9911796707
TMI Blog2007 (1) TMI 507X X X X Extracts X X X X X X X X Extracts X X X X ..... he petitioners herein have established their industrial units in the unified State of Bihar before its bifurcation. The factual background leading to filing of these writ petitions is almost similar. Additionally, in W.P. (T) No. 2664 of 2006 (Tata Steel Ltd. v. State of Jharkhand) and W.P. (T) No. 5130 of 2006 (Ram Krishna Industries v. State of Jharkhand) there are concluded judgments in favour of the petitioners. In the case of Tata Steel Ltd., the final judgment is by the apex court whereas in the later case the final judgment is by the High Court of Jharkhand. It is useful to refer to factual background emerging from the pleadings of the parties. In the year, 1995 the State Government formulated and notified its Industrial Policy, 1995. The salient features of this policy are enumerated in paragraph No. 4, which are reproduced hereunder: Create an environment for optimal utilisation of State's agro climatic, mineral and human resources; Provide quality infrastructure for accelerated industrialisation of the State; Attract investment to generate economic activities employment, incomes and growth; Receive potentially viable and closed industries; Boost exports o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ries) as also industries located in 'A' category backward districts the ceiling for deferment would be 150 per cent of the fixed investment. The ceiling for deferment linked to the fixed investment in regard to telecommunication, computers, software/hardware and electronic industries would be 300 per cent of the fixed investment made by the unit. The amount of sales tax collected under sales tax deferment option would require to be returned in six equal monthly instalments in such manner so that the entire amount is returned by the 13th year from the commencement of deferment option. 16.3 Units undertaking expansion/diversification Such units should be given identical treatment as new units for their expanded/diversified capacity and incremental production both in purchase of raw materials and for sales tax on finished goods. All such incentives will be admissible to such units which are covered by the definition of expansion/diversification as given in the annexure. Incremental production means: The incremental production shall mean the excess of actual production over 2/3 of the originally installed capacity or the highest production in 3 years immediatel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th similar request of assurance for exemption from sales tax. It is stated that a meeting was held on July 21, 1997 under the Chairmanship of the then Chief Minister, wherein, a number of high officials of the State Government were also present and it was decided to grant exemption within the purview of the industrial policy for diversification involving investment of Rs. 500 crores or more and an amendment was proposed to the industrial policy. Consequently, a resolution was adopted for amendment of the industrial policy. The extract, relevant for the purposes of this petition, is reproduced hereunder: (III) 'Definitions' chapter in Industrial Policy, 1995-Para-7-expansion/modernisation/diversification The policy reads as follows: 'Exemption/modernisation/diversification of an existing industrial unit would mean additional fixed capital investment in plant and machinery of 50 per cent or more of the undepreciated value of fixed capital investment in the existing unit leading to incremental production capacity which would not be less than 50 per cent of the initial installed capacity.' The following will be added after the above: 'Provided all inves ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,874.04 crores. In the meeting dated April 26, 2000 the Commissioner and Secretary, Commercial Taxes, Government of Bihar, Patna, accorded approval to as many as seven units, including this petitioner. Following the formal approval, the petitioner applied for grant of exemption certificate and it was granted exemption certificate dated December 21, 2000, allowing exemption from payment of sales tax on the sale of goods produced from August 1, 2000 to July 31, 2008 in terms of section 7(2)(b) of the Bihar Finance Act, 1981. It is stated that on the basis of the exemption certificate the petitioner altered its position and started conducting transactions by investing huge amount of approximately Rs. 2,000 crores. In the meantime, the petitioner received an order dated February 22, 2000, issued under sub-section (4) of section 46 of the Bihar Finance Act, staying exemption certificate dated December 21, 2000. This order became subject-matter of challenge before this court in C.W.J.C. No. 788 of 2000. During pendency of this writ petition, the Commissioner of Commercial Taxes rejected the claim of the petitioner-company for grant of exemption vide order dated April 3, 2001. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax on purchase of raw material and sale of finished products for the period from March 7, 2005 to March 6, 2013. W.P. (T) No. 2845 of 2006 (Krishna Coke Pvt. Ltd. v. State of Jharkhand and others): Petitioner in this petition is a private limited company, engaged in manufacture of beehive hard coke, having its industrial unit at Ratanpura, G.T. Road, Govindpur, Dhanbad. It's unit was issued temporary registration certificate on July 5, 2000 and the unit started commercial production from March 4, 2005 and was granted permanent registration certificate on March 22, 2005. The unit was also given exemptions under S.Os. 478 and 479 on June 22, 2005 valid up to March 3, 2013. W.P. (T) No. 3744 of 2006 (Ashirwad Steel Industries Ltd. v. State of Jharkhand and others): Petitioner in this case is a limited company, engaged in manufacture of sponge iron, having its industrial unit at Phase-V, Adityapur Industrial Area, Gamharia, Jamshedpur. Petitioner was issued exemption certificates dated April 29, 2002 under S.Os. 478 and 479, valid for the period from August 30, 2000 to August 29, 2008. W.P. (T) No. 3912 of 2006 (Bisco Sponge Iron Pvt. Ltd. v. State of Jharkhand an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Udnabad, District-Giridih. Petitioner was granted exemption certificates in respect of its all the three units, situated within the same premises, under S.Os. 478 and 479 with validity periods from November 4, 1999 to November 3, 2007, July 4, 2000 to July 3, 2008 and February 1, 2001 to January 31, 2009 for each unit respectively. W.P. (T) No. 5600 of 2006 (J.C.I. Cement Pvt. Ltd. v. State of Jharkhand and others): Petitioner in this case is a private limited company, engaged in manufacture of portland slag cement, having its industrial unit at Post OfficeMorangi, Demotand, District-Hazaribagh. The unit was granted exemption certificates dated August 10, 2000 under S.Os. 478 and 479, valid for the period from May 6, 1999 to May 5, 2007. W.P. (T) No. 5603 of 2006 (Goyal Construction Cement v. State of Jharkhand and others): Petitioner in this case is a proprietorship firm, engaged in manufacture of portland slag cement, having its industrial unit at village-Rajgoda P.O.-Morangi, District-Hazaaribagh. The unit was granted exemption certificates dated August 10, 2000 under S.Os. 478 and 479, valid for the period from May 6, 1999 to May 5, 2007. W.P. (T) No. 5130 of 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the tax exemption into deferment of the tax for the balance unexpired period of exemption in respect of all the registered dealers, who were enjoying the facility of exemption of tax before the appointed day. Section 96 of the VAT Act further repealed the orders, notifications and certificates granted for availing the facilities by way of exemption for the new industrial units or the units which have undertaken expansion, modernisation or diversification. The impact of section 96 of the VAT Act was that all exemption notifications and exemption certificates allowed to various industrial units and in force as on March 31, 2006 are deemed to be cancelled. Since by virtue of the impugned Notifications No. S.O. 201 dated March 30, 2006 and S.O. 202 dated March 30, 2006 earlier exemption notifications whereunder petitioners were enjoying the exemption benefits had already been withdrawn, petitioner also lost the right of claiming deferment of tax under section 95(3) of the VAT Act. Petitioner in W P. (T) No. 2664 of 2006, however, made an application for deferment of tax under the 1995 Industrial Policy in view of Notification Nos. 478 and 479 both dated December 22, 1995 as also the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efits of exemption for the period, provided under S.O. 478 and S.O. 479 read with S.O. 57 and S.O. 58. (v) Issuance of impugned notifications is a motivated device to deprive the petitioners from even enjoying the facility of deferment of tax under section 95(3)(ii) of the Jharkhand VAT Act, 2005. Resisting the relief claimed by the petitioners, the State has justified and defended its action of withdrawing the notification by the impugned notifications, primarily on the following grounds: (a) The State has absolute power to withdraw the exemption under larger public interest. (b) Promissory estoppel cannot be invoked in so far as the legislative field is concerned. (c) Promise under the Industrial Policy, 1995 was a conditional one. Conditions were imposed under clause 16(4) of 1995 Industrial Policy and under clause 19 of S.O. 478 and clause 20 of S.O. 479. The State has authority to revoke, alter and modify the notifications and, thus, to withdraw the exemption. (d) With the introduction of VAT the facility of exemption cannot continue as it breaks the VAT chain and thereby interferes in the implementation of the VAT Act. (e) The exemption has been withdra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... adopted by the State of Jharkhand on June 1, 2002 vide Notification No. 1259 dated June 1, 2002. From this notification it is also evident that all statutory notifications S.O. 478, 479, 480 and 481 all dated December 22, 1995 and S.O. 57, 58, 59 