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Rajasthan High Court · body

1993 DIGILAW 25 (RAJ)

Lokendra Industries v. State (12)

1993-01-12

M.R.CALLA, N.C.KOCHHAR

body1993
Honble CALLA, J.—All these writ petitions are directed against the impugned notification dated 7/5/1990 issued by the Government of Rajasthan in exercise of the powers conferred by Sub-section (v) of Sec. 8 of the Central Sales Tax Act, 1956 (Central Act No. 74 of 1956) amending the earlier notification dated 6/7/1989, whereby the petitioners have been rendered ineligible for Sales Tax Incentives and, therefore, the petitioners have also prayed for quashing of the consequential orders and have sought a direction against the respondents to give benefit of Sales Tax Incentive Schemes of 1987 and 1989 and that they may be held entitled for the benefit of the incentive scheme. (2) All these writ petitions involve a common grievance in identical circumstances and are essentially directed against the impugned notification dated 7/5/1990, referred to hereinabove. We, therefore, propose to decide all these seven writ petitions by this common judgment and order. (3) In exercise of the powers conferred by Sub-section (v) of Sec. 8 of the Central Sales Tax Act, 1956, the Government of Rajasthan having been satisfied that it was expedient in the public interest to frame and notify the Sales Tax Incentive Scheme for Industries 1987 and exempt the industrial units from payment of tax on sales made in the course of inter-State trade and commerce of the goods manufactured by them within the State, notified such Sales Tax Incentive Scheme vide notification dated 23/5/1987, which was to come into operation with effect from 5/3/1987 and to remain in force upto 31/3/1992. On 6/7/1989, again a notification was issued in exercise of the powers conferred by sub-section (2) of Sec. 4 of the Rajasthan Sales Tax Act, 1954, whereby the Government notified "Sales Tax New Incentive Scheme for Industries, 1989" and exempted the industrial units from payment of tax on sales of goods manufactured by them within the State in the manner and to the extent for the period as exempted by this notification. The operation of this New Incentive Scheme was deemed to have come into force with effect from 5/3/1987 and was to remain in force upto 31/3/1992. The operation of this New Incentive Scheme was deemed to have come into force with effect from 5/3/1987 and was to remain in force upto 31/3/1992. The relevant provisions under the Scheme are as under: — "New Industrial Unit" means an industrial unit which commences commercial production during the operative period of the New Incentive Scheme but will not include: (i) an industrial unit established by transferring or shifting or dismantling an existing industry; and (ii) an industrial unit established on the site of an existing unit manufacturing similar goods. "Eligible Area" means area mentioned in Annexure/8 of this notification and in Annexure/A at item No. 7 in category No. 2, Bharatpur is included. "Banned Area" means the areas as under: (i) The Urban Agglomeration Limits of Jaipur and Kota, and (ii) Municipal Limits/UIT limits of all towns: Provided that industrial units located in the industrial areas developed/financed by the State Government or its Corporation will be eligible for incentive as admissible to the category of districts, in which the particular area is situated: Provided further that the locational restrictions shall not apply to sick units as defined in clause 2 (b). "Eligible Industries" means industrial State in Annexure/8 to this notification will not eligible in Sales Tax Scheme." (4) Annexure B is the list of industries, which were not eligible for sales tax incentive scheme. Under the New Incentive Scheme 20 categories of industries were enlisted in this list under Annexure B and, it has been submitted on behalf of the petitioners that the incentive schemes were intended to give protection to the specified categories of industries by giving them tax concession so that they may be in a better position to compete in the market and with the view that more industries may be set up. The above schemes were widely published and notified so that more and more persons may set up new industries. It has been submitted that the petitioners believing upon the promise held out in these incentive schemes for Sales Tax exemption, started to set up new oil industries. The above schemes were widely published and notified so that more and more persons may set up new industries. It has been submitted that the petitioners believing upon the promise held out in these incentive schemes for Sales Tax exemption, started to set up new oil industries. (5) The case of M/s. Lokendra Industries (DBCW No. 2562/1990) is that the industrial plot was purchased in the year 1983 and a sale agreement was also executed, but due to financial problems and other problems, it could not utilise and start the industry after publication of the notification of the aforesaid scheme and the petitioner with a view to take advantage from the same, again