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Madhya Pradesh High Court · body

2003 DIGILAW 432 (MP)

Century Yarn v. Commercial Tax Officer

2003-03-21

A.K.GOHIL

body2003
Judgment ( 1. ) PETITIONER has filed this writ petition under Article 226 of the Constitution of India for quashment of order dated September 4, 2002 passed by the State Appellate Forum, Bhopal (annexure "o") and order dated December 29, 2000 passed by the State Level Committee, Indore (annexure "r-1") and also for quashment of demand notices (annexures "e-1", "f-2" and "l") and also for a direction to respondents Nos. 3 to 5 to issue an eligibility certificate to the petitioner for the period from March 25, 1994 to March 24, 2003 for grant of exemption. ( 2. ) PETITIONER-COMPANY has set up a factory at Village Satrati, District Khargone, which has been alleged to be a backward district. The finished products of the petitioner are cotton yarn and blended yarn. The production of the unit had commenced from March 25, 1994. The respondent No. 3, State Level Committee, in its meeting held on September 27, 1995 resolved to give to the petitioner exemption from payment of sales tax for a period of five years from March 25, 1994 to March 24, 1999 under Notification F. No. A3-41-81 (35)-ST-V dated October 23, 1981 read with Notification No. A-3-1-92-ST-V (57) dated March 31, 1992. Again the State Level Committee in its meeting dated October 29, 1997 took another decision to extend this facility for exemption for a period of nine years from March 25, 1994 to March 24, 2003 to the petitioner being a pioneer industry. The said resolution was communicated by respondent No. 2 to the petitioner under letter dated December 22, 1997. On January 9, 1998, Joint Director of Industries addressed a letter to the petitioner to furnish an agreement in the prescribed format and on July 13, 1998 the agreement was executed by the petitioner in favour of the Joint Director of Industries. In pursuance of the aforesaid resolution the eligibility certificate was to be issued to the petitioner but the same could not be issued despite various letters of request by the petitioner-company to the various authorities. Thereafter, petitioner filed a writ petition which was registered as Writ Petition No. 1098 of 2000. In pursuance of the aforesaid resolution the eligibility certificate was to be issued to the petitioner but the same could not be issued despite various letters of request by the petitioner-company to the various authorities. Thereafter, petitioner filed a writ petition which was registered as Writ Petition No. 1098 of 2000. The aforesaid writ petition was disposed of by this Court vide order dated August 25, 2000 with a direction to the respondents to take decision in the matter particularly with reference to the decision of the State Level Committee vide annexure-"p/8" on the said letters of the petitioners at the earliest, say within two months from the date of communication of the copy of the order issued in Writ Petition No. 1098 of 2000. Thereafter, petitioner-company wrote a letter dated October 10, 2000 to the respondents for the compliance of the orders passed by the High Court. Thereafter, the State Level Committee passed another resolution dated December 29, 2000 stating therein that the petitioners industry is not a pioneer industry within the definition of Subsidy Rules, 1989 and, therefore, petitioner-company is not entitled for issue of any eligibility certificate. Copy of this resolution is annexure "r-1". Thereafter the petitioner filed a contempt petition on January 9, 2001 and the notices were directed to be issued and by order dated November 23, 2001 this Court disposed of the aforesaid contempt petition. In the meantime respondent No. 1 issued demand notices dated February 15, 2001 (annexure "e") ; February 14, 2001 (annexure "e-1") ; February 15, 2001 (annexures "f" and "f-1") against which the petitioner filed this petition, challenging the aforesaid action. Thereafter notice under Section 146 of the Madhya Pradesh Land Revenue Code, 1959 dated March 21, 2001 (annexure "l") was issued and the petition was amended. ( 3. ) IN reply the respondents have taken a defence that vide resolution dated December 29, 2000 (annexure "r-1") the State Level Committee after considering the directions issued by the High Court in Writ Petition No. 1098 of 2000 dated August 25, 2000 has taken a decision that the petitioner-company is not covered within the definition of "pioneer industry" as has been defined in the Subsidy Rules, 1989 and is not set-up within the growth centre. Therefore, the petitioner-company is not entitled for any eligibility certificate and this decision of the State Level Committee (annexure "r-1") is perfectly legal, justified and, therefore, prayed for the dismissal of the aforesaid writ petition. ( 4. ) I have heard Shri G. M. Chaphekar, learned Senior Advocate instructed by Shri P. B. S. Nair, for the petitioner and Shri S. Mukati, learned Government Advocate for the respondents/state. ( 5. ) THE submission of Shri Chaphekar, learned Senior Advocate is that the aforesaid resolution dated December 29, 2000 (annexure "r-1") is contrary to the notifications issued by the State Government dated October 23, 1981 (annexure "p-2") and dated March 31, 1992 (annexure "p-3") which have been issued under Section 12 of the Madhya Pradesh General Sales Tax Act, 1958 and also under Sections 6 and 7 of the Madhya Pradesh General Sales Tax Act, 1958 and under Central Sales Tax Act, 1956. He urged that as per the aforesaid notifications only three conditions are required to be fulfilled by the petitioner-company which the company is fulfilling. His further submission was that the Director of Industries have already issued certificate of pioneer status for getting sales tax concession to the petitioner-company vide letter dated October 16, 1997 and this letter is still in force and has not been withdrawn by the State Government up till now and the State Level Committee or the State Government has also not cancelled the same. His further submission was that in pursuance of resolution dated October 29, 1997 petitioner-company has already executed agreement dated December 22, 1997 (annexure "p-8" ). His last submission was that just to defeat the claim of the petitioner, they have applied the definition of "pioneer industry" applicable to the Subsidy