1991 (4) TMI 422 - HC - VAT and Sales Tax

Issues Involved:
1. Eligibility for Sales Tax Deferment Scheme
2. Application of Promissory Estoppel
3. Interpretation of Government Resolutions
4. Applicability of Relaxations in Incentive Schemes

Detailed Analysis:

1. Eligibility for Sales Tax Deferment Scheme:
The petitioner, a manufacturer of glazed tiles and sanitary wares, set up a new plant in Padra, a specified growth centre, and commenced commercial production on October 29, 1983. The petitioner applied for a sales tax deferment certificate, which was initially granted by the Industries Commissioner but later rejected by the Assistant Sales Tax Commissioner. The rejection was based on the ground that new industries within 24 kms of Baroda Municipal Corporation limits were not entitled to the deferment scheme benefits. The petitioner contended that Padra was consistently mentioned as a growth centre in various government resolutions, thus entitling them to the benefits.

2. Application of Promissory Estoppel:
The petitioner argued that the government had held out a clear promise through its resolutions that new industrial units set up in Padra would be eligible for sales tax incentives. The petitioner claimed reliance on this promise and asserted that the government should be estopped from retracting it.

3. Interpretation of Government Resolutions:
The court examined several resolutions, including those dated December 22, 1977, August 27, 1980, and March 18, 1982. It was contended that Padra was mentioned as a growth centre in these resolutions, suggesting an intention to extend benefits to units set up there. The petitioner argued that these resolutions should be read harmoniously to infer that the 24 km limit did not apply to specified growth centres like Padra.

4. Applicability of Relaxations in Incentive Schemes:
The petitioner also referred to subsequent relaxations in the incentive schemes through resolutions dated September 15, 1978, and March 31, 1981. The 1978 resolution provided half the incentives to units within the prohibited distance, while the 1981 resolution extended full benefits to certain backward areas within the prohibited distance. The petitioner claimed eligibility for these relaxations.

Court's Findings:

1. Eligibility for Sales Tax Deferment Scheme:
The court found that the resolutions clearly stated that the incentives were not applicable to units within 24 kms of Baroda. Despite Padra being mentioned as a growth centre, the court held that the specific distance restrictions in the resolutions took precedence. Thus, the petitioner was not entitled to the sales tax deferment benefits under the original schemes.

2. Application of Promissory Estoppel:
The court rejected the application of promissory estoppel, stating that the resolutions explicitly excluded areas within the prohibited distance from the benefits. Therefore, no assurance was given that could be relied upon to claim estoppel.

3. Interpretation of Government Resolutions:
The court held that the resolutions must be read as a whole and in context. It concluded that the mention of Padra as a growth centre did not override the explicit distance restrictions. The resolutions were interpreted to mean that only units outside the prohibited distance were eligible for benefits.

4. Applicability of Relaxations in Incentive Schemes:
The court acknowledged that the 1978 resolution provided some relaxation, making the petitioner eligible for 50% of the incentives. However, it found that the 1981 resolution did not apply to Padra, as it was not a backward taluka or centrally notified backward district. Therefore, the petitioner was not entitled to full incentives under the 1981 resolution.

Conclusion:
The court partially allowed the petition. It quashed the impugned orders and directed the respondents to issue a deferment certificate up to Rs. 25 lacs for the period between October 20, 1983, and October 19, 1990, provided all conditions were satisfied. The petition was partly allowed with no order as to costs, and interim relief was vacated.

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