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TMI Blog1989 (2) TMI 382X X X X Extracts X X X X X X X X Extracts X X X X ..... tition No. 52 of 1982, order No. STG/168 dated 16th January, 1982 passed by respondent No. 1 assessing the petitioner to the sales tax for the period ending September, 1981, is sought to be quashed, inter alia, on the grounds that Government Order No. 159-Ind. of 1971 dated 26th March, 1971 read with Government Order No. 414-Ind. of 1971 dated 26th August, 1971, is by itself an outright exemption from payment of sales tax and consequently the assessment made and the order for recovery of sales tax made by the assessing authority cannot be allowed to stand. Alternatively, it has been pleaded that even if for any reason the 1971 Orders are not held to be the orders of exemption under section 5 of the Act, the same unmistakably contain a representation, holding a clear promise for grant of exemption from the payment of sales tax for the period of five years from the date the unit of the petitioner went into production and the respondents are on the basis of the doctrine of promissory estoppel, estopped from claiming payment of sales tax being bound by the representation. To invoke the doctrine of promissory estoppel, the plea put forward in nutshell is that but for the promised conces ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Government Order No. 414-Ind. of 1971, was only a sanction to the grant of incentives by the Industries Department which could not be a substitute for an order of exemption under section 5 of the Act. Counter-affidavit also contains the positive averment that the petitioner having collected the sales tax on the sales made by it, cannot be allowed to retain the same and that having not acted upon the so-called representation and collected the sales tax, there was no equity in its favour to allow retention of the amount of sales tax collected on behalf of the State. Significantly no rejoinder to this counter was filed by the petitioner and the factual statement made by the State supported by the finding of fact recorded by the statutory authority, remains uncontroverted. The argument of Mr. V.K. Gupta, learned counsel for the petitioner in both the petitions (Nos. 52 of 1982 and 822 of 1984) is twofold: (i) that the Government Order No. 159-Ind. of 1971 (read with Government Order No. 414-Ind. of 1971) is by itself an order of outright exemption from the payment of sales tax both on the raw material as also on the finished products and the petitioner having set up the factory pursu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... overnment to grant exemption from payment of sales tax. That section reads as follows: "Exemption from taxation.-The Government may, subject to such restrictions and conditions as may be prescribed, including conditions as to licence and licence fees, by order exempt in whole or in part from payment of tax any class of dealers or any goods or class or description of goods." On a plain reading the section does not speak of a general order of exemption, as the power to grant exemption is limited to a class of dealers or goods and that too subject to such restrictions and conditions as may be prescribed. The section does not envisage a general order of exemption and, postulates the need of a specific notification of exemption issued under this section in favour of the party claiming the benefit. As to what is the true nature of Government Orders No. 159-Ind. of 1971 and No. 414-Ind. of 1971, came up for consideration by a Division Bench of this Court in Pine Chemicals v. Assessing Authority [1989] 73 STC 101; 1988 KLJ 697. The Bench, after considering the provisions of section 5 of the Act (supra) and the contents of the two orders, noticed above, opined: "The combined reading of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inequitable to allow him to do so, having regard to the dealings which have taken place between the parties..........." Opined that though the 1971 Orders amount to a representation made by the State promising, inter alia, exemption from sales tax but in order to bind the respondents, it was necessary for the party to establish that the representation/promise had been so understood and acted upon by it. The petitioner in the instant cases had been informed as early as on 12th August, 1981, before its unit went into production, that it was not entitled to exemption from payment of sales tax on the raw material or the finished products and that the two Government orders were not orders of exemption under section 5 of the Act and that without a notification issued under section 5 of the Act, no exemption could be granted to the petitioner. It would be advantageous to refer to the contents of that communication which is on the departmental file, produced before the court by the Advocate-General: "Office of the Assessing Authority, Sales Tax Circle V, Jammu. K.C. Vanaspati, Bari Brahmana, Jammu (Tawi). No. 546-47/STG Dated: 12-8-1981 Sub: Exemption from payment of sales tax on the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the petitioner never acted upon the representation either before setting up the factory or when it went into production and being conscious of the Government's stand, it started collecting the sales tax from the very beginning but retained the sales tax so collected and did not deposit with the department even when called upon to do so. From the impugned assessment order it emerges that an understanding had been reached between the Vanaspati Manufacturers' Associations and the Government and the price of vanaspati, which is a controlled item, at Jammu, was fixed inclusive of sales tax, surcharge and other levies. The assessment orders impugned in these petitions contain a finding of fact recorded by the assessing authority to the effect that the petitioner had charged sales tax from the consumers. The assessing authority in its order observed that even if Government Orders of 1971, on which the petitioner was relying, were construed as promises, the assessee himself had not acted upon the alleged promises as it had collected the sales tax from consumers. Relying upon the profit and loss account of the petitioner-company as also its balance-sheet and the price structure of the prod ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are so inextricably mixed up and the prevention of public injury and the vindication of public justice require it that recourse may be had to article 226 of the Constitution. But then the court must have good and sufficient reason to by-pass the alternative remedy provided by statute. Surely matters involving the revenue where statutory remedies are available are not such matters. We can also take judicial notice of the fact that the vast majority of the petitions under article 226 of the Constitution are filed solely for the purpose of obtaining interim orders and thereafter prolong the proceedings by one device or the other. The practice certainly needs to be strongly discouraged." We need say no further on this aspect of the case as the facts already noticed speak volumes. The respondents have specifically and emphatically stated that the petitioner had collected the sales tax from the consumers as is clear from para 4 of the counter-affidavit which reads: "That as per the provisions of the Jammu and Kashmir General Sales Tax Act, if an assessee collects sales tax from the customers then such tax is liable to be paid to the Government. A perusal of the balancesheet filed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er understood it very clearly and the assessing authority has found, on facts, that sales tax had, in fact, been collected on the sales made to the consumers, and, thirdly, because the petitioner could invoke the doctrine only if the finding of fact recorded by the assessing authority, respondent No. 1, was reversed by the appellate or revisional authorities where the assessment orders impugned herein could be challenged and yet the recoveries were ordered from it, which is not the case here and so long as the finding of fact is not displaced, the petitioner cannot avoid depositing the sales tax collected by it as an agent of the sales tax department. It will be wholly inequitable and even atrocious to allow the petitioner to retain the amount of sales tax charged and collected by it from the consumers as an agent of the sales tax department of the Government. Even otherwise, the sales tax being an incidence of sales and the burden being always on the consumers, there is no equity in favour of the petitioner who acts as an agent of the department to collect on its behalf, to retain the sales tax collected by it as held in Bharat Steel Tubes Ltd. v. State of Haryana [1988] 70 STC 12 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the minimum acceptable foundation for invoking the equitable doctrine. Since, it is on facts that the petitioner is being non-suited to invoke the equitable doctrine of promissory estoppel, it is not necessary for us to deal with the argument of the learned Advocate-General that even if the doctrine of equitable estoppel was attracted, no command could be issued to the State to grant exemption from payment of sales tax to the petitioner, as that would amount to mandating the State to bring forth a legislation and we leave that question open. From the aforesaid discussion it follows that the answer to the question posed in the opening part of this judgment has to be in the negative and it is answered accordingly. Consequently both the writ petitions (Nos. 52 of 1982 and 822 of 1984), fail and are hereby dismissed. The interim directions staying the recovery of sales tax, surcharge, interest, penalty, etc., are hereby vacated. This takes us to the third writ petition filed by the petitioner. Writ Petition No. 711 of 1987 is rather of a general nature challenging the validity of Notification No. S.R.O. 448 of 1982 dated 22nd October, 1982 by which the recovery of the sales tax on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 448 on the grounds: firstly, that vanaspati manufactured by the petitioner being clearly exempt from payment of general sales tax under Government Order No. 159-Ind. of 1971 read with Order No. 414-Ind. of 1971, no sales tax could be charged on its products either at the first or the second point of sale; secondly, that the State Government in terms of the aforesaid orders had promised to exempt the petitioner's product from levy of sales tax and was bound by the doctrine of promissory estoppel and could not be permitted to resile from the promise and assurances contained in the Government Orders on the basis of which the petitioner had changed its position; thirdly, that the impugned S.R.O. had been issued with the object of circumventing the effect of the stay order granted by this Court in the writ petition filed by the petitioner earlier; and, fourthly, that the provisions of section 4(7) of the Act under which the notification has been issued were violative of article 14 of the Constitution of India and, therefore, unconstitutional. According to the learned Advocate-General, the grievance of the petitioner has no substance because by changing the point of levy of sales tax n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be taxed subject to the embargo contained in the proviso. The Bench also held that section 4(7) of the Act was constitutionally valid and that the State Government had the discretion to fix and notify the point of levy of sales tax and it was for the State to decide how and in what manner it would levy and collect the sales tax. The court observed that the object of the provision was to enable the Government, in its own judgment, to select the levy point so as to further the object of the Act, viz., generation of maximum revenue for the State by permissible taxation in accordance with law. The challenge to the vires of S.R.O. 247 failed in Ram Singh's case 1987 KLJ 286 and Mr. Gupta was unable to satisfy the court as to how, on the parity of reasoning in Ram Singh's case 1987 KLJ 286, the constitutional validity of S.R.O. 448 could be challenged. The question of the vires of S.R.O. 448 is, therefore, no longer res integra. The argument of Mr. V.K. Gupta, that by charging sales tax, the sale of the product of the petitioner in the competitive market would be affected is untenable and without any factual foundation having been laid down in the petition for raising it. There is not ev ..... X X X X Extracts X X X X X X X X Extracts X X X X
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