1998 (8) TMI 569 - HC - VAT and Sales Tax

Summary

Issues:
Assessment order under Assam Finance (Sales Tax) Act, 1956 challenged based on exemption claim, eligibility certificate validity, Industrial Policy of 1986, and promissory estoppel plea.

Analysis:

1. Assessment Order Challenge:
The petitioner challenged the assessment order for periods ending March 31, 1989 and September 30, 1989 under the Assam Finance (Sales Tax) Act, 1956. The dispute arose as the assessing authority rejected the petitioner's claim for exemption based on an eligibility certificate issued by Udyog Sahayak. The Joint Commissioner of Taxes dismissed the revision petitions, holding that only new industrial units were entitled to exemption under the Assam Industries (Sales Tax Concessions) Act, 1986. The petitioner contended that the Industrial Policy of 1986 entitled them to exemption, but the court found no infirmity in the assessment order.

2. Industrial Policy of 1986 and Exemption Claim:
The petitioners relied on the Incentive Scheme of 1986 by the Government of Assam, which granted sales tax exemption to specified units. The Scheme applied to new units set up on or after January 1, 1987, or existing units undertaking expansion, modernization, or diversification. The petitioners claimed to fulfill all requirements and possessed valid eligibility certificates. However, the court emphasized that the Scheme did not confer an absolute right to exemption, and the plea of promissory estoppel based on the Scheme was not upheld.

3. Promissory Estoppel Plea:
The petitioners invoked promissory estoppel, arguing that they substantially invested in reliance on the Government's assurance of sales tax exemption under the Industrial Policy of 1986. The court discussed the principles of estoppel, emphasizing that public authorities cannot be estopped from lawful duties. The doctrine of promissory estoppel cannot override statutory provisions or bind authorities to unlawful activities. The court held that the doctrine of estoppel could not be applied based on mere assertions without supporting material facts.

4. Judicial Interpretation of Promissory Estoppel:
The judgment referred to legal precedents such as Motilal Padampat Sugar Mills Co. Ltd. v. State of Uttar Pradesh, emphasizing that promissory estoppel cannot override legal obligations or legislative powers. The court highlighted that the doctrine of estoppel is based on equity to prevent injustice but cannot supersede the operation of law. Various legal principles were discussed to illustrate the limitations of promissory estoppel against public authorities and legislative actions.

5. Final Decision:
After analyzing the arguments and legal principles, the court dismissed the writ petition challenging the assessment order. The court found no grounds to interfere with the assessment decision made by the Joint Commissioner of Taxes. The petition was dismissed with a cost imposed on the petitioners. The interim order was vacated, and the writ petitions were ultimately dismissed.

This detailed analysis covers the issues raised in the legal judgment, focusing on the assessment order challenge, Industrial Policy of 1986, promissory estoppel plea, judicial interpretation of estoppel, and the final decision of the court.