TMI Blog2014 (6) TMI 829X X X X Extracts X X X X X X X X Extracts X X X X ..... s as OEMs to the auto manufacturers. The Government of Gujarat noticed that no major industry had been set up in the State during the recent past. As the respondent No.3, Tata Motors Limited is a leading vehicle manufacturing company and has extensive sales network through out the territory of India, the Government of Gujarat found that the investment by the respondent No.3, Tata Motors Limited would provide the State with opportunities for infrastructure development, growth of allied industries and development of the local economy, by providing employment opportunities for skilled and unskilled workers. This appears to be the main objective behind the issuance of the Resolution dated 1st January, 2009. Loan advanced in the instant case by the Government in favour of the respondent No.3 is with a view to encourage the establishment of the automobile industries in the State as a part of its industrialization policy and the establishment of the project in question has encouraged establishment of other industries like Ford India Private Limited and Maruti Suzuki India Limited. - The quantum of VAT and Central Sales Tax recovered is only a measure for determining the quantum of loan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation in the nature of a public interest litigation, the petitioner, a practicing Advocate in the District Court at Gandhinagar, has brought to our notice that the State Government has issued a Government Resolution dated 1st January, 2009, providing for a loan to be paid to the respondent No.3, equal to the gross value of the Value Added Tax (for short VAT ) and Central Sales Tax payable to the State Government, which tantamountly amounts to the refund of VAT. The petitioner has brought to our notice that such Resolution has been passed by the State Government only with a view to favour the respondent No.3, Tata Motors Limited. 2. The case made out by the petitioner in this petition may be summarized as under:- 2.1 The petitioner is a local resident of village Adalaj, situated at the outskirts of the city of Ahmedabad. The petitioner is a practicing Advocate in the District Court at Gandhinagar and is also a Member of the Syndicate of the Gujarat University. 2.2 It is his case that the State Government has, in violation and contravention of its policy decisions, been providing fiscal incentives to the Tata Motors Limited, in the form of a loan to the Tata Motors Limited ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Motors Limited has been misusing the same by showing the total sales of the Nano cars, to have been made to a wholly owned subsidiary company of the respondent No.3 in the State of Gujarat and after such sale being shown to the wholly owned subsidiary company, the cars are indirectly sold in the different parts of the country by such wholly owned subsidiary company. It is alleged that in such a manner, a larger amount of loan is being availed of from the State Government by showing fictitious sale in the State, which in fact, could not be said to be the true figures of the sale of the Nano cars all over the country. 3. In such circumstances referred to above, the petitioner has prayed for the following reliefs:- (A). Be pleased to admit and allow the present petition. (B). Be pleased to issue a writ of Mandamus or a writ in nature of Mandamus and/or any other appropriate writ/s, order/s, and/or direction/s and thereby quashing and setting aside Government Resolution dated 01/01/2009 at ANNEXURE-C and further be pleased to quash and set aside the agreement made between State Government and the respondent no. 3 pursuant to the impugned government resolution and further be p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its true spirit, in spite of the facts that other States were providing VAT incentives for the development of Industries. In the year 2008, the State Government has initiated to formulate the New Industrial Policy to attract investment in the State. It was recommended under the proposed new industrial policy to offer need based assistance to certain sectors under Mega and Innovative projects. Under the Mega Project scheme, the department has proposed to give assistance to the projects generating sizable employment and new technology adopted for the first time. To qualify for a Mega project, the minimum investment is Rs.1000 crore and employment generation to 2000 persons is proposed by the department. The Quantum of incentive and type of incentives are also not specifically proposed. It was proposed to give need based assistance to Mega project which have a spin off effect on the employment and industrial development in the State. The sectors of Mega projects proposed are as under:- 1. Auto and auto components 2. Ship building and ship repair 3. Semi conductor fabrication 4. Industries having a Nano technology application 5. Maintenance, repair and overhaul (MRO) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itioner has not succeeded in establishing that the decision taken by the Government