1992 (7) TMI 322 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Entitlement to sales tax deferment benefits.
2. Applicability of the doctrine of promissory estoppel.
3. Validity and impact of government resolutions on eligibility.
4. Binding nature of the eligibility certificate issued by the Industries Commissioner.

Detailed Analysis:

1. Entitlement to Sales Tax Deferment Benefits:
The petitioner, a partnership firm established in May 1982, sought entitlement to sales tax deferment benefits under the Government Resolution (G.R.) dated May 18, 1982. Despite the subsequent G.R. dated May 19, 1982, which excluded industries manufacturing plastic products from high-density polyethylene, the petitioner applied for and was initially granted an eligibility certificate by the Industries Commissioner on March 7, 1983. However, the Assistant Commissioner of Sales Tax rejected the application on April 18, 1984, stating that the petitioner's industry was excluded from the benefits. This rejection was upheld on appeal by the Deputy Commissioner of Sales Tax.

2. Applicability of the Doctrine of Promissory Estoppel:
The petitioner invoked the doctrine of promissory estoppel, arguing that it had relied on the Government resolutions dated December 22, 1977, August 27, 1980, January 7, 1982, and March 18, 1982, to establish its industry. The court referenced the decision in Motilal Padampat Sugar Mills Co. Ltd. v. State of Uttar Pradesh, which held that the Government is bound by its promises if the promisee has acted upon them. However, the court found that the petitioner failed to prove that it bona fide believed the sales tax incentives were available for its industry when it made substantial investments.

3. Validity and Impact of Government Resolutions on Eligibility:
The petitioner argued that the incentives announced in the resolutions induced it to set up the industry. The court noted that the resolution dated March 18, 1982, did not replace or modify the scheme declared by the resolution dated August 27, 1980, which excluded certain industries. The court held that the Government had not given any new promise or assurance on March 18, 1982, that sales tax incentives would be available to all industries except the 14 specified. The resolution dated January 7, 1982, clearly stated that industries listed in annexure I were not eligible for incentives, and this was not altered by the March 18, 1982, resolution.

4. Binding Nature of the Eligibility Certificate Issued by the Industries Commissioner:
The petitioner contended that the eligibility certificate granted by the Industries Commissioner entitled it to the benefits. The court clarified that the eligibility certificate issued by the Industries Commissioner did not have a binding effect on the Government or the Commissioner of Sales Tax. The Government could recover wrongly given subsidies, and the Sales Tax Commissioner could refuse to issue a certificate for sales tax deferment if the industry was not entitled to it under the scheme.

Conclusion:
The court concluded that the petitioner did not have a valid claim for sales tax deferment benefits and that the doctrine of promissory estoppel was not applicable in this case. The eligibility certificate issued by the Industries Commissioner did not bind the sales tax authorities. Consequently, the petition was dismissed, and the rule was discharged with no order as to costs. Ad interim relief was vacated.