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TMI Blog1994 (9) TMI 324X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act of 1987. Under the proviso to section 15(2) of the Act, 1987, interim order passed by the High Court, Calcutta regarding any of the aforesaid matters arising out of any State Act specified in the Schedule of the Act of 1987 is to continue for a period not exceeding twelve weeks from the commencement of section 6(1) of the Act of 1987, unless this Tribunal by an order varies or modifies the same earlier or extends the order of the High Court. In C.O. No. 12170(W) of 1987 filed in the High Court, Calcutta on December 2, 1987, interim order was passed by the High Court on December 21, 1987. Under that interim order the respondents were restrained from demanding any turnover tax for the period up to May 3, 1984, from the applicants or withholding issuance of declaration forms and permits for non-payment of turnover tax. On an application by the applicants for extension of this interim order under the proviso to section 15(2) of the Act of 1987, which was registered as Case No. RN 554(T) of 1989, an interim order similar to the aforesaid interim order of the High Court, Calcutta, was passed by this Tribunal till the disposal of the case, on October 16, 1989. Subsequently, the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... certificate as small-scale industrial unit by the Directorate of Cottage and Small Scale Industries, Government of West Bengal on December 12, 1978. The first sale of cocoanut oil took place on May 3, 1979. The applicants were granted permanent certificate as small-scale industrial unit on January 18, 1980. In April, 1980, the applicants filed application before the respondent No. 3, Assistant Commissioner of Commercial Taxes for issuing eligibility certificate. The system of granting eligibility certificate was introduced in rule 3(66) of the Rules of 1941 from April 1, 1975. Thereafter, rule 3(66) of the Rules of 1941 was renumbered with effect from April 1, 1980, as clause (i) of sub-rule (66) of rule 3 of the Rules of 1941 by a notification. As regards notified commodities, a similar system of issuing eligibility certificate was introduced under a notification dated April 1, 1976, on the basis of the provisions in section 4AA of the Act of 1954. These provisions for issuing eligibility certificate were beneficial provisions for inducing persons or dealers to invest capital for industrial development of West Bengal by granting them incentives for not paying sales tax and turnove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 86. Being aggrieved by these orders of assessment dated August 30, 1985 and the dismissal of the appeals on November 21, 1986, the applicants filed a second writ petition in the High Court, Calcutta, under article 226 of the Constitution. This second writ petition was registered as C.O. No. 4005(W) of 1987. The respondent No. 4, made assessments for four quarters ending on August 31, 1982 and on August 31, 1983 and issued demand notices dated August 30, 1986 and August 11, 1987, respectively. 5.. During the pendency of the second writ petition, being C.O. No. 4005(W) of 1987 in the High Court, Calcutta, the West Bengal Taxation Laws (Amendment) Act, 1987 (West Bengal Act 5 of 1987) was passed on May 30, 1987, with the intention of realising more revenue from turnover tax. By that Amending Act of 1987 the rate of turnover tax was increased, the ceiling limit of exemption from payment of turnover tax was lowered down from rupees fifty lakhs to rupees twenty-five lakhs and clause (e) of sub-section (2) of section 6-B of the Act of 1941 was omitted with retrospective effect. Because of the passing of this Amending Act, the applicants prayed before the High Court, Calcutta for withdra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tta, and contended that a newly set-up small- scale industrial unit, being in possession of eligibility certificate, was entitled to have exemption from payment of sales tax and turnover tax during the initial periods from the date of first sale of their product, on fulfilment of certain conditions. The applicants filed along with the affidavit-in-reply a statement showing the extent of profit earned from business to show that the imposition of turnover tax was confiscatory in nature. 