February 15, 2007, res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to registered dealers and the Government and as such, the sales tax exemption for a period of seven years from the date of commercial production enjoyed by the petitioner cannot be set at naught by the impugned notification and that the impugned notification, in so far as it is repugnant to the Industrial Policy, 1997, and the Meghalaya Industries (Sales Tax Exemption) Scheme, 2001, is bad to that extent and as such, the same is liable to be quashed. The petitioner further contends that on the promise held out by the State respondents in their Industrial Policy, 1997, it had altered its position by incurring huge expenditures and as such the respondent-authorities are bound in law and in equity to fulfil its promises. Consequently, so submits the petitioner, the impugned assessment order as well as the demand notice, which are issued pursuant to the impugned notification cannot stand independently and are liable to be quashed. The writ petition is opposed by the State respondents. In their affidavitin-opposition, it is stated by them that the writ petition is not maintainable on the ground that the policy decision of the Government or the wisdom of the economic policy of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th good intention under the Industrial Policy, 1997 regrettably failed due to the amendment of section 8(5) of the Central Sales Tax Act, in the year 2002, by the Parliament of India and that levying of sales tax on sales of goods in course of inter-State trade or commerce made by dealers is the subject-matter and power of the Central Government under the List I of the Seventh Schedule to the Constitution: Parliament has the exclusive powers to make laws with respect to any matters enumerated in List I also referred to as the Union List and as such, the Meghalaya Industrial Policy, 1997, as well as the Meghalaya Industries (Sales Tax Exemption) Scheme, 2001, cannot go beyond the Central Sales Tax Act, 1956, as amended on 2002 by the Parliament. Taking into consideration of the amended section of the Central Sales Tax Act, 1956, the State Government was changing its policy decision. The impugned notification, the impugned assessment order and also the impugned notice of demand, therefore, do not suffer from any illegality and obviously do not call for any interference of this court. Dr. A.K. Saraf, the learned senior counsel for the petitioner, submits that the impugned notific ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... State of U.P. [1979] 44 STC 42 (SC); [1979] 2 SCC 409, (d) Manjushree Extrusions Limited v. State of Assam [2001] 123 STC 366 (Gauhati); [2004] 2 GLR 218 and (e) Union of India v. Shree Ganapati Rolling Mills Pvt. Ltd. [2006] 4 GLT 1. Mr. S.P. Mahanta, the learned Additional Advocate-General appearing for the State-respondents, strenuously defends the impugned notification and contends that the same has been issued in accordance with and consequent upon the amendment of section 8(5) of the Central Sales Tax Act, 1956 by the Parliament and the State-respondents have no alternative but to follow and implement the Central legislation. It is also his submission that the doctrine of promissory estoppel cannot be pressed into service in this case when the notification dated April 12, 2001 has fallen foul of a statutory provision, namely, the newly amended section 8(5) of the Central Sales Tax Act, 1956: the law is now well-settled that the doctrine cannot be pressed into aid to compel the Government to carry out a representation or promise which is contrary to law or which was outside the authority or power of the officer of the Government or of the public authority. He maintains that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of finished products manufactured by such eligible units within the State of Meghalaya and in the course of inter-State trade or commerce in conformity with the provisions of the Industrial Policy of Meghalaya, 1997. Thereafter, the State Government issued the notification dated April 12, 2001, which is in the following terms: No. ERTS(T)64/98/88. In exercise of the powers conferred by sub-section (5) of section 8 of the Central Sales Tax Act, 1956, the Governor of Meghalaya, being satisfied that it is necessary to do so in the public interest, is pleased to direct that no tax under this Act shall be payable by any eligible industrial unit, to whom an exemption certificate in the form of certificate of authorization has been granted by the Commissioner of Taxes with the prior approval of the taxation Department, in respect of sale of goods manufactured by such unit in the course of inter-State trade or commerce during the period of validity of the certificate of authorization, subject to the condition that such sale to any person outside the State of Meghalaya is supported by proper documents of Sale. This shall be deemed to have come into force with effect from August 12, 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the notification, which are made, in the course of inter-State trade or commerce, to a registered dealer by any dealer having his place of business in the State or by any class of such dealers as may be specified in the notification, to any person or such class of persons as may be specified in the notification, no tax under this Act shall be payable or the tax on such sales shall be calculated at such