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TMI Blog2006 (7) TMI 597X X X X Extracts X X X X X X X X Extracts X X X X ..... r its promise contained in the aforesaid Scheme particularly clause 14 thereof and the remission of tax allowed to petitioner No. 1 Damodhar Cement and Slag Ltd., by letter dated February 6, 1997 as modified by the letter dated April 23, 1997 read with the scheme sanctioned by BIFR in the case No. 502 of 1994 and/or on the basis of the eligibility certificate; directing respondent No. 1, Assistant Commissioner of Commercial Tax, Corporate Division, West Bengal to councel and/ or rescind and/or withdraw the decision contained in the memo No. 80 dated September 23, 2003 and the memo No. 83 (CD) 301 dated October 15, 2003 and the view taken by the Joint Secretary to the Government of West Bengal contained in his letter dated September 29, 2003 and/or direction by which the aforesaid petitioner No. 1-company had been directed to pay turnover tax under section 16B of the Act and for directing the respondent to act as per the aforesaid Incentive Scheme of 1993 and cost. The fact as made out in the application is this: (a) The business of petitioner No. 1 Damodhar Cement and Slag Ltd., is to manufacture portland cement in its factory at Madhukunda in a notified backward region in the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ernment of West Bengal, Commerce and Industry Department, informed the Director of the Industries, West Bengal and others that in pursuance of the resolution adopted in the meeting of the High Power Committee held on July 27, 1995, the State Government decided to extend financial support to petitioner No. 1 company and accordingly it was decided that petitioner No. 1 company might be allowed as a special case 100 per cent exemption to sales tax payment on the quantity of cement sold in West Bengal without applying any cap for a period up to nine years from the date of commencement of commercial production. The said Deputy Secretary further informed that by order of the Governor in exercise of power conferred under para 18(ii) of the West Bengal Incentive Scheme, 1993, the Governor was pleased, in terms of para 18.1 of the said scheme, to sanction in relaxation of the provisions of para 14.1.1. of that scheme full exemption of the payment of sales tax on the sale of cement by said petitioner No. 1-company in West Bengal for nine years from the date of commencing of commercial production without applying any cap. Thereafter under letter dated March 17, 1997, the aforesaid Deputy S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould apply in respect of the tax payable under the said Act inclusive of the turnover tax. The provision of section 16B of the 1994 Act was not intended to apply and that the imposition of turnover tax on the sale of cement by the petitioners during the relevant period is violative of articles 14 and 19(1)(g) of the Constitution of India as it doesn't make out a rational classification and that the imposition of turnover tax on the petitioners is inconsistent with the provisions of the Sick Industrial Companies (Special Provisions) Act, 1985. There having been no other alternative efficacious remedy available to the petitioners, the petitioners challenged the vires of the provision of section 16B of the West Bengal Sales Tax Act, 1994. Respondent No. 1, Assistant Commissioner of Commercial Taxes, Corporate Division, West Bengal, contested the application by filing affidavit-in-opposition supporting the demand of turnover tax and disputing the petitioner's contention as regards applicability of the principle of promissory estoppel and illegality of the provision of section 16B of the West Bengal Sales Tax Act, 1994. He contended that the turnover tax is a separate tax and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... article 19(1)(g) provides that all citizens shall have the right to practice any profession or to any occupation, trade or business. The learned advocate appearing for the petitioner did not argue on this point. I am at one with the learned Senior State Representative Mr. Gupta that the fact asserted in the position, does not suggest violation of the Constitutional provisions as contended in the petition and that this contention is baseless. (i) The fact of grant of exemption from payment of sales tax under section 41 of the West Bengal Sales Tax Act, 1994 for nine years from October 30, 1996 without applying any cap under the industrial Scheme 1993 is not disputed. By the letter No. 120(3) CI/H/4F 23/95 dated February 6, 1997 the Deputy Secretary to the Government of West Bengal, Commerce and Industries Department, Group H, intimated the Commissioner of the Commercial Taxes, West Bengal and others that in pursuance of the decision of the State Government to extend financial support to M/s. Damodhar Cement and Slag Ltd., for its revival, the high power committee of industrial development at its meeting held on July 27, 1995 provided, inter alia, that