1984 (4) TMI 253 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Promissory Estoppel and Public Law
2. Validity of the Notification under Section 10 of the Kerala General Sales Tax Act
3. Discrimination in Granting Exemptions
4. Recognition of Units Set Up After 1st April, 1979

Detailed Analysis:

1. Promissory Estoppel and Public Law:
The petitioners argued that the State Government should be bound by its promise of a "sales tax holiday" as per the Government Orders dated 11th April, 1979, and 8th November, 1979. They contended that they had started new units based on this promise and would not have done so had they known about the subsequent limitation to 90% of the fixed capital investment. The court discussed the principle of promissory estoppel, which prevents a party from acting inconsistently with a promise if the other party has altered their position based on that promise. However, the court emphasized that estoppel cannot operate against a statute and that public authorities have a duty to act for the public good, which may override private interests.

2. Validity of the Notification under Section 10 of the Kerala General Sales Tax Act:
The court noted that the Government had the power under Section 10 of the Kerala General Sales Tax Act to issue notifications granting tax exemptions. The notification issued on 29th September, 1980, provided for a sales tax exemption with certain conditions, including the 90% limitation. The court held that the statutory notification had retrospective effect from 1st April, 1979, and that the petitioners were liable to pay sales tax as per its terms. The court also referred to the Supreme Court's decision in Narinder Chand v. Union Territory, which stated that no court can direct a government to refrain from enforcing a provision of law.

3. Discrimination in Granting Exemptions:
The petitioners argued that the notification discriminated against them by providing more favorable treatment to small-scale industrial units belonging to women and harijans, and those established in mini industrial estates. The court dismissed this plea, stating that these categories are prima facie capable of being separately classified and that no materials were produced to show that such classification was impermissible.

4. Recognition of Units Set Up After 1st April, 1979:
Some petitioners complained that their units, set up after 1st April, 1979, were not being recognized by the authorities. The court held that this dispute could not be investigated in the present proceedings and that there was no evidence to support the petitioners' claims. The court also noted that the refusal of the District Industries Officers to grant the certificates applied for was not shown to be arbitrary or unrelated to the facts.

Conclusion:
The court upheld the validity of the notification dated 29th September, 1980, in full and dismissed the petitions without costs. The petitioners were permitted to pay off the tax due in six equal monthly installments if they complied with the conditions imposed by the court. The request for leave to appeal to the Supreme Court was declined as no substantial question of law of general importance was involved in the case.