in allotting the land to 2nd respondent has in any way violates any statutory provision or statutory rules or regulations. General allegation that if the lands are allotted, it will adversely affect the agriculture, power supply, etc. cannot be countenanced by a writ court. Petitioner has not succeeded in showing that the transaction entered into between the State Government and 2nd respondent is a malafide exercise of power. Under the circumstances, we find no reason to entertain this Public Interest Litigation, which is not in public interest and intended only for media attention and publicity. Consequently, Special Civil Application is dismissed. However, in the facts of the case, we are not awarding any costs. (3). SCA No. 15993 of 2008:- 6. Even so, having regard to the fact that the petitioners have been residing on the land in question for quite some time and that the petitioners children are studying in the primary school at Northkotpura which primary school is being run by the State Government and the Collector, Ahmedabad, we are inclined to direct the State authorities to continue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p Ltd. at Halol Thus, the intention of the Government, to give thrust to the MSMEs engineering industries, as envisaged while granting incentives, to Tata Motors Ltd. is fulfilled. The State would be automobile manufacturing hub in the nation, when all the above mentioned projects will be commissioned in future (i.e. within 2 to 3 years). Though Tata Nano Project, was a pioneer Mega Project, the State Government offered some less concessions, compared to the concessions already agreed to them at Singur. It is also pertinent to note that projects coming after Nano will get even less incentives, compared to TATA Nano Project. These companies were offered remission of VAT+ CST to the amount equal to the 100% of fixed capital investment made by the company or 15 years whichever is earlier. Tata Nano Project being the first large automobile project in the State, more incentives were offered compared to other Automobile projects. Automobile industries are non polluting industry. After the publication of white paper by GOI in 2000, the Government of India has published a report on Automotive Mission 2006-2016 for the development of Indian Automotive Industries. The Government of Ind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Gross Value Added Tax (VAT) plus central sales tax payable by the company to State Government. Thus, the scheme sanctioned to the Tata Motors Ltd. is almost similar to the earlier scheme of deferment introduced since 1980. There is Industrial Development in the State. The New Industrial Projects are continuously being set up in the State. Due to proactive administration and support provided by the State Government, 424 large scale projects having a cost of Plant and Machinery above Rs.10 Crore is set up in the State and these projects have made the investment of Rs.41257 Crore since January, 2009 i.e. after the coming of Nano project in Sanand. At the same time, the Government has also promoted the Micro, Small and Medium Enterprise (MSME) Industrial units. The year wise data are given as under:- Year No. of MSME units Investment (Rs. In Lacs) Employment 2006-07 4065 316236.40 75424 2007-08 12240 845126.59 191599 2008-09 16482 8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2011-12 4713 41671 153.44 2012-13 5614 42251 350.00 Thus, the State Government has taken due care of Micro, Small and Medium Industries of the State. Apart from the development of MSMEs sectors in the State, the large and medium industries have shown interest in and around the Nano Project. Before the establishment of Nano Project, there was a GIDC estate having an area of only 2 hectares since 1983 having 23 units and providing employment to approximate 70 persons. After the establishment of Nano Car Project and looking to the demand of the industries, the GIDC has planned another estate of 1997.37 hectares and allotted 488.95 hectares land to 423 industrial units. This will generate the employment for 58000 persons and investment of approximate Rs.7000 Crore is in pipe line (Annexure-R2). It is also pertinent to note that there is a spurt in economic activities in and around Sanand. At present 42 nationalized and private banks are working in Sanand block. Before the establishment of Nano Project, only 11 banks were functioning. (An ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and in the nation. That because of such policies of the State Government the industrialization in the State of Gujarat has achieved high rate of growth. That simultaneously the State has given equal importance to the agricultural growth. The State of Gujarat ranks amongst top States even in agricultural sector. That along with the establishment of a major industry, other medium and small scale industries also get a boost and fillip. That before 10 years there were hardly and significant industries in and around Sanand where Tata s Nano Plant is located. That with the entry of Nano Project the entire area has become an