and 60 all dated March 2, 2000 were adopted by the State of Jharkhand. It is urged on behalf of the petitioners that the impugned notifications S.O. 201 and S.O. 202 simply revoke the earlier exemption, granted vide S.O. 478 and S.O. 479 both dated December 22, 1995 and S.O. 57 and S.O. 58 both dated March 2, 2000 as also S.O. 481 dated December 22, 1995 without recording any reasons for withdrawing the exemption earlier granted to the petitioners on the basis of a well thought of notified Industrial Policy of 1995. It is contended that the exemption notifications were issued in implementation of the Industrial Policy, wherein, promise was extended to the entrepreneurs for grant of exemption from payment of sales tax on the raw materials utilised in the industries and on finished products produced by such industries. This promise was extended in public interest, i.e., for the promotion of industries in the State for its economic growth. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asons for issuing the impugned notifications on the basis of the counter-affidavits filed by the respondents and the records produced to judge the validity or otherwise of the impugned notifications. We have briefly noticed the grounds on which the impugned notifications have been defended by the respondent-State. We may also notice the relevant pleadings to find out the grounds in defence of the impugned notifications. It has been mentioned that the Government of India in consultation with the States decided to introduce value added tax. In most of the States of India it was introduced with effect from April 1, 2005 and the State of Jharkhand also enacted Value Added Tax Act, 2005 and enforced the same with effect from April 1, 2006 and with a view to apply uniform tax structure through the value added tax all exemptions were withdrawn by virtue of section 96(3) of the VAT Act, 2005. Mr. Modi, learned counsel appearing for the respondent-State has also referred to the minutes of the Empowered Committee to submit that it was considered by the Empowered Committee of Finance Ministers to introduce system of value added tax in all the States of the country with a view to introdu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as not been denied. The next question, which falls for determination is whether the assurance and promise extended by the State of Jharkhand to writ petitioners is enforceable for the tenure it was extended or can it be curtailed through the intervention of the impugned notifications or even by the statutory provisions, contained under the VAT Act, 2005. First of all we would like to deal with the enforceability of the promise, independent of the provisions of the VAT Act and, thus, examine the validity of the impugned notifications. A promise invites the application of rule of estoppel only if it is based upon equity. That is why it is also called an equitable estoppel. The other important rule for application of this doctrine is acting on the promise or assurance and changing the position. We have already opined that the petitioners acting on the assurance have altered their position and invested huge amounts in setting up industrial units and/or diversifying their manufacturing activities. The rule of promissory/equitable estoppel has developed in this country in last four/five decades. Both the sides have relied upon various judgments of the apex court. We may briefly notice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the Indo-Afghan Agencies case [1968] 2 SCR 366, claim to be exempt from the liability to carry out the promise 'on some indefinite and undisclosed ground of necessity or expediency', nor can the Government claim to be the sole judge of its liability and repudiate it 'on an ex parte appraisement of the circumstances'. If the Government wants to resist the liability, it will have to disclose to the the court to decide whether those events are such as to render it inequitable to enforce the liability against the Government. 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 . . . In the case of Union of India v. Godfrey Philips India Ltd. reported in [1985] 4 SCC 369, the honourable Supreme Court while reiterating the view in M. P. Sugar Mills [1979] 44 STC 42 (SC); AIR 1979 SC 621 and disagreeing with the later view in the case of Jit Ram Shiv Kumar v. State of Haryana reported in [1981] 1 S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e-requisites for the operation of promissory estoppel had been established, directed the issuance of the exemption notification. A later Full Bench judgment, presided over by one of us (M. Karpaga Vinayagam, C.J. the then Judge of the Madras High Court) in the case of Vairavikulam Lime Products Private Limited v. Government of India reported in [2006] 3 MLJ 317 (FB), examined the applicability of the doctrine of promissory estoppel in depth by taking note of all the relevant judgments of the apex court, including referred to hereinabove, and laid down following guidelines: 21. From the above decisions, the following guidelines would