2003 (3) TMI 700 - HC - VAT and Sales Tax

Summary

Issues:
1. Quashment of orders passed by State Appellate Forum and State Level Committee
2. Demand notices challenge
3. Eligibility certificate issuance

Issue 1: Quashment of orders passed by State Appellate Forum and State Level Committee

The petitioner filed a writ petition under Article 226 to quash the order passed by the State Appellate Forum and the State Level Committee. The petitioner's factory, located in a backward district, produced cotton and blended yarn. The State Level Committee initially granted a sales tax exemption for five years, later extended to nine years. Despite fulfilling conditions and executing agreements, the eligibility certificate was not issued. The State Level Committee subsequently denied the pioneer industry status to the petitioner, leading to a contempt petition and demand notices. The petitioner challenged the decision, arguing that the resolution was contrary to notifications and the Director of Industries had granted pioneer status. The Government Advocate supported the Committee's decision, citing a previous case irrelevant to the issue. The court found the petitioner met the conditions for the eligibility certificate, and the State had not withdrawn the pioneer status granted earlier.

Issue 2: Demand notices challenge

The State Level Committee's decision to deny pioneer industry status led to the issuance of demand notices against the petitioner. The petitioner contended that the resolution was inconsistent with the notifications governing the exemption. The court observed that the State had not withdrawn the pioneer status granted earlier, and the Committee's resolution did not address the cancellation or withdrawal of this status. The court noted the absence of any Subsidy Rules application for the eligibility certificate. The appellate forum upheld the Committee's decision without addressing the withdrawal of the pioneer status granted to the petitioner.

Issue 3: Eligibility certificate issuance

The court referred to previous judgments emphasizing the legal obligation of the State to honor commitments made through notifications granting exemptions. The court cited the rule of promissory estoppel and substantive legitimate expectation, holding that the State cannot retract promises made through notifications. The court allowed the writ petition, quashing the State Level Committee's resolution and the demand notices. It directed the respondents to issue the eligibility certificate to the petitioner within 30 days, in accordance with previous decisions and notifications. Each party was directed to bear its own costs, and the petition was allowed.

This detailed analysis of the judgment highlights the issues involved, the arguments presented by the parties, and the court's reasoning leading to the decision.