applied to the RIICO for renewal in the year 1987. The renewal was granted on 21/11/1989. The petitioner deposited the penalty, development and other charges in respect of the plot in question. The petitioner installed its industry and was ready in April, 1990, but in want of electric connection, production could not start. The petitioner deposited a sum of Rs. 1,02,283.65 with RIICO and invested Rs. 3,97,459.53 in the construction of building and for running oil industry and also invested a sum of Rs. 10,29,981.16 for machines and, thus, invested a total sum nearly Rs. 16 lacs in completing the works and setting up of plant by the end of April, 1990. However, for non-availability of electric connection production could not be started and the same was started from 11/6/1990. The petitioner then approached the respondents for granting exemption in the incentive scheme and, it was conveyed to the petitioner by the non-petitioners that the oil industries have been withdrawn from the exemption and the oil industries are not exempted under the New Sales Tax Incentive Scheme. The petitioner came to know that a notification dated 7/5/1990 by way of amendment in the scheme i.e. Incentive Scheme for Industries 1989 had been issued and after existing Entry No. 20 two entries were added as Entry No.21 and 22 in the list of industries which were not eligible for Sales Tax Incentive under Annexure/B, referred to hereinabove. The newly, added industries at No. 21 and 22 are as under: — 21. Oil extracting or manufacturing industry. 22. Cotton ginning industry. (6) The same amendment was also made in the Sales-Tax Incentive Scheme for 1987. The newly, added industries at No. 21 and 22 are as under: — 21. Oil extracting or manufacturing industry. 22. Cotton ginning industry. (6) The same amendment was also made in the Sales-Tax Incentive Scheme for 1987. The text of this notification dated 7/5/1990, is reproduced as under: — Notification Jaipur 7/5/1990 In exercise of the powers conferred by sub-section (5) of Section 8 of the Central Sales Tax Act, 1956 (Central Act No. 74 of 1956), the State Government being satisfied that it is expedient in the public interest so to do, hereby makes the following amendment in this department Notification No. F. 4 (35) FD/Gr. 1V/87, dated July 6, 1989 (as amended from time to time) namely: AMENDMENT In annexure B of the Sales Tax Incentive Scheme for Industries, 1989 list of industries not eligible for sales tax incentives after existing Entry No. 20 the following shall be added : "21 Oil Extracting or manufacturing Industry. 22. Cotton Ginning Industry." (7) On behalf of respondents No. 1 to 3 reply has been filed, wherein the issue of the notification of the Sales Tax Incentive Scheme for Industries 1987 and 1989 operative from 5/3/1987 has not been disputed, but the other averments regarding investing and setting up of the plant by the end of April 1990 and the starting of production from 11/6/1990, have not been admitted for want of knowledge and, it has been pleaded that the petitioner may be put to struck proof of the same. It has been submitted that the petitioner had submitted an application under the Sales Tax Incentive Scheme on 29.08.1990, whereas the oil extracting industries were declared to be not eligible for sales tax incentive scheme on 7/5/1990 and the petitioner, thus, ceases to be entitled for the benefit of the Sales Tax Incentive Scheme. (8) In Aditya Oil Mills (D B CW No. 5189/1990) similar averments regarding the publication and notification of the Incentive Scheme for Sales Tax Exemption have been made, and it has been stated that the petitioner was allotted industrial plot in old industrial area, Bharatpur and lease agreement was granted on 29/9/1989 by RIICO. The petitioner deposited the development charges, lease money and other amounts and invested heavy amount on the construction of building for running industries for a sum of Rs. The petitioner deposited the development charges, lease money and other amounts and invested heavy amount on the construction of building for running industries for a sum of Rs. 8,09,761/- on the machines installed for running the oil industries and in all a sum of nearly Rs. 15 lacs was invested. The petitioner completed all the works and set up the plant in the month of March, 1990: but on account of non-availability of electric connection, the industry could not be started prior to 1/5/1990, when it was so started by generator and the electric connection was granted to the petitioner on 15/5/1990 and since then the petitioner is running an oil industry. Thereafter he applied for the grant of exemption from sales tax under the aforesaid incentive scheme. (9) Reply has been filed on behalf of respondents No. 1 to 3 on more or less the same lines as mentioned above, in the case of M/s. Lokendra Industries. The averments regarding the lease agreement dated 29/8/1989 has been denied and, it has been further submitted that the petitioner did not approach respondents No.1 to 3 for grant of eligibility certificate and that there is no material placed