1987 (11) TMI 361 - HC - VAT and Sales Tax

Summary

Issues Involved
1. Interpretation of Notification F. No. A-3-41-81(35)-ST-V dated 23rd October, 1981.
2. Validity of subsequent Notification No. A-3-52-87-ST-V(29) dated 3rd July, 1987.
3. Eligibility for exemption from sales tax for traditional industries like dall mills.
4. Application of the principle of promissory estoppel.
5. Authority and scope of executive instructions vis-`a-vis statutory notifications.

Detailed Analysis

1. Interpretation of Notification F. No. A-3-41-81(35)-ST-V dated 23rd October, 1981
The primary issue revolves around the interpretation of the 1981 notification which exempts new industrial units from sales tax. The petitioners argued that the notification itself prescribed the conditions for obtaining an eligibility certificate, and since they fulfilled these conditions, they were entitled to exemption. However, the court noted that while the notification required an eligibility certificate, it did not provide guidelines or procedures for issuing such certificates. Consequently, the State Government issued executive instructions to avoid arbitrariness in granting these certificates.

2. Validity of Subsequent Notification No. A-3-52-87-ST-V(29) dated 3rd July, 1987
The petitioners challenged the validity of the 1987 notification, which excluded traditional industries like dall mills from the exemption, arguing it had retrospective effect and violated section 12(2) of the M.P. General Sales Tax Act. The court held that the 1987 notification was a clarification rather than a rescission of the 1981 notification. It merely reiterated the consistent government policy that traditional industries were not eligible for sales tax exemption.

3. Eligibility for Exemption from Sales Tax for Traditional Industries like Dall Mills
The court examined the history of government policies and executive instructions from 1973 to 1983, which consistently excluded traditional industries from sales tax concessions. The court concluded that the 1981 notification did not automatically grant exemption to traditional industries and that the executive instructions were necessary to clarify this.

4. Application of the Principle of Promissory Estoppel
The petitioners invoked the doctrine of promissory estoppel, arguing that they had established their units based on the promise of tax exemption in the 1981 notification. The court rejected this argument, noting that the petitioners were aware of the executive instructions excluding traditional industries from exemptions. The petitioners had applied for exemption only after a favorable court decision in a similar case, indicating they knew they were not initially entitled to the exemption.

5. Authority and Scope of Executive Instructions Vis-`a-vis Statutory Notifications
The court addressed whether executive instructions could override a statutory notification. It held that in the absence of specific guidelines in the notification, the State Government was competent to issue executive instructions under Article 162 of the Constitution. These instructions were necessary to provide a consistent and non-arbitrary framework for granting eligibility certificates.

Conclusion
The court dismissed the petitions, holding that the 1987 notification was a valid clarification of the 1981 notification, and that traditional industries like dall mills were not entitled to sales tax exemption. The principle of promissory estoppel did not apply as the petitioners were aware of the executive instructions excluding traditional industries. The State Government's executive instructions were upheld as necessary and valid in the absence of specific guidelines in the statutory notification.