emerge, with regard to promissory estoppel: (1) If a statutory authority functioning on behalf of the State, in exercise of its legally permissible powers has held out any promise to a party, who relying on the same, has changed its position, then, on the principle of promissory estoppel, the promisor can be pinned down to the promise offered by it, by way of representation, containing such promise for the benefit of the promisee. (2) The doctrine of promissory estoppel cannot be pressed into service, to compel the Government, to carry o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r a period of eight years in B districts and ten years in A districts from the date of production and in all the present cases it extends beyond the date of issuance of impugned notifications S.O. 201 and S.O. 202 both dated March 30, 2006. (vi) Jharkhand Value Added Tax Act, 2005 came into operation with effect from April 1, 2006. (vii) After creation of the State of Jharkhand on November 15, 2000, the State Government issued order dated December 15, 2000 and applied Bihar Finance Act, 1981, Central Sales Tax (Bihar) Rules, 1957 and various other Acts, Rules and Regulations to the newly created State of Jharkhand. (viii) The State of Jharkhand vide Notification No. 1259 dated June 1, 2002 adopted the Industrial Policy of 1995 issued by the erstwhile State of Bihar and Notifications S.O. 478, S.O. 479, S.O. 480 and S.O. 481 all dated December 22, 1995 and S.O. 57, S.O. 58, S.O. 59 and S.O. 60 all dated March 2, 2000 and acknowledged the right and entitlement of various industries, established in the unified State of Bihar, falling in the territory of the newly created State of Jharkhand for the benefit of exemption under the Industrial Policy and consequential statutor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds urged in the counter-affidavit filed is that on account of specific stipulations under clause 16.4 of 1995 Industrial Policy and clause 19 and clause 20 of S.O. 478 and S.O. 479 respectively, the State can always withdraw and revoke the incentives granted to the petitioners with respect to the exemption from payment of sales tax. Clause 16.4 of Industrial Policy, clause 19 of S. O. No. 478 and clause 20 of S.O. 479 read as under: 16.4 The commercial taxes authorities will prescribe the required procedure and condition for extending aforesaid sales tax incentives to industrial units. 1991 for grant of exemption to small-scale industrial units. The petitioner in the case of Rom Industries Ltd. [2006] 147 STC 575 (SC); [2005] 7 SCC 348, established its unit for edible oils. The exemption was up to March 31, 2000. It was also stipulated in the exemption notification that the industries in the negative list to be notified by the Government will not be entitled for exemption. The policy also stated that the negative list may be altered by the Government from time to time. After establishment of the industry edible oil was brought on the negative list by amending S.R.O. 93. This w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his court had no other option but to place edible oils in the negative list. The questions whether Shree Mahavir Oil Mills [1997] 104 STC 148 (SC); [1996] 11 SCC 39 has been rightly decided or not and whether it is in conflict with the principles enunciated in Video Electronics Pvt. Ltd. [1990] 77 STC 82 (SC); [1990] 3 SCC 87 are moot. But while the decision stands, the State Government is bound to comply with it. The application of the aforesaid judgments to the present case would depend upon the true and correct interpretation of clause 16.4 of the Industrial Policy, 1995 and clauses 19 and 20 of S.O. 478 and S.O. 479, respectively. Clause 19 of S.O. 478 is in pari materia with clause 20 of S.O. 479. In so far as clause 16.4 is concerned, it merely authorises the commercial taxes authorities to prescribe the procedure and condition for extending sales tax incentives to the industrial units. This clause does not even remotely suggest amendment or revocation of the Industrial Policy at any stage. On the contrary, this clause tends to facilitate the grant of incentives. The procedure and conditions to be prescribed by the commercial tax authorities can only be for granting in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccordance with the procedure, prescribed under law. Section 7(3) of the Bihar Finance Act, 1981 provides for grant of exemption from payment of local tax whereas section 8(5)(k) provides for grant of exemption from payment of Central sales tax in accordance with the conditions, prescribed therein. Hence the statutory notifications were required to be issued as per the requirement of laws in force, i.e., Bihar Finance Act, 1981 and Central Sales Tax Act to grant exemption. Therefore, the notifications S.Os. 478 and 479 have to be read as a sequence to the basic Industrial Policy, which alone conveys the intention of the State and cannot be read in isolation of the Industrial Policy to understand the meaning and purport of any of its conditions. It is in this context we have