industrial hub. This has resulted in to providing employment to the youths of the area. It has resulted into providing rich dividends to the farmers who own the lands in surrounding areas. That with the entry of Tata s Nano Motor Car the industrial activities in the area has got the boost. In addition there to the infrastructure has developed. There is corresponding increase in service industries like hotel industries and other industries. Therefore, the incentive granted has the effect of giving return in manifold ways. Therefore, the allegations and avermen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in April, 2013 i.e. after more than 4 years from the dates of passing of the aforesaid resolution, and that too after the commencement of the commercial business activities by the respondent no. 3 in the State of Gujarat. Since no explanation is given by the petitioner in respect of such gross delay and laches, the petition is required to be dismissed. The respondent no. 1 has already announced its Industrial Policy 2009. The said policy is within public domain. In the said policy it is categorically stated that for financial benefits to the mega projects, like that of the respondent no. 3, the respondent no. 1 would decide the same on the merits of each case. Prior to 2009, when the Tata Nano Project of the respondent no. 3 was under consideration during the 2009 policy framing stage, the respondent no. 1 adopted the same process of deciding on the financial benefits to be extended to mega projects in the State of Gujarat by taking specific approvals of the cabinet on a case to case basis and enshrining the principles of industrial promotion assistance through appropriate Government Resolution, as is evident from the resolution dated 01/01/2009 annexed to the petition. Furth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt no. 3, as part of the objectives sought to be achieved by the respondent no. 1 under its policy, would not make the huge investment and development of the project in the State of Gujarat made/ done by the respondent no. 3, so called , as alleged or as sought to be alleged or in the manner alleged or at all. The allegation that the respondent no. 3 is misusing or abusing any of the conditions issued by the respondent no. 1 vide its resolution dated 01/01/2009 is baseless. The allegation that selling of the Nano Cars by the respondent no. 3 to its wholly owned subsidiary company is done with a view to misuse or abuse any of the conditions of the respondent no. 1 is false. In respect of all the Nano Cars manufactured by the respondent no. 3 at its Sanand plant in the State of Gujarat and sold by it to its wholly owned subsidiary, the respondent no. 3 makes proper and adequate payment of VAT to the State of Gujarat. The wholly owned subsidiary is not established, as sought to be made out by the petitioner, to fetch any larger amount of loan or by showcasing any fictitious sales figure as alleged or in the manner alleged or at all. That globally several automobile manufacturers h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estment amount could increase further as the investment period available to the respondent no. 3, for making the Phase I investment, is yet to get over. The respondent no. 3 has undertaken various Corporate Social Responsibility initiatives in the areas of health, education, employability and environment. The vision is to improve the quality of the life of people living in and around the aforesaid plant. In last three years the work has expanded to about 32 villages and certain works have also been taken up at the Taluka level of Sanand. The programs implemented include low cost sanitation, safe drinking water, eye checkup camps, skill building training for women, dairy development, solid waste management, water harvesting, alternative source of cooking, comprehensive health care, tree plantation, malnutrition prevention, primary teachers training, alternative school program for drop-out students, health awareness on malaria prevention/ HIV-AIDS amongst others. 6. Submissions on behalf of the petitioner: Mr. Yatin Oza, the learned Senior Advocate appearing for the petitioner vehemently submitted that the Government Resolution providing for a loan equal to the gross value ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch policies of the State Government, the industrialization in the State has achieved high rate of growth. Mr. Jani also submitted that with the Nano project, the entire area has become an industrial hub. The project has resulted in providing employment to the youths of the area. Mr. Jani submitted that all the allegations levelled by the petitioner against the Government are absolutely frivolous and vexatious. According to Mr. Jani, the State Government took the initiative with the object of not showing any undue favour or showering any advantage to a particular industrial group, but the same is with the object of providing overall growth to the industrial activities. Mr. Jani prays that there being no merit in this petition, the same deserves to be rejected with costs. 