9911796707
TMI Blog1999 (6) TMI 463X X X X Extracts X X X X X X X X Extracts X X X X ..... ial circumstances while narrating the facts. 2.. The petitioners are incorporated under the Companies Act, 1956. They have set up sugar factory for the manufacture of white crystal sugar at Naranapuram, Vasudevanallur, Nellai Kattabomman district. The letter of intent was issued by the Ministry of Industry, Government of Tamil Nadu on May 12, 1987. Their application was made on January 23, 1987. The factory was authorised to have a crushing capacity of 2,500 tonnes per day. They have been reserved the specified areas for drawal of sugarcane by the Commissioner of Sugarcane, in their letters dated October 8, 1987 and March 23, 1988. It is the case of the petitioners that they ventured into the project in an under-developed area because of the various incentives assured by the Government of Tamil Nadu and Government of India for new sugar mills. The petitioners had acquired lands to the extent of 200 acres between August, 1987 to August, 1988. The necessary orders for the machineries were placed in the month of December, 1987. It is worthwhile to quote the alleged assurance on the part of the Government of Tamil Nadu in the words of the petitioners. The affidavit states: The del ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eged promises made by the Government of Tamil Nadu, we restrict ourselves to the G.Os. issued by the Government of Tamil Nadu. In G.O. Ms. No. 1294 dated October 24, 1975 a subsidy equivalent to the quantum of purchase tax on cane due from sugar factories for a period of 5 years from the date of their going into production was offered. The very caption of the G.O. is new sugar factories in co-operative and public sector . The body of the G.O. also makes it very clear that the subsidy was confined to sugar factories yet to be commissioned in the co-operative and public sectors. The petitioners are aware of the fact that the said Government order did not refer to new sugar factories in the private sector. The Government of India is said to have relaxed the policy of licensing even the private sector wherever proposals were not received from the co-operative and public sectors. Stopping here, we must recognise the fact that the Government of Tamil Nadu did not at any time make any promise regarding payment of subsidy to sugar factories in the private sector. Reference is made to certain relaxation made by the Government of Tamil Nadu in respect of two private sugar factories, namel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0/Industries-B, large and medium Industries-AE Consumer IndustriesSchemes in the Sixth 5-year Plan-II-State Plan-B assistance to sugar mills towards payment of purchase tax . The above is indicated to say that the G.O. Ms. No. 989, dated September 1, 1988 was issued, the Government of Tamil Nadu had granted total waiver of purchase tax on the entire quantity of cane crushed for a period of five years to new sugar mills in the private sector, co-operative sugar mills as well as public sector sugar mills and the basis was clear and unambiguous. 6.. It is difficult to accept the argument that a venture of such a huge nature involving heavy financial investment could embark upon the project mainly based on the above assumption of the petitioner that the Government of Tamil Nadu had agreed or promised to grant waiver of purchase tax to all sugar mills whether in the private sector or public sector or co-operative sector. We are unable to decipher any such policy from any of the Government orders. 7.. If we now peruse the counter-affidavit filed by the respondents the conduct of the petitioners with reference to the Tamil Nadu Government orders will be more revealing. It is stated t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in the case. But the learned Government Advocate did not raise the objection. We will however decide that issue also. 10.. The petitioners are raising the following points in the affidavit and the oral arguments: (1) Has this Tribunal jurisdiction to hear and adjudicate on the T.P. and O.P.? (2) Are the petitioners entitled to subsidy equivalent to purchase tax on sugarcane for a period of five years from the date of commercial production on the basis of Tamil Nadu Government policy obtaining prior to September 1, 1988 (G.O. No. 989), applying the principles of promissory estoppel and legitimate expectation? (3) In any event is the refusal to give the said benefit in violation of article 14 of the Constitution of India, when compared to the relief given to Bannari Amman Sugars and Ponni Sugars? (4) Is the action taken by respondents contrary to the principles of natural justice and section 13 of the TNGST Act, rule 18 of the TNGST Rules and should the rules be so read as to preserve the principles of natural justice? Issue No. 1: 11.. On the 1st issue of jurisdiction we believe that in certain earlier cases the Government raised the issue in the High