2003 (9) TMI 719 - HC - VAT and Sales Tax

Issues Involved:
1. Entitlement to benefit of deferment of tax.
2. Applicability of the M.P. Deferment of Tax Rules post-reorganization.
3. Interpretation of the Madhya Pradesh Reorganisation Act, 2000.
4. Impact of Adaptation of Laws Order, 2000.
5. Promissory estoppel and legitimate expectation.
6. Jurisdiction of the High Court of Madhya Pradesh.

Detailed Analysis:

1. Entitlement to Benefit of Deferment of Tax:
The petitioner claimed entitlement to the benefit of deferment of tax as per the eligibility certificate issued on November 19, 1996, under the M.P. Deferment of Tax Rules, 1986. The petitioner argued that this benefit should continue even after the reorganization of the State of Madhya Pradesh into Madhya Pradesh and Chhattisgarh.

2. Applicability of the M.P. Deferment of Tax Rules Post-Reorganization:
The core issue was whether the petitioner, whose unit is now located in Chhattisgarh, could continue to claim the benefit of the M.P. Deferment of Tax Rules in the successor State of Madhya Pradesh. The petitioner contended that the import of cement from Chhattisgarh to Madhya Pradesh should not be considered an inter-State sale but remain an intra-State sale under the provisions of the Reorganisation Act.

3. Interpretation of the Madhya Pradesh Reorganisation Act, 2000:
The court examined sections 78 and 79 of the Reorganisation Act. Section 78 provides that the provisions of Part II of the Act shall not be deemed to have effected any change in the territories to which any law in force extends or applies. Section 79 allows the appropriate government to make adaptations and modifications of the law for facilitating its application in relation to the State of Madhya Pradesh or Chhattisgarh.

4. Impact of Adaptation of Laws Order, 2000:
The Adaptation of Laws Order, 2000, issued by the State of Chhattisgarh substituted "Chhattisgarh" for "Madhya Pradesh" in the relevant laws. This adaptation meant that the M.P. Commercial Tax Act was now applicable as the Chhattisgarh Commercial Tax Act within the territory of Chhattisgarh. The court held that the benefit of deferment could not be extended to both States simultaneously as per the Reorganisation Act.

5. Promissory Estoppel and Legitimate Expectation:
The petitioner argued that the benefit conferring notifications issued by the erstwhile State of Madhya Pradesh should bind both successor States based on principles of promissory estoppel. The court, however, held that the concept of promissory estoppel could not override statutory provisions. The court also rejected the plea of legitimate expectation, stating that it could not travel beyond the law, especially fiscal law.

6. Jurisdiction of the High Court of Madhya Pradesh:
The petitioner sought relief from the High Court of Madhya Pradesh, arguing that the sales made in Madhya Pradesh should be treated as intra-State sales. The court, however, held that the transactions between Chhattisgarh and Madhya Pradesh post-reorganization should be treated as inter-State sales, and the High Court of Madhya Pradesh had no jurisdiction to entertain the petition for sales made in Chhattisgarh.

Conclusion:
The court dismissed the writ petition, holding that the petitioner could not claim the benefit of deferment of tax in the successor State of Madhya Pradesh post-reorganization. The court found no merit in the petitioner's arguments and upheld the statutory provisions and adaptations made under the Reorganisation Act, 2000. The appeals were also dismissed, with no order as to costs.

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