9911796707
TMI Blog2009 (9) TMI 886X X X X Extracts X X X X X X X X Extracts X X X X ..... the Companies Act, 1956, and has set up a steel plant at Hajipur, district Vaishali. The State Government had issued its Industrial Policy for rapid growth of industries in the State of Bihar, whereby incentives were given to entrepreneurs to set up industrial units in the State of Bihar, vide its resolution No. 13730, dated September 1, 1986, which was extended up to 1993, by various orders of the State Government. The State Government noticed that the desired industrial growth had not been achieved in all the districts of the State. It was also felt that in the context of new Industrial Policy, 1991 of the Central Government, and with the withdrawal of freight equalization policy, the incentives granted by the said Industrial Policy of the Bihar Government required new dimensions to achieve balanced industrial growth in a planned manner so that natural and human resources of the State are fully utilised and developed and the opportunities for employment are progressively increased. With these objectives clearly stated in the preamble, the new Industrial Incentive Policy, 1993 (hereinafter referred to as, "the Industrial Policy"; annexure 1) came to be issued, replacing the prev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... counsel for the petitioner submitted that in view of the preamