1983 (11) TMI 271 - HC - VAT and Sales Tax

Summary

Issues:
- Interpretation of section 5CC of the Rajasthan Sales Tax Act, 1954
- Validity of the amendment made by Act No. 8 of 1982
- Application of promissory and equitable estoppel principles
- Alleged violation of article 301 of the Constitution of India

Interpretation of Section 5CC:
The petitioner, a textile industry owner, claimed remission of purchase tax under section 5CC of the Rajasthan Sales Tax Act, 1954 for raw materials purchased for manufacturing cloth. The petitioner asserted entitlement to remission based on the installation of the industry in 1979 and the extension of remission periods by subsequent amendments. The Rajasthan Legislative Assembly amended section 5CC through Act No. 8 of 1982, leading to a dispute regarding the petitioner's remission eligibility.

Validity of Amendment by Act No. 8 of 1982:
The petitioner challenged the amendment of section 5CC by Act No. 8 of 1982 on two grounds. Firstly, the petitioner argued that the amendment, withdrawing the remission, breached the principles of promissory and equitable estoppel. Secondly, it was contended that the amendment violated article 301 of the Constitution of India, impacting the freedom of trade and commerce. However, the court held that the Legislature had the authority to amend the provision and withdraw the remission, dismissing the petitioner's arguments.

Promissory and Equitable Estoppel Principles:
The court clarified that promissory and equitable estoppel principles do not apply when an Act is passed by the appropriate Legislature. The amendment made by the Rajasthan State Legislature was deemed valid within its legislative competence, distinguishing it from cases involving estoppel principles. Therefore, the court rejected the petitioner's argument based on the Motilal Padampat Sugar Mills Co. Ltd. case.

Alleged Violation of Article 301:
Regarding the alleged violation of article 301 of the Constitution, the court emphasized that the removal of remission by the Legislature did not restrict freedom of trade and commerce. Citing the State of Madras v. N.K. Nataraja Mudaliar case, the court highlighted that tax laws do not necessarily impede trade flow. The amendment requiring industries to pay a 1% tax on raw materials was considered legitimate and not violative of constitutional provisions.

In conclusion, the court found the writ petition devoid of merit and dismissed it, stating that the amendment under section 5CC by Act No. 8 of 1982 was lawful. No costs were awarded in the matter.