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TMI Blog2000 (5) TMI 1049X X X X Extracts X X X X X X X X Extracts X X X X ..... oduct of an industrial unit situated within or outside West Bengal and where such product is sold in West Bengal." 2.. The cases of the applicants are similar. The case of Pacific Health Care Pvt. Ltd. in RN-375 of 1999 is that it manufactures ayurvedic medicines. M/s. Himani Ltd., now known as Emami Ltd., agreed to buy the entire production of the said company on principal to principal basis after getting its brand names/trade marks affixed by the applicant-company on the goods. Neither in section 39 of 1994 Act, nor in rules 98 to 101 of 1995 Rules there was any restriction on use of trade mark/brand name of other established manufacturers. Accordingly, the applicant-company decided to set up its factory in the State of West Bengal for availing of the tax holiday under section 39 in respect of its manufactured goods in the newly set up industrial unit for a period of five years. The company has narrated what steps it had to take and what investments it had to make for commencing production. The applicant-company duly applied on July 28, 1998 under section 39 of 1994 Act for issuance of eligibility certificate for availing of the tax holiday. On January 6, 1999 the respondent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ution of India (paragraph 31). In paragraph 32 it is contended that the goods manufactured by the applicant-company are sold on principal to principal basis to M/s. Himani Ltd., which is the owner of the brand names/trade marks and it is the said buyer which uses the said brand names/trade marks while selling the goods in the market. In paragraph 33 the case made out by the applicant-company is that the amendment in question and the public notice dated August 31, 1999, issued by respondent No. 2 seek to make an arbitrary and hostile discrimination between persons similarly situated, and the distinction sought to be made between SSI units using the brand names/trade marks of other industrial units and such units not using them, and such distinction has got no rational nexus with the objects sought to be achieved by section 39. The company prays for a declaration that the amendment effected by the notification dated August 12, 1999 and the public notice dated August 31, 1999 issued by respondent No. 2 are ultra vires articles 14, 19, 265 and 300A of the Constitution of India and ultra vires section 39 of 1994 Act, and illegal and void. 3.. The case of the other applicants are identic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion on the basis of the tax holiday provisions as obtaining at the time of establishment of the unit. The challenge to the amendment in rule 98 of 1995 Rules is identical. 5.. In RN-420 of 1999, the case of Sm. Shashi Malik is that she runs a business under the trade name of Lakshmi Electronics. That is a SSI unit which started the business of re-selling TV sets in 1998. The sets were being imported into West Bengal from outside. In July, 1998 the applicant entered into an agreement with M/s. BPL Ltd., for supply of TV sets. It allowed the applicant to use its brand name in TV sets to be manufactured by the applicant. Manufacture of such TV sets was started in February, 1999. On March 8, 1999 the applicant prayed for issuance of EC under section 39 in respect of TV sets manufactured in her unit. The respondent No. 1 made verification on the application and found as a fact that the applicant was manufacturing TV sets with the brand name "BPL". In view of the impugned Notification No. 2425-FT dated August 12, 1999 made effective from September 1, 1999, the respondent No. 1 passed an order on September 7, 1999 and granted EC for the period from February 26, 1999 to August 31, 199 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all these cases. Now we are summarising the case of the respondents in the affidavit-inopposition in RN-375 of 1999 (Pacific Health Care Pvt. Ltd.). According to respondents, the EC was granted under section 39 to the applicant for tax holiday in respect of its turnover of sales of hair oil and anteseptic cream manufactured in their newly set up SSI unit. If the applicant used the brand name, trade mark or logo of M/s. Himani Ltd., for their products, it was purely a private arrangement between them, and none of the respondents is in any way responsible for or bound by such private arrangement. The applicant is eligible for the tax holiday, provided it manufactures hair oil and anteseptic cream in the SSI unit during the specified period. There is allegedly nothing on record that the applicant ever used any such brand name, etc. The EC granted to it did not expressly or impliedly confer any authority to use any such brand name of any other company. It is contended that there was an implicit condition that brand name, trade mark or logo of any other industrial unit cannot be used, if the tax holiday is availed of. By insertion of clause (v) in the Explanation I to rule 98 the condit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax holiday, and it cannot derive a benefit indirectly. Similar affidavit-in-opposition was filed by respondents in RN-338 of 1999 (Universal Systems Incorporate), RN-372 of 1999 (Jesie Household Care Products Pvt. Ltd.) and RN-357 of 1999 (Ronix Electronics Pvt. Ltd.). No affidavitin-opposition was filed by respondents in RN-420 of 1999 (Sm. Shashi Malik) and RN-425 of 1999 (Quality Home Products Pvt. Ltd.), because the question involved is a question of law and because of the analogous hearing. 