2006 (7) TMI 597 - AT - VAT and Sales Tax

Summary

Issues Involved:
1. Constitutionality of Section 16B of the West Bengal Sales Tax Act, 1994.
2. Whether the respondents made a promise for remission of turnover tax.
3. Whether the demand for turnover tax is barred by the principle of promissory estoppel.

Issue-wise Detailed Analysis:

1. Constitutionality of Section 16B of the West Bengal Sales Tax Act, 1994:
The petitioners argued that Section 16B, which imposes turnover tax, violates Articles 14 and 19(1)(g) of the Constitution of India, as it lacks rational classification. Article 14 ensures equality before the law, and Article 19(1)(g) guarantees the right to practice any profession or trade. However, the Tribunal found no merit in this contention, stating, "the fact asserted in the position does not suggest violation of the Constitutional provisions as contended in the petition and that this contention is baseless."

2. Whether the respondents made a promise for remission of turnover tax:
The petitioners claimed that the remission of "sales tax" granted under Section 41 of the West Bengal Sales Tax Act, 1994, should include turnover tax introduced later under Section 16B. The Tribunal noted that the original promise for tax remission did not include turnover tax, as it was introduced only in 2003. The Tribunal concluded, "the promise of exemption from the payment of 'sales tax' does not include exemption from payment of 'turnover tax' which was introduced subsequent to the time of making promise."

3. Whether the demand for turnover tax is barred by the principle of promissory estoppel:
The petitioners invoked the doctrine of promissory estoppel, arguing that they relied on the government's promise of tax exemption when investing in the revival of the sick unit. The Tribunal acknowledged that promissory estoppel could apply against the government but emphasized that it does not extend to legislative provisions. The Tribunal stated, "the doctrine of promissory estoppel does not extend to legislative provision," and concluded that the turnover tax under Section 16B was not a substitute for the sales tax referred to in the BIFR Scheme. Therefore, the demand for turnover tax was not barred by promissory estoppel.

Decision:
The Tribunal dismissed the application, stating that the petitioners were not entitled to the benefit of Section 32 of the Sick Industrial Companies (Special Provisions) Act, 1985, and that the turnover tax under Section 16B of the West Bengal Sales Tax Act, 1994, was validly imposed. The Tribunal concluded, "the application stands dismissed without cost."

Separate Judgments:
The Chairman and the Technical Member concurred with the Judicial Member's conclusion but provided additional reasoning. They emphasized that the promise of tax exemption was limited to sales tax and purchase tax, and did not extend to turnover tax introduced later. They also reiterated that the doctrine of promissory estoppel requires a clear and unambiguous promise, which was absent in this case regarding turnover tax. Thus, they agreed that the application should be dismissed.