1995 (1) TMI 413 - HC - Indian Laws

Summary

Issues Involved:
1. Entitlement to benefits under paragraph 10.4(i)(b) of the Industrial Incentive Policy, 1993.
2. Interpretation of the Industrial Incentive Policy, 1993.
3. Validity of Notification No. S.O. 95 dated 4.4.1994 issued by the Commercial Taxes Department.
4. Application of the principle of estoppel.

Issue-Wise Detailed Analysis:

1. Entitlement to Benefits under Paragraph 10.4(i)(b) of the Industrial Incentive Policy, 1993:
The core issue is whether the petitioners, who established their industrial units before 1st April 1993 with investments on plant and machinery not exceeding Rs. 15 crores and commenced production before that date, are entitled to the benefit of sales tax exemption on the purchase of raw materials for seven years from 1.4.1993. The petitioners argued that paragraph 10.4(i)(b) of the Industrial Incentive Policy, 1993, clearly grants this benefit without any condition related to prior benefits under earlier policies. The State contended that the policy did not intend to extend benefits to units that had already availed of incentives under previous policies.

2. Interpretation of the Industrial Incentive Policy, 1993:
The court examined the language of paragraph 10.4(i)(b) and the overall scheme of the Industrial Incentive Policy, 1993. It was noted that the policy aimed to accelerate industrial growth and provided various incentives to new units coming into production between 1.4.1993 and 31.3.1998. However, the policy also extended a limited benefit of sales tax exemption on the purchase of raw materials to older units with investments not exceeding Rs. 15 crores as of 1.4.1993. The court emphasized that the policy must be read as a whole, and the clear and unequivocal language of paragraph 10.4(i)(b) should be given effect.

3. Validity of Notification No. S.O. 95 dated 4.4.1994 issued by the Commercial Taxes Department:
The petitioners challenged the notification issued by the Commercial Taxes Department on 4.4.1994, which imposed a condition that the sales tax exemption on the purchase of raw materials would only be available to old units that had not availed of benefits under any previous industrial policy. The court found that this condition was inconsistent with the clear language of paragraph 10.4(i)(b) of the Industrial Incentive Policy, 1993. The court held that the Commercial Taxes Department could not modify the policy decision by imposing such a condition and that the notification was, therefore, unwarranted and illegal.

4. Application of the Principle of Estoppel:
The court considered the principle of estoppel, noting that the petitioners had altered their position based on the representation made in the Industrial Incentive Policy, 1993. The petitioners had purchased raw materials within the State of Bihar, relying on the promise of sales tax exemption. The court held that the petitioners could not be deprived of the promised benefit by a subsequent notification that was inconsistent with the policy decision.

Conclusion:
The court allowed the writ petitions, quashing the Notification No. S.O. 95 dated 4.4.1994 to the extent that it imposed a condition that the sales tax exemption on the purchase of raw materials would only be available to old industrial units that had not availed of benefits under any previous industrial policy. The court declared that the petitioners are entitled to the facility of sales tax exemption on the purchase of raw materials under paragraph 10.4(i)(b) of the Industrial Incentive Policy, 1993.