the company might be allowed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x had to be made in the manner referred to in section 30 of the said Act. It was also clarified that section 44 of the WBST Act of 1994 empowered the State Government to relax certain conditions and restrictions in respect of deferment of payment of tax or remission of tax but it neither granted any tax benefit nor covered section 16B. By the letter dated August 5, 1995, the Executive Director (II) of WBIDC Ltd., intimated the ACC Ltd., petitioner No. 2, that as a part of the revival package of Damodhar Cement and Slag Ltd. (DCSL), the State Government agreed 100 per cent exemption of any sales tax payment for nine years from the date of commencement of commercial production. (ii) The petitioner's contention is that remission of sales tax includes the subsequent imposition of turnover tax under section 16B within the meaning tax under section 2(35) as well as section 41 of the WBST Act, 1994. The learned State Representative in disputing this contention submitted that the tax proposed to be remitted did not include the turnover tax. The decision for the grant of exemption from payment of sales tax was taken on April 4, 1997. On those dates, the tax was payable on turnove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the learned Senior Advocate in his written notes of argument, contended, the 1994 Act did not contain at the relevant time any impost known as 'turnover tax'. Thus the exemption granted was from payment of sales tax. The definition of 'tax' in section 2(35) of the 1994 Act did not include turnover tax until its amendment in 2003 . He submitted that when there was no provision for charging turnover tax in the statute, the Government could not also make promise for exemption therefrom. Dr. Debi Pal, the learned Senior Advocate for the petitioner, in his written notes of argument contended, in fact under the West Bengal Sales Tax Act, 1994 although turnover tax payable under the Bengal Finance (Sales Tax) Act, 1941 was withdrawn but surcharge and additional surcharge were imposed in addition to the sales tax under the West Bengal Sales Tax Act, 1994. Hence, the definition of tax means tax payable under the Act of 1994. When turnover tax was again introduced by introduction of section 16B of the West Bengal Sales Tax Act, 1994, the definition of tax was amended so as to include surcharge payable under section 16, additional surcharge payable under section 16A and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of promissory estoppel applies against the Government. The issue in our case is as to whether the doctrine of promissory estoppel applies against the Legislature because in our case the turnover tax was demanded as per enactment of the provision of section 16B in the West Bengal Sales Tax Act, 1994 with effect from August 5, 2003. The learned Senior Advocate Dr. Pal for the petitioner contended that it is settled law in India that though there is no estoppel against the Legislature but the State Government may be compelled to honour its promise and not to give effect to a legislative provision for the said purpose. In support of his contention he referred to the decision of the honourable Supreme Court in the cases Motilal Padampat Sugar Mills Co. Ltd. v. State of Uttar Pradesh reported in [1979] 44 STC 42 at page 56; AIR 1979 SC 621 at page 631, Union of India v. Godfrey Philips India Ltd. reported in [1986] 158 ITR 574 at page 589; AIR 1986 SC 806 (at paras 11 and 15), Pournami Oil Mills v. State of Kerala reported in [1987] 65 STC 1 (at page 5). State of Bihar v. Usha Martin Industries Ltd. reported in [1987] 65 STC 430 (SC) affirming the honourable Patna High Court judgment in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 620. In this case the honourable Supreme Court observed, it is beyond any cavil that the doctrine of promissory estoppel operates even in the legislative field . But in the earlier case, Union of India v. Godfrey Philips India Ltd. reported in [1986] 158 ITR 574; AIR 1986 SC 806 cited by Dr. Pal himself, the Bench consisting of the honourable Chief Justice and his companions two honourable Judges observed, there can be no promissory estoppel against the Legislature in the exercise of its legislative functions nor can the Government or a public authority be debarred by promissory estoppel from enforcing statutory prohibition. It is equally true that promissory estoppel cannot be used to compel the Government or the public authority to carry out a representation or promise which is contrary to law or which was outside the authority or power of the officer of the Government or of the public authority to make . Mr. Gupta, the learned Senior State Representative pointed out that in another earlier case Motilal Padampat Sugar Mills Co. Ltd. v. State of Uttar Pradesh reported in [1979] 44 STC 42 (SC); AIR 1979 SC 621 which was also relied on by Dr. Pal, the honourable Supreme Court h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e