7.. After the record of C.O. No. 12170(W) of 1987 was forwarded to this Tribunal from the High Court, Calcutta, the applicants filed in this Tribunal a supplementary affidavit on June 15, 1992, with the leave of this Tribunal, in support of the statement in the affidavit-in-reply about the total turnover of the applicants during the relevant periods. They filed copies of audited balance-sheet for the periods from 1978-79 to 1984-85 and copies of income-tax assessment orders for the purpose of showing that for the relevant periods the applicants were either running at a loss or at meagre profit. It was alleged in the supplemen- tary affidavit that due to illegal curtailment of benefit assured by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of 1941. By these amendments the rate of turnover tax as well as the exemption limit for payment of turnover tax were changed. The effect of these amendments was that a dealer, whose aggregate of gross turn- over under the Act of 1941 and the Act of 1954 during the accounting year ending before April 1, 1979 exceeded Rs. 50 lakhs, was liable to pay turnover tax with effect from April 1, 1979. If the above quantum was exceeded during any accounting year which ended during the period from April 1, 1979 to May 31, 1987, he became liable to pay turnover tax with effect from commencement of the year following the year on which his aggregate of gross turnover under the Act of 1941 and the Act of 1954 had exceeded rupees fifty lakhs. With effect from June 1, 1987, when the aggregate of gross turnovers under these two Acts of a dealer during the accounting year which ended before June 1, 1987, exceeded Rs. 25 lakhs, he would have to pay turnover tax with effect from June 1, 1987. If the aggregate of gross turnovers of a dealer under these two Acts during any accounting year which ended on or after June 1, 1987, exceeded rupees twenty- five lakhs, he would be liable to pay turnover tax wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax holiday given to small-scale industrial units in terms of a notification dated March 31, 1983, issued on the basis of section 4AA of the Act of 1954 was available also in respect of turnover tax under section 4AAA of the Act of 1954. These decisions of the Calcutta High Court regarding turnover tax came up for consideration subsequently before this Tribunal. In the case of the Calcutta Oil Industries Limited v. State of West Bengal [1991] 82 STC 26, as referred to by Mr. D. Majmudar, the learned State Representative, it was held by this Tribunal that (a) the doctrine of promissory estoppel could not be invoked against legislative functions of the State by way of levy of turnover tax during the period of tax-holiday from sales tax under rule 3(66) of the Act of 1941, that (b) the omission of clause (e) of section 6B(2) of the Act of 1941 by the West Bengal Taxation Laws (Amendment) Act, 1987 was merely clarificatory in nature and therefore valid and that (c) there was nothing in the amendment by way of omission of section 6B(2)(e) of the Act of 1941 which was unreasonable within the meaning of article 14 of the Constitution. In this decision in the case of Calcutta Oil Indus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment, which has the machinery to implement the acts of Legislature, is estopped in some cases from implementing such legislative acts, if the Government by its own actions has granted or assured others to do certain acts, which may be in some way or other against the legislative acts. It is not necessary to deal at length with this submission by Mr. Somen Bose, learned advocate for the applicants. Imposition of turnover tax by enacting section 6B of the Act of 1941 or section 4AAA of the Act of 1954 is a legislative act. Even in the case of Union of India v. J.K. Industries Ltd. AIR 1991 Raj 45 it has been held that the doctrine of promissory estoppel is not available against the Legislature. It has been held by this Tribunal in the case of Calcutta Oil Industries Limited [1991] 82 STC 26 that the doctrine of promissory estoppel could not be invoked against legislative functions of the State. Moreover, there is nothing to show that there was any assurance by the Government that no turnover tax would be imposed if any new industrial unit was set-up by the applicants. The promise or assurance by the Government was about tax-holiday in respect of sales tax under rule 3(66) of the Rule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cants started their production on April 26, 1979. There is no question of the applicants being guided by these two decisions of the Calcutta High Court for thinking at the time of starting of their industrial unit that turnover tax could not be demanded from them. These decisions cannot lead anyone to think that because of these decisions of the Calcutta High Court there was an unequivocal assurance by the State Government under rule 3(66) of the Rules of 1941 or under notifications issued under section 4AA of the Act of 1954 that no other tax would be levied on any person during the period of entitlement of eligibility certificate. 