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TMI Blog2003 (3) TMI 693X X X X Extracts X X X X X X X X Extracts X X X X ..... oleum gas (LPG). Their claim essentially centers around the industrial policy announced by the State Government for new industries in terms of G.O. Ms. No. 108, dated May 20, 1996. The petitioners herein claim the benefit of exemption in respect of the sales tax in accordance with the said policy decision taken by the State Government. 4.. The case of the respondent-State is that the petitioner's industries do not qualify for the grant of any relief under the said policy decision of the Government, as there is neither manufacture nor commercial production as such undertaken by them in the factories set up by them in the State of Andhra Pradesh. 5.. The case of the petitioners is that the industrial units set up by them are engaged in the production of a product with distinct commercial identity and nomenclature, i.e., bottled liquefied petroleum gas, which conforms to the provisions of the Liquefied Petroleum Gas (Regulation of Supply and Distribution) Order, 1993 (for short, "the Distribution Order") and I.S.I. specifications. It is stated in the affidavit filed in support of the writ petition that the process carried out in the petitioner's plants is for the purpose of prod ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he benefit of exemption. 9.. It is also submitted that the competent authority (the Manager, District Industries Centre) has, after inspection and verification, held that the petitioner's units were eligible to avail of the benefit of exemption under G.O. Ms. No. 108 of 1996. The decision of the competent authority is binding on the sales tax authorities. The cancellation of temporary eligibility certificate in January, 2001 is of no relevancy at all, since the said cancellation has taken place in pursuance of the policy decision taken by the State Investment Promotion Board in December, 1999 and communicated in the circular dated May 17, 2000. 10.. The learned Special Government Pleader for Taxes submitted that the petitioner's industrial units are not entitled for any benefit whatsoever under G.O. Ms. No. 108, dated May 20, 1996 even if the said G.O., is read along with G.O. Ms. No. 117, dated March 17, 1993 and the guidelines issued therewith. It is contended that the industrial units, which do not produce or manufacture, are not eligible and entitled for the benefit of exemption as provided for under G.O. Ms. No. 108, dated May 20, 1996. 11.. The learned Special Governmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er the new comprehensive scheme itself provides the sales tax payable by the new industrial units on the sales of finished goods (approved products manufactured in the unit) both under the Andhra Pradesh General Sales Tax Act and the Central Sales Tax Act from the date of commencement of commercial production for a period up to 5 years in case of exemption/up to 10 years in case of deferment subject to the limits prescribed under the scheme. 14.. At any rate, G.O. Ms. No. 108, dated May 20, 1996 issued by the industries department in modification of all the earlier orders including G.O. Ms. No. 117, dated March 17, 1993 is a self-contained one. We may have to notice three relevant clauses in the said G.O. Ms. No. 108, dated May 20, 1996 and they read: "(6.01) All new industrial units, whether large, medium or small other than those listed in the annexure, to be located anywhere in the State of Andhra Pradesh, except within the Municipal Corporation areas of Hyderabad, Vijayawada and Visakhapatnam, and going into commercial production on or after November 15, 1995 are eligible for the following incentives. (6.02) Investment subsidy: 20% of the fixed capital investment but not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al units is a manufactured product and, therefore, the petitioner is entitled to the benefit of exemption? The learned Senior Counsel contended that the expression "commercial product" and "manufacturing process" cannot be over switched in order to deprive the benefit of deferment of sales tax as provided for under G.O. Ms. No. 108, dated May 20, 1996. This is the main thrust of the submissions made by the learned Senior Counsel appearing on behalf of the petitioner. 16.. Reliance is placed upon various decisions in support of the submission and we shall advert to each one of them: In Chrestien Mica Industries Ltd. v. State of Bihar [1961] 12 STC 150, the Supreme Court held, "the process of mining mica is a process of production within the meaning of section 2(g) of the Bihar Sales Tax Act, 1947, as amended by Bihar Act VI of 1949". The Supreme Court referred to the elaborate process that has been set out in the Mica Enquiry Committee Report of 1944-45 in support of the conclusion that the process as described in the report would fall within the dictionary meaning of the word "production". The court further held that it is unnecessary to decide what the word "manufacture" mea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a way as to make it marketable, that is to say, in airtight containers". It was under those circumstances, the Supreme Court took the view that the calcium carbide manufactured by the assessee therein is not excisable. 20.. We fail to appreciate as to how the said judgment would render any assistance whatsoever in order to consider the question as to whether any process of manufacturing is at all involved and undertaken by the petitioner's industrial units. 