2001 (2) TMI 1017 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Legality of the resolution dated April 29, 2000, discontinuing sales tax incentives under the Industrial Incentive Policy 1995-2000.
2. Application of the principle of promissory estoppel regarding the resolution.
3. Retrospective effect of the resolution and its arbitrariness.
4. Petitioner's eligibility as a pipeline case under the Industrial Incentive Policy 1995-2000.

Detailed Analysis:

1. Legality of the Resolution:
The petitioner challenged the resolution dated April 29, 2000, which sought to discontinue sales tax incentives provided under the Industrial Incentive Policy 1995-2000. The resolution was issued following a consensus at a conference of Chief Ministers and Finance Ministers on November 16, 1999, to abolish sales tax-related incentives with effect from January 1, 2000. The resolution stipulated that incentives for new investments or expansions would be discontinued from January 1, 2000, but existing commitments would be honored if certain conditions were met.

2. Principle of Promissory Estoppel:
The petitioner argued that based on the Industrial Incentive Policy 1995-2000, they had obtained provisional registration as a small-scale industry and land on lease, and thus the respondents were estopped from refusing the benefits of the policy. The petitioner cited the principle of promissory estoppel, supported by the Supreme Court decisions in Pawan Alloys and Casting Pvt. Ltd., Meerut v. U.P. State Electricity Board (1997) and State of Rajasthan v. Bhatnagar Cement Co. (Pvt.) Ltd. (2002). However, the court found that the petitioner had not altered its position irretrievably before the cut-off date and thus could not invoke promissory estoppel.

3. Retrospective Effect and Arbitrariness:
The petitioner contended that the resolution's retrospective implementation from January 1, 2000, was arbitrary and illegal. The court noted that the resolution was based on a prior decision taken on November 16, 1999, and that the petitioner must be presumed to be aware of this decision. The court held that the resolution was neither arbitrary nor irrational, as it was issued in public interest and based on a consensus for sales tax reforms.

4. Eligibility as a Pipeline Case:
The petitioner claimed eligibility as a pipeline case, arguing that they had satisfied the conditions stipulated in the resolution. However, the court found that the petitioner had not applied for provisional registration, obtained land, or applied for finances before January 1, 2000, as required by the resolution. Consequently, the petitioner did not meet the criteria for being treated as a pipeline case.

Conclusion:
The court dismissed the petition, holding that the resolution dated April 29, 2000, was not arbitrary or illegal. The petitioner failed to establish the plea of promissory estoppel and did not meet the conditions to be treated as a pipeline case. The court emphasized that public interest and resource constraints justified the policy change, aligning with the Supreme Court's principle that public interest overrides private loss or gain. The petition was thus dismissed with no order as to costs.