to read and interpret clause 19/20 of S.O. 478/479. This clause is couched in such a language that it does leave some scope for the argument which is being contended by Mr. Modi. However, in our view, these follow up notifications have to be read and construed as a sequence to clause 24 of the Industrial Policy Resolution, 1995 so as to give the purposeful meaning intended under clause 16 of the Government's ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of purchases of such goods. Section 7(3) speaks of conditions or restrictions to be imposed for grant of exemption. Therefore, clause 19/20 of S.O. 478/479 is to be read in consonance with the provisions of sub-section (3) of section 7 of the Bihar Finance Act, 1981 and clause 16.4 of the Industrial Policy Resolution. There is no provision in the Bihar Finance Act conferring power of revocation unlike section 6 of the Orissa Sales Tax Act. The apex court has interpreted the provisions of sub-section (3) of section 7 of the Bihar Finance Act, 1981 in relation to Industrial Policy Resolution of 1993 of the State of Bihar and while interpreting this provision, the apex court in the case of State of Bihar v. Suprabhat Steel Ltd. reported in [1999] 112 STC 258 (SC); [1999] 1 SCC 31, observed that it was not open to the State Government to issue a notification under section 7 of the Act overriding the Industrial Incentive Policy itself. It also observed that the expression such conditions and restrictions as it may impose appearing in section 7(3) did not authorise the State to negate the incentives and benefits, which any industrial unit would be otherwise entitled to under the Ge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nion of India reported in [1997] 3 SCC 398, wherein, the following is observed: 3. . . Suffice it to say that the principle of promissory estoppel is applicable against the Government but in case there is a supervening public equity, the Government would be allowed to change its stand; it would then be able to withdraw from representation made by it which induced persons to take certain steps which may have gone adverse to the interest of such persons on account of such withdrawal. However, the court must satisfy itself that such a public interest exists . . . 7.. . . . 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. The Government is competent to resile from a promise even if there is no manifest public interest involved, provided, of course, no one is put in any adverse situation which cannot be rectified. To adopt the line of reasoning in Emmanuel Avodeji Ajayi v. Briscoe [1964] 3 All ER 556 quoted in M.P. Sugar Mills case [1979] 44 STC 42 (SC); [1979] 2 SCC 409 even where there is no such overriding public interest, it may still be within the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Court [2004] 136 STC 57; [2004] 6 SCC 689. Again in paragraph Nos. 13, 18, 21, 30, 31 and 38 of the counter-affidavit reference is made to the VAT Act, 2005 and it is stated that in view of major shift in the policy decision of the Government, the exemptions are to be discontinued. It is also stated that under the VAT Act petitioners are better placed. During the course of arguments Mr. Modi has referred to various provisions of the VAT Act to bring home his points that after the enforcement of VAT Act, exemption cannot be continued. Except this, nothing has been stated in the counter-affidavit. However, in the written submissions filed on conclusion of the arguments Mr. Modi has referred to continued fiscal deficit in the budget of the State Government and has also relied upon the record and the notings in the Government file, preceding the issuance of the impugned notifications. He has further mentioned about enhancement in plan and non-plan expenditure of the Government due to increase of the age of retirement of the State Government employees as also introduction of new Industrial Policy of 2001 by the State of Jharkhand, providing for deferment of tax. We have carefully gone ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Cabinet Memo dated March 25, 2006, wherein it is recorded that in view of deferment of tax provision in the VAT Act, it would be appropriate to end the exemption. The Cabinet finally gave the approval for withdrawal and the impugned notifications came to be issued. This is the all material placed on record. It has to be noticed that there is a budget deficit right from 2001 and still the Government chose to adopt the Industrial Policy of 1995 and all exemption notifications vide S.O. No. 1259 dated June 1, 2002, extending the benefit of exemption to all the industrial units in the State of Jharkhand. It has also been brought on record that the State has issued S.O. 213 dated March 31, 2006 whereby, the industrial units, established under 1993 Industrial Policy, have been allowed the benefit of exemption of tax. It is relevant to note that this policy was issued earlier to 1995 Policy and was, in fact, replaced by the 1995 Policy. Based upon this notification, it is pleaded on behalf of the petitioners