9911796707
TMI Blog1991 (7) TMI 357X X X X Extracts X X X X X X X X Extracts X X X X ..... ferred for disposal to this Tribunal in terms of section 15 of the West Bengal Taxation Tribunal Act, 1987. All these four applications will be disposed of by this common judgment. 2.. The first applicant in RN-195 and 196 of 1990 is a company called B.D.J. Stampings Industries Ltd., which manufactures for sale various items taxable under the 1941 Act, like jar caps, pressed components, M.S. racks, M.S. containers, electrical lamination, stampings, slotted angles, transformers, etc. It also manufactures for sale some items taxable under the West Bengal Sales Tax Act, 1954, namely, tube light fittings. The company having been incorporated on January 28, 1982, the first sale of manufactured products taxable under the 1941 Act took place on December 18, 1982. It was registered under the Small Scale and Cottage Industries Directorate of the State Government on June 15, 1982. The first sale of manufactured products taxable under the 1954 Act, however, took place on November 6, 1986. The company's case is that the industrial unit was set up, relying upon the incentives, exemptions and concessions for the period promised and available under the law in force at the relevant time. On Marc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ey who carries on business of manufacture of cast iron castings for sale under the name of Modern Foundry and Engineering Works. He claims that he set up his factory in 1982, acting on the representation made by way of rule 3(66) of the 1941 Rules. He was registered under the Directorate of Cottage and Small Scale Industries of the State Government on January 5, 1983. The first sale of his product was made on October 18, 1982. Upon application on January 7, 1983, a registration certificate as dealer was issued to him on October 13, 1983, with effect from January 11, 1983. He claims to be entitled to exemption from sales tax for five years under rule 3(66). Meanwhile, rule 3(66) was amended and a new rule 3(66a) was inserted with effect from April 1, 1983. Having allegedly fulfilled all the conditions of rule 3(66), he applied for eligibility certificate which was issued for the period from January 11, 1983 to January 10, 1984, but in form XXXVIA under the new rule 3(66a). Renewals of eligibility certificate were granted for the periods from January 11, 1984 to January 10, 1985 and from January 11, 1985 to December 31, 1985. The application dated February 28, 1986, for renewal of el ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ready granted and renewed for three years up to February 22, 1985. The applicant unsuccessfully preferred a revision on two grounds, that (i) he was entitled to eligibility certificate for five years under rule 3(66) and (ii) as a registered dealer he was entitled to apply for eligibility certificate at any time after April 1, 1983. The applicant's case is that the statutory authority had no jurisdiction to treat his application for eligibility certificate under rule 3(66) as one under rule 3(66a) and the amended rule 3(66)(iv) read with its added proviso should be interpreted to mean that a registered dealer may apply at any time after April 1, 1983. Rule 3(66a) does not allegedly apply to the applicant. The State was not entitled to withdraw the benefit which was available under rule 3(66). If it is understood that the time-limit for making application under rule 3(66) was April 14, 1983, then allegedly it is unreasonable, it was not made known to the public and, thus, is arbitrary. 6.. As regards RN-195 and 196 of 1990, the case of the Revenue is that the orders granting eligibility certificate and renewals under rule 3(66) of the 1941 Rules and under the 1954 Act had to be re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lication dated January 7, 1983, for registration that as on December 30, 1982, his gross turnover was Rs. 1,67,257. So he was aware that he became liable to pay sales tax during the year 1982 itself. Although registration was granted on October 31, 1983, it has no concern with the failure to apply for eligibility certificate before the last date. 8.. In RN-695(T) of 1989 the case of the Revenue is that although on the date of first sale itself, i.e., on February 23, 1982, the applicant exceeded the taxable quantum and became liable to pay tax during the year, he applied for eligibility certificate only on June 2, 1986 for the period from February 23, 1982 to February 22, 1983. Therefore, eligibility certificate was granted under rule 3(66a) and then renewed covering the total admissible period of three years. Application for further renewal had to be rejected, as not admissible. 9.. B.D.J. Stamping Industries Ltd. is the first applicant in RN-195 of 1990. Its case there is that eligibility certificate and renewals were rightly allowed under rule 3(66). The new rule 3(66a) had no application and, therefore, revisional order dated February 2, 1990 is illegal. Mr. Somen Bose, lear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not relevant in such a situation. The learned State Representative opposed the application of doctrine of promissory estoppel on the ground that rule 3(66) or 3(66a) is a statutory rule, having the force of law. There cannot be any estoppel against a statute. He also contended that there was no representation or offer made by the State Government. Exemption was available to eligible dealers on fulfilment of statutory conditions laid down in those rules. Regarding the fourth submission of Mr. Bose, the argument advanced by Mr. Majumdar was that noncollection of tax from purchasers was one of the conditions of those rules for availing of the exemption, and unless all the conditions are satisfied, the exemption cannot be allowed. Hence, the question of prejudice is irrelevant. 