8. Submissions on behalf of the respondent No.3, Tata Motors Limited: Mr. Mihir Thakore, the learned Senior Advocate has vehemently opposed this petition submitting that the petition deserves to be rejected solely on the ground of delay and laches. Mr.Thakore submitted that the petitioner seeks to challenge the Resolution dated 1st January, 2009, issued by the State Government. He submitted that based o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the court would allow a litigation in public interest if it is found : (i) That the impugned action is violative of any of the rights enshrined in Part III of the Constitution of India or any other legal right and relief is sought for its enforcement; (ii) That the action complained of is palpably illegal or mala fide and affects the group of persons who are not in a position to protect their own interest on account of poverty, incapacity or ignorance; (iii) That the person or a group of persons were approaching the Court in public interest for redressal of public injury arising from the breach of public duty or from violation of some provision of the Constitutional law; (iv) That such person or group of persons is not a busy body or a meddlesome inter-loper and have not approached with mala fide intention of vindicating their personal vengeance or grievance; (v) That the process of public interest litigation was not being abused by politicians or other busy bodies for political or unrelated objective. Every default on the part of the State or Public Authority being not justiciable in such litigation; (vi) That the litigation initiated in public interest was suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en basis human rights are invaded or when there are complaints of such acts as shock the judicial conscience that the Courts, especially the Supreme court, should leave aside procedural shackles and hear such petitions and extend its jurisdiction under all available provisions for remedying the hardships and miseries of the needy, the underdog and the neglected. It is necessary to have some self-imposed restraint on Public Interest Litigants. 12. In a recent pronouncement of the Hon'ble Supreme Court in the case of State of Uttaranchal Vs. Balwant Singh Chaufal and Ors., reported in (2010) 3 SCC 402, in paragraphs 178, 179, 180 and 181, the Supreme Court laid down the following guidelines relating to Public Interest Litigation:- 178. We must abundantly make it clear that we are not discouraging the Public Interest Litigation in any manner, what we are trying to curb is its misuse and abuse. According to us, this is a very important branch and, in a large number of PIL petitions, significant directions have been given by the Courts for improving ecology and environment, and the directions helped in preservation of forests, wildlife, marine life etc. It is the bounden dut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Courts should also ensure that the petitions filed by busybodies for extraneous and ulterior motives must be discouraged by imposing exemplary costs or by adopting similar novel methods to curb frivolous petitions and the petitions filed for extraneous considerations. 13. In a very recent pronouncement of the Hon'ble Supreme Court in the case of P.Seshadri Vs. S.Mangati Gopal Reddy and Ors., reported in (2011) 5 SCC 484, has observed that :- Public Interest Litigation can only be entertained at the instance of bonafide litigants. It cannot be permitted to be used by unscrupulous litigants to disguise personal or individual grievances as Public Interest Litigations. The Supreme Court does not approve of an approach that would encourage petitions filed for achieving oblique motives on the basis of wild and reckless allegations made by individuals i.e. busybodies, having little or not interest in the proceedings. The credentials, the motive and the objective of the petitioner have to be apparently and patently aboveboard. Otherwise the petition is liable to be dismissed at threshold. 14. It appears from the materials on record that the Government of Gujarat has int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to increase the capacity of the Plant as mentioned above, from 2,50,000 Nano cars per annum or 3,50,000 Nano cars per annum as the case may be, to 5,00,000 Nano cars per annum ( TML Phase II Investment ) with an additional investment of about Rs.1100 Crore. The above investments would provide the State of Gujarat with opportunities for infrastructure development, growth of allied industries and development of the local economy, by creating employment opportunities for skilled and unskilled workers. 15. A bare perusal of the preamble would indicate the object and the intention behind passing of such resolution. The Government of Gujarat took notice of the fact that the auto sector in the States like Maharashtra, Tamil Nadu and at the outskirts of the State of Delhi has been doing very well over a period of time and all the three States have been dominating in the auto sector. On the other hand, the State of Gujarat has only one such project. Although the State of Gujarat has a strong engineering base and there are number of engineering units in the MSME sector, yet the same are engaged in the supply of auto components as OEMs to the auto manufacturers. The Government of Gujar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uirement of the Project in the range of 40-50 MVA. The project would require a separate 66/11 KV sub-station (having double circuit feeding). All above requirement will be made at the expense of TML which would constitute a part of the TML Phase I Investment. iv. It will include the expenditure made by TML towards water supply, i.e. water up to 14000 Cum/day up to a point, as mutually agreed to by GoG and TML, required for TML Phase I Project. v. The actual TML Phase I Investment shall be certified by a reputed chartered accountant firm which shall be mutually agreed upon by the GoG and TML. 4. Project Period: The project period to implement the Phase I Project will be five years from the date of allotment of the land to TML. 5. Procedure: i. The High Level Committee shall approve provisionally the Investment of Phase I Project on the basis of a Detailed Project Report (DPR) to be submitted by TML within three months from the date of issue of this Resolution. ii. For final eligibility certificate, TML shall submit the details of investment made in the Phase I Project duly certified by a statutory Auditor of the Company and a reputed chartered accountant firm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n/ Academy for Technical Education and aiding development of technical skill sets. The purpose of this Institution/ Academy would be to impart Technical Training primarily to local persons so as to enhance their Employability. iv. TML will undertake steps for the development of the general society in and around the project in a manner consistent with TML s existing corporate society responsibility practices. v. TML will establish a driving training school for the purposes of enhancing skill sets and employability of local persons on mutually acceptable terms that will be agreed to between GoG and TML. vi. The TML will provide extension services to Vendors for establishment of ancillary units for the supply of products in relation to the Project, and other service providers, and will ensure that its actions shall generate significant direct and indirect employment opportunities. vii. TML shall provide an appropriate subservient charge over its Project assets, in favour of the GoG in respect of the loan amounts disbursed under this GR. For the avoidance of doubt, this will not in any way restrict TML s right or ability to secure third party financing for the Project and c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bile industries in the State as a part of its industrialization policy and the establishment of the project in question has encouraged establishment of other industries like Ford India Private Limited and Maruti Suzuki India Limited. 21. The quantum of VAT and Central Sales Tax recovered is only a measure for determining the quantum of loan to be advanced. We have noticed that the maximum amount of loan, which can be advanced on an year to year basis is made dependent on the sales effected by the respondent No.3. The respondent No.1 State of Gujarat instead of giving a lump-sum loan, has made the entitlement of loan dependent upon the performance of the respondent No.3. 22. We are also not impressed by the submission of Mr. Oza that a huge amount of loan to the tune of approximately Rs. 9,000 crore would be granted by the Government in favour of the respondent No.3 as indicated in Clause 2.1 of the Resolution dated 1st January, 2009. It is true that the maximum amount of loan will be equal to 330% of the Phase-I investment by the respondent No.3. However, we have noticed that there is an additional condition that the loan amount shall be equal to the gross VAT and Central Sal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TML Distribution Company Limited was incorporated in March, 2008 as a wholly owned subsidiary with a view to look after the outbound logistic needs of the respondent No.3. It is evident that the said distribution and logistic company was established even before the impugned Resolution dated 1st January, 2009 was passed. The object, according to the respondent No.3 of establishing such a distribution company, is to improve the service levels in respect of logistics and distribution and reduction in chain costs in the longer run. It has been brought to our notice that not only the respondent No.3, but various other companies have also such distribution companies. 