on record by the petitioner to show that he had approached respondent No.2 for grant of such eligibility certificate. It has been submitted that the petitioner neither applied under the Sales Tax Incentive Scheme for Industries 1987, nor has he applied under the Sales Tax New Incentive Scheme for Industries, 1989 and, therefore, the petitioner has no legal right to approach this Court under Art. 226 of the Constitution of India. The factual averments made in para 5 of the writ petition that the industry was started on 1/5/1990 by the generator and electric connection was granted to the petitioner on 15/5/1990 have not been denied. (10) In M/s. Jagdamba Industries (DBCW No. 3680/1990) after narrating the facts about the publication of notification of the Sales Tax Incentive Scheme, 1987 and 1989, it has been stated by the petitioner that the petitioner had deposited the development charges of the land and the lease money and other amount with RIICO and had invested Rs. 9.26 lacs on the machines etc. and had completed all the works and set up plant and started production with effect from 2/2/1990. 9.26 lacs on the machines etc. and had completed all the works and set up plant and started production with effect from 2/2/1990. After starting the production, the petitioner on 23/7/1990 moved an application in the prescribed form seeking exemption under the aforesaid incentive scheme before the CTO as per the application Annexure/3, but the CTO refused to accept the application on the ground that the industry is no more exempted under the new Sales Tax Incentive Scheme in terms of the impugned notification dated 7/5/1990. The petitioners application was rejected on 22/1/1991 by the District Level Committee vide Annexure/5. (11) In the reply filed on behalf of respondents No. 1 to 3, while narrating the factual averments with regard to the allotment of the plot have not been admitted in want of particulars regarding obtaining of industrial plot and the provisional registration of the petitioner firm and obtaining Sales Tax number under Certificate dated 23/6/1989 has not been disputed. The factual averment made in para 9 that production was started on 23/7/1990 has not been denied and it has been stated that the District Level Committee considered the petitioners case on 3/1/1991 in its meeting held on 3.1.1991 and in view of the notification dated 7/5/1990, rejected the petitioners application. (12) In Rajasthan Roller Flour Mills Ltd. vs. State of Rajasthan & Ors. (DBCW No. 6331/1991), it has been stated that the petitioners industrial unit was registered provisionally by the Director of Industries vide letter dated 12.12.1989 and immediately thereafter the construction of the factory was started, substantial investment was made and that order had been placed for purchase of machinery and substantial amount had also been given in advance. It has been stated in para 8 that the petitioner had established a new unit and had taken steps from 1987 for establishment of the unit for manufacturing oil on the promises of the Government of Rajasthan and a reference has been made to the notification Annex.4 dated 26/7/1991, whereby it was provided further that the oil extracting or manufacturing industries, whether new or going for expansion or diversification shall be entitled to claim exemption from tax as provided in Clause 4 of this notification. The contents of this notification dated 26/7/1991, Annex. 4 of this writ petition, are reproduced as under: — NOTIFICATION Jaipur, dated the 26.07.1991. The contents of this notification dated 26/7/1991, Annex. 4 of this writ petition, are reproduced as under: — NOTIFICATION Jaipur, dated the 26.07.1991. In exercise of the powers conferred by sub-section (5) of Section 8 of the. Central Sales Tax Act, 1956 (Central Act No. 74 of 1956) the State Government being of the opinion that it is expedient in the public interest so to do, hereby makes the following amendments in this Department Notification No. F.4 (35) FD/Gr. IV/87-89, dated July 6, 1989 as amended from time to time, namely: AMENDMENT In the said notification: 1. After the existing proviso to sub-clause (j) of Clause 2, the following new proviso shall be inserted, namely: — "Provided further that oil extracting or manufacturing industry, whether new or going for expansion or diversification, shall be entitled to claim exemption from tax as provided in Clause 4 of this notification." 