1990 (9) TMI 310 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Validity of Notification dated 30th December, 1987, concerning tax exemption for tiny industries.
2. Application of the doctrine of promissory estoppel to the withdrawal of tax exemptions.
3. Distinction between legislative and delegated authority in issuing notifications.
4. Validity of the same notification concerning khadi and village industries.

Issue-wise Detailed Analysis:

1. Validity of Notification dated 30th December, 1987, concerning tax exemption for tiny industries:
The petitioners challenged the validity of the Notification dated 30th December, 1987, which superseded the previous exemption notification dated 2nd June, 1979. The new notification limited the tax exemption to a turnover of Rs. 5,00,000 per year and modified the existing exemption certificates accordingly. The petitioners argued that this adversely affected their economic viability, as their units achieved a turnover of Rs. 5,00,000 monthly.

2. Application of the doctrine of promissory estoppel to the withdrawal of tax exemptions:
The petitioners contended that the State Government was bound by the rule of promissory estoppel, having acted upon the promise made in the earlier notification (annexure P2). The respondent authorities argued that there could be no rule of estoppel against a statute and that the exemption was a concession which could be withdrawn. The court cited the Supreme Court's principles in Motilal Padampat Sugar Mills Co. Ltd. v. State of Uttar Pradesh, emphasizing that a clear and unequivocal promise intended to create legal relations, acted upon by the promisee, binds the promisor. The court found that the respondents failed to provide material justifying the withdrawal of the exemption, thus applying the rule of promissory estoppel.

3. Distinction between legislative and delegated authority in issuing notifications:
The court differentiated between the sovereign legislative power of the Parliament and the subordinate legislative power exercised by the Governor under section 13 of the Haryana General Sales Tax Act, 1973. The court held that the Governor's notifications (annexures P1 and P2) were acts of subordinate legislation and could not be equated with statutes framed by the Legislature. Therefore, the argument that the impugned notification was a legislative act at par with a statute was rejected.

4. Validity of the same notification concerning khadi and village industries:
The court distinguished the case of khadi and village industries from that of tiny industries. It held that the rule of promissory estoppel did not apply to khadi and village industries, as the exemption was a concession that could be withdrawn by the State Government at any time. Consequently, the notification dated 30th December, 1987, was deemed legal and within the powers of the Governor of Haryana concerning khadi udyog.

Judgment:
The court quashed the notification dated 30th December, 1987 (annexure P1) concerning tiny industries, upholding the rule of promissory estoppel and allowing the related writ petitions. However, it dismissed the writ petitions related to khadi and village industries, affirming the legality of the notification for these industries. No costs were awarded.