Court, Madras. As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at a document containing certain admissions constitutes substantial evidence and can be relied upon. This decision has been referred to only because the petitioners alleged that there is an admission on the part of the Revenue in G.O. Ms. No. 989, dated September 1, 1988. The reference is to the words: The above scheme had also been extended to the new sugar mills in private sectors in the G.O. s. 2nd and 3rd read above. The Government have reviewed the existing scheme of grant of purchase tax subsidy to new sugar mills in the context of new sugar mills which have been licensed in the current plan period and which will be coming up both in co-operative and in the private sectors in the next two years. 14.. We are unable to see how there is any admission on the part of the Revenue to the effect that the grant of purchase tax subsidy was available even to sugar factories in the private sector. To the same effect is the judgment in AIR 1977 SC 1724 [Thiru John (in C.A. Nos. 1895-1896 of 1974), V. Subramhamanyan (in C.A. No. 1907 of 1974) v. Returning Officer]. That was a case where there were several admissions made ante litam motam during the period prior to the elections. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of excise duty attributable to the case of the petitioners. 16.. [1984] 55 STC 380 (Pat) (Usha Martin Industries Ltd. v. Additional Superintendent of Commercial Taxes, Jamshedpur Circle, Jamshedpur) is relied upon for the proposition that an earlier notification granting certain benefits which had been acted upon by the beneficiaries cannot be modified to the prejudice of the beneficiaries merely because of the increasing overdrafts and deficit budget of the State Government and the shortage of resources for progressing development. In the case before us there is some reference to the financial constraints of the Government. But this is not the only ground on which the revenue seeks to sustain the impugned Government order. The last decision cited before us is AIR 1993 SC 155 (Navjyoti Co-Group Housing Society v. Union of India). This case is relied upon because there is also a reference to the theory of legitimate expectation. In that case a brochure was issued by the Delhi Development Authority in the year 1982 stating that the policy of allotment was on the basis of seniority in registration. The Supreme Court observed that the concerned societies were entitled to legit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... turely on giving reasonable notice to the promisee to enable the promisee to restore the status quo anti. For this purpose they relied on Emanuel Ayothiji v. Brisco (1964) 3 All. ER 556 (page 255) and Shrijee Sales Corporation v. Union of India (1997) 3 SCC 398. 17.. We will now take up a few decisions cited on behalf of the Government by the Government Advocate, Mr. R. Mahadevan. The first decision is [1993] 89 STC 452 (Vishnu Khandsari Udyog v. Government of Gujarat) by the Gujarat High Court. The facts of this case should be carefully noticed because they have a close resemblance to the facts of the case before us. According to the petitioners in that case they had relied upon certain Government resolutions dated December 22, 1977 and August 27, 1980 and established a new industries for manufacturing khandsari from sugarcane. They claimed benefit of purchasing free of sales tax raw materials, packing materials and processing materials utilised for the purpose of manufacturing khandasari. The revenue in that case had denied the benefit of sales tax exemption with respect to the purchase of the raw materials, namely sugarcane. By a notification dated February 5, 1981 exemption w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ished goods were exempted from purchase tax without such goods were sold to a registered dealer. A similar notification was issued on April 23, 1976, granting exemption for a period of 5 years from the date on which the production was commenced. By a further notification dated May 20, 1977 the earlier notifications were abrogated. On September 9, 1977 the exemption was restored to a limited extent in respect of industries which had started production prior to April 1, 1977. The Supreme Court held as follows: that the doctrine of promissory estoppel could not be raised by the respondent in this case ; no particulars were given by the respondent as to when the decision to set up the industry was taken, the date when the loan was obtained, exactly when the land was purchased and machinery was acquired for setting up the small-scale industrial unit and the respondent had not given factual details as to how in the short span of four months, from July 18, 1979, when the resolution was issued in November 28, 1979, when the provisional certificate was issued, it set up its industry; The Supreme Court also held that the Government could change its industrial policy if the situation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o sales tax exemption under Part I, clause 7.1.1 of IPR 1989. This argument of learned counsel is totally misplaced. Under Part I, clause 7.1.1 of IPR 1989 only those new industries which were set up under IPR 1989 were entitled to incentives/ concessions. This implies that under Part II, only eligible continuing industries of 1986 policy were entitled to sales tax exemption for further period of two years. The respondent-unit being ineligible to receive sales tax exemptions under 1986 policy was precluded to entitlement of sales tax exemption under IPR 1989. 