1993 (8) TMI 280 - HC - VAT and Sales Tax

Summary

Issues:
1. Interpretation of Government Order No. 498 for sales tax holiday eligibility.
2. Discrepancy between the Government Order and the Manual of Guidelines.
3. Application of promissory estoppel in granting tax concessions.
4. Validity of restrictions imposed by the District Committee.
5. Entitlement of small-scale industrialists to full sales tax holiday benefits.

Analysis:
The judgment of the Andhra Pradesh High Court dealt with writ petitions filed by small-scale industrialists seeking sales tax holiday benefits as per Government Order No. 498. The petitioners established industrial units post-October 3, 1989, with investments below Rs. 35,00,000. The court addressed the issue of restricting the incentives/exemptions to the capital investment, particularly for oil millers excluded under clause 5. The court rejected the belated objection raised by the respondents and focused on determining the extent of the tax holiday entitlement for the petitioners.

The court analyzed the scope of the sales tax holiday as per the Government Order and the Manual of Guidelines issued subsequently. It highlighted that the Manual of Guidelines, which limited the benefits to 100% of fixed capital investment or Rs. 35 lakhs, was issued without proper gazetting. The court emphasized that the guidelines could not curtail the concessions provided under the Government Order. It referenced a Supreme Court decision to support the principle that statutory provisions cannot be restricted by executive instructions.

Regarding the application of promissory estoppel, the court found that the petitioners had acted upon the representations in the Government Order and altered their positions accordingly. The court emphasized that the respondents could not deny the full concession benefits promised in the Government Order based on the guidelines or committee decisions. It upheld the principle of promissory estoppel in ensuring the petitioners' entitlement to the tax holiday benefits as per the initial representation.

The court addressed the validity of restrictions imposed by the District Committee on the petitioners' eligibility for tax concessions. It held that the committee's decisions could not limit the petitioners' entitlement beyond what was promised in the Government Order. The court emphasized that the petitioners should receive the full extent of the concession granted in the Government Order, disregarding any limitations set by the committee or assessment orders.

In conclusion, the court allowed the writ petitions, directing the respondents to provide the petitioners with the full sales tax holiday benefits as per the Government Order, up to a ceiling of Rs. 35,00,000 for a period not exceeding five years. The judgment highlighted the importance of upholding the representations made in the Government Order and rejected any attempts to curtail the petitioners' entitlement to tax concessions based on subsequent guidelines or committee decisions.