9911796707
TMI Blog1977 (12) TMI 128X X X X Extracts X X X X X X X X Extracts X X X X ..... e of which several rules were framed "regarding grant of incentives to new and already established industries in the Pradesh". According to these rules, new industries as well as established industries were given different types of incentives and one of such incentives was with regard to sales/purchase tax. This particular incentive was given by rule 3(4)(c), which reads as under: "3. (4)(c) Sales/Purchase tax: No sales/purchase tax will be charged from the small-scale industries registered with the Industries Department, Himachal Pradesh. In the case of new industries, the period for this concession will be 5 years and for those already established, it will be 3 years. Industries desiring exemption of sales/purchase tax should get themselves registered with the Industries Department. A certificate of eligibility will be issued by the Director of Industries, to an industrial concern registered for the grant of this concession. Provided that this power may also be exercised by an officer duly authorised by the Director of Industries in this respect." Rule 2 of the Incentive Rules gives certain definitions and defines the expression "sales tax" as under in clause (p): " 'Sale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng and are registered with the Industries Department as such after 12th April, 1971, would be applicable for a period of 5 years commencing from the date of their coming into existence. 3.. That the small-scale industries registered as such with the Industries Department who deal partly in the manufacture of goods and partly otherwise, would be entitled to avail the sales/purchase tax holiday in respect of such goods as are purchased by them for the purpose of manufacture for sale in H. P. 4.. That no holiday from Central sales tax would be available to smallscale industries under the Central Sales Tax Act, 1956. 5.. That holiday from sales/purchase tax shall be admissible only to those small-scale industries which are registered under the Himachal Pradesh General Sales Tax Act, 1968, and comply with its provisions. 6.. That a small-scale industry must continue to function for a period for which the concession has been availed failing which it shall pay tax for the remaining period, equal to the amount which would have been paid during the said exempted period but for such exemption, and 7.. that the holiday from the sales/purchase tax will be subject to the filing of cer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ereof relates to the sale of any goods, the sale or, as the case may be, the purchase of which is, under the sales tax law of the appropriate State, exempt from tax generally or subject to tax generally at a rate which is lower than four per cent (whether called a tax or fee or by any other name), shall be nil or, as the case may be, shall be calculated at the lower rate. Explanation.-For the purposes of this sub-section a sale or purchase of any goods shall not be deemed to be exempt from tax generally under the sales tax law of the appropriate State if under that law the sale or purchase of such goods is exempt only in specified circumstances or under specified conditions or the tax is levied on the sale or purchase of such goods at specified stages or otherwise than with reference to the turnover of the goods." It is apparent from the provisions contained in sub-section (2A) of section 8 that if the goods in question are exempt from tax generally, then the rate of Central sales tax which would apply in the case of such goods would be nil. The main provisions of sub-section (2A) are, however, controlled by the explanation, which is appended thereto. According to this explan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to sub-section (2A) of section 8 of the Central Sales Tax Act, but not otherwise. We have already given the analysis of the explanation which is attached to sub-section (2A) of section 8. So far as the facts of this case are concerned, conditions Nos. 3 and 4 which bring that explanation into operation are not relevant, but the first two conditions are relevant because the contention of the State is that incentive rule 3(4)(c) as well as the notification annexure C do not contemplate any exemption which is free from certain conditions. Under the circumstances, it is first necessary to see what is the scope of the operation of the existence of specified circumstances or specified conditions which are contemplated by the explanation. The simple reading and the plain meaning of the language employed by the legislature in the explanation shows that the exemption contemplated by subsection (2A) would not be available if the four conditions already described above are found to be in existence. It is, therefore, clear that the first two conditions, namely, the existence of specified circumstances and specified conditions operate as conditions for not allowing exemption contemplated by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uestion is a bona fide and genuine industry contemplated by the Incentive Rules. Under these circumstances, we are of the opinion that clause (c) of rule 3(4) of the Incentive Rules does not specify any circumstance or condition as contemplated by the explanation attached to sub-section (2A) of section 8 of the Central Sales Tax Act. As already noted above, the above Incentive Rules were framed on 12th April, 1971. About three years thereafter the Government issued notification annexure C. We have already quoted this notification in extenso. The notification shows that it has