1986 (1) TMI 366 - HC - VAT and Sales Tax

Issues Involved:
1. Continuation of sales tax exemption benefits under Resolution No. 17767.
2. Eligibility of the petitioner for sales tax exemption based on production commencement date.
3. Validity of the petitioner's claim for exemption under the relevant government resolutions.
4. Interpretation of government resolutions and notifications regarding tax exemptions.
5. Application of the doctrine of promissory estoppel.

Detailed Analysis:

1. Continuation of Sales Tax Exemption Benefits under Resolution No. 17767:

The core issue was whether Resolution No. 17767 of the Government of Bihar, dated 19th October 1979, extended the sales tax exemption benefits for newly set-up small-scale industrial units beyond 30th September 1979. The petitioner argued that the benefits were extended unreservedly till 30th September 1979, as per the resolution. The court found merit in this argument, stating that the resolution explicitly extended all incentives operative till March 1979 to 30th September 1979.

2. Eligibility of the Petitioner for Sales Tax Exemption Based on Production Commencement Date:

The petitioner, a small-scale industry, started production on 22nd August 1979 and claimed exemption based on the resolution. The respondent-State contended that the benefits were only available to units that commenced production before 1st July 1976. The court rejected this argument, noting that Resolution No. 16808 of 29th September 1973, which was referenced in the 1979 resolution, did not specify a cut-off date for the commencement of production. Therefore, the petitioner, having started production before 30th September 1979, was eligible for the exemption.

3. Validity of the Petitioner's Claim for Exemption under the Relevant Government Resolutions:

The court examined the series of notifications and resolutions issued by the Government of Bihar regarding tax exemptions for small-scale industries. It was noted that the benefits were extended and withdrawn multiple times between 1969 and 1979. The court concluded that the petitioner's claim for exemption was valid as per the resolutions in force during the relevant period, specifically Resolution No. 16808 and its extension by Resolution No. 17767.

4. Interpretation of Government Resolutions and Notifications Regarding Tax Exemptions:

The court emphasized the importance of interpreting government resolutions and notifications in a manner that promotes the intended benefits. It was noted that the resolutions provided tax relief to small-scale industries without any limitation on the commencement date of production. The court held that the benefits granted by Resolution No. 16808 were extended by Resolution No. 17767, and therefore, the petitioner was entitled to the exemption.

5. Application of the Doctrine of Promissory Estoppel:

Although the court did not find it necessary to rely on the doctrine of promissory estoppel, it acknowledged the petitioner's argument that the State had held out a promise of exemption, based on which the petitioner had set up the industry. The court noted that the respondent-State could not retract this promise on technical grounds, especially when similar benefits had been extended to other small-scale industries.

Conclusion:

The writ petition was allowed, and the impugned order dated 24th November 1982, passed by the Assistant Commissioner of Commercial Taxes, Bhagalpur Circle, was quashed. The court directed that the liability to sales tax be assessed afresh in accordance with the findings in this judgment. The parties were ordered to bear their own costs.

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