2006 (11) TMI 600 - HC - VAT and Sales Tax

Issues Involved:
1. Denial of sales tax exemption under the Industrial Policy of 1986.
2. Validity of assessment orders for various periods.
3. Constitutionality of rule 2(f) of the Assam Industries (Sales Tax Concessions) Rules, 1988.
4. Application of the doctrine of promissory estoppel.
5. Validity of Notification No. FTX.28/87/Pt. II/38 dated July 30, 1988.

Issue-wise Detailed Analysis:

1. Denial of Sales Tax Exemption Under the Industrial Policy of 1986:
The appellants challenged the denial of sales tax exemption under the Industrial Policy of 1986, arguing that eligibility certificates had been issued envisaging sales tax exemption for sales of goods from April 14, 1988, to April 13, 1993. The court noted that the policy did not unequivocally guarantee an absolute right to sales tax exemption, as it was subject to conditions that could be decided by the Government from time to time. The policy's clause 7 indicated that sales tax would be exempted "as may be decided by the Government from time to time," thus reserving the Government's right to stipulate conditions for such exemptions.

2. Validity of Assessment Orders for Various Periods:
The appellants contested the validity of various assessment orders for periods ending between September 30, 1988, and March 31, 1993. The court upheld the assessment orders, stating that the appellants did not hold an authorisation certificate as required by the impugned notification dated July 30, 1988. The notification stipulated that dealers must not collect any amount by way of sales tax and must hold an authorisation certificate to be eligible for sales tax exemption. Since the appellants did not meet these conditions, the assessment orders were deemed valid.

3. Constitutionality of Rule 2(f) of the Assam Industries (Sales Tax Concessions) Rules, 1988:
The appellants initially challenged the vires of rule 2(f), which excluded certain commodities, including tea, from being considered as raw materials for sales tax exemption purposes. However, this challenge was abandoned during the proceedings. The court noted that the learned single Judge had upheld the constitutionality of rule 2(f) on merits, and since the issue was not pursued in the appeals, no further discussion was warranted.

4. Application of the Doctrine of Promissory Estoppel:
The appellants argued that the Government's promise of sales tax exemption under the policy should estop it from denying the exemption. The court found that the pleadings did not provide an adequate factual foundation to sustain the plea of promissory estoppel. The court reiterated that for promissory estoppel to apply, there must be a clear and unequivocal promise, and the promisee must have acted upon it to their detriment. The court concluded that the policy, Act, and Rules did not unequivocally promise an unrestricted right to sales tax exemption, and thus, the plea of promissory estoppel was not applicable.

5. Validity of Notification No. FTX.28/87/Pt. II/38 Dated July 30, 1988:
The appellants challenged the validity of the notification, arguing that it was contrary to the policy and the Act. The court upheld the notification, stating that it was issued in exercise of the powers conferred by section 3A of the Assam Sales Tax Act, 1947, as amended by the Assam Industries (Sales Tax Concessions) Act, 1986. The notification stipulated conditions for sales tax exemption, including the requirement for an authorisation certificate. The court found that the notification was consistent with the legislative scheme and the policy, and thus, it was valid and enforceable.

Conclusion:
The appeals were dismissed, and the court upheld the validity of the assessment orders, the constitutionality of rule 2(f), and the validity of the notification dated July 30, 1988. The plea of promissory estoppel was rejected due to the lack of a clear and unequivocal promise and the Government's reserved right to stipulate conditions for sales tax exemption.

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