13.. In the written notes attempt has been made to show that rule 3(66) of the Rules of 1941 and the notifications issued under section 4AA of the Act of 1954 were beneficial provisions for the purpose of inducing persons or dealers to invest capital for the industrial development of West Bengal by altering their positions by starting newly set up industry for the consideration of non-payment of sales tax or turnover tax by them for the limited period they held eligibility certificates. In order to give effect to the beneficial aspects of these provis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n themselves interpretative criteria. They are simply methods or techniques by which the court applies the interpretative criteria. The choice between a strict and liberal construction arises only in case of doubt in regard to the intention of Legislature manifest on the statutory language. If the words are plain and clear and directly convey a meaning, there is no need for any interpretation. When the question is whether a subject falls under a notification or in any exemption clause, it, being in the nature of exception, is to be construed strictly and against the subject but once ambiguity or doubt about the applicability is lifted and the subject falls in the notification, then full play should be given to it and wider and liberal construction should then be made. In the present case, there was no ambiguity in the words of section 6B(2)(e) of the Act of 1941, which was omitted with retrospective effect by the Amending Act of 1987. It has been held by this Tribunal in the case of the Calcutta Oil Industries Limited [1991] 82 STC 26 that the amendment by which clause (e) of section 6B(2) of the Act of 1941 was omitted with effect from June 1, 1987, was merely clarificatory in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was in this context that the honourable Supreme Court held in that case that the appellant of that case was entitled to get a decree for eviction under section 13A-1 of that Act. Where the words of a statute are clear and unambiguous, there can arise no question of construction. As such, when the language in section 6B of the Act of 1941 or section 4AAA of the Act of 1954 are plain and clear, there arises no question of any interpretative process for holding that turnover tax was not to be paid by the applicants, as rule 3(66) of the Rules of 1941 or the notifications under section 4AA of the Act of 1954 were beneficial provisions. In the case of Mangalore Chemicals Fertilizers Limited [1991] 83 STC 234 (SC); AIR 1991 SCW 2851 the question was whether a subsequent notification dated August 11, 1975, containing, inter alia, a condition of prior permission from the Deputy Commissioner of Commercial Taxes (Administration) was to be given the same importance as the substantive provision of exemption from payment of sales tax under another notification dated June 30, 1969, which contained a provision for cash refund of all sales tax paid by new industry on raw materials purchased b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asonableness to the administrative law on the substantive side is equal to the contribution of the principles of natural justice to administrative law on the procedural side. Unfairness in the form of unreasonableness comes close to unfairness in the form of violation of natural justice. The doctrine of legitimate expectation operates in these contexts. It has grown from two separate roots, natural justice or fairness and estoppel. Nevertheless, as decided by the Supreme Court in the case of Sri Srinivasa Theatre v. Government of Tamil Nadu [1993] 89 STC 201; AIR 1992 SC 999, no case has yet been brought to the notice of the Supreme Court where a legislation has been invalidated on the basis that it offends the legitimate expectation of the persons affected thereby. The applicants cannot avoid payment of turnover tax on invoking the theory of legitimate expectation, arising from the provision of tax-holiday under rule 3(66) of the Rules of 1941 and the notifications under section 4AA of the Act of 1954. 15.. The imposition of turnover tax has been challenged in the written notes on the ground that the imposition of this tax is against the provisions of articles 14 and 19(1)(g) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was not withdrawn by the imposition of turnover tax. The withdrawal of section 6B(2)(e) of the Act of 1941 by the Amending Act of 1987 had not the effect of withdrawing the benefit of non-payment of turnover tax, the liability to pay which remained irrespective of existence or omission of section 6B(2)(e) of the Act of 1941, which was merely clarificatory in nature, as per the decision of this Tribunal in the case of the Calcutta Oil Industries Limited [1991] 82 STC 26. 17.. An attempt has been made in the written notes to show that the provisions for imposition of turnover tax will not apply at least in the case of the applicants. This contention cannot be accepted. The amendments made in section 6B of the Act of 1941 by the Amending Act of 1987 does not affect the applicants as regards the rate of turnover tax payable by them for the years in question in the present case. As discussed in the case of the Calcutta Oil Industries Limited [1991] 82 STC 26 (WBTT) at page 44, advantage cannot be taken of the provisions in clause (g) to section 6B(2) of the Act of 1941 for challenging imposition of turnover tax. 18.. The result is that all the contentions raised in the written note ..... X X X X Extracts X X X X X X X X Extracts X X X X
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