1999 (8) TMI 951 - HC - VAT and Sales Tax

Summary

Issues:
Petition under Article 226 for direction to issue eligibility certificate; Withholding eligibility certificate without valid reason.

Analysis:
The petitioner, a public limited company, established a solvent extraction plant and was granted pioneer industry status with an eligibility certificate for nine years. Despite fulfilling all conditions, the respondents failed to issue the certificate, leading to potential tax imposition. The respondents did not provide a valid reason for withholding the certificate, despite the State Level Committee's approval and communication to the petitioner. The notification granting tax exemption to pioneer industries has legal force, binding the government to honor its commitment. The principles of promissory estoppel and substantive legitimate expectation prevent the government from retracting its promise. Denying the certificate contradicts the objective of incentivizing industrial development in underdeveloped areas, hindering progress.

In a similar case, the Supreme Court emphasized that if a taxpayer falls within the exemption's terms, the benefit cannot be denied based on supposed intentions of the exemption authority. Any additional conditions not in the notification are invalid, as executive instructions must align with statutory provisions and cannot undermine their effect. The judgment directed the respondents to issue the eligibility certificate within one month, upholding the petitioner's right based on the State Level Committee's decision communicated by the Industries Commissioner.

This judgment highlights the importance of upholding legal commitments, preventing arbitrary withholding of benefits, and ensuring that government decisions align with statutory provisions without deviating from the intended objectives of industrial development incentives.