20.. The judgment of the Supreme Court in (1995) 1 SCC 274 (Kasinka Trading v. Union of India) is authority for the preposition that the doctrine of promissory estoppel must yield when the equity so requires. If it can be shown by the Government or public authority that having regard to the facts as they had transpired, it would be inequitable to hold the Government or public authority to the promise or representation made by it, the court would not raise a equity in favour of the person to whom the promise or representation was made and enforce the promise or representation against the Government or public authority. Obser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... call for the applicability of the principle of promissory estoppel or legitimate expectations, to enable the petitioners to get the benefit under G.O. Ms. No. 1294 dated October 24, 1975. That apart we have already indicated that on the facts of the case there was no promise to private sector sugar factories that they will be given annual subsidy equivalent to the quantum of purchase tax on sugarcane. For all the above reasons the second issue raised by us is answered against the petitioner. Issue No. 3: 23.. Does the action of the respondent denying the benefit of subsidy in accordance with G.O. No. 1294 dated October 24, 1975 in violation of article 14 of the Constitution of India especially when compared with M/s. Bannari Amman Sugars and Ponni Sugars. In our opinion this issue assumes importance because the grant of a similar benefit to M/s. Ponni Sugars by G.O. Ms. No. 1414, dated November 30, 1984 and to M/s. Bannari Amman Sugars by G.O. Ms. No. 268, dated April 16, 1987, has made a reference to G.O. Ms. No. 1294 dated October 24, 1975. Even so we have held that the grant of the benefit under G.O. Ms. No. 1294 dated October 24, 1975, to two industries would not amount to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uction on October 16, 1981 and July 1, 1984. The private sector sugar mill, namely, M/s. Ponni Sugars commenced commercial production on January 27, 1984. During the seventh plan period (1985-86 to 1989-90) six more sugar mills had commenced commercial production. There was only one co-operative sugar mill and five private sector sugar mills. Among the private sector sugar mills M/s. Bannari Amman Sugars commenced production on January 22, 1986 whereas petitioners commenced production on March 6, 1989. Similarly four other private sector sugar mills commenced production on March 21, 1989, January 18, 1990 and April 24, 1990. The significant point is that the last three private sector sugar mills were not also granted the subsidy as per G.O. Ms. No. 1294 dated October 24, 1975. The Government further states that the purchase tax subsidy commitments for the Government was estimated at Rs. 9.60 crores in respect of the three sugar mills established during the Sixth Plan. The purchase tax subsidy commitments of the Government during the Seventh Plan was estimated at Rs. 19.20 crores. It is precisely for these reasons and considering the fact that huge revenue loss was anticipated by wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in support of the petitioners case. That decision related to the decision to the dismissal of certain members of police force and there was discrimination in the award of punishment. Considerable stress was made on the judgment reported in AIR 1979 SC 1628 (Ramana Dayaram Shetty v. International Airport Authority of India). This judgment is a familiar judgment and the observations contained therein are very often quoted. The following observations may be noticed: The discretion of the Government has been held to be not unlimited in that the Government cannot give or withhold largess in its arbitrary discretion or at its sweet will. It is insisted, as pointed out by Professor Reich in an especially stimulating article on The New Property in 73 Yale Law Journal 733, that Government action be based on standards that are not arbitrary or unauthorised . The Government cannot be permitted to say that it will give jobs or enter into contracts or issue quotas or licences only in favour of those having grey hair or belonging to a particular political party or professing a particular religious faith. The Government is still the Government when it acts in the matter of granting l ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
