9911796707
TMI Blog2004 (9) TMI 611X X X X Extracts X X X X X X X X Extracts X X X X ..... on, the petitioner set up a small-scale industrial unit for manufacturing of card-board boxes and corrugated card-board boxes by investing money from his own personal resources as well as from out of the loans from the State Bank of India in the year 1991. A permanent registration certificate thereafter was granted by the General Manager, District Industries Center, Cuttack indicating therein that the date of commercial production of the small-scale industrial unit of the petitioner is September 11, 1993 and the petitioner was entitled to enjoy the aforesaid benefits of exemption from sales tax for a period of seven years up to September 11, 2000. The petitioner enjoyed the said benefits of sales tax exemption from September 11, 1993 but on July 30, 1999 Notifications Nos. 622 of 1999, 623 of 1999, 624 of 1999 and 625 of 1999 were issued by the Government of Orissa in the Finance Department withdrawing all such benefits with effect from the 1st August, 1999. Aggrieved, the petitioner has filed this writ petition praying for quashing the said notifications dated 30th of July, 1999. 3.. O.J.C. No. 13017 of 1999 (Petitioner Larsen Toubro Co. Ltd.): Under IPR 1989 the State Governmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... manufacturing 1,920 metric tonnes of continuous casting refractories and started commercial production on 1st February, 1993. The Director of Industries, Orissa, also issued a certificate of eligibility in favour of the petitioner certifying that the industrial unit of the petitioner was a large scale industrial unit and was eligible for deferment of payment of tax for a period of seven years from the date of commercial production as per IPR 1989. For availing benefit of deferment of sales tax, the petitioner executed an agreement with the Industrial Promotion and Investment Corporation of Orissa Ltd. on 23rd of August, 1993 agreeing to the various terms and conditions for availing sales tax deferment facilities for the period from 1st February, 1993 to 31st January, 1995. Thereafter the petitioner enjoyed the sales tax deferment facilities on the finished products for a period of 5 years from 1st February, 1993. The petitioner then requested the Director of Industries, Orissa, to issue the eligibility certificate for the sixth year from the date of commercial production by letter dated 23rd July, 1999, but the petitioner was informed in January, 2000 that the requisite eligibilit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unit of IPR 1986 and was entitled under IPR 1989 to exemptions from sales tax on sale of finished products. The petitioner was accordingly issued with the eligibility certificate certifying that the petitioner was exempted from sales tax on sale of finished products for a period of five years from May 9, 1998 and the petitioner was availing such exemption from sales tax on sale of its finished products under the Notification No. 790 of 1990 dated August 16, 1990 and Notification No. 1013 of 1990 dated November 12, 1990 under the Orissa Sales Tax Act and the Central Sales Tax Act which were issued to implement the IPR 1989. Thereafter Notifications S.R.O. No. 623 of 1999 and S.R.O. No. 624 of 1999 were issued on July 30, 1999 withdrawing the said exemptions under the Orissa Sales Tax Act and the Central Sales Tax Act with effect from August 1, 1999. Aggrieved, the petitioner has filed this writ petition with a prayer to quash the said notifications dated July 30, 1999. 7. O.J.C. No. 962 of 2001 (Petitioner Agarwala Fabricators): The petitioner is a proprietorship concern and has set up a small-scale industrial unit at Atabira in district Sambalpur for carrying out general a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial unit could either enjoy the benefit of deferment of payment of sales tax or in lieu of deferment could claim exemption from payment of tax admitted as payable in respect of sale of finished products produced by such industrial units. Encouraged by the said declarations in the IPR 1989, the petitioner set up a large industrial unit for manufacture of sugar and molasses in the district of Bolangir and commenced commercial production on 16th of February, 1994 and applied to the Director of Industries, Orissa opting for exemption from payment of sales tax in lieu of deferment of sales tax. Eligibility certificates were issued by the Director of Industries declaring that the petitioner was entitled to exemption from payment of sales tax on its finished products either sugar or molasses produced for a period of seven years from the date of commercial production. The petitioner was also granted a certificate of eligibility for sales tax concession on purchase of raw materials, spare parts of machinery and packing materials for the said period of seven years. Thereafter the petitioner availed the said benefits and in the regular assessment for years 1996-97 and 199798 the petitioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the sales tax benefits were withdrawn with effect from August 1, 1999. On 9th of October, 2000 the unit of the petitioner started its commercial production and on November 24, 2000 the industrial unit of the petitioner granted permanent registration certificate by the General Manager, District Industries Centre, Ganjam, Berhampur. On November 28, 2000 the petitioner No. 1 company applied to the