1997 (11) TMI 510 - AT - VAT and Sales Tax

Summary

Issues Involved:
1. Promissory Estoppel
2. Validity of G.O. Ms. No. 989, Industries, dated August 1, 1988
3. Refund of Purchase Tax

Issue-wise Detailed Analysis:

1. Promissory Estoppel:
The petitioner argued that the Government of Tamil Nadu had made a lawful promise through G.O. Ms. No. 1414, Industries, dated November 30, 1984, and G.O. Ms. No. 1497, Industries, dated December 26, 1984, to grant a purchase tax subsidy for five years from the date of commencement of production. The petitioner relied on the doctrine of promissory estoppel, citing the Supreme Court 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. The petitioner claimed that they had arranged their affairs based on this promise and that the Government cannot rescind it.

2. Validity of G.O. Ms. No. 989, Industries, dated August 1, 1988:
The petitioner contended that G.O. Ms. No. 989, Industries, dated August 1, 1988, which imposed a monetary ceiling of Rs. 300.00 lakhs on the purchase tax subsidy and limited the subsidy period, was not applicable to them. The petitioner argued that this new order adversely affected them by imposing a limit that was not present in the earlier orders. The Tribunal found that the Government's promise through the earlier orders should bind it for the stipulated period, and it could not rescind or alter the promise to the petitioner's detriment.

3. Refund of Purchase Tax:
The petitioner sought a refund of Rs. 92,85,277 collected as purchase tax after April 1, 1988, arguing that this collection was contrary to the earlier promises made by the Government. The Tribunal accepted the petitioner's argument, holding that the Government's promise of a five-year subsidy should be honored, and the subsequent order limiting the subsidy was not applicable to the petitioner. Consequently, the petitioner was entitled to a refund of the purchase tax collected during the disputed period.

Conclusion:
The Tribunal held that the doctrine of promissory estoppel applied to the facts of the case, and the Government of Tamil Nadu was bound by its earlier promises. G.O. Ms. No. 989, Industries, dated August 1, 1988, was deemed inapplicable to the petitioner, and the petitioner was entitled to the consequential relief of a refund of the purchase tax collected. The petition was allowed, and the Tribunal ordered that its decision be observed and executed by all concerned.