2018 (1) TMI 754 - SC - VAT and Sales Tax

Deferment/remission of sales tax payable - Agro-Processing (Food Processing) Units - West Bengal Incentive Scheme, 1999 - Held that - In the absence of any plea of promissory estoppel we cannot understand the appellant to have been vested with any right to claim deferment or remission of the tax payable by it - As the appellant did not have a right capable of enforcement in law, there is no infirmity with the rejection of the writ petition filed by the appellant before the High Curt so as to warrant any order in favor of the appellant in this appeal. Penalty - Held that - imposition of penalty should be interdicted by this Court as non-payment of the tax by the appellant was on account of what we perceive to be a bonafide doubt with regard to its liability to pay tax. Appeal dismissed.

Summary

Issues: Interpretation of West Bengal Incentive Scheme, 1999 and West Bengal Sales Tax Rules, 1995; Applicability of promissory estoppel doctrine; Liability for tax payment, interest, and penalty.

The judgment by the Supreme Court involved a case where the appellant, owning a bakery unit in West Bengal, sought incentives under the West Bengal Incentive Scheme, 1999. The Scheme provided incentives for industries, including Agro-Processing Units, through deferment/remission of sales tax. However, a discrepancy arose as the Rules omitted additional incentives for "Food Processing" industries, to which the appellant belonged. The appellant approached the West Bengal Taxation Tribunal and later the High Court, seeking relief from this discrepancy. The Court observed that benefits like tax deferment can only be granted through a statutory process, not merely based on a policy statement. The appellant failed to establish a claim under promissory estoppel, which would require showing reliance on a promise to their detriment. The Court found no legal basis for the appellant's claim for tax deferment or remission, ultimately dismissing the appeal without costs.

Regarding the liability for tax payment, the Court noted that the appellant would now be required to pay the due tax along with interest as per the law. However, considering the appellant's genuine doubt regarding tax liability, the Court decided to interdict the imposition of a penalty for non-payment of tax. The judgment highlights the importance of statutory provisions in granting incentives and emphasizes the need for specific legal grounds, such as promissory estoppel, to support claims against the government's policy decisions.