2023 (3) TMI 124 - HC - VAT and Sales Tax

Doctrine of promissory estoppel - Prayer for a writ of mandamus (To compel a court or judicial tribunal to exercise its jurisdiction when it has refused to exercise it), commanding the respondents to allow remission of sales tax - HELD THAT - In the case on hand the petitioners have failed to prove that there exists a legal right which is to be enforced against the State and that the State has failed to perform its legal or statutory duty. No mandamus can, therefore, be issued commanding the State to exercise the power of relaxation in a manner so as to fulfill the desire of the unit to avail remission of sales tax - This Court has already observed that the petitioners have failed to demonstrate that the investment of Rs. 23 crores made by the unit was pursuant to any promise made by the government to allow remission of sales tax on such investment. Therefore, the question of reversing the promise by the State does not arise in the case on hand. Under such circumstances, the necessity to assign reasons for not allowing the remission as argued by the learned Senior Counsel for the petitioner does not arise as it is not a case of claiming exemption from liability. This Court is of the considered view that the State action in the case on hand cannot be said to be arbitrary. The learned Tribunal rightly observed that no right accrued in favour of the petitioners to claim remission of tax. The Tribunal was also right in observing that the unit was granted benefit as a special case. This Court accordingly holds that the impugned order passed by the learned Tribunal do not suffer from any infirmity. Therefore, no interference with the said order is called for. The issue that fell for consideration in K.M. Refineries 2019 (9) TMI 522 - BOMBAY HIGH COURT was whether the Commissioner of Sales Tax had the power to curtail the validity period for enjoyment of incentives and other benefits under the relevant Incentive Scheme and also whether such reduction could have been made in the name of the policy of GST. On such facts it was held that no authority was given to the Commissioner to modify, enlarge or curtail the validity period and also that the benefits under the Incentive Scheme cannot be curtailed in the name of the new GST policy - In the case on hand it cannot be said that the validity period for enjoyment of the Incentive Scheme has been curtailed or that the unit was deprived from enjoying the benefits of remission of tax for the investments made on Fixed Capital Assets within 31.03.2004. Thus, the reported decision in K.M. Refineries, being distinguishable on facts, do not have any manner of application to the case on hand. In Brahmputra Metallics 2020 (12) TMI 1241 - SUPREME COURT , the curtailment of the validity period as promised by the State was in issue. It was found on facts that though the State made a representation in the relevant Industrial Policy that a rebate/ deduction in electricity duty would be offered for a specified period, the units were deprived from enjoying such benefit for such specified period due to unexplained delay in issuance of notification as contemplated under the scheme. On such factual background, the Hon ble Supreme Court held that the State action is arbitrary and violative of Article 14 - In the case on hand, this Court has already observed that State action is not arbitrary and therefore, the said reported decision is not applicable. This Court, holds that the writ petition is devoid of any merit and the same is liable to be dismissed - Petition dismissed.

Issues Involved:
1. Remission of tax on investments made after the scheme's duration.
2. Application of the doctrine of promissory estoppel.
3. Validity of the State's decision and its adherence to Article 14 of the Constitution.
4. Interpretation of Section 118(c) of the WB VAT Act, 2003.
5. Authority of the State to relax provisions under Section 44 of the 1994 Act.

Detailed Analysis:

1. Remission of Tax on Investments Made After the Scheme's Duration:
The petitioner, a registered dealer under the West Bengal Sales Tax Act, 1994, and the WB VAT Act, sought remission of tax on investments made after the scheme's duration. The State had allowed remission on investments up to Rs. 194 crores, but the petitioner sought remission for an additional Rs. 23 crores invested between 01.04.2005 and 31.12.2005. The Tribunal upheld the State's decision, and the High Court agreed, stating that the scheme's duration was limited to 5 years and investments made after 31.03.2004 did not qualify for remission.

2. Application of the Doctrine of Promissory Estoppel:
The petitioner argued that the State's promise under the incentive scheme should bind it to allow remission for all investments made, regardless of the date. The Court, however, held that the promise was limited to investments made within the scheme's duration, and there was no breach of promissory estoppel. The State had fulfilled its promise by allowing remission on investments up to Rs. 194 crores.

3. Validity of the State's Decision and Its Adherence to Article 14 of the Constitution:
The petitioner claimed the State's action was arbitrary and violated Article 14 of the Constitution. The Court found that the State's decision was consistent with the scheme's terms and conditions, and there was no arbitrary action. The Tribunal's observation that the petitioner had no right to claim remission beyond the approved amount was upheld.

4. Interpretation of Section 118(c) of the WB VAT Act, 2003:
The petitioner contended that Section 118(c) of the WB VAT Act allowed for remission of tax on investments made after the scheme's duration. The Court clarified that this provision applied only to the balance unexpired period or balance eligible amount under the 1994 Act. Since the investments in question were made after the scheme's duration, they did not qualify for remission under the WB VAT Act.

5. Authority of the State to Relax Provisions Under Section 44 of the 1994 Act:
The petitioner sought a writ of mandamus directing the State to exercise its power to relax provisions under Section 44 of the 1994 Act. The Court held that the State's power to relax provisions was discretionary and not subject to compulsion by the petitioner. The petitioner failed to demonstrate a legal right to claim such relaxation, and no mandamus could be issued.

Conclusion:
The Court dismissed the writ petition, stating that the petitioner had no right to claim remission for investments made after the scheme's duration and that the State's actions were not arbitrary. The Tribunal's decision was upheld, and no costs were awarded.

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