General Manager, District Industries Centre, Ganjam, Berhampur for issuing sales tax exemption as envisaged under IPR 1996, but on December 27, 2000 the General Manager, District Industrial Centre, Ganjam, Berhampur intimated the petitioner No.1 company that it will not be entitled to any sales tax incentives in view of the aforesaid Government of Orissa, Finance Department notifications dated 30th of July, 1999. Aggrieved, the petitioner has prayed for quashing the said communications dated December 27, 2000 of General Manager, District Industries Centre, Ganjam, Berhampur to the petitioner annexed to the writ petition as annexure 15 and for a mandamus on the opposite parties to forthwith grant to the petitioner No. 1 company the various incentives granted under IPR 1996 and the Finance D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance was laid in the Orissa Legislative Assembly in July, 1999 in which the deteriorating finances of the State were depicted and fiscal corrective measures were suggested. One such fiscal corrective measure suggested was that all tax concessions/deferrals/exemptions extended under different Government Policies should be reviewed and wherever necessary abolished immediately. A self-explanatory Cabinet Memorandum on withdrawal of sales tax concessions was prepared and was vetted by the Industries Department on July 5, 1999 for being placed before the Council of Ministers. In anticipation of approval of the cabinet, however, the Chief Minister approved withdrawal of sales tax concession on July 27, 1999. Thereafter the impugned notifications S.R.O. No. 622 of 1999, S.R.O. No. 623 of 1999, S.R.O. No. 624 of 1999 and S.R.O. No. 625 of 1999 all dated July 30, 1999 were issued withdrawing some sales tax incentives and concession in the public interest. 11.. The Cabinet Memorandum was thereafter placed in the meeting of the Council of Ministers held on October 14, 1999 and the counsel of Ministers did not approve the incentives indicated in the Memorandum and observed that the incentive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntioned in the notifications. After the elections, the new Government assumed office on March 5, 2000 and the Cabinet of the new Government in its meeting held on April 22, 2000 annulled the decisions of the Council of Ministers taken on October 14, 1999 and ratified the four impugned notifications S.R.O. Nos. 622, 623, 624 and 625 of 1999 dated 30th July, 1999. Submissions of learned counsel for the petitioners: 13.. Mr. Yasobant Das, learned counsel for the petitioner in O.J.C. No. 9967 of 1999 submitted that relying on the exemption from sales tax on purchase of spare parts of machinery, raw materials and packing materials and on sale of finished products granted pursuant to the IPR 1989, the petitioner has set up its industry and has expanded the same and the Government cannot withdraw the sales tax exemption at this stage as it is bound by the principle of promissory estoppel laid down by the Supreme Court in various decisions to keep its promise of exemption. In support of this contention, Mr. Das cited the decisions of the Supreme Court in Union of India v. Anglo Afghan Agencies AIR 1968 SC 718, Motilal Padampat Sugar Mills Co. Ltd. v. State of Uttar Pradesh [1979] 44 ST ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he exemptions from sales tax was not given any notice. In support of this argument Mr. Das cited the decision of the Supreme Court in National Buildings Construction Corporation v. S. Raghunathan (1998) 6 JT 21 (SC). 16.. Mr. Das further submitted that the impugned notifications dated 30th July, 1999 issued by the Finance Department of the Government of Orissa were not ratified by the Council of Ministers in their meeting held on October 14, 1999 and consequently became null and void. He argued that the Council of Ministers in its subsequent meeting held on April 22, 2000 sought to annul the decision of the Council of Ministers taken on October 14, 1999 and ratify the two notifications dated 30th July, 1999, but by April 22, 2000 the notifications dated 30th July, 1999 were already dead and could not be revived retrospectively. Mr. Das submitted that in the Task Force constituted by the State Government, the Director of Industries opined that withdrawal of sales tax incentives to small-scale industries would adversely affect the industrialists of the State but this opinion of the Director of Industries was not taken into account before the impugned notifications dated 30th July, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 18.. Mr. Rath next submitted that it will be clear from the preliminary counter-affidavit filed by the State-opposite parties that the Chief Minister approved the withdrawal of the sales tax concession on July 27, 1999 in anticipation of the approval of the Cabinet, but the Council of Ministers in their meeting held on October 14, 1999 did not approve of the said withdrawal of sales tax concession and instead observed that the sales tax incentives may be restored subject to some stipulations. He argued that once the Council of Ministers refused to approve the withdrawal of sales tax concession in their meeting held on October 14, 1999, the impugned notifications dated 30th July, 1999 became dead and could not be revived subsequently by the new Council of Ministers which assumed office on March 5, 2000. 