that the action of the respondents is discriminatory in nature and is violative of article 14 of the Constitution of India. Now the question, which needs consideration, is whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... JT SC 231: Where public interest is likely to be harmed, neither the doctrine of 'legitimate expectation' nor 'estoppel' can be allowed to be pressed into service by any citizen against the State authorities. (v) Bannari Amman Sugars Ltd. v. Commercial Tax Officer [2005] 139 STC 86 (SC); [2005] 1 SCC 625: 9. While the discretion to change the policy in exercise of the executive power, when not trammelled by any statute or rule is wide enough, what is imperative and implicit in terms of article 14 is that a change in policy must be made fairly and should not give impression that it was so done arbitrarily or by any ulterior criteria. 14. . . . The decision-maker has the choice in the balancing of the pros and cons relevant to the change in policy. It is, therefore, clear that the choice of policy is for the decision-maker and not the court. The legitimate substantive expectation merely permits the court to find out if the change of policy, which is the cause for defeating the legitimate expectation, is irrational or perverse or one which no reasonable person could have made. 16.. If the State acts within the bounds of reasonableness, it would be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nefit has been allowed under the earlier Industrial Policy which stood replaced by 1995 Industrial Policy Resolution and similar benefit has been taken away in respect to the industries, established pursuant to 1995 Industrial Policy. In absence of any material on record and even pleadings regarding the discriminatory treatment, we are not inclined to examine the question of discrimination. But the fact remains that the State has been extending the benefits to very old industries even when they might have enjoyed most of the benefits but the industries established later are not being given the same benefit. The plea of budget deficit and financial burden upon the State does not seem to be bona fide in view of the above circumstances. Apart from above, in the case of Usha Martin Industries Ltd. v. Additional Superintendent of Commercial Taxes reported in [1984] 55 STC 380 (Patna), a similar plea was raised before the Ranchi Bench of the Patna High Court, which was negatived by a division Bench of this court by observing: The public interest shown in this paragraphs was, therefore, increasing over draft and deficit budget of the State Government and due to shortage of resources f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e noticed that the petitioners are unable to resume status quo ante at this belated stage and in view of the dictum of the judgment of the apex court in the case of M.P. Sugar Mills case [1979] 44 STC 42 (SC); AIR 1979 SC 621, the promise becomes irrevocable. Thus, we can conveniently say on the basis of the above circumstances that there is no supervening public interest enabling the State to resile from its promise. Now the next question is whether the promissory estoppel can be enforced in the legislative field. It has been urged on behalf of Mr. Modi that impugned notifications are legislative measures, though in exercise of delegated legislative power. Hence the principle of promissory estoppel cannot be pressed into service. His further contention is that even if the exemption is not revoked by impugned notifications, yet by virtue of section 96(3), all exemption notifications having been repealed, thus, with effect from April 1, 2006 the exemption would have automatically vanished. It is relevant to refer to extract of section 96 of the VAT Act, which reads as under: 96. Repeal and savings. (1)(a) Bihar Finance Act, 1981, Part I, Rules made thereunder and notificat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 96(3) of the VAT Act. But then the petitioners would be entitled to the benefit of deferment of tax under section 95(3) of the VAT Act. Section 95(3) of the VAT Act is quoted hereunder: 95. Transitional provisions. (1) . . . (3)(i) Where a registered dealer was enjoying the benefits of deferment of tax under the repealed Act immediately before the appointed day, and who would have continued to be so eligible, on such appointed day under that Act, had it not come into force, may be allowed deferment of payment of tax payable by him under this Act by the Commissioner, for the balance unexpired period or such percentage of gross value of the fixed assets as might have been allowed to such dealer under that Act as prescribed. (ii) Where a registered dealer was enjoying the facility of exemption for payment of tax extended to him under the provision of adopted Bihar Finance Act, 1981 for his having established new industrial unit in the State or undertaken expansion, modernisation or diversification in such industrial units immediately before the appointed day, may be allowed to convert the facility of exemption from payment of tax for the un-expired period