been applied with retrospective effect as from 12th April, 1971, which is the date on which the Incentive Rules were framed. It is, therefore, obvious that the notification purports to cover the past period of three years for the purpose of giving incentive under the Sales Tax Act. It was contended on behalf of the petitioners that it was not open to the Government to issue notification with retrospective effect because no such power is given by the main statute under which the notification is issued. We find that it is not necessary to go into this question because the discussion which follows shows that, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he goods so purchased, the exemption would not be available. The learned Advocate-General contended that this clause clearly stipulates a condition, namely, sale in Himachal Pradesh and, therefore, if the matter is covered by this clause then the explanation attached to subsection (2A) of section 8 would be invited. We find that it is not the case of the respondents that the industry conducted by petitioner No. 1 is of the type which is visualised by clause (3). In fact, the petitioners have specifically stated in paragraph 1 of the petition that petitioner No. 1 is engaged in "the business of manufacturing electric goods and their sale". This particular averment is not denied in the return. It, therefore, means that petitioner No. 1 is an industry which only manufactures goods for sale and, therefore, it is not the composite type of industry which is contemplated by clause (3) of the notification annexure C. Under the circumstances, even if it is believed, for the sake of argument, that this clause (c) contemplates a condition for earning exemption, the same is not applicable to the case of the petitioners. The fact of the matter is that at no stage in the past during the cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I." This entry, therefore, shows that the legislative power of the State extends to the levy or exemption of sales tax or purchase tax only with regard to those items which are not covered by entry 92-A of List I. This entry 92-A of List I is in the following terms: "Taxes on the sale or purchase of goods other than newspapers, where such sale or purchase takes place in the course of inter-State trade or commerce." It is thus clear that levy of tax on the sale and purchase of goods in the course of inter-State trade or commerce is a Central subject and not a State subject. That being so, it was not open to the State Government to give any prescription as regards levy or exemption of Central sales tax at the time of issuing the notification annexure C. If exemption under the Central Sales Tax Act is available to the petitioners that exemption is available to them in spite of what the State Government thinks about it, because the said exemption would be available by virtue of the operation of the statute, namely, the Central Sales Tax Act, and not by virtue of any incentive proposed to be given by the State Government. Under the circumstances, we are of the opinion, not only t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es Tax v. Kapoor Dori Niwar and Co.[1968] 22 S.T.C. 152. The question similar to the one which has arisen before us also arose before that High Court. The assessee contended in the case that its turnover on inter-State sales of niwar could not be taxed in view of section 8(2A) of the Central Sales Tax Act after its amendment in the year 1958 as there was an exemption given under the State Sales Tax Act. The court, when construing the expression "exempt only in specified circumstance or under specified condition" occurring in the explanation attached to sub-section (2A), held that this expression meant such circumstances or conditions the non-existence or non-performance of which precluded the grant of exemption, so that if those circumstances did not exist or those conditions were not performed, the sales of goods would not be exempted from tax even if they were effected by a class of dealers to whom the exemption was granted and during the period for which the exemption was granted. While discussing this point, the High Court has further observed that neither the period for which the exemption is granted, nor the requirement that the dealer in question should be registered would o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n referred to and approved. In view of the above discussion, we are of the opinion that neither the incentive rule 3(4)(c) nor the notification annexure C prescribes any condition or circumstance which would bring this case under the explanation attached to sub-section (2A) of section 8 of the Central Sales Tax Act. That being the position, we are of the opinion that the demand for the Central sales tax on the turnover in question for the assessment year 1972-73 from the petitioners was not proper. The learned counsel for the petitioners contended that even otherwise the respondents would be estopped from demanding Central sales tax under the provisions of the notification annexure C, under the principle of promissory estoppel. The argument was that by enacting the Incentive Rules the State Government held out a promise that on proper investment these incentives would be earned by the industry in question. In view of the discussion which has preceded, we find that it is not necessary for us to go into the question of the application of this principle of promissory estoppel. In view of this we allow this writ petition and declare that the petitioners are not bound to pay Cen ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
