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TMI Blog1992 (3) TMI 163X X X X Extracts X X X X X X X X Extracts X X X X ..... t was in contravention of public purpose thus violative of public policy. No legal relationship could have arisen by operation of promissory estoppel as it was contrary both to the Constitution and the law. Realisation of tax through State mechanism for sake of paying it to private person directly or indirectly is impermissible under constitutional scheme. The law does not permit it nor equity can countenance it. The scheme of refund of sales tax was thus incapable of being enforced in a court of law. Fallacy of such constitutionally inhibited policy, sacrificing public interest resulting in illegal private enrichment is exposed by claim of refund for nearly ₹ 2 crores, for a period of three years, only, when total investment in establishing the unit was ₹ 1.5 crores. Levy of tax to raise revenue for promoting economic growth of the State reduced itself in enhancing the profit margin of the manufacturer and the sales tax stood converted into income of the appellant. Such contrivance of law even though bona fide is legally unenforceable. Appeal dismissed. - Civil Appeal No. 2832-2833 of 1979 - - - Dated:- 5-3-1992 - R.M. Sahai and S. Mohan, JJ. REPRESENTED BY: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of Cabinet Sub-Committee as far back as 1966 not to give any refund of sales tax yet the government officials acting contrary to it issued the brochure and corresponded with the appellant in, wholly, unauthorised manner therefore their action could not create any right in favour of the appellant. It also negatived the claim of appellant, as refund of an amount paid as sales tax by the appellant, would be raising revenue by the Government not for itself or for public but for a private person which would be contrary to Articles 265 and 266 of the Constitution of India. 3. Law of Promissory Estoppel which found its most eloquent exposition in Union of India v. Indo Afghan Agencies [1968 (2) SCR 366], crystallised in Motilal Padampat Sugar Mills v. State of U.P; [1979 (2) SCR 641] as furnishing cause of action to a citizen, enforceable in a court of law, against government if it or its officials in course of their authority extended any promise which created or was capable of creating legal relationship, and it was acted upon, by the promisee irrespective of any prejudice. It was reiterated in Union of India v. Godfrey Philips India Ltd. [1985 (4) SCC 370] and was taken further ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ormed the appellant that the Government was willing to consider such additional concession which the appellant may require for implementation of the scheme. It was followed by exchange of correspondence and various meetings between appellant s representative and officials of the government. Outcome of it is recorded in the note submitted by the Secretary of Industries on 1-4-1969 to Finance Department, on certain queries made by it, relevant portion of which reads, As Government investment had taken place in Rajpura the Sub-Committee ap pointed for allotment of industrial plots was very much concerned to allot the same but it was finding difficulty in getting suitable parties. In October 1968 Shri Khaitan of Amrit Banaspati Factory of Ghaziabad approached me and the D.I. for location of their vanaspati plant of 100 tonnes capacity per day in Punjab. These people since they were already very much in the business and since their vegetable ghee was meeting 20 to 25% of Punjab s needs of vanaspati it was felt that if we encourage these people to come to Punjab it will give great boost to industrial growth. These people were attracted mainly to Punjab on account of the availability o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... licy cannot be held to be unauthorised or beyond the scope of authority. The Government functions through its officials and so long they are acting bona fide in pursuance of Government policy the Government cannot be permitted to disown it as a citizen can have no means to know if what was being done was with tacit approval of the Government. And if it is found that the representation made by the official concerned was such that any reasonable person would believe it to have been made on behalf of the Government then unless such representation is established to be beyond scope of authority it should be held binding on the Government. It is another matter that even if it is binding it may be contrary to law and therefore unenforceable. In Motilal Padampat Sugar Mills (supra) the Government was held bound to grant exemption from sales tax to the sugar mill even though the manufacturer had written letter to the Director of Industries on a news item published for grant of exemption from sales tax, based on a statement issued by the Secretary of Industries which was favourably replied first by the Director of Industries endorsed later by the Chief Secretary informing the manufacturer th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terial to show that the Government either disassociated itself from the letter sent by the Secretary or Director of Industries or acted contrary to what was alleged to have been represented or assured by them. On the other hand the notings of the Secretary, extracted earlier, demonstrate unmistakenly that the authorities were not only assuring the appellant but were making every effort that the unit be established in consonance with the policy of Government as it would result in industrialisation and development of the State. Such painstaking effort of responsible and senior officers of the State was neither unauthorised nor beyond scope of their authority. In fact the letter dated 16th January 1969 and the notification declaring the land where the unit of appellant was established to be in focal point to enable it to avail of the concession were only follow up action which demolish any such conclusion as was canvassed by the learned counsel. 