7.. In RN-375 of 1999 an affidavit-in-reply was used by the applicant-company. It was stated therein (paragraph 4) that the fact that the company was using the brand name of M/s. Himani Ltd., for its products was duly disclosed and was made known to the respondents. In this connection annexure "A", an agreement, has been referred to. It is an agreement between the applicant-company and Himani Ltd., for use of brand name, trade mark, etc. It is asserted by the applicant-company that the said agreement was duly produced before respondent No. 4 (Assistant Commissioner, Commercial Taxes, Special Cell, Behala Circle). He duly considered the same before grant of EC and registration certificate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctions as may be prescribed, no tax shall be payable by a dealer for such period as may be prescribed in respect of his sales of goods manufactured by him in his newly set up small-scale industrial unit............................". The heading of section 39 is: "Tax holiday for new small-scale industrial units". The conditions and restrictions and the period of tax holiday are prescribed in rules 98 to 101. Rule 55 is also to an extent relevant and rule 98 together lay down that in order to avail of the tax holiday the dealer must obtain an EC and shall claim deduction from his gross turnover. In order to fully appreciate the scheme of tax holiday, rules 98 to 101 are to be closely analysed. The Explanation I below rule 98(3) is very important. It is the definition of "newly set up small-scale industrial unit". Unless the dealer is such a unit, it is not eligible for enjoying the tax holiday. A dealer who is not such a unit, is to be shut out at the threshold. The conditions and restrictions prescribed in Explanation I are naturally to be more strictly observed than the other conditions and restrictions prescribed in rules 98(2) and 98(3). Here there is no dispute that all the req ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6 with capital investment exceeding Rs. 3 lakhs. There was no condition that exemption, once granted, would cease to operate on capital investment being in excess of Rs. 3 lakhs. It was held that subsequent excess in capital investment could not be the ground for denying the exemption. It is interesting to note that in the West Bengal Rules also the limit of capital investment is clause (i) in the Explanation I to rule 98. That means, it is a requirement of the definition. So, when the requirements of the definition are fulfilled on the date of application and the date of first sale, and when the EC is granted for a specified period (as in the cases before us) the EC cannot be invalidated and the tax holiday cannot be denied on the ground that the dealer has subsequently failed to comply with the requirements of the definition in the Explanation I. That being the position, how can a new requirement like the clause (v) regarding brand name, trade mark, logo, adversely affect such a dealer? How can such a dealer be asked to comply with the new requirement after grant of EC, i.e., tax holiday? It is not legally possible. There is nothing in rules 98 to 101 to the effect that such a de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1941 and the Act of 1954 were expressly repealed by 1994 Act under section 106(1). The ban on use of other's brand name, etc., was omitted in the provisions of the new Act. This indicates that the ban was consciously withdrawn. When all these are considered together, the only reasonable interpretation is that there is an implied consent or permission to the effect that the dealers could enjoy tax holiday even by using the brand name, trade mark, or logo of any other industry. In our view, absence of the ban is sufficient indication that use of other's brand name, etc., would be no ground for denying the tax holiday. 11.. Regarding the alleged "right" of the State to impose the ban or a new condition at any stage, Mr. Bajoria rightly submitted that it was not a "right"; but the "power" of the State to amend the provisions in exercise of legislative or subordinate legislative power, was beyond question. He contended that in exercise of such right the State could not take away the vested right of individuals. We shall presently discuss the contention about vested right. But at this stage it is enough to say that the power of the State to amend the rules is not without any restric ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... press its intention in the words used. Therefore, if the contention of the respondents is to be accepted, the court has to supply the ban on use of other's brand name with effect from May 1, 1995, when there was none. And then assume further that there was some mistake in the provision. The whole thing becomes imaginary. According to Craies (ibid P. 520), "as a general rule a court of law is not authorised to supply a casus omissus, or to alter the language of a statute for the purpose of supplying a meaning, if the language of the statute is incapable of one, even though they may be of opinion that a mistake has been made in drawing the Act". In this case, of course, we hold no opinion that a mistake was made in drawing the rule. No material has been placed to hold any such opinion. Again, Craies (ibid P. 521) deals with the position of law about correction (clarification): "But if there is an obvious misprint in an Act of Parliament the courts will not be bound by the letter of the Act, but will take care that its plain meaning is carried out. 