19.. Mr. S.C. Lal, learned counsel for the petitioners in O.J.C. No. 2718 of 2000 and in O.J.C. No. 2761 of 2001, submitted that in the absence of any express provision in section 7 of the Orissa Sales Tax Act conferring power on the State Government to withdraw sales tax exemption granted to a class of dealers or deferment of payment of tax, such power of withdrawal cannot be ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pursuant to the IPR 1989 was entitled to sales tax incentives for the full period of seven years from the date of its commercial production, the Government of Orissa in the Finance Department has by the impugned notifications dated 30th July, 1999 withdrawn the said sales tax incentives on unreasonable and erroneous grounds and that the impugned notification S.R.O. No. 622 of 1999 dated 30th July, 1999 deleting entries 26-F, 30-FFF and other entries from the Tax-free List with effect from 1st August, 1999 are not sustainable in the eye of law. Alternatively, Mr. Paikray submitted that by a fresh notification dated February 17, 2000 issued by the Government of Orissa in the Finance Department and in particular under the first proviso thereof new small-scale industrial units who are in receipt of sales tax incentives immediately before 1st January, 2000 under the Finance Department notification No. 20206-CTA-14/76-F dated April 23, 1976 as amended by notification No. 27662-CTA-56/90-F dated August 16, 1990 shall continue to avail the incentives for the full period of seven years as per the said notification dated August 16, 1990. According to Mr. Paikray, even a small-scale industria ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment has to satisfy the court by placing relevant materials that the departure from the promise was necessary in the public interest. He argued that in the present case the only reason given by the State Government in their counter-affidavit for withdrawing from the promise of sales tax incentives under the Industrial Policy Resolutions is that the State Government will suffer financial loss if the sales tax incentives continue, but this reason should not be accepted by the court because the State Government knew at the time when the Industrial Policy Resolutions were made that grant of sales tax incentives would cause revenue loss to the State Government and also because sales tax incentives have been restored to the industries by notifications dated February 17, 2000 resulting in loss of revenue to the State Government. 24.. Mr. Mahanti next submitted that the counter-affidavit filed on behalf of the State Government would show that a Cabinet Memorandum was prepared for withdrawal of sales tax incentives for being placed before the Council of Ministers and in anticipation of approval of the Cabinet, the Chief Minister approved withdrawal of sales tax concession on July 27, 1999 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eved and is discriminatory and violative of article 14 of the Constitution. 26.. Mr. Mahanti finally argued that the State Government must follow some morality while dealing with its subjects and institutions and morality requires that the State Government fulfils its promises of sales tax incentives to the industrial units both existing and new made in the Industrial Policy Resolutions and this is also a legitimate expectation of the subjects. Hence, the impugned notification S.R.O. No. 623 of 1999 dated July 30, 1999 withdrawing the benefits granted to the petitioner by notification dated August 16, 1990 be quashed by the court. 27.. Mr. Jagabandhu Sahoo, learned counsel appearing for the petitioner in O.J.C. No. 962 of 2001, submitted that the petitioner undertook modernisation and expansion of his industrial unit pursuant to IPR 1989 and was entitled to exemption from tax on purchase of raw materials, spare parts of machinery and packing materials and on sale of finished products for a period of seven years from the date of commercial production, i.e., up to June, 2000, but the exemptions were withdrawn with effect from August 1, 1999 by the impugned notification dated July ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Union of India (1997) 3 SCC 398. He also cited the decision of the Supreme Court in Motilal Padampat Sugar Mills Co. Ltd. v. State of Uttar Pradesh [1979] 44 STC 42; AIR 1979 SC 621 for the proposition that the Government must satisfy the court by placing relevant materials that the withdrawal of a promise was in public interest and the court will apply a rigorous test while allowing the Government to withdraw the benefit in public interest. 31.. Mr. Sahoo finally submitted that law has been settled in the case of Kunnathat Thathunni Moopil Nair v. State of Kerala AIR 1961 SC 552, that a fiscal statute can be challenged on the ground that it is discriminatory and violative of article 14 of the Constitution. He argued that in this case the State Government while withdrawing the sales tax exemptions from industrial units as that of the petitioner set up pursuant to IPR 1989 by the impugned notifications dated July 30, 1999 has allowed sales tax incentives to existing units and industrial units in pipeline under the notifications dated February 17, 2000 and this amounts to discrimination and the impugned notification dated July 30, 1999 is liable to be quashed for violation of artic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d areas/regions of the State through industrial and mining ventures, strengthening the rural economy through development of agro-industries, small industries, village and cottage industries, etc., stimulating and strengthening local entrepreneurial base and developing skill/expertise in the State of Orissa. 