1977 (1) TMI 170 - HC - Indian Laws

Summary

Issues Involved:
1. Applicability of equitable estoppel against the government.
2. Validity and enforceability of assurances given by government officials.
3. Entitlement to refund of sales tax and inter-state sales tax under revised government policy.
4. Compliance with statutory provisions under the Punjab General Sales Tax Act.

Detailed Analysis:

1. Applicability of Equitable Estoppel Against the Government:
The court examined the doctrine of equitable estoppel and its applicability against the government. It was argued that there can be no estoppel against the government in the exercise of its legislative, sovereign, or executive powers. However, the court noted that while there can be no estoppel against the government in the exercise of its legislative or sovereign powers, estoppel may apply in certain executive actions unless it impedes statutory duties or public policy. The court referenced several precedents, including Union of India v. Indo-Afghan Agencies and Century Spinning and Manufacturing Co. v. Ulhas Nagar Municipality, indicating that equitable estoppel could bind the government under specific circumstances.

2. Validity and Enforceability of Assurances Given by Government Officials:
The court scrutinized whether the assurances given by government officials to the company were valid and enforceable. It was found that no final decision was taken during the meeting on 16-10-1968 between the company representative and the government official. The company sought confirmation of concessions in subsequent communications, indicating that no definitive commitment was made at the initial meeting. The final decision communicated on 16-6-1969 was subject to the revised policy effective from 14-5-1969, which limited the concessions available to the company.

3. Entitlement to Refund of Sales Tax and Inter-State Sales Tax Under Revised Government Policy:
The court determined that the company's entitlement to concessions and incentives was governed by the revised policy of 14-5-1969, which was in effect when the final decision was communicated on 16-6-1969. Under the revised policy, the company was entitled to a refund of sales tax on direct sales to consumers and inter-state sales only. The court found that the company could not claim concessions based on earlier representations that were inconsistent with the revised policy.

4. Compliance with Statutory Provisions Under the Punjab General Sales Tax Act:
The court emphasized that the Punjab General Sales Tax Act provided specific provisions for declaring goods tax-free, exempting dealers, and refunding taxes, which had to be strictly followed. The government could not grant refunds or exemptions outside the statutory framework. The court noted that unauthorized representations in government brochures and correspondence could not override statutory provisions. The doctrine of equitable estoppel could not be invoked to compel the government to act contrary to the statutory scheme and public policy.

Conclusion:
The court concluded that there was no equitable estoppel against the government entitling the company to a refund of sales tax. The company's rights, if any, were subject to the revised policy effective from 14-5-1969. The court dismissed the civil writ petitions and allowed the letters patent appeal, indicating that the company could still approach the government for a refund of inter-state sales tax and tax on direct sales to consumers, as the government had expressed its readiness to refund these amounts.