1998 (4) TMI 522 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Promissory Estoppel
2. Tax Exemption under Industrial Policy Resolution (IPR)
3. Issuance of Notification under Section 6 of the Orissa Sales Tax Act
4. Validity of Assessment Orders

Detailed Analysis:

Promissory Estoppel:
The petitioner argued that the Industrial Policy Resolution (IPR) created a legitimate expectation for tax exemptions based on the doctrine of promissory estoppel. They cited the case of State of Himachal Pradesh v. Ganesh Wood Products, which emphasized equity and justice between parties. The court, however, found that the conditions for invoking promissory estoppel were not met. The petitioner had acquiesced to the provisions for exemption of tax in lieu of deferment as per clause 7.1.6 of the IPR. The court ruled that the scope of promissory estoppel must be understood correctly, and the promise must be clear and unequivocal, which was not the case here.

Tax Exemption under Industrial Policy Resolution (IPR):
The petitioner sought exemption from sales tax on finished products (cement) under the IPR. The IPR provided benefits for new large industrial units, including tax exemptions on purchases of spare parts, raw materials, and packing materials. The petitioner argued that the State's policy brought a legitimate expectation of these benefits. However, the court found that the petitioner had already availed of tax exemptions on raw materials and machinery and had applied for exemption in lieu of deferment for finished products. The court held that the petitioner could not extend the promise of the IPR beyond its clear terms.

Issuance of Notification under Section 6 of the Orissa Sales Tax Act:
The petitioner requested the court to direct the State Government to issue a notification under Section 6 to cover the classes of goods manufactured by new large-scale industries. The court found this request confusing and untenable. The existing notification under Section 7 was consistent with the IPR, and the petitioner could not enlarge the scope of the promise. The court ruled that it could not compel the State to issue a new notification based on the petitioner's interpretation of the IPR.

Validity of Assessment Orders:
The petitioner challenged the assessment orders for the years 1993-94 and 1994-95, arguing that they were entitled to tax exemptions. The court noted that the assessing authority, being a creature of statute, could not grant relief based on a prospective notification. The court did not scrutinize the assessment orders but granted the petitioner leave to challenge them separately. The court also clarified that if Larsen & Toubro Ltd. paid the tax liability, Kehar Agencies should not be subjected to double payment.

Conclusion:
The court dismissed the writ petitions, ruling out the point of promissory estoppel and refusing the prayer for a writ commanding the State Government to issue a notification under Section 6. The court emphasized that the petitioner could not extend the scope of the IPR beyond its clear terms and that the assessing authority could not grant relief based on anticipated notifications. The court granted leave to the petitioner to challenge the assessment orders separately, ensuring that double taxation would not occur. The writ petitions were disposed of with no order as to costs.