2. After the existing proviso to sub-clause (a) of Clause 4, the following new proviso shall be inserted, namely: "Provided further that oil extracting or manufacturing industry, shall be entitled to claim exemption from tax to the extent of 75% of their tax liability in case new industries and to the extent of 60% of their tax liability in case of industries going for expansion or diversification, with all conditions and restriction, with all conditions and restrictions as mentioned in Annexure "C" to this notification". (13) The petitioner approached the District Level Committee for submitting an application for grant of eligibility certificate but the said application was refused, rather it was not entertained in terms of the notification dated 7/5/1990 and thereafter issued notification Annexure/4. The petitioner again applied for grant of eligibility certificate on 4/5/1991. It has been submitted that the petitioner invested a sum of nearly Rs. 50 lacs upto 31.3.1991 for the purpose of land, building and machinery and has started production on the basis of the promises of respondents for exemption from sales tax. It has been further submitted that according to the notification dated 26/7/1991 the exemption for eligibility certificate has been given only under the Central Sales Tax Act. In this case no return has been filed. It has been further submitted that according to the notification dated 26/7/1991 the exemption for eligibility certificate has been given only under the Central Sales Tax Act. In this case no return has been filed. (14) In Gopal Oil Mills (DBCW No. 2519/1992) after narration of facts with regard to the publication and notification of the incentive scheme, it has been stated that the petitioner had obtained an industrial plot in Brij Industrial Area, Bharatpur and the agreement in this regard was executed on 1/6/1988. The petitioner deposited the development charges of the land, lease money and other amount to the RIICO, and the petitioner paid Rs. 98,100/ as development charges, Rs. 2500/- as security money as charges of rent and incurred Rs. 13,000/-in registration of the lease deed. The petitioner also incurred heavy amount in construction and erection of the plant, for building construction had incurred a sum of Rs. 6,98,821.91 and incurred Rs. 13,43,977.67 in plant and machinery and, thus, incurred a total sum of Rs. 22/ lacs. It had placed orders for installation of plant and machinery on 30/3/1990; had placed orders to Essen Engineers and Techmece Engineers on 9/4/1990 etc. had applied for electric connection on 28.07.1989. Demand notice was issued on 20/1/1990. The entire amount was deposited by the petitioner on 19/2/1990. Electric connection was released to the petitioner on 30/1/1991 and the petitioner started its factory and oil production was started on 8/2/1991 and commercial production was started on 25/2/1991. The petitioner then moved the non-petitioner and ultimately sent the application on 29/7/1991 for sanction of eligibility certificate under the Sales Tax Incentive Scheme, 1987. The application was rejected on the ground that oil industry had been excluded from the eligibility under the Scheme from 7/5/1990 and, it was stated in the letter dated 17/9/1991 that the petitioner may apply for getting CST Exemption under the notification dated 26/7/1991 upto 75%. The petitioner applied for the same as directed by the non-petitioner through his application on 23/1/1991, Annexure/12. Non-petitioner further directed the petitioner to file all documents along with four copies, the petitioner did submit the same, but the non-petitioners have not passed any order and exemption certificate has not been granted. The petitioner applied for the same as directed by the non-petitioner through his application on 23/1/1991, Annexure/12. Non-petitioner further directed the petitioner to file all documents along with four copies, the petitioner did submit the same, but the non-petitioners have not passed any order and exemption certificate has not been granted. In these circumstances, the petitioner approached this Court and in the prayer, apart from the reliefs claimed against the notification dated 7/5/1990 and its consequence, the order dated 17/9/1991, Annexure/10 has also been sought to be quashed and set aside. (15) In Kalibond Oil Mills (DBCW No. 4809/1992) after narration of its own history and the facts relating to the publication and notification regarding the incentive schemes, it has been stated that it obtained a loan to the tune of Rs. 25 lacs, which was sanctioned by the SBBJ, Behror on 29/4/1989 and was received by the petitioner on 6/5/1989; that the petitioner had applied for electric connection on 8/5/1989 and on 4/11/1989, and a certificate of CA under which the fixed assets of the company existing on 7/5/1990 have been certified, has also been placed on record on Annexure/9. The Auditors report dated 29/8/1990 specified the balance-sheet upto 31/3/1990 has also placed on record as Annexure/10. It has been submitted that after completing the construction and installation of the plant, the petitioner moved, in the prescribed form under the Sales Tax Incentive Scheme for Industries 1987 on 2/5/1991 stating therein that commercial production was started from 2/4/1991. This request has been turned down on the ground that the production of the Company was started between the period of 7/5/1990 to 26/7/1991 and, as such, the company was not entitled for the benefits under the Incentive Scheme of 1987 and 1989 and the District Level Committee had rejected the petitioners application in its meeting held on 23/12/1991, as per the order Annexure/13. In this case also, no return has been filed on behalf of the respondents. In this case