1991 (4) TMI 384 - HC - VAT and Sales Tax

Issues Involved:
1. Eligibility for sales tax deferment benefits under various Government resolutions.
2. Application of the doctrine of promissory estoppel against the Government.
3. Interpretation of Government resolutions and their impact on the petitioner's entitlements.

Detailed Analysis:

1. Eligibility for Sales Tax Deferment Benefits:
The petitioner, a manufacturer of cold rolled steel strips, invested approximately Rs. 1.82 crores in expanding its unit and commenced production on 31st March 1982. The petitioner claimed eligibility for sales tax deferment benefits under the resolutions dated 22nd December 1977, 27th August 1980, and 18th March 1982. The petitioner argued that the resolutions dated 7th January 1982 and 15th September 1982, which excluded cold rolled steel strips from the benefits, should not apply retroactively to their case as their commercial production began before these resolutions were issued.

The Court found that the petitioner was entitled to sales tax deferment benefits until 14th September 1982, but the second respondent erroneously limited the deferment period. The Court held that the petitioner should have been granted the benefits for the full period from 31st March 1982 to 30th March 1988, as the industry was only included in the list of excluded industries on 15th September 1982.

2. Application of the Doctrine of Promissory Estoppel:
The petitioner relied on the doctrine of promissory estoppel, arguing that the Government's promise of sales tax deferment benefits induced them to make substantial investments. The Court referred to the Supreme Court's decisions in *Motilal Padampat Sugar Mills Co. Ltd. v. State of Uttar Pradesh* and *Union of India v. Godfrey Philips India Ltd.*, which established that promissory estoppel applies when a promisee has altered their position based on a clear and unequivocal promise by the promisor.

The Court rejected the argument that the Government's promise was conditional, noting that the Government's declaration of its discretionary powers did not negate the promise made under the 1980 scheme. The Court held that the petitioner was entitled to rely on the Government's assurance and that the doctrine of promissory estoppel applied, preventing the Government from retracting the benefits promised.

3. Interpretation of Government Resolutions:
The Court analyzed the resolutions in question, particularly focusing on the 1980 scheme, which allowed new industrial projects to opt for sales tax benefits. The Court noted that the Government's ability to review and amend the list of excluded industries did not make the initial promise conditional. The assurance given to new industrial units was that they would receive benefits as long as they were not excluded at the time of commencing commercial production.

The Court held that the petitioner's industry was not excluded from the benefits at the time it started commercial production on 31st March 1982. Therefore, the petitioner was entitled to the benefits under the 1980 scheme until 30th March 1988. The Court also ordered the refund of Rs. 6,57,853 paid by the petitioner as sales tax for the period between 31st March 1982 and 14th September 1982.

Conclusion:
The petition was allowed, and a writ of mandamus was issued directing the second respondent to issue a sales tax deferment certificate for the period between 31st March 1982 and 30th March 1988. The respondents were also directed to refund the sales tax amount paid by the petitioner during the specified period. The Court applied the doctrine of promissory estoppel, ensuring that the Government could not retract its promise, thereby upholding the petitioner's entitlement to the benefits.

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