10.. We have already noticed that the new rule 3(66a) came into force from April 1, 1983. Rule 3(66) was inserted by Notification No. 3360-F.T. dated September 18, 1973 and came into force on October 1, 1973. Explanation (iv) to that rule as well as rule 3(66a) requires that the exemption can be claimed by a newly set up small-scale industry "which is liable to pay tax as a dealer under the Act...........". ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... certificate, laid down in clause (iv) of rule 3(66) and the proviso thereto is one of the conditions precedent for availing exemption under rule 3(66). We have noticed that compliance of explanation (iv) to rule 3(66) is also a condition precedent for being entitled to claim exemption under rule 3(66). These two conditions are, in the facts and circumstances of this case, interlinked. In other words, if the liability to pay tax does not arise up to April 14, 1983, the applicant-company cannot apply even as a registered dealer. In this case, liability to pay tax arose on May 22, 1983 and the application for eligibility certificate was made on June 2, 1983. In spite of this, the eligibility certificate was granted on February 6, 1984 for the period from May 22, 1983 up to March 31, 1984 and, thereafter applications for renewal were made from time to time and there is no dispute that renewals were granted up to December 17, 1987, covering a total period of five years from the date of first sale, as contemplated in rule 3(66)(i). Subsequently, suo motu revision was initiated and the impugned order was passed by the Additional Commissioner on February 2, 1990, converting the eligibil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... time-frame allowed by rule 80(5) of the 1941 Rules, the delay in passing the revisional order, in the context of this case, is also a factor to be reckoned. Apart from the question of existence of any new material for exercise of the power of suo motu revision, an important circumstance should be taken note of. The power was exercised by the Additional Commissioner for the purpose of rectifying a mistake said to be committed by the Assistant Commissioner. True, the Additional Commissioner is the superior authority and in suitable cases, he may be justified in revising an order of an Assistant Commissioner on this ground. But, the power of revision in this particular case must have to content with the loss suffered by the company for not collecting tax on its sales. Moreover, the reason for suo motu revision is simply to correct a mistake. But the mistake is not of the nature as in a case of escaped turnover. We do not intend to lay down any straight-jacket formula as to in which cases the power can be used for correcting a mistake of an inferior authority. The justification for exercise of this power will vary from case to case. The amended provisions of rule 3(66) which came in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 31, 1987. By this combined revisional order dated February 2, 1990 the Additional Commissioner declared the certificate dated October 31, 1987, invalid ab initio. Therefore, the point of dispute is different from that in RN-195 of 1990. In this case, interpretation of the amended clause (iv) and its proviso introduced with effect from April 1, 1983 in the old Notification No. 1809-F.T. dated April 1, 1976, which is similar to rule 3(66) under the 1941 Act, is not involved. The Additional Commissioner withdrew the eligibility certificate dated October 31, 1987 on the following ground, stated in his impugned order: "As the dealer is entitled to enjoy the benefit of tax holidays for a total period of three years only reckoned from the date of first sale of the goods manufactured in the newly set up industrial unit and as 'tubelights fitting' were manufactured in the same industrial unit, the order dated October 31, 1987, should be revised and the certificate of eligibility issued under the West Bengal Sales Tax Act, 1954, should be declared invalid ab initio." Thus, the questions for determination are whether the applicant-company is entitled to eligibility certificate under the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ufactured notified commodities taxable under the 1954 Act was November 6, 1986. Rule 3(66)(i) as well as the new rule 3(66a)(i) under the 1941 Act lay down that the period of exemption available to a "newly set up small-scale industry of goods" would commence from "the date of its first sale" of its manufactured "goods". Notification No. 1177-F.T. dated March 31, 1983 issued under the 1954 Act similarly lays down that the period of exemption available to a "newly set up small-scale industry of notified commodity or class of notified commodities" would commence from "the date of