or percentage o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... doctrine of promissory estoppel to the legislative action, the issue has been examined by the apex court from time to time. It has been held in the case of M. P. Sugar Mills [1979] 44 STC 42 (SC); AIR 1979 SC 621 that there can be no promissory estoppel against the exercise of legislative power. The Legislature can never be precluded from exercising its legislative function by resort to the doctrine of promissory estoppel. Even in later judgment in the case of Union of India v. Godfrey Philips India Ltd. [1985] 4 SCC 369 it has been stated that there can be no promissory estoppel against the Legislature from exercising its legislative function nor can the Government or public authority be debarred by promissory estoppel from enforcing statutory provision. The honourable Supreme Court held: In the case of Vij Resins Pvt. Ltd. v. State of Jammu Kashmir reported in AIR 1989 SC 1629: 25. . . . The petitioners were invited to set up industries by assuring them supply of the raw material. They changed their position on the basis of representations made by the State and when the factories were ready and they were in a position to utilise the raw material, the impugned Act cam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made to any person. Issuance of notification under any statutory provision, though a delegated legislative action, it is ex facie based upon the decision of the executive and has to be viewed from that angle. We are, therefore, of the opinion that by issuance of the impugned notifications accrued right cannot be negated to the detriment of the petitioners, irrespective of the fact that impugned notifications are issued in exercise of statutory power. Doctrine of legitimate expectation and promissory/equitable estoppel are attracted in the present set of circumstances. It has further been urged on behalf of the respondents that the exemption is impermissible in view of the operation of the VAT Act as it breaks the VAT chain. Mr. Modi has referred to sections 15, 16, 17 and 18 of the VAT Act to contend that under the VAT Act tax paid on the purchase of raw material will be an input tax and tax to be paid on sale of fresh product will be an output tax and the tax payable becomes the difference between the output tax and input tax. According to him, if there is an exemption, the next dealer who will purchase the finished product from the petitioners will not be in a position to p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gorical finding that the respondent-State is bound to honour its promise extended to the petitioner for the period envisaged under the 1995 Industrial Policy and consequential notifications and a direction was given to honour the promise. As a consequence the State restored the exemption certificates in favour of the petitioner. It has been, accordingly, argued by Mr. Debi Prosad Pal, Senior Advocate, that the State, in exercise of its power under section 7(3) of the Bihar Finance Act, has no power, competence and jurisdiction to override and/or annul the judicial decision of the apex court and to deny exemption, which is already allowed by the highest court of the land. His further contention is that even by legislative measure the same cannot be taken away. According to him, it is a colourable exercise of power to render the judgment nugatory. Mr. Modi, on the other hand, has stated that no law has been passed to nullify the judgment. The State has exercised legislative power which is general in nature and applicable to all uniformly. It is a different aspect that its incidence may be the overriding effect of the judgment. In the case of S. R. Bhagwat v. State of Mysor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wn in the aforesaid judgments is that the State cannot nullify the concluded decision inter se parties by enacting a law, though it has the power and competence to change the basis on which decision has been given by changing the law in general, which may affect a class of persons and events at general. The principle enunciated in these cases is of no help to the petitioners. Neither by the impugned notifications nor by enacting VAT Act the judgment of the apex court has been superseded. The State has only changed its policy and hence the basis for rendering the judgment by the Supreme Court no more exists. The benefit accrued to the petitioner under the Supreme Court's judgment gets revoked as an incidence of the law, which cannot be said to be constitutionally impermissible or makes inroads into the basic structure of the Constitution. From the records produced it has been revealed that the State had clear intention to prevent the petitioners from claiming deferment of tax and the exemption notifications were withdrawn with this objective in so far as 1995 Industrial Policy is concerned and at the same time allowed, rather notified, the exemption in favour of the industrie ..... X X X X Extracts X X X X X X X X Extracts X X X X
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