2000 (10) TMI 964 - HC - VAT and Sales Tax

Summary

Issues Involved:

1. Applicability of the Government Order dated 14th July, 1992, regarding the amendment of grant in aid for entertainment tax.
2. Entitlement to grant in aid based on promissory estoppel.
3. Legality of the orders dated 14th May, 1992, 16th July, 1993, 22nd July, 1993, 13th September, 1993, and 22nd September, 1993.

Detailed Analysis:

1. Applicability of the Government Order dated 14th July, 1992:

The petitioner argued that the Government Order dated 14th July, 1992, which amended the grant in aid for the first two years from 100% to 75% of the entertainment tax, should not apply to their case. The petitioner had relied on the initial Government Order dated 18th July, 1989, which promised 100% grant in aid for the first two years. The petitioner had taken steps to construct a new cinema hall based on this promise, and thus, the amended order should apply prospectively to those who decided to construct new cinema halls after 14th July, 1992.

2. Entitlement to Grant in Aid Based on Promissory Estoppel:

The petitioner claimed that they had altered their position based on the incentives announced in the Government Order dated 18th July, 1989. The principle of promissory estoppel was invoked, arguing that the State should be bound by its promise, as the petitioner had acted on it and changed their position by investing in the cinema hall construction. The petitioner cited the Supreme Court decisions in M/s. Motilal Padampat Sugar Mills Co. Ltd. v. State of U.P. and Pawan Alloys and Casting Pvt. Ltd., Meerut v. U.P. State Electricity Board, which support the doctrine of promissory estoppel.

3. Legality of the Orders Dated 14th May, 1992, 16th July, 1993, 22nd July, 1993, 13th September, 1993, and 22nd September, 1993:

The petitioner challenged the legality of these orders, which demanded a 25% entertainment tax for the first two years, contrary to the initial promise of 100% exemption. The respondents argued that the petitioner completed the cinema hall construction and obtained the license after the amended order came into force, thus entitling them to only 75% grant in aid.

Court's Findings:

The court found that the petitioner had applied for permission to construct the cinema hall before the amended order came into effect and had acted on the promise of 100% grant in aid. The court held that the principle of promissory estoppel applied, and the petitioner was entitled to the benefits promised in the Government Order dated 18th July, 1989. The court noted that the respondents did not provide any material to show that the reduction in grant in aid was in the public interest or that the petitioner could restore the status quo ante.

Conclusion:

The court concluded that the Government Order dated 14th July, 1992, would not apply to the petitioner. The orders dated 16th July, 1993, 22nd July, 1993, 13th September, 1993, and 22nd September, 1993, were quashed. The petitioner was entitled to 100% grant in aid for the first two years as per the initial Government Order dated 18th July, 1989. The writ petition was allowed, and no order as to costs was made.