2004 (8) TMI 681 - SC - VAT and Sales Tax

Whether in fact the appellant in its newly established industry manufactures a product which is commercially different from the product manufactured in its pre-existing unit of manufacturing Hot Rolled Product (HRP)? Held that - The material produced before the Joint Commissioner was in our opinion sufficient to decide whether the product manufactured by the appellant is CRM or not and the said Joint Commissioner having given a positive finding and that finding having not been interfered with by the Commissioner we think the High Court erred in remanding the matter for fresh inquiry. We are convinced that the issue before the High Court was not whether in fact the new unit of the appellant manufactures HRM or CRM. That being the case the High Court ought not to have raised the issue suo motu and remanded the matter to the Commissioner. Appeal allowed and the impugned order of the High Court is set aside. We restore the proposal made by the Joint Commissioner for grant of exemption certificate to the appellant as also the exemption certificates granted consequently.

Issues Involved:
1. Whether the product manufactured by the appellant in its new unit is commercially different from the product manufactured in its pre-existing unit.
2. Application of the principle of promissory estoppel against the State.
3. The validity of the High Court's decision to remand the matter for re-examination.

Detailed Analysis:

1. Commercial Difference Between Products:
The appellant established a new unit for the manufacture of Cold Rolled Mill (CRM) products, distinct from the Hot Rolled Mill (HRM) products produced in its old unit. The High Court remanded the matter to the Commissioner of Commercial Taxes to re-examine if the CRM product is commercially different from the HRM product. The Joint Commissioner had previously concluded, based on extensive inquiry and evidence, that CRM and HRM are distinct products requiring different manufacturing processes and equipment. The Commissioner, however, initiated a suo motu revision and concluded that both products should be treated as the same commodity for tax purposes, relying on an entry in the Central Sales Tax Act and an overruled judgment.

2. Principle of Promissory Estoppel:
The appellant argued that the State of Bihar, through its industrial policy and subsequent assurances, promised sales tax exemptions, inducing the appellant to invest Rs. 2000 crores in the new unit. The appellant claimed that the State is precluded by the principle of promissory estoppel from retracting its promise. The High Court did not address this issue directly, focusing instead on the factual determination of the product's nature.

3. Validity of High Court's Remand Decision:
The High Court, despite accepting the appellant's case in other respects, remanded the matter for further evidence on whether CRM is commercially different from HRM. The Supreme Court found this remand unnecessary, noting that the Joint Commissioner's factual findings were conclusive and unchallenged by the Commissioner. The Supreme Court emphasized that the appellant had consistently communicated its intention to manufacture CRM, and the State had accepted this plan at every stage. The High Court's decision to remand for additional evidence was deemed an error, as the issue had already been conclusively decided.

Conclusion:
The Supreme Court set aside the High Court's order of remand, restoring the Joint Commissioner's proposal for granting the exemption certificate to the appellant. The Court held that the High Court should not have raised the issue of the product's nature suo motu and remanded the matter, as it was already conclusively decided that CRM and HRM are distinct products.

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