Rules and not for grant of eligibility certificate and the respondents have taken decision dated December 29, 2000 (annexure "r-1") only because the petitioner earlier had filed writ petition in the High Court and thereafter contempt petition against the respondents officers. ( 6. ) SHRI S. Mukati, learned Government Advocate for the Respondents/state vehemently supported the decision taken by the State Level Committee on December 29, 2000 (annexure "r-1") and cited division Bench decision of this Court in the case of Jiwajirao Sugar Company Ltd. v. State of Madhya Pradesh reported in [1985] 59 STC 273 : (1984) 17 VKN 87. ( 6. ) SHRI S. Mukati, learned Government Advocate for the Respondents/state vehemently supported the decision taken by the State Level Committee on December 29, 2000 (annexure "r-1") and cited division Bench decision of this Court in the case of Jiwajirao Sugar Company Ltd. v. State of Madhya Pradesh reported in [1985] 59 STC 273 : (1984) 17 VKN 87. The said decision is not relevant for this case as it is not on the question of grant of eligibility certificate to the petitioner. ( 7. ) HAVING heard learned Counsel for the parties and after perusal of the record and documents, it is clear that the petitioner-company has already fulfilled the conditions laid down in notification dated March 31, 1992 (annexure "p-3") for grant of eligibility certificate and thereafter the State Level Committee in its meeting dated October 29, 1997 had already taken a decision for extending the facility to the petitioner-company from five years to nine years, i. e. , March 25, 1994 to March 24, 2003 and thereafter the petitioner has already entered into an agreement dated December 22, 1997 and it is true that by letter dated October 16, 1997 (annexure "p") the Director of Industries has already granted certificate of pioneer status for getting sales tax concessions to the petitioner-company which up till now has not been either cancelled or withdrawn by the State Government despite the resolution dated December 29, 2000 (annexure "r-1" ). ( 8. ) I have also perused annexure "r-1". In this resolution respondent No. 5, State Level Committee, has not stated anything either about cancellation or withdrawal of the status of pioneer industry to the petitioner. They have simply stated that now we have stopped from issuing such certificate with effect from July 1, 1998 and this letter of dated July 1, 1998 has also not been produced before this Court that what is the decision of the State Government. The respondents have also not produced the copy of any Subsidy Rules of 1989 whether they are applicable in such cases for grant of eligibility certificate. ( 9. ) I have also perused the order dated September 4, 2002 (annexure "o") passed by the appellate forum. The appellate authority has also repeated the same order as the decision was taken by the State Level Committee. ( 9. ) I have also perused the order dated September 4, 2002 (annexure "o") passed by the appellate forum. The appellate authority has also repeated the same order as the decision was taken by the State Level Committee. The appellate forum has also not taken a decision about the withdrawal of the letter dated October 16, 1997. Therefore, from the perusal of the aforesaid documents, it is clear that the State Government or the State Level Committee or the Appellate Forum has not withdrawn this letter of October 16, 1997 issued in favour of the petitioner and has not declared that it is not a pioneer industry. ( 10. ) THE Writ Petition No. 1098 of 2000 was disposed of by this Court by order dated August 25, 2000 with a direction to the respondents to take decision in the matter particularly with reference to the decision of the State Level Committee dated December 22, 1997 (annexure "p-8" ). In another Writ Petition No. 746 of 1999 by order dated August 25, 1999 this Court in the case of Prime Solvent Extraction Ltd. v. State of M. P. , in the similar set of facts and circumstances has held that the notification granting exemption from payment of sales tax to the pioneer industry under Section 12 of the Madhya Pradesh General Sales Tax Act, 1958 has the force of law. Its efficacy cannot be whittled down by any executive order. The State Government has no option but to honour its commitment. The rule of "promissory estoppel" and the emerging doctrine of "substantive legitimate expectation" also do not permit the Government to wriggle out of its unequivocal promise. The court has further held that the notification has not been rescinded and has also discussed the object of granting the exemption. The learned single Judge has also placed reliance on a decision of the Supreme Court in the case of State of Madhya Pradesh v. G. S. Dall and Flour Mills reported in [1991] 80 STC 138 : (1992) Supp 1 SCC 150, and the same has also been cited by Shri Chaphekar. In this case it has been held by the Supreme Court as under : If the tax-payer is within the plain terms of the exemption it cannot be denied its benefit by calling in aid any supposed intention of the exempting authority. In this case it has been held by the Supreme Court as under : If the tax-payer is within the plain terms of the exemption it cannot be denied its benefit by calling in aid any supposed intention of the exempting authority. If any other condition is prescribed which is not in the notification, it is liable to be struck down on the ground of impermissible delegation of legislative power to the executive. The executive instructions can supplement a statute or cover areas in which the statute does not extend. They cannot run contrary to statutory provisions or whittle down their effect. It is not permissible to travel beyond the terms of the notification. ( 11. ) IN view of the foregoing discussions, this writ petition is allowed. The resolution of the State Level Committee dated December 29, 2000 (annexure "r-1") is quashed. Consequently the demand notices (annexures "e-1", "f-2" and "l") are also quashed and it is held that the petitioner-company is entitled for issuance of eligibility certificate for the extended period. Accordingly the respondents are directed to issue eligibility certificate to the petitioner-company as per the decision dated October 29, 1997 as also the notification dated March 31, 1992 (annexure "p-3") within a period of 30 days. Parties are directed to bear their own costs.