28. We are also not impressed by the submission of Mr. Oza that there is total absence of exchange of consideration during the sale of Nano cars from the respondent No.3 to the aforesaid distribution company. Our attention has been drawn to the fact that the sale of Nano cars from the respondent No.3 to the distribution company are supported by invoices and the necessary taxes in respect of the same are also paid. 29. Mr. Thakore, the learned Senior Advocate appearing for the respondent No.3 as well as Mr. P.K. Jani, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Special Leave Petition (C) No. 32507 of 2013, decided on 22nd November, 2013], the Supreme Court made the following observations in para 8 of its judgment, which are worth noting:- But we cannot lose sight of the fact that it is the Government which administers and runs the State, which is accountable to the people. State s welfare, progress, requirements and needs of the people are better answered by the State, also as to how the resources are to be utilized for achieving various objectives. If every decision taken by the State is tested by a microscopic and a suspicious eye, the administration will come to standstill and the decision makers will lose all their initiative and enthusiasm. At hindsight, it is easy to comment upon or criticize the action of the decision maker. Sometimes, decisions taken by the State or its administrative authorities may go wrong and sometimes it may achieve the desired results. Criticisms are always welcome in a Parliamentary democracy, but a decision taken in good faith, with good intentions, without any extraneous considerations, cannot belittled, even if that decision was ultimately proved to be wrong. 32. We shall now deal with the decisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n respect of refund of Sales-tax. However, the Supreme Court took the view that the promissory estoppel being an extension of principle of equity, the basic purpose of which is to promote justice founded on fairness and relieve a promisee of any injustice, perpetuated due to promotor's going back on its promise, is incapable of being enforced in a Court of law if the promise which furnishes the cause of action or the agreement, express or implied, giving rise to a binding contract is statutorily prohibited or is against public policy. 34. Thus, it appears that although the Supreme Court observed that the Government was bound by the principle of promissory estoppel, yet if the promise by the Government regarding an incentive was otherwise statutorily prohibited or was against the public policy, then the same would not be enforceable in the Court of law. 35. Mr. Oza seeks to rely on the following observation made by the Supreme Court in Amrit Banaspati Co.Ltd. (supra) which we quote as under:- 10. ...... .... What then was the nature of refund which was promised by the government? Was such promise contrary to law and against public policy? Could it be enforced in a court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r by non-payment. Such provisions in an Act or Notification or orders issued by Government are neither illegal nor against public policy. 12. But refund of tax is made in consequence of excess payment of it or its realisation illegally or contrary to the provisions of law. A provision or agreement to refund tax due or realised in accordance with law cannot be comprehended. No law can be made to refund tax to a manufacturer realised under a statute. It would be invalid and ultra vires. The Punjab Sales Tax Act provided for refund of sales tax and grant of exemption in circumstances specified in Sections 12 and 30 respectively. Neither empowered the Government to refund sales tax realised by a manufacturer on sales of its finished product. Refund could be allowed if tax paid was in excess of amount due. An agreement or even a notification or order permitting refund of sales tax which was due shall be contrary to the statute. To illustrate it the appellant claimed refund of sales tax paid by it to the State Government on sale made by it of its finished products. But the tax paid is not an amount spent by the appellant but realised on sale by it. What is deposited under this head is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion should not be confused with refund of tax. The amount in the present case paid by the Government to the respondent No.3 is a loan and not refund of tax. There is a fine distinction between the two. We have discussed this aspect at length in our earlier part of the judgment and we need not reiterate the same. 38. Thus, to our mind, the decision of the Supreme Court referred to above does not help the petitioner in any manner in making good his case that the impugned Resolution of the Government amounts to refund of tax, which is impermissible in law and contrary to the provisions of the Constitution of India. 39. In the overall view of the matter, we are not at all convinced with the issue raised by the petitioner in public interest and that too after a period of almost four years from the date of passing of such Resolution. It has been brought to our notice that pursuant to the Resolution dated 1st January, 2009, passed by the State Government, the respondent No.3 has already set up a plant to manufacture 2,50,000 cars on two shifts basis and 3,50,000 cars on three shifts basis at Sanand. The plant was successfully commissioned in Gujarat and Tata Nano cars rolled out of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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