33.. Mr. Parija submitted that by notification S.R.O. No. 141/ 2000 dated February 17, 2000 issued under section 6 of the Orissa Sales Tax Act, the State Government has allowed sales tax incentives to pipeline industries if they satisfied the criteria mentioned therein. He submitted that the industry of the petitioner was also a pipeline industry and satisfied the criteria mentioned in the said notification and is entitled to sales tax exemption under the said notification. He submitted that M/s. Hindustan Cocacola Beverage Pvt. Ltd., which had set up its unit under IPR 1996 and had become disentitled to sales tax exemption by the impugned notification dated July 30, 1999 like the petitioner has been granted the benefit of sales tax exemption under IPR 1996 as a pipeline industry under the notification dated February 17, 2000 of the State Government and the petitioner is sim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eferment of Payment of Taxes) Orissa Rules, 1990, as amended from time to time and by the impugned Notification S.R.O. No. 625 of 1999 dated 30th July, 1999 issued under section 8(5) of the Central Sales Tax Act the State Government rescinded the notification dated 12th November, 1990 as amended from time to time under which exemptions had been granted under sub-section (5) of section 8 of the Central Sales Tax Act, 1956 on sale of finished products to various categories of new, existing and continuing industrial units of IPR 1980 and IPR 1986 in the small-scale sector. Mr. Roy and Mr. Mohanty submitted that the effect of these four impugned notifications dated 30th July, 1999 was that the exemption from tax and deferment of payment of tax granted pursuant to IPR 1980, IPR 1986 and IPR 1989 were withdrawn in the public interest, but the exemption from tax and deferment of payment of tax pursuant to the IPR 1992 and IPR 1996 were continued. Both Mr. Roy and Mr. Mohanty vehemently argued that the facts stated in the counteraffidavit filed on behalf of the State as well as the impugned notification themselves would show that the said four impugned notifications were issued because o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tal fixed capital investment, IPR 1989 envisaged exemption from tax/deferment of payment of sales tax for 5 to 7 years without any financial ceiling and this open ended facility of IPR 1989 resulted in a serious erosion of the tax base and for this reason the exemption from tax and deferment of payment of sales tax under IPR 1989 were withdrawn by the impugned notifications dated 30th July, 1999, whereas those under IPR 1992 and IPR 1996 were continued. They further submitted that by the impugned notifications dated 30th July, 1999 not a single industrial unit set up pursuant to the IPR 1980, IPR 1986 and IPR 1989 was allowed to avail the benefit of exemption from tax or deferment of payment of tax and only the industrial units set up pursuant to IPR 1992 and IPR 1996 were allowed to enjoy the sales tax benefits granted under the said IPRs. There was therefore classification of the categories of industrial units which were not allowed and which were allowed the benefits of exemption from tax and deferment of payment of tax under the impugned notifications dated 30th July, 1999 and such classification had rational nexus sought to be achieved and the impugned notifications dated 30th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Government to grant exemption from duty but does not expressly provide for withdrawal of such exemption of duty and yet the Supreme Court has upheld the power of the Central Government to withdraw exemptions under the said section 25 of the Act in Kasinka Trading v. Union of India AIR 1995 SC 874. 40.. Mr. Ashok Mohanty, learned Senior Standing Counsel (Commercial Taxes), explained that the counter-affidavit filed on behalf of the State Government would further show that on account of the developments after the impugned notifications were issued on 30th July, 1999, the State Government had to take a decision to restrict such sales tax incentives only to industrial units which were in receipt of such incentives immediately before 1st January, 2000 or which were in pipeline as on 1st January, 2000 and accordingly the State Government issued Notifications S.R.O. No. 140 of 2000 and S.R.O No. 141 of 2000 dated 17th February, 2000. Mr. Mohanty explained that by the said Notifications S.R.O. No. 140 of 2000 and S.R.O. No. 141 of 2000 dated 17th February, 2000, the notifications S.R.O. No. 622 of 1999, 623 of 1999, 624 of 1999 and 625 of 1999 dated 30th July, 1999 have not been rescinde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... effect from August 1, 1999 by the impugned notifications dated July 30, 1999. 44.. In O.J.C. No. 2718 of 2000, the case of the petitioner, IFGL Refractories Limited, is that under IPR 1989 large scale industrial units were eligible for deferment of payment of tax under the Orissa Sales Tax Act and the Central Sales Tax Act for a period of seven years from the date of commercial production. The large scale industrial unit of the petitioner set up pursuant to the IPR 1989 went into commercial production on February 1, 1993 and thus the promised period of seven years of such deferment of payment of tax was up to January 31, 2000, but the said benefit of deferment of payment of tax was withdrawn with effect from 1st August, 1999 by the impugned notifications dated July 30, 1999. 