1986 (12) TMI 338 - HC - VAT and Sales Tax

Summary

Issues:
1. Interpretation of government orders related to interest-free sales tax loans (I.F.S.T.)
2. Validity of incentives offered to new industries under G.O. 224
3. Implementation of recommendations by the committee advising the government
4. Allegations of discrimination under Article 14 of the Constitution
5. Consideration of promissory estoppel in the case of denied loans

Detailed Analysis:
1. The judgment concerns the interpretation of government orders regarding interest-free sales tax loans (I.F.S.T.), particularly focusing on G.O. 224 issued on March 9, 1976, which provided incentives to new industries. The incentives included exemptions from sales tax on various items and were applicable for five years until December 31, 1980. Subsequent orders like G.O. 736 and G.O. 375 extended the scheme and introduced classifications for different areas eligible for incentives.

2. The validity of the incentives offered under G.O. 224 was questioned due to the inaction of the government in amending the loan limit recommended by a committee in 1978. This raised issues regarding the operative period of G.O. 224, whether it ended in 1980 or 1983, and the application of later orders like G.O. 482 and G.O. 483 to specific companies, leading to concerns of discrimination under Article 14 of the Constitution.

3. The judgment also addressed the implementation of recommendations made by the committee advising the government, highlighting the failure to amend G.O. 224 as suggested. This inaction resulted in confusion and legal challenges, emphasizing the importance of government responsiveness in policy implementation.

4. Allegations of discrimination under Article 14 of the Constitution were raised concerning the denial of loans to certain companies, including M/s. Ambuja Petro Chemicals Limited. The court considered whether the denial constituted discrimination and the application of legal principles such as promissory estoppel in determining the company's entitlement to I.F.S.T. loans.

5. The court directed the State Government to take action within a specified timeframe, either through an executive order or legislative measure, to address the issues arising from the interpretation and implementation of the incentive scheme. Failure to do so would require affected parties to submit claims for consideration under G.O. 224 or any modified schemes, with the government obligated to pass appropriate orders within three months. The judgment aimed to provide clarity and resolution to the complex issues surrounding the I.F.S.T. loans and related government policies.