its first sale of such notified commodity or commodities". The expressions "goods" and "notified commodity" have some special significance. The expression "goods" at once points to the 1941 Act. The expression "notified commodity" similarly establishes a nexus with the 1954 Act. Therefore although the new industrial unit may be one and the same, it attracts the exemption rule under the 1941 Act from the date of its first sale of its manufactured goods taxable under the 1941 Act. Similarly, it attracts the exemption notification under the 1954 Act from the date of its first sale of its manufactured notified ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Commissioner had no jurisdiction to revise the order granting the said eligibility certificate, as there was no mistake in that order except the date of first sale which should be November 6, 1986. Accordingly, the Additional Commissioner's impugned order dated February 2, 1990, should be set aside and the eligibility certificate dated October 31, 1987 should be restored with that modification. The application for the renewal of eligibility certificate for the period from November 1, 1987 to December 17, 1987 should be directed to be disposed of in accordance with law within eight weeks of this judgment. 18.. In RN-460(T) of 1989 arising out of C.O. No. 4833(W) of 1988 of the High Court, Bhagwat Chowbey is the applicant. The date of first sale of his manufactured goods was October 18, 1982. The liability to pay tax accrued on January 11, 1983 under section 4(2) of the 1941 Act then in force, the taxable turnover having reached the prescribed quantum on November 11, 1982. We have already noticed that liability to pay tax is a condition precedent for application of either rule 3(66) or rule 3(66a), as the case may be. Therefore, the applicant was in need of eligibility certificate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x. Accrual of liability to pay tax is a condition precedent for claiming or granting exemption, but the date of first sale is always the starting point for counting the exemption period. Since the applicant's date of first sale was October 18, 1982, that date must be the starting point for the above purpose. Which rule should apply is altogether a different question. 20.. Mr. Bose then contended that rule 3(66), as amended, together with the added proviso (already extracted), should be construed in such a way that a registered dealer could apply for eligibility certificate even after April 14, 1983, the last date being open-ended. He drew support from the single Bench decision of the High Court, Calcutta, in the case of Anadi Nath Halder v. Commercial Tax Officer reported in [1994] 93 STC 413 (App.) supra; (1989) 22 STA 291 and the Division Bench judgment of the same High Court in appeal, reported in [1994] 93 STC 516 (App.) infra; (1990) 94 CWN 1034. Mr. Majumdar, the learned State Representative, opposed this submission and argued that the last date of filing application for eligibility certificate under rule 3(66) was April 14, 1983, for a registered dealer and that was March ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... There was no element of compulsion in the matter of applying for registration, as far as rule 3(66) was concerned. Learned counsel for the applicant tried to argue, by referring to a column in form XXXVIA for granting eligibility certificate under rule 3(66), that it was compulsory to be a registered dealer in order to obtain eligibility certificate. The column, to which he drew our attention, was for recording the particulars of registration certificate. The learned State Representative rightly explained that the column was meant to be filled in for only a registered dealer and was to be left blank in other cases, as it was not applicable to an unregistered one. But the most important thing is that rule 3(66) unambiguously permits an unregistered dealer to apply for eligibility certificate. In any case, the form cannot override this statutory rule. 22.. The conduct of the applicant, Chowbey, was consistent with the above legal and factual position. He applied for eligibility certificate and renewals under rule 3(66a), and not under rule 3(66), being conscious of his deficiencies. Mr. Somen Bose, learned counsel, argued that reference to rule 3(66a) in those applications was by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cannot be the foundation of the ground of promissory estoppel without something pointing to the alteration of one's position solely or substantially on that basis. There must be something demonstrating a nexus between the rule operating as a promise and the setting up of the industry. Reference was made to decisions in AIR 1989 SC 1692 (Lakhanpal National Ltd. v. M.R.T.P. Commission), [1979] 44 STC 42 (SC) (Motilal Padampat Sugar Mills Co. Ltd. v. State of Uttar Pradesh), [1987] 65 STC 1 (SC) (Pournami Oil Mills v. State of Kerala), [1987] 65 STC 430 (SC) (State of Bihar v. Usha Martin Industries Ltd.) and [1990] 76 STC 386 (All.) (Bajaj Packwell v. State of Uttar Pradesh). There being nothing to indicate that the industry was set up acting upon the promise, if any, contained in rule 3(66), the ratio of these cases hardly helps the applicant. Secondly, all the conditions must be fulfilled before the exemption