45.. In O.J.C. No. 4297 of 2000, the case of the petitioner, Kali Oil Mills (P) Ltd., is that under IPR 1989 new small-scale industries were entitled to sales tax exemption on spare parts of machinery, raw materials and packing materials and on sale of finished products with effect from the date of commercial production. Pursuant to IPR 1989, the petitioner set up a small-scale industrial unit which went ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... commercial production on February 16, 1994 and opted for exemption from tax on sale of its finished products and the promised period of seven years of such exemption was up to January 15, 2001, but by the impugned notifications dated July 30, 1999 the said exemption was withdrawn with effect from 1st August, 1999. 49.. In O.J.C. No. 5122 of 2001, the case of the petitioners, Mahanadi Distilleries Pvt. Ltd. and another, is that under IPR 1996 effective from March 1, 1996 various incentives including sales tax incentives were allowed to new industries in the State of Orissa. The petitioners purchased the assets of M/s. Suki Industries Pvt. Ltd. from the O.S.F.C. and invested further in land and machinery and converted the said assets into a Bottling Unit of I.M.F.L. which went into commercial production on November 24, 2000. The petitioner No. 1 company applied to the General Manager, District Industries Centre, Ganjam, Berhampur, for issuing sales tax exemption envisaged under IPR 1986, but on October 27, 2000 the General Manager, District Industries Center, Ganjam, Berhampur, intimated the petitioner No. 1 company that it will not be entitled to sales tax exemption in view of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the said judgment of the Supreme Court on which the counsel for the petitioners have placed great reliance is quoted herein below: "Mere claim of change of policy would not be sufficient to exonerate the Government from the liability; the Government would have to show what precisely is the changed policy and also its reason and justification so that the court can judge for itself which way the public interest lies and what the equity of the case demands. It is only if the court is satisfied, on proper and adequate material placed by the Government, that overriding public interest requires that the Government should not be held bound by the promise but should be free to act unfettered by it, that the court would refuse to enforce the promise against the Government...................." The crux of the law laid down by the Supreme Court in the aforesaid case is that the court should compel the Government to make good its promise to its subjects on grounds of equity or morality, but where the court is satisfied on materials placed before it that due to change in circumstances overriding public interest demands that the promise should not be enforced against the Government, the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1995 SC 874 were followed in Shrijee Sales Corporation v. Union of India (1997) 3 SCC 398 wherein the very same Notification No. 205 dated October 16, 1980 withdrawing the exemption from customs duty on import of PVC resins was challenged on the ground that on the faith of the solemn assurance given in the exemption Notification No. 66 dated March 15, 1979 that no duty of customs is leviable on the import of the PVC resins up to March 31, 1981, the appellant had entered into arrangements for import of PVC resins as actual user with U.P. Export Corporation Company and opened Letters of Credit against the foreign suppliers and goods had also arrived at Bombay Port on November 18, 1980. The Supreme Court held that the facts of the economic situation explained in the judgment in Kasinka Trading AIR 1995 SC 874 have not been controverted nor is it alleged by the appellant that public interest did not call for supersession of the exemption Notification No. 66. The Supreme Court further observed: "..........Once public interest is accepted as the superior equity which can override individual equity, the principle should be applicable even in cases where a period has been indicated..... ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f withdrawal of exemption of sales tax under the Orissa Sales Tax Act. Under the Industrial Policy Resolution dated July 18, 1979 promulgated by the Industries Department of Government of Orissa, sales tax was not payable by a new industry on purchase of raw materials for a certain period. The respondent therein M/s. Shree Durga Oil Mills set up an industry in terms of the said Industrial Policy Resolution and was allowed exemption from sales tax on purchase of raw materials under the earlier exemption notifications issued on November 11, 1969 and April 23, 1976 under section 6 of the Orissa Sales Tax Act, but by a notification dated September 25, 1977 the said two earlier notifications were abrogated. The State Government again restored the earlier two notifications by notification dated September 9, 1977 but the exemption was limited to the industries which had started production prior to April 1, 1976. Since the industry of the respondent commenced production only on March 19, 1980 it was not eligible for the exemption under the notification dated September 9, 