also, no return has been filed on behalf of the respondents. (16) In M/s. Bindal Oil Mills Pvt. Ltd. (DBCW No. 4986/1992), also, after narrating the history of this industrial unit and the narration of the notification and publication of the incentive scheme, it has been stated that substantial investments were made on construction and purchase of machinery; the provisional registration was given to this company by the Sales Tax Department with effect from 1/4/1990 and it has been extended from time to time; had moved the District Level Committee for grant of sales tax exemption mentioned therein that the oil production was started on 6/12/1990 and the commercial production was started thereafter from 4/1/1991. The established turn over as stated in the application for the purpose of RST and CST is 0.5 crore and 1.0 crore respectively. The petitioner then received the letter dated 11/9/1991 from the office of the District Industries officer requiring certain documents which were submitted by the petitioner. The petitioner received another letter dated 21/1/1991 from respondent No. 2 wherein it has been conveyed that in the meeting dated 23.12.1991 the company was not found to be eligible for exemption of sales tax and the application has been rejected as per Annexure/5. The petitioner moved an application on 13/2/1992 and the respondent vide order dated 15/2/1992 has rejected the same mentioning therein that the company was not eligible for exemption under the Sales Tax Incentive Scheme in terms of Annexures 6,7 and 8 filed along with this writ petition. Apart from other prayers, order dated 21.1.1992 (Annex. 5) and order dated 15/2/1992 (Annexure 6) have also beep sought to be quashed and set aside. In this case, also, no return has been filed. (17) The cases in which the reply has not been filed have been sought to be argued on behalf of the respondents on the basis of the pleadings in the cases in which the replies have been filed on the ground that all these cases are of identical nature. In this case, also, no return has been filed. (17) The cases in which the reply has not been filed have been sought to be argued on behalf of the respondents on the basis of the pleadings in the cases in which the replies have been filed on the ground that all these cases are of identical nature. (18) It has been submitted on behalf of the petitioners that on account of the schemes notified in 1987 and 1989 they had invested heavy sums running into lacs of Rupees motivated by the incentive of the exemption and had installed the industries and in certain cases even the commercial production was started prior to 7/5/1990 and in certain cases the industries had been established but the production could not be started before 7/5/1990 for want of electric connection or the reasons akin in nature. The case of the petitioners is that they had thus acted to their prejudice on the representation of the respondents though the scheme was notified in 1987 and 1989, which was operative upto 31/3/1992 and, in these circumstances the respondents were estopped by the principle of equitable and promissory estoppel under Sec. 115 of the Indian Evidence Act from denying the benefit of the schemes which had been notified in 1987 and 1989 which were to remain in force upto 31/3/1992. The argument advanced on behalf of the respondents is that it was within the powers of the Government to have issued the notification dated 7/5/1990 in exercise of the powers conferred under Sec. (v) of Sec. 8 of the Central Sales Tax Act, 1956 and there is no question of any estoppel against statute. (19) I have considered the rival submissions made by the parties. In the case of Lokendra Industries, the industry had been duly installed by April, 1990 and, it has been submitted that it could not be so installed earlier on account of non-availability of electric connection and the production was started on 11/6/1990. In the case of Aditya Industries, it has been submitted that the industry had been installed in March, 1990,but the production could not be started prior to 1/5/1990 on account of non-availability of electric connection and even on 1/5/1990, the production was started with the help of the generator and the electric connection was granted on 15/5/1991. In Jagdamba Industries, the production was started on 2/2/1990. In Jagdamba Industries, the production was started on 2/2/1990. In the case of Rajasthan Roller Floor Mills Ltd. all necessary steps were taken immediately after 12/12/1989. In the case of Gopal Mills, the production was started on 8/2/1991 and commercial production was started on 25/2/1991. The electric connection was applied for on 28/7/1989, although the amount was deposited on 19/2/1990, the electric connection was released as late as on 30/1/1991. In M/s. Kalibond Oil Mills the commercial production was started on 2/4/1991. In the case of Bindal Oil Mills Pvt. Ltd., the production was started on 6/12/1990 and commercial production was started on 4/1/1991. On the basis of the pleadings, it is clear that the petitioners companies had started taking