1988 (3) TMI 443 - HC - VAT and Sales Tax

Summary

Issues Involved:

1. Right to Interest-Free Sales Tax Loans (IFST)
2. Promissory Estoppel
3. Discrimination
4. Validity of Andhra Pradesh Interest-Free Sales Tax Loans for Industries (Imposition of Ceiling) Act, 1987
5. Financial Stringency

Detailed Analysis:

1. Right to Interest-Free Sales Tax Loans (IFST):

The petitioners sought mandamus for the disbursement of IFST loans based on G.O. Ms. No. 224, dated March 9, 1976. The government had initially agreed to provide IFST loans to new and expanding industries. However, due to financial constraints, the State Level Committee recommended a ceiling of Rs. 10 lakhs per unit. The Andhra Pradesh Interest-Free Sales Tax Loans for Industries (Imposition of Ceiling) Act, 1987, retroactively limited the IFST loans to Rs. 10 lakhs per unit. The court upheld the Act's validity, stating that the legislature has the power to pass laws with retrospective effect and that financial stringency is a valid reason for such limitations.

2. Promissory Estoppel:

The petitioners argued that the government was bound by the principles of promissory estoppel due to the assurances given in G.O. Ms. No. 224. The court rejected this contention, stating that no principles of estoppel can override a statute. The court cited several Supreme Court decisions affirming that promissory estoppel cannot be invoked against legislative actions.

3. Discrimination:

The petitioners alleged discrimination as certain companies, such as Bhadrachalam Paper Boards Ltd. and A.P. Rayons Ltd., were granted higher IFST loans. The court noted that these companies were not parties to the case and that the government had initiated steps to recover the excess amounts withheld by these companies. The court found no illegal discrimination against the petitioners and held that the government's actions were based on financial constraints and were not arbitrary.

4. Validity of Andhra Pradesh Interest-Free Sales Tax Loans for Industries (Imposition of Ceiling) Act, 1987:

The petitioners challenged the Act's validity, claiming it violated Articles 14 and 19(1)(g) of the Constitution. The court upheld the Act, stating that the legislature has the power to enact laws with retrospective effect and that financial stringency is a reasonable ground for limiting the IFST loan. The court found the Act to be reasonable, based on objective criteria, and not liable to be struck down.

5. Financial Stringency:

The petitioners argued that the plea of financial stringency was false, citing the grant of higher IFST loans to certain companies and the introduction of a new incentive scheme in G.O. Ms. No. 375, dated August 23, 1985. The court rejected this argument, stating that the government's financial constraints were genuine and that the new incentive scheme was applicable only to specified backward areas. The court held that the state's policy to provide concessions to backward areas, even during financial stringency, was reasonable and realistic.

Conclusion:

The court dismissed all three writ petitions, upholding the validity of the Andhra Pradesh Interest-Free Sales Tax Loans for Industries (Imposition of Ceiling) Act, 1987, and rejecting the claims based on promissory estoppel and discrimination. The court found the government's actions to be reasonable and based on financial constraints, and not violative of Articles 14 and 19(1)(g) of the Constitution.