time of making promise, the Government cannot straightaway grant exemption from payment of the turnover tax under section 16B of the Act because the doctrine of promissory estoppel does not extend to legislative provision. The turnover tax under section 16B of the West Bengal Sales Tax Act, 1994 has not substituted the sales tax referred to in the BIFR Scheme. So, the petitioner is also not entitled to the benefit of the section 32 of the Sick Industrial Companies (Special Provisions) Act, 1985. The application therefore fails. The application stands dismissed without cost. PRADIPTA RAY J. (Chairman) For myself and honourable B.K. MAJUMDAR (Technical Member) We agree with the conclusion of the honourable Judicial Member. We, however, like to give our reasons for the views expressed in this judgment. Our learned brother in his judgment has stated the facts in detail. Only those facts which are necessary for dealing with the contentions raised by the petitioner are briefly narrated herein. Petitioner No. 1, Damodhar Cement and Slag Limited, a public limited company, was incorporated in 1977. Petitioner No. 1-company became sick. Under the provisions of the Sick Industr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting units for their approved projects of expansion were eligible for deferred payment of sales tax due for payment or alternatively remission of sales tax due for payment for different periods and up to different ceilings depending upon location of the units and their expansion projects as mentioned therein. Paragraph 18 of the Incentive Scheme provided for incentives to closed and sick units. Para 18 of the 1993 Scheme is quoted below: 18. Closed and sick units. 18.1. With the approval of the State Government, operation of a unit with fixed assets taken over by a new owner/management from a closed unit, may be granted incentive equivalent to that to a new unit, provided that incentives, if any, disbursed to the closed unit shall be deducted from the corresponding incentive admissible under the 1993 Scheme and that the State Government may also lay down any general or specific conditions in such cases while according their approval. 18.2. With the approval of the State Government, the sick units may be granted incentives equivalent to that to a new unit based on an agreed and approved rehabilitation/revival package, provided that incentives, if any, disbursed to the unit ea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... octrine of promissory estoppel inasmuch as there was never any promise to exempt payment of turnover tax which was introduced only in August, 2002. Mr. Gupta has placed the relevant provisions in the BIFR Revival Scheme of 1996 and the Government Orders granting exemption to show the exemption which was contemplated and actually granted was/is in respect of sales tax and purchase tax only. He has submitted that there could not be any promise with regard to a non-existent tax at the time of promise. A particular Act may impose different kinds of taxes within its scope and ambit. In fact, Act of 1994 has at present, imposed three different taxes, viz., sales tax, purchase tax and turnover tax. It is to be ascertained whether exemption actually granted was in respect of all taxes under the Act or a particular tax or taxes. To counter the submission of the respondents, Dr. Pal has drawn attention to the expression sales tax due for payment as defined in the Incentive Scheme, 1993 and submitted that exemption was in respect of both sales tax and turnover tax. An Incentive Scheme permits and authorises grant of different concessions and exemptions as enumerated in the scheme. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l scheme was finalised by the BIFR. In the Revival Scheme there was no reference to the Incentive Scheme of 1993. The reliefs which were to be given by the State Government of West Bengal under the Revival Scheme, were made available by the State Government by specific Government Orders issued in exercise of the powers under paragraph 18 of the Incentive Scheme, 1993. Assuming that Incentive Scheme contemplated exemption of turnover tax also, an industry was not entitled to all the benefits automatically. It was a discretion of the State Government to allow some reliefs or benefits as it thought fit in appropriate cases. In the present case the State Government granted exemption from sales tax and purchase tax only. We are unable to accept the claim of the petitioner that the promise was to exempt payment of all taxes which might be introduced in future. We have already referred to the language used in the Government orders. In fact, the Government orders did not include any promise that exemption would automatically extend to any tax substituting sales tax or purchase tax. The said condition was available in the Revival Scheme only. However, taking the Revival Scheme and the Go ..... X X X X Extracts X X X X X X X X Extracts X X X X
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