lower rates than those specified in sub-section (1) as may be mentioned in the notification. It may also be profitable to refer to the provisions of section 8(5) of the Central Sales Tax Act, 1956 prior to its amendment in 2002, which are in the following terms: 5. Notwithstanding anything contained in this section, the State Government may, if it is satisfied that it is necessary so to do in the public interest, by notification in the Official Gazette, and subject to such conditions as may be specified therein, direct, (a) that no tax under this Act shall be payable by any dealer having his place of business in the State in respect of the sales by him, in the course of inter-State trade or commerce, from any such place of business of any such goods or classes of goods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant the sales tax exemption irrespective of whether the sale of goods by the dealer in the course of inter-State trade or commerce was upon a registered dealer or not. A closer scrutiny of the Central Sales Tax Act, 1956 as amended in 2002 will reveal that the amendment came into force only with effect from May 11, 2002 and cannot, therefore, have any retrospective effect. The Union Parliament and the State Legislatures, undoubtedly, have plenary powers of legislation within the fields assigned to them and subject to certain constitutional and judicially recognized restrictions can legislate prospectively as well as retrospectively. It is a cardinal principle of construction that every statute is prima facie prospective in operation unless it is expressly or by necessary implication made to have retrospective effect. This rule in general is applicable where the object of the statute is to affect vested rights or to impose new burdens or to impair existing obligations. Unless there are words in the statute sufficient to show the intention of Legislature to affect the existing rights, it is deemed to be prospective only 'nova constitutio futuris formam imponere debet non praeter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y or power of the officer of the Government or of the public authority to make'. There is preponderance of judicial opinion that to invoke the doctrine of promissory estoppel clear, sound and positive foundation must be laid in the petition itself by the party invoking the doctrine and that bald expression, without any supporting material, to the effect that the doctrine is attracted because the party invoking the doctrine has altered its position relying on the assurance of the Government would not be sufficient to press into aid the doctrine. In our opinion, the doctrine of promissory estoppel cannot be invoked in the abstract and the courts are bound to consider all aspects including the result sought to be achieved and the public good at large, because while considering the applicability of the doctrine, the courts have to do equity and the fundamental principles of equity must forever be present to the mind of the court, while considering the applicability of the doctrine. The doctrine must yield when the equity so demands if it can be shown having regard to the facts and circumstances of the case that it would be inequitable to hold the Government or the public authority ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the doctrine of promissory estoppel from issuing the impugned notification, which, ex facie, is bad in law. The petitioner has, therefore, made out a clear case for the application of the doctrine of promissory estoppel to the facts of this case warranting the interference of this court. Resultantly, this writ petition succeeds. The impugned notification dated September 5, 2005 (annexure G), the assessment order dated February 15, 2007 (annexure E) and the notice of demand dated February 20, 2007 (annexure F) emanating therefrom cannot stand and are hereby quashed. Let a writ of mandamus issue forbearing the State-respondents from recovering a sum of Rs. 98,085 from the petitioner in terms of the impugned demand notice. However, on the facts and circumstances of this case, the parties are directed to bear their respective costs. W.P. (C) No. 111(SH) of 2007 Coming now to the facts in W.P. (C) No. 111 (SH) of 2007, the petitioner-company, also encouraged by and acting upon the representation/ assurance/promise held out by the State-respondents in the Industrial Policy, 1997 decided to set up a plant for production of colour coated cold forming corrugated sheet, galvaniz ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. Plant and machinery and utility installation 75.20 93.76 4. Miscellaneous fixed assets 1.06 10.76 5. Preliminary and preoperative expenses 1.57 1.39 6. Margin money for working capital 52.47 85.96 Total 146.82 221.94 The petitioner started its commercial production on December 12, 2004. It is thus contended by the petitioner that the State-respondents, contrary to the promise held out by them, issued the impugned notification dated September 5, 2005 withdrawing/setting at naught the tax exemption in respect of sale of goods made by it in the course of inter-State trade or commerce. Following the impugned notification, respondent No. 5 passed the assessment order dated February 15, 2007 assessing the turnover aggregate of the sale price in respect of goods sold in the course of interState trade or commerce for the period from Septemb ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