can be claimed. The doctrine of promissory estoppel does not make any difference in that context. We have noticed that the applicant failed to fulfil all the conditions. Thirdly, the promise, if any, was not withdrawn and the length of five years was not denied to the applican ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion for two more years. Even if he did not realise sales tax on his sales for two years after December 31, 1985, he cannot plead prejudice, because the granting authority cannot be held responsible, as none of his conduct or action misled the applicant in any manner. Accordingly, we hold that applicant's prayer for further renewal of eligibility certificate after December 31, 1985, was rightly rejected and the Additional Commissioner rightly dismissed the revision, confirming the rejection order. The writ application should, therefore, fail. 25.. The last of this batch of cases is RN-695(T) of 1989 in which Somnath Palui is the applicant. The date of first sale of manufactured goods in this case was February 23, 1982. His turnover exceeded the taxable quantum on February 23, 1982, vide internal page 3 of annexure "A" to the writ petition. So, the liability to pay tax arose on April 23, 1982. If governed by rule 3(66), he would get five year tax holiday from February 23, 1982 and if governed by rule 3(66a), he would get three year tax exemption from that date. He claims to have applied for eligibility certificate under rule 3(66) for the first time on June 2, 1986, but was granted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of course upon fulfilment of the conditions. Although the liability to pay tax accrued on April 23, 1982, the applicant did not apply for eligibility certificate until June 2, 1986, that is to say, more than four years from that date. The unamended rule 3(66) required that an application for eligibility certificate was to be made by any dealer, registered or unregistered, ordinarily within one month from the date from when it was required. The amended rule fixed April 14, 1983 and March 31, 1983 as last dates for registered and unregistered dealers respectively. The making of application for registration as a dealer or obtaining the same is immaterial and extraneous to the making of an application for an eligibility certificate. The reasons for holding this view have already been indicated. Looked at from these angles, the granting authority was justified in issuing eligibility certificate and renewing the same up to February 22, 1985 under rule 3(66a). We are also unable to accept Mr. Bhattacharya's contention that when the Calcutta High Court and this Tribunal have taken different views, the favourable view should be applied to the case of the applicant. The reason for this has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ption. So, there was nothing in the conduct of the granting authority which might amount to a promise or assurance or even representation. Having accepted that without demur for three years, the plea of estoppel seems to be an after-thought. Let us look at the case of estoppel as made out by the applicant. He wants to say that the notification under which rule 3(66) was introduced was published in newspapers and that was an "assurance" to him. But rule 3(66) was introduced on September 18, 1973 with effect from October 1, 1973. Some amendments were made to it from time to time. The applicant has not substantiated his case by any means. The applicant has not cared to show what publication in newspapers amounted to an assurance, although the scheme was operating from October 1, 1973, while he started his business in 1980 and made his first sale of manufactured product in 1982. 30.. In the case of Pournami Oil Mills [1987] 65 STC 1 (SC), the facts were that the exemption was allowed for five years by a Government order dated April 11, 1979, without reference to the statutory provision in section 10 of the Kerala General Sales Tax Act, 1963. On October 21, 1980, another notification ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e instant case, however, we are unable to conclude that the applicant has established that it set up the industry acting upon the representation made by way of rule 3(66). So, the decision in [1990] 76 STC 386 (All.) (Bajaj Packwell v. State of Uttar Pradesh) has no application. On the facts of this case, we are of the view that the doctrine of promissory estoppel against reduction or exemption period cannot be applied to this case. Therefore, the applicant's prayer for renewal after February 22, 1985, was rightly rejected and the Additional Commissioner was justified in dismissing his revision. We do not consider it necessary to enter into other contentions of the learned State Representative to the effect that there was no promise by the Government and that no estoppel can be claimed against a statutory rule like rule 3(66), or against the exercise of legislative powers. 32.. In the result, the applications in RN-195 and 196 are allowed. The proviso to clause (iv) and amendment of clause (iv) of rule 3(66) which came into force on April 1, 1983, are valid and constitutional, not being hit by article 14 of the Constitution. The revisional order dated February 2, 1990, is quashed ..... 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