1998 (4) TMI 509 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Legality and validity of the Assam Industries (Sales Tax Concessions) Scheme, 1995.
2. Application of the doctrine of promissory estoppel.
3. Retrospective effect of the 1995 Scheme.
4. Compliance with Article 14 and Article 19(1)(g) of the Constitution of India.

Detailed Analysis:

1. Legality and Validity of the Assam Industries (Sales Tax Concessions) Scheme, 1995:
The petitioners challenged the Assam Industries (Sales Tax Concessions) Scheme, 1995, which limited sales tax exemptions to increases in production following expansion, modernization, and diversification. They argued that the scheme prejudicially affected their vested rights granted by earlier schemes and contradicted the Assam General Sales Tax Act, 1993. The court noted that the 1995 Scheme was framed under statutory powers conferred by Section 9(4) of the Assam General Sales Tax Act, 1993, and was therefore statutory in both origin and content. The court found no substantial difference between the 1991 and 1995 schemes, concluding that the 1995 Scheme did not materially depart from the 1991 policy.

2. Application of the Doctrine of Promissory Estoppel:
The petitioners claimed that the 1991 Industrial Policy contained an unequivocal promise of full sales tax exemption for seven years, which they relied upon to their detriment. They argued that the state was estopped from resiling from this promise by introducing the 1995 Scheme. The court, however, found no breach of promise or higher equity in favor of the petitioners. It held that the doctrine of promissory estoppel, which emanates from equity to avoid injustice, did not apply as the petitioners had already availed full benefits under earlier schemes. The court emphasized that there cannot be estoppel against a fiscal measure.

3. Retrospective Effect of the 1995 Scheme:
The petitioners contended that no notification providing relief under Section 9(4) of the Assam General Sales Tax Act, 1993, could be made with retrospective effect to take away accrued rights. The court held that the 1995 Scheme, being statutory, could not be read as retrospective. The Legislature had conferred full mandate to the executive authority to frame schemes from time to time. Therefore, the 1995 Scheme was not considered retrospective in effect.

4. Compliance with Article 14 and Article 19(1)(g) of the Constitution of India:
The petitioners argued that the 1995 Scheme was arbitrary and violated Articles 14 and 19(1)(g) of the Constitution by linking sales tax benefits to production increases, which were not guaranteed outcomes of expansion, modernization, or diversification. The court held that the right to tax incentives is not a fundamental right and that the criteria for determining increase in production were reasonable and not arbitrary. The court found no violation of Articles 14 and 19(1)(g), as the petitioners had already benefited from earlier schemes and were not entitled to full incentives under the new scheme.

Conclusion:
The court dismissed all the writ petitions, holding that the 1995 Scheme was valid and did not violate the principles of promissory estoppel, nor was it retrospective or unconstitutional. The petitioners were ordered to pay costs of Rs. 2,000 each.