steps for installation of the oil mills much prior to 7/5/1990 when the impugned notification was issued; may be that in some cases the production was started after 7/5/1990, but the fact cannot be lost sight of that installation of an industry and starting of the production in such industries is certainly a long process which is bound to take some time. The schemes which were notified in 1987 and 1989 granting incentive of exemption of the commercial taxes were to remain in force upto 31/3/1992 and there is no case before us in which the respondents have alleged that the production did not start in any of these industries before 31/3/1992. In the cases of M/s. Aditya Oil Industries and Jagdamba Industries, the production was started even prior to 7/5/1990 and in the case of Lokendra Industries, the production was started on 11/6/1990, although the industry had been duly installed in April, 1990 and the production could not be started on account of non-availability of the electric connection. In such matters merely because the impugned notification was issued on 7/5/1990 while the Incentive Scheme of 1987 and 1989 was operative till 31/3/1992, 7/5/1990 cannot be fixed as a cutoff date. One thing can be said with certainty that in all these cases the petitioners had taken effective steps and had invested huge sum worth several lacs prior to 7/5/1990 believing upon the representation made at the instance of the respondents that the products of these industries would get the benefit of the exemption of the commercial tax. One thing can be said with certainty that in all these cases the petitioners had taken effective steps and had invested huge sum worth several lacs prior to 7/5/1990 believing upon the representation made at the instance of the respondents that the products of these industries would get the benefit of the exemption of the commercial tax. Therefore, the fact that the petitioners acted to their prejudice in investing huge sums on account of the representation made by the respondents through the notified Schemes of 1987 and 1989 cannot be disputed. In these circumstances, the petitioners can very well invoke the principle of equitable and promissory estoppel against respondents under Sec. 115 of the Indian Evidence Act. (20) So far as the argument of the respondents that there cannot be any estoppel against the statute is concerned, we may make it clear that there is no question of estoppel against statute. In the facts and circumstances of the present cases, the question is of estoppel against the conduct of the respondents and law of equitable and promissory estoppel is the law of evidence. The essence of the impugned notification dated 7/5/1990 is the conduct of the respondents in withdrawing exemption which had been granted under the Schemes of 1987 and 1989 for a period upto 31/3/1992. This impugned notification is a notification issued in exercise of the powers under the provisions of sub-section (v) of Sec. 8. This notification is, therefore, a notification issued in exercise of the powers under the law and the effect of this notification causing prejudice to the petitioners has to be judged with reference to the conduct of the respondents which is reflected through the impugned notification and, as such, there is no question of estoppel against law. It is a plain and simple question of estoppel against conduct reflected through the impugned notification. Therefore, we do not agree with the submission of the respondents that it is a case of estoppel against statute. It is a plain and simple question of estoppel against conduct reflected through the impugned notification. Therefore, we do not agree with the submission of the respondents that it is a case of estoppel against statute. If the schemes had been notified to be operative upto 31/3/1992, then such industries like the petitioners, which had taken effective steps for installation of the industries prior to 7/5/1990 and had started the production even before 7/5/1990, in certain cases as pointed out above and in other cases also much prior to 31/3/1992 (the date upto which the Scheme was to remain operative), could not be deprived of exemption and, therefore, we find that the inclusion of the oil extracting or manufacturing industry at Item No. 21 declaring such industries to be not eligible for the tax incentive under Annexure/B cannot be allowed to be given effect to and acted upon against those industries of this category which had been duly installed and in which the production had also been started prior to 7/5/1990 or even before 31/3/1992, the date upto which the Schemes were to be operative. (21) We, therefore, allow all these seven writ petitions and direct that anything contained in the impugned notification dated 7/5/1990 would not come in the way of the petitioners claiming exemption of the sales tax under the Sales-Tax Incentive Schemes of 1987 and 1989 notified, in cases where the industries had been installed and production was started prior to 31/3/1992. (22) The writ petitions are allowed as indicated above with no order as to costs.