2001 (11) TMI 981 - HC - VAT and Sales Tax

Summary

Issues:
1. Change in scheme of assistance to sugar mills by the government.
2. Petitioner's grievance regarding the assistance provided under the revised scheme.
3. Legitimate expectation and estoppel against the State.
4. Government's authority to change economic policies.
5. Justification for the change in the subsidy scheme.
6. Petitioner's financial position and impact of policy change.
7. Allegations of discrimination and hostile treatment.
8. Comparison to previous judgments and dismissal of the writ petition.

Analysis:
Issue 1: The judgment discusses the change in the scheme of assistance to sugar mills by the government through the Government Order of September 1, 1988. The new scheme involved deferral of purchase tax for a specified period, replacing the previous subsidy scheme.

Issue 2: The petitioner, a sugar mill, expressed dissatisfaction with the assistance provided under the revised scheme, comparing it to the benefits granted to other sugar mills like Ponni Sugars & Chemicals Ltd. and Bannari Amman Sugar Mills Ltd. The petitioner argued that the policy prevailing at the time of establishment should continue to govern their industry.

Issue 3: The court examined the petitioner's claim of legitimate expectation and estoppel against the State, concluding that mere knowledge of existing policy does not create a binding promise or legitimate expectation against policy changes.

Issue 4: The judgment emphasized the government's authority to change economic policies, stating that economic policies are subject to change based on evolving scenarios and governmental discretion, guided by constitutional requirements.

Issue 5: The court justified the change in the subsidy scheme by highlighting the government's need to minimize revenue loss, especially considering the increasing number of sugar mills commencing production and the financial implications of continuing the previous subsidy scheme.

Issue 6: The judgment evaluated the petitioner's financial position post-policy change, noting the company's profitability and stability despite the altered subsidy scheme, indicating that the policy change did not critically impact the petitioner's operations.

Issue 7: Allegations of discrimination and hostile treatment were addressed, with the court ruling that the government's treatment of the petitioner was not discriminatory, as all sugar mills established after 1988 were uniformly treated under the revised scheme.

Issue 8: The judgment compared the case to previous judgments, dismissing the petitioner's claim by affirming the decision of the Special Taxation Tribunal, citing lack of merit in the petition and upholding the dismissal of the writ petition.