21.. In Ardeshir H. Bhiwandiwala v. State of Bombay AIR 1962 SC 29 the Supreme Court was concerned with the question whether the "salt works" come within the definition of the word "factory" under clause (m) of section 2 of the Factories Act, 1948. The question was as to whether the salt works covering an area of about two hundred and fifty acres is to be treated as a factory within the meaning of clause (m) of section 2 of the Factories Act, 1948. On the entire land, the only buildings consist of temporary shelters constructed for the resident labour and for an office. The question that had arisen for consideration was whether any manufacturing process was being carried on in salt works in converting the seawater into sal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o-food processing and/or agro-based hi-tech packaging industrial unit" and therefore, under the policy decision of the State Government pronounced in the first notification, the products of the industrial unit of the petitioner therein was entitled to all incentives including that of exemption from sales tax. 23.. The said decision, in our considered opinion, does not really support the case of the petitioner herein since it is mainly based upon the concession made by the learned Advocate-General appearing on behalf of the State that there was absolutely no change in the policy decision of the Government between the first and second notifications in respect of grant of incentives to new industrial undertakings as originally devised and according to which sales tax exemption was ensured and promised on the sale of "output" of the industries mentioned in the notification which admittedly covered the industrial unit of the petitioner therein. The High Court took the view that the words used in the said notification "goods manufactured" had to acquire colour from the corresponding expressions used in the first notification. The court accordingly held that the words "goods manufacture ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es tax percentage of deferment/tax holiday and the period as specified shall be applicable only on products manufactured in the industrial units. Therefore, the question is as to whether any products as such are manufactured by the petitioner's industrial units located in various places in the State. Secondly, certain industries were declared ineligible for the benefit of exemption provided for under the said G.O. for the purpose of ensuring that no industrial unit is able to obtain any benefit including that of obtaining provisional/temporary exemption certificate affecting the revenue of the State. The list admittedly includes even the manufacturing units. Yet, the Government in its wisdom thought that they are not entitled for the benefit of the new industrial policy providing certain benefits to the newly set up industries. Therefore, we find it difficult to accept that all other industries, except such of the ineligible industries specified in annexure I, are entitled for the benefit of deferment/tax holiday on sales tax. 27.. The crucial question is as to whether any products as such are manufactured in the industrial units of the petitioner? The said question, in our c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of such process. 30.. In Deputy Commissioner of Sales Tax v. Pio Food Packers [1980] 46 STC 63, the Supreme Court succinctly stated the principle and the test to be applied as to when a commodity may be said to have been manufactured. It is observed: "Commonly, manufacture is the end result of one or more processes through which the original commodity is made to pass. The nature and extent of processing may vary from one case to another, and indeed there may be several stages of processing and perhaps a different kind of processing at each stage. With each process suffered, the original commodity experiences a change. But it is only when the change, or a series of changes, take the commodity to the point where commercially it can no longer be regarded as the original commodity but instead is recognised as a new and distinct article that a manufacture can be said to take place. Where there is no essential difference in identity between the original commodity and the processed article it is not possible to say that one commodity has been consumed in the manufacture of another. Although it has undergone a degree of processing, it must be regarded as still retaining its original ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ices required to be taken by the manufacturers of cylinders and marketing of cylinders. We fail to appreciate as to how the said Rules disclose the nature of manufacturing process involved, if any, of LPG. The Rules mainly deal with filling, possession, import and transport of cylinders and safety measures required to be taken by the persons filling in cylinders with any compressed gas, etc. The Rules exclusively do not deal with LPG as such. 34.. The Distribution Order as well as the Gas Cylinder Rules, in our considered opinion, do not have any bearing whatsoever or provide any clue as to the manufacturing process of LPG, if any, involved. 35.. For the aforesaid reasons, we are of the considered opinion that the petitioner's industrial units are, in no manner, engaged in the activity of "production of bottled LPG". There is no manufacturing process as such involved. The bottled LPG is not entirely a different product as such. It is not a new substance. Mere change in the substance does not amount to any manufacture. The character of the substance remained the same even after bottling. It is not a new commercial commodity brought into existence. 36.. It is very well-settled ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inciple of contemporanea expositio" in support of his submission that the competent authority (Manager, District Industries Centre) has, after inspection and verification, held that the petitioner's units were eligible to avail of the benefit of exemption under G.O. Ms. No. 108 of 1996. It is submitted that the understanding by the competent authority about the nature and scope of the notification issued by the Government granting the benefit of exemption is correct and reflects the true intention of the Government in issuing the notification. The decision of the competent authority is binding on the sales tax authority, is the submission. 40.. We express our inability to accede to the said submission. There is no decision as such by the Manager, District Industries Centre in issuing temporary eligibility certificate under the notification issued in G.O.Ms. No. 108, dated May 20, 1996. Even according to the guidelines, the temporary eligibility certificate indicates the tentative eligibility fixed for availing the deferment of sales tax facility at 20 per cent of the total quantum of eligibility towards the deferment of sales tax as determined on the basis of the fixed capital in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... non-manufacturing units are not eligible for sales tax incentives. It is for that reason, final certificate was not issued. The case on hand reflects different interpretations placed by two of the departments of the Government of Andhra Pradesh. The Commercial Tax Department came to the conclusion that the petitioner's units are not entitled for the benefit of deferment of sales tax in terms of G.O. Ms. No. 108, dated May 20, 1996. Initially, the industries department thought that the petitioner would be entitled for the benefit of deferment of sales tax solely on the ground that the petitioner's industry has not been included in the list of ineligible industries. Later, the industries department also realised its mistake. It is thus obvious that there is no uniformity even amongst the administrators and the personnel entrusted with the implementation of the scheme as to the eligibility and entitlement of the petitioner for grant of benefit under G.O. Ms. No. 108, dated May 20, 1996. In such circumstances, we are not inclined to rely upon the initial interpretation of the notification issued by the industries department. For the aforesaid reasons, we hold that the principle of con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... el however, contended that in view of the provisional eligibility certificate, the petitioner did not collect any sales tax from the consumers in respect of the LPG marketed by it and it would be unjust to impose liability upon it. 47.. It is the settled position that an assessee is liable to pay the sales tax and the question whether he has collected it from the consumer or not is of no consequence. His liability is by virtue of being an assessee under the Act. Under the provisions of the Andhra Pradesh General Sales Tax Act, the statutory liability to pay the sales tax is on the dealer. The Act does not impose any legal obligation on the dealer to recover the sales tax on the goods sold to the vendee. Therefore, the fact of non-collection of tax from the purchasers itself would not be a legal justification to avoid the liability to pay the sales tax by the petitioner. [For the proposition See: American Remedies Pvt. Ltd. v. Government of Andhra Pradesh [1999] 113 STC 400 (SC); (1999) 29 APSTJ 43, Al-kabeer Exports Ltd. v. Commissioner of Commercial Taxes, Hyderabad [2000] 120 STC 543; (2000) 31 APSTJ 58 and Central Wines v. Special Commercial Tax Officer [1987] 65 STC 48 (SC); ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eferment/tax holiday on sales tax in terms of G.O. Ms. No. 108, dated May 20, 1996. It is the submission of the State that the petitioner merely imports LPG and the same is filled in their units in the containers named as LPG cylinders. Therefore, the petitioner's industrial units are not engaged in any manufacturing activity. LPG is not manufactured by the petitioner. The petitioner's industrial units/factories do not have any refinery or machinery to manufacture the gas. From the counter-affidavit it appears that the assessing officer issued a show cause notice on December 13, 1997 and got the same served on the same day. On December 18, 1997 the petitioner filed adjournment letter requesting for grant of some time. The petitioner without any reason or justification wilfully avoided to file its objections to the said show cause notice. 54.. From the averments made in the affidavit filed in support of the writ petition, it is difficult to discern the reason for filing of the writ petition. In the affidavit, it is even stated that the Assistant Commissioner of Commercial Taxes, Vigilance, Panjagutta even passed a provisional assessment order dated March 18, 1998. Demands have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ms of G.O. Ms. No. 108, dated May 20, 1996? 58.. The answer to the said question results in disposal of all the writ petitions. 