1977. The petitioner challenged the said notification dated September 9, 1977 before this Court in a writ petition and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1954, and under section 8(5) of the Central Sales Tax Act, the State Government of Rajasthan notified a sales tax incentives scheme under which new industrial units were exempted from Rajasthan sales tax and Central sales tax respectively on sale of goods in the State of Rajasthan and on inter-State sale of goods manufactured by them in the State of Rajasthan during the period from 5th March, 1987 to 31st March, 1992. After the said notifications, the respondent M/s. Mahaveer Oil Industries set up an industry for oil extraction and oil manufacturing in the State of Rajasthan. Thereafter, two notifications dated 7th May, 1990 were issued under the Rajasthan Sales Tax Act and the Central Sales Tax Act amending the aforesaid two notifications dated 23rd May, 1987 and as a result of the said amendments, the benefit of the sales tax incentives scheme were withdrawn from oil extracting and manufacturing industries. Subsequently, however, a notification dated July 26, 1991 was issued restoring the benefit of exemption of Central sales tax to oil industries and oil manufacturing industries to the extent indicated therein. The result was that new industrial units established after 1990 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... preme Court held that withdrawal of the benefits of the incentive scheme in respect of oil industries was in the public interest and the notification dated May 7, 1990 was issued on account of supervening public interest. Here italicised. Reported in [1998] 115 STC 25 (SC). 57.. The law laid down in Kasinka Trading (1995) 1 SCC 274 and Shrijee Sales Corporation (1997) 3 SCC 398 was again taken note of by the Supreme Court in Dai-Ichi Karkaria Ltd. v. Union of India (2000) 119 ELT 516 (SC). The discussion is para 6 at page 62 of the judgment as reported in (2000) 4 SCC 57; para 7, page 519 of (2000) 119 ELT 516 (SC) runs thus: "The law on the matter is now well-settled that even in respect of exemptions that may have been made by the Government the doctrine of promissory estoppel will not be applicable if the change in the stand of the Government is made on account of public policy. This position has been explained in detail by this Court in Kasinka Trading (1995) 1 SCC 274 and reiterated in Shrijee Sales Corporation v. Union of India (1997) 3 SCC 398. In both these cases this Court is concerned with notifications issued under section 25 of the Customs Act. In Kasinka Tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Union of India it was stated that it was believed that the imposition of a nil rate of duty on import of raw materials and components required for manufacture and supply of products to ONGC, OIL and GAIL would lead to misuse, specially by the private contractors who have other interests, in addition to the supplies to the oil sector. The Supreme Court held that the circumstances relating to public interest disclosed in the counter-affidavit of the Union of India cannot stand close scrutiny because the appellant could not misutilise the exemption inasmuch as the appellant was obliged only to import goods for the purpose of supplying them to ONGC and the licence issued under the policy to the appellant reflected export obligation imposed on the appellant and the finished product Diatrolite manufactured from raw materials imported under licence is highly specialised product and could be sold only to ONGC, OIL and others. The Supreme Court held that the factors taken into consideration by the Government appear to be wholly irrelevant and did not subserve public interest. 58.. Keeping in mind the aforesaid law as laid down by the Supreme Court, we may now examine the circumstances le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nces which have arisen after the State Government issued the IPRs 1980, 1986, 1989, 1992 and 1996 and for these supervening circumstances, the State Government had to issue the said impugned notifications withdrawing the sales tax benefits and concessions before the expiry of the period during which the said concessions and incentives were promised to the concerned industries. 59.. The argument of the learned counsel for the petitioners, however, is that exemption from tax or deferment of payment of sales tax were granted under the IPRs for the growth of industries in the State of Orissa and for generating employment in the State and the court should not accept the plea of change of policy due to revenue deficit as a plea of overriding public interest. But as we have indicated above, in the case of Shree Durga Oil Mills [1998] 108 STC 274, the Supreme Court has held that a plea of change of policy on the basis of resource-crunch is sufficient for dismissing a case based on doctrine of promissory estoppel as public interest in such case demanded modification of the IPR. In the language of the Supreme Court in the said case of Shree Durga Oil Mills [1998] 108 STC 274: "17. Moreov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich they were promised under the IPRs 1980, 1986 and 1989 on the principle of promissory estoppel. 