1993 (1) TMI 266 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Validity of the impugned notification dated May 7, 1990.
2. Application of the principle of equitable and promissory estoppel.
3. Entitlement to Sales Tax Incentive Schemes of 1987 and 1989.

Summary:

Issue 1: Validity of the Impugned Notification Dated May 7, 1990

All writ petitions challenge the notification dated May 7, 1990, issued by the Government of Rajasthan u/s 8(5) of the Central Sales Tax Act, 1956, which amended the earlier notification dated July 6, 1989, and rendered the petitioners ineligible for sales tax incentives. The petitioners sought quashing of the consequential orders and a direction to grant the benefits of the Sales Tax Incentive Schemes of 1987 and 1989.

The court noted that the Government had the power to issue the notification u/s 8(5) of the Central Sales Tax Act, 1956. However, the notification dated May 7, 1990, could not be applied to industries that had taken effective steps and started production before this date or before March 31, 1992, when the schemes were to remain operative.

Issue 2: Application of the Principle of Equitable and Promissory Estoppel

The petitioners argued that they had invested heavily based on the promise of tax exemptions under the schemes notified in 1987 and 1989, which were to remain in force up to March 31, 1992. They contended that the respondents were estopped by the principle of equitable and promissory estoppel u/s 115 of the Indian Evidence Act from denying the benefits of the schemes.

The court agreed with the petitioners, stating that the respondents' conduct in withdrawing the exemption through the impugned notification dated May 7, 1990, after the petitioners had acted to their prejudice, invoked the principle of equitable and promissory estoppel. The court clarified that this was not a case of estoppel against statute but estoppel against the respondents' conduct.

Issue 3: Entitlement to Sales Tax Incentive Schemes of 1987 and 1989

The court observed that the petitioners had taken effective steps and invested substantial amounts believing in the incentive schemes. In some cases, production had started before May 7, 1990, and in others, before March 31, 1992. The court held that the inclusion of oil extracting or manufacturing industries in the ineligible list under annexure "B" of the notification dated May 7, 1990, could not be applied to industries that had started production before these dates.

Consequently, the court allowed all seven writ petitions, directing that the impugned notification dated May 7, 1990, would not affect the petitioners' entitlement to sales tax exemptions under the Sales Tax Incentive Schemes of 1987 and 1989, provided the industries had been installed and production started before March 31, 1992.

Judgment:

The writ petitions were allowed with no order as to costs.