6. Effort was, also, made to advance an innovative submission of offer, counter offer and recounter offer. It was submitted that policy of the Government announced in the brochure was only an offer. And letter of the appellant sent on 25th O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssion mentioned in the letter dated 25th October 1968 were reiterated in a telegram sent on 11th January and letters dated 3rd, 13th and 23rd January 1969. It would be too much to read the letter dated 25th October 1968, as counter offer. It was intimation by the appellant that it had decided to set up the unit as it has been assured that the concessions as announced would be available to it. The request that the period of five years for refund should be calculated from the date of production, and capital grant may be made every quarterly equivalent to the amount of sales tax are impossible to be read as declining of availing the offer made by the Government. What was requested was that if instead of refunding of the sales tax or purchase tax an amount equivalent to it was paid to them every quarter for a period of five years it would enable them to utilise the same for the benefit of the State itself. It was this request which was reiterated in the telegrams and letters but at no point of time the appellant made any request that if capital grant was not paid it shall not avail of the concession in respect of sales tax. The request was to change the nature of payment and not the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter and Industries Minister of State that concession made in the booklet would be available was not the government policy as the Cabinet Sub-Committee earlier had taken some other decision. The Government cannot be permitted to go back on its promise by producing some documents lying in its file which was neither known, nor announced, nor acted upon as it would be unjust and unfair, therefore, illegal. Factual-ly the Division Bench read too much in the minutes of 15th December 1968 but it is not necessary to deal with it. Suffice it to say how the Government understood and wanted others to understand its policy was mentioned in the brochure. Even the Secretary who was a member of the Sub-Committee understood it in the manner in which it was printed in the booklet. In the note submitted to the Finance Department it was stated, ..... The Entire Matter of giving concessions was discussed at the Cabinet level and all these factors (namely exemption from sales tax)* were taken into consideration when the Government took a decision t6 give such attractive concessions to the industry. I would like this case to be seen by I.M. also as he had enquired about this case from me. The Amrit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt. Even the letter dated 16th June, 1969, did not mention that the concessions would be available as provided in the new policy. In Poumami Oil Mills etc. v. State of Kerala, [1987 (1) SCR 654] the Government was not permitted to go back on its earlier promise of wider exemption from sales tax in pursuance of which the industries had been set up on principle of promissory estoppel and the Notification issued after one year curtailing exemption was held to apply to industries set up thereafter. To same effect is the decision in Assistant Commissioner of Commercial Taxes v. Dhamendra Trading Company [1988 (3) SCR 946]. 10. But Promissory Estoppel being on extension of principle of equity, the basic purpose of which is to promote justice founded on fairness and relieve a promisee of any injustice perpetrated due to promisor s going back on its promise, is incapable of being enforced in a court of law if the promise which furnishes the cause of action or the agreement, express or implied, giving rise to binding contract is statutorily prohibited or is against public policy. What then was the nature of refund which was promised by the Govt.? Was such promise contrary to law and aga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consumer gain, one by concession of non-levy and other by non-payment. Such provisions in an Act or Notification or orders issued by Government are neither illegal nor against public policy. 12. But refund of tax is made in consequence of excess payment of it or its realisation illegally or contrary to the provisions of law. A provision or agreement to refund tax due or realised in accordance with law cannot be comprehended. No law can be made to refund tax to a manufacturer realised under a statute. It would be invalid and ultra vires. The Punjab Sales Tax Act provided for refund of sales tax and grant of exemption in circumstances specified in Sections 12 and 30 respectively. Neither empowered the Government to refund sales tax realised by a manufacturer on sales of its finished product. Refund could be allowed if tax paid was in excess of amount due. An agreement or even a notification or order permitting refund of sales tax which was due shall be contrary to the statute. To illustrate it the appellant claimed refund of sales tax paid by it to the State Government on sale made by it of its finished products. But the tax paid is not an amount spent by the appellant but realised ..... X X X X Extracts X X X X X X X X Extracts X X X X
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