'It is our duty'," said Tindal, C.J., in Everett v. Wells (1841) 2 M G 269, "neither to add to nor to take away from a statute, unless we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ptitude or the procrastination of the officer in disposing of the application praying for the benefit under rule 99 of 1995 Rules (i.e., same Rules as involved in this case). It was further held that the nature of such right gets settled according to the relevant provisions of law prevailing on the date. Subsequent amendment, if any, shall not change its nature unless the amending Act/Rules make provisions otherwise. This decision was upheld by the Division Bench of the High Court, according to the learned advocates for the applicants. We have already discussed the case of Industrial Coal Enterprises [1999] 114 STC 365 (SC); [1999] 2 JT 6 SC. That decision gives support to the contention of Mr. Bajoria that tax holiday, once granted when there was no ban on use of brand name, cannot be withdrawn or nullified during the period allowed by freshly imposing the ban. The contention of the learned State Representatives appearing for the respondents, is that it is not a retrospective amendment. So, why the operation of clause (v) in respect of the dealers who were granted EC before September 1, 1999 is being resisted? But they made a basic fallacy. The right or vested right of tax holiday ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f promissory estoppel. Because they had altered their position on the basis of the incentive offered through the rules, framed for implementation of section 39. The learned State Representatives appearing for respondents, argued that the doctrine of promissory estoppel has no role to play. The State Government cannot be estopped from amending the rules in the public interest. Their main contention was that it was learnt from experience that big and well-established industrial units who were ineligible for tax holiday, were deriving the benefits of tax holiday indirectly by allowing the SSI units like those of the applicants to use their brand names. According to the learned State Representatives, the objectives of taxholiday scheme is to encourage new entrepreneurs, who need financial incentives, to set-up small-scale industries in the State. Government need not give such assistance to others, who masquerading as newly set-up units take advantage of trade mark or brand name of established industry. They can stand on their own without such support from the Government and the limited resources of the State could be profitably utilised for boosting comparatively weaker entrepreneurs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... K. Goswami, State Representative, cited the case of Roxy Roller Flour Pvt. Ltd. [1994] 94 STC 464 (AP). In that case it was held that grant of exemption from sales tax was not in the nature of promise, that the power of grant of exemption under section 9 of A.P. General Sales Tax Act included the power to rescind the same, and the State Government had power to rescind the exemption granted earlier. At this stage we may say that withdrawal of an exemption altogether, is a different matter. But according to the Andhra Pradesh judgment also, such withdrawal would be in the public interest or in the interest of State revenue. Respondents did not put forward or establish any such defence in the present case. On the contrary, the applicants cited the case of Civil Asbestos v. State of Gujarat [1995] 96 STC 154 (Guj) in which it was held that exemption granted by State Government under the Sales Tax Act constitutes a promise, and though the Government is entitled to withdraw the benefits of exemption under a scheme, the power is operative only prospectively, and does not affect rights already vested in entrepreneurs to claim the benefit of the scheme. The Gujarat High Court further held t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... frustrating the object of promoting development of industry in the State. In these circumstances, we hold that the doctrine of promissory estoppel will apply in favour of the applicants and they cannot be denied their right to enjoy the full period of tax holiday to which they are entitled to. The new clause (v) of Explanation I to rule 98 will not apply to these applicants. 15.. Some of the applicants have submitted that at the time of granting EC the authorities were aware and informed that brand name or trade mark of other industries were being used by them. So, when EC was granted with such knowledge, the new ban could not be applied to them. This contention was not directly opposed on behalf of respondents, but it was argued for the respondents that use of brand name was not mentioned in the EC. As regards RN-375 of 1999 (Pacific Health Care Pvt. Ltd.), the order dated January 6, 1998 under which EC for five years from May 30, 1998 was issued, was passed after considering all the requirements under the Rules. In quite some of the documents examined at that time there was clear reference to use of brand names of Himani Ltd. Orders dated July 6, 1998 and July 9, 1998 relat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... EC was granted on October 30, 1998 for the period from March 27, 1998 to March 26, 2003. In para 8 of the application the applicant has stated that it was using other's brand names. In para 9 of the opposition the respondents took the same plea that they were not bound by or responsible for any such use by franchise agreement. They did not deny knowledge. In the case of Ronix Electronics (RN-357 of 1999), the EC was granted on January 18, 1999 for the period from May 21, 1998 to May 20, 2003. In paras 7 and 8 of the application the applicant stated that the respondent No. 2 was informed of the use of the brand name"Oscar"-and at the time of enquiry on the application for EC the respondent No. 2 noticed such use. From order dated November 18, 1998 passed by the assessing authority for granting registration certificate it is clear that the authorities were aware of use of brand names. In para 5 of the opposition the respondents did not deny the assertion by the applicant, and rather there is an admission. 16.. In the result, it is hereby declared that the clause (v) added to the Explanation I to rule 98 of 1995 Rules by means of the Notification No. 2425-FT dated August 12, 1999, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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