60.. The third question which arises for consideration is whether the State Government was obliged to give notice to persons likely to be affected by the impugned notifications dated 30th July, 1999 withdrawing the exemptions from sales tax or deferment of payment of sales tax before issuing the impugned notifications. In National Buildings Construction Corporation v. S. Raghunathan (1998) 6 JT 21 (SC) cited by Mr. Yasobant Das, learned counsel for the petitioner in O.J.C. No. 9967 of 1999, the Supreme Court held that claims based on legitimate expectation are similar to claims based on promissory estoppel and referred to Lord Diplock's judgment in Council of Civil Services Union v. Minister for the Civil Services 1985 AC 374 on the doctrine of legitimate expectation which, inter alia, requires that before withdrawing a benefit which a person had been enjoying, the decision-maker must give such person an opportunity to comment, or advance reasons as to why the benefit should not be withdrawn. But in Union of India v. Hindustan Development Corpn. AIR 1994 SC 988, the Supreme Court a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learned counsel for the petitioners placed great reliance on the decision of the Supreme Court in the case of State of Bihar v. Suprabhat Steel Ltd. [1999] 112 STC 258; (1998) 8 JT 2 (SC) wherein it was held that a notification issued in exercise of powers under section 7 of the Bihar Finance Act cannot authorise the State Government to negate the incentives and the benefits which an industrial unit would otherwise be entitled to under the Industrial Policy Resolution of the State Government and to the extent such notification is found repugnant to the Industrial Policy Resolution declared by the Government, such notification must be held to be bad. The reason for the said decision of the Supreme Court as indicated in para 7 at page 7 of the judgment as reported in (1998) 8 JT 2 (SC) (para 7, page 273 of [1999] 112 STC 258) is quoted hereinbelow: "..........The Industrial Incentive Policy is issued by the State Government after such policy is approved by the Cabinet itself. The issuance of the notification under section 7 of the Bihar Finance Act is by the State Government in the Finance Department which notification is issued to carry out the objectives and the policy decisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in H.M. Seervai's "Constitutional Law of India", Third Edition at page 249 paragraph 8.18 is extracted hereunder: "(1) There is a distinction between a law unconstitutional for lack of legislative power and a law unconstitutional because violative of provisions of the Constitution other than those which relate to the distribution of legislative power. (2) A law which is unconstitutional for lack of legislative competence is void ab initio: a law which is unconstitutional for violation of constitutional limitations is unenforceable as long as it continues to violate constitutional limitations. Such a law, whether pre-Constitution or post-Constitution, is not wholly void if it violates fundamental rights; it is merely eclipsed by the fundamental right and remains, as it were, in a moribund condition as long as the shadow of fundamental rights falls upon it. When that shadow is removed the law begins to operate proprio vigore from the date of such removal unless it is retrospective. (3) A law void for lack of legislative competence is not revived if legislative power is subsequently given to the Legislature which enacted it; a law partly void because of violation of constitution ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Constitution, the executive power of a State shall extend to matters with respect to which the Legislature of the State has power to make laws. Article 154(1) of the Constitution provides that the executive power of the State shall be vested in the Governor and shall be exercised by him either directly or through officers subordinate to him in accordance with the Constitution. Article 154(2) further provides that nothing in article 154(1) of the Constitution shall be deemed to transfer to the Governor any function conferred by any existing law or by any other authority or prevent the Parliament or the Legislature of the State from conferring by law functions of any authority subordinate to the Governor. Article 163 of the Constitution further provides that there shall be a Council of Ministers with the Chief Minister as the head to aid and advance the Governor in the exercise of his functions, except in so far as he is by or under the Constitution required to exercise the functions or any of them in his discretion. Article 166(3) of the Constitution provides that the Governor shall make rules for the more convenient transaction of the business of the Government of the State ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ods or class of goods and also withdraw such exemption, under section 7 of the Act the State Government can exempt in whole or in part any class of dealers from the payment of tax or allow any class of dealers to defer payment of tax, but the State Government cannot withdraw such exemption or deferment of payment of tax once granted. The decision of the Supreme Court in Gopi Chand v. Delhi Administration AIR 1959 SC 609 has been cited by the learned counsel for the petitioners for the proposition that the power to cancel a notification issued under the Act has to be exercised within the limits prescribed by the provision conferring the power to issue the notification. The provisions of the Orissa Sales Tax Act have to be read along with the provisions of the Orissa General Clauses Act, 1937. Section 22 of