2003 (10) TMI 623 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Legitimacy of tax exemption under G.O. Ms. No. 377 for roller flour mills.
2. Interpretation of G.O. Ms. No. 377 in the context of the Andhra Pradesh General Sales Tax Act, 1957.
3. Historical background and representation leading to the issuance of G.O. Ms. No. 377.
4. Misrepresentation and fraud in obtaining G.O. Ms. No. 377.
5. Applicability of the doctrine of promissory estoppel.

Detailed Analysis:

1. Legitimacy of Tax Exemption Under G.O. Ms. No. 377:
The appellant, M/s. Kalyani Roller Flour Mills (P) Limited, was assessed on gross and net turnover for the assessment years 1991-92 and 1992-93. The Commercial Tax Officer levied tax on the first sale of wheat and wheat products and the sale of atta by the assessee. The appellant contested the tax imposition, arguing that G.O. Ms. No. 377 granted them an exemption from sales tax. The Commissioner of Commercial Taxes, however, withdrew the exemption, stating that the exemption was only applicable to roller flour mills undertaking the grinding process, which the appellant did not.

2. Interpretation of G.O. Ms. No. 377:
The appellant argued that the exemption should apply generally to all roller flour mills, regardless of whether they undertook the grinding process. The Commissioner, however, interpreted G.O. Ms. No. 377 as only applying to mills that engaged in the grinding of wheat, based on the historical context and the representation made by the millers' association. The court examined the language of the G.O. and concluded that the exemption was intended for mills involved in the grinding process, as supported by the historical background and the specific wording in the representation to the government.

3. Historical Background and Representation Leading to Issuance of G.O. Ms. No. 377:
The A.P. Roller Flour Mills Association had requested an exemption from sales tax on wheat products to restore parity with neighboring states. The court noted that the representation specifically sought the removal of sales tax on wheat obtained by roller flour mills for grinding, indicating that the exemption was intended for mills engaged in the grinding process. This historical context was crucial in interpreting the scope of G.O. Ms. No. 377.

4. Misrepresentation and Fraud in Obtaining G.O. Ms. No. 377:
The court found that the exemption under G.O. Ms. No. 377 was obtained through misrepresentation by the roller flour mills association, as they falsely claimed that neighboring states did not levy sales tax on wheat and wheat products. This misrepresentation led to the issuance of G.O. Ms. No. 561, which withdrew the earlier exemption. The court cited the division bench's observation in Roxy Roller's case that the exemption was based on fraudulent claims and thus could not be sustained.

5. Applicability of the Doctrine of Promissory Estoppel:
The appellants argued that the withdrawal of the exemption amounted to a breach of promissory estoppel, as they had relied on the exemption to their detriment. However, the court held that since the exemption was obtained through misrepresentation, the doctrine of promissory estoppel did not apply. The government was justified in withdrawing the exemption, as it was based on fraudulent claims.

Conclusion:
The court dismissed the appeals, finding no justification for extending the tax exemption under G.O. Ms. No. 377 to the appellants, who did not engage in the grinding process. The court emphasized that the exemption was intended only for roller flour mills involved in grinding, as evidenced by the historical background and specific representations made to the government. The court also upheld the government's decision to withdraw the exemption due to misrepresentation, rejecting the appellants' claim of promissory estoppel. Appeals dismissed.