59.. Sri E. Manohar, learned Senior Counsel appearing on behalf of the petitioner in this group of writ petitions filed by the same petitioner, while adopting the submissions made by Sri. S. Ganesh, learned Senior Counsel appearing on behalf of the petitioner in W.P. Nos. 24303 and 26797 of 2000, submitted that the respondents are estopped from refusing to grant benefits under G.O. Ms. No. 108, dated May 20, 1996. The learned Senior Counsel invoked the doctrine of "promissory estoppel" in support of his submission. It is also, though mildly, contended that the respondents cannot impose liability upon the petitioner for payment of sales tax for the reason that the petitioner had never collected any such sales tax from the consumers while marketing the LPG. 60.. It is totally unnecessary to recapitulate as to what we have stated in the preceding paragraph dealing with the question as to whether the petitioner manufactured any product as such in its new industrial units. We have already expressed our opinion. 61.. The only question that remains to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... concessions being determined on the basis of a certificate to be issued by the Department of Industries and Commerce. By another order dated August 11, 1975, the procedure was prescribed for obtaining the concessions. On January 12, 1977 the Government issued another order which recited that the reasons for making the said order dated January 12, 1977 were that the scheme of concessions adopted by the Government earlier had given room for many types of misuse and the earlier orders had not prescribed any ceiling limits or restrictions on the quantum of refund of sales tax or concessions to be granted. The Government accordingly limited the concession of refund of sales tax on raw material to 10 per cent of the cost of fixed assets per year, thus not exceeding the total of 50 per cent over a period of five years for which the concession is available. Several persons claimed that they had started new industrial units in the State on the assurance extended or because of the concessions granted to them, inter alia, under the said order dated June 30, 1969. They have invoked the doctrine of promissory estoppel. The High Court upheld their contention and held that the Government was no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... up the unit provided the concessions were made available to it. The Director of Industries assured the industrialist that the concession as announced shall be available and further informed the industrialist that the Government was willing to consider such additional concession which the industrialist may require for implementation of the scheme and it was followed by exchange of correspondence and various meetings between industrialist's representatives and officials of the Government. There was a representation to the industrialist that it would be entitled to concession and incentives announced by the Government if it set up its unit in the prescribed area. The Supreme Court held that any agreement for refund of sales tax due under the Act to individual being contrary to public policy was void under section 23 of the Contract Act. The constitutional requirements of levy of tax being for the welfare of the society and not for a specific individual the agreement or promise made by the Government was in contravention of public purpose thus violative of public policy. The scheme of refund of sales tax was incapable of being enforced in a court of law. 67.. We fail to apprecia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rmendra Trading [1988] 70 STC 59 (SC); AIR 1988 SC 1247. 70.. For the aforesaid reasons, we do not propose to burden this judgment with various pronouncements of the Supreme Court dealing with the principle of promissory estoppel. 71.. Sri E. Manohar, learned Senior Counsel, however, relied upon the decision of a division Bench of this Court in Coromandel Fertilisers Ltd. v. Commercial Tax Officer [1992] 85 STC 212; (1992) 1 ALT 327 in support of his submission that the petitioner cannot be made liable to pay the sales tax since it did not collect any amount towards the sales tax-as it could not have-in view of the provisional eligibility certificate issued by the Manager, District Industries Centre. It is submitted that imposing of such liability upon the petitioner would be unjust and oppressive. 72.. The facts as evident from the said judgment may briefly be noted for the purpose of appreciating the principle, if any, laid down in the said judgment. The Government of Andhra Pradesh in exercise of the power under section 9 of the Andhra Pradesh General Sales Tax Act, 1957 granted reduction in the rate of sales tax to the manufacturers of cement in Andhra Pradesh by issuing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... therefore, feel that it would be unjust and unreasonable to permit the respondents to collect the amounts of difference of sales tax on the basis that the said G.Os., were not in force during the said period." 73.. The observations so made in the said order may have to be confined to the fact situation. 74.. We have already noticed that except the so called provisional/final eligibility certificate granted by the Manager, District Industries Centre there is no restriction as such imposed by any authority directing the petitioner not to realise the sales tax. We have already noticed the law declared by the Supreme Court that payment of sales tax under the provisions of the Andhra Pradesh General Sales Tax Act is upon the dealer. The fact whether he has collected the sales tax or not is immaterial. 75.. For the aforesaid reasons, we are of the considered opinion that the writ petitions are totally devoid of any merit. 76.. The writ petitions fail and shall accordingly stand dismissed with costs. 77.. Consequently, the interim orders earlier granted by this Court shall accordingly stand vacated. 78.. Immediately after pronouncing the judgment, learned counsel for the pe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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