the Orissa General Clauses Act, 1937 contains the following provision relating to interpretation of an Orissa Act: "22. Power to make to include power to add to, amend, vary or rescind orders, rules or by-laws. Where, by any Orissa Act, a power to make or issue notifications, orders, schemes, rules, by-laws or forms, is conferred, then that power includes a power exercisable in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ety Act, the Provincial Government was authorised to declare the whole or any part of the province as may be specified in the notification to be a dangerously disturbed area and under section 36(1) of the said Act the Provincial Government was empowered to certify the offences under the said Act. Four notifications were issued under section 20 of the said Act. By the first notification issued on 8th July, 1949, the whole of the province of Delhi was declared to be a dangerously disturbed area. This first notification was cancelled with effect from 1st October, 1950 by the second notification issued on 28th September, 1950. Third notification was issued on 6th October, 1950 modifying the aforesaid second notification dated 28th September, 1950 by inserting the words "except as respect things done or omitted to be done before the date of this notification". In other words, this third notification purported to introduce an exception to the cancellation of the first notification caused by the second notification and in effect, the third notification purported to treat the Province of Delhi as a dangerously disturbed area in respect of things done or omitted to be done before the da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... authority conferred on the delegate by section 20 or section 36(1). We must, therefore, hold that the third and the forth notifications are invalid and a result of the second notification the whole of the Province of Delhi ceased to be a dangerously disturbed area from October 1, 1950." Thus, in the aforesaid case, the Supreme Court held the two notifications to be invalid because they were wholly outside the authority conferred on the delegate by section 20 or section 36(1) of the aforesaid Act. But in the present batch of cases, it is not disputed that the State Government had issued the earlier notifications for exemption of tax and deferment of payment of tax under the Orissa Sales Tax Act. Therefore the State Government also had the power under the Orissa Sales Tax Act read with section 22 of the Orissa General Clauses Act to rescind such notification of exemption of tax or deferment of payment of tax and the impugned Notifications S.R.O. No. 624 of 1999 and S.R.O. No. 625 of 1999 cannot be held to be beyond the power of the State Government as a delegate of the State Legislature under section 7 of the Orissa Sales Tax Act. 66.. The next question is whether the impugned no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment. Thus, the classification of the industries adopted by the State Government while issuing the impugned notifications dated July 30, 1999 and February 17, 2000 appear to have a rational nexus with the objective of improving the financial position of the State and the classification does not seem to be unreasonable so as to make the said notifications discriminatory. 67.. It is now well-settled that in taxation matters a very wide latitude is given to the Government to pick and choose districts, objects, persons, methods and even rates for taxation and a heavy burden is cast on the person who assails a taxation provision as discriminatory to show that the classification adopted by the provision of the taxation law is not a valid classification. In East India Tobacco Company v. State of Andhra Pradesh [1962] 13 STC 529; AIR 1962 SC 1733, the Supreme Court held: "It should, in this connection, be remembered that under the law it is for the person who assails a legislation as discriminatory to establish that it is not based on a valid classification and it is wellsettled that this burden is all the heavier when the legislation under attack is a taxing statute. 'In taxation even ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a well defined differentiation. There is nothing wrong in the Central Government forming an opinion that it was in public interest to grant exemption from payment of custom duty to the imports meant for power projects engaged in production of power as an end-product meant for public distribution as such while denying a similar benefit to the imports referable to power plants generating electricity for captive consumption only." Hence, we do not find any merit in the challenge to the impugned notifications dated July 30, 1999 and February 17, 2000 on the ground of discrimination. 69.. In the result, we are not inclined to quash the impugned notifications dated July 30, 1999 and February 17, 2000 issued by the State Government and we declare the said notifications to be valid in law. All interim orders passed by this Court in these cases are vacated. It will be, however, open for the petitioners to contend before the competent authority of the State Government or the competent authority under the Orissa Sales Tax Act and the Central Sales Tax Act that despite the impugned notifications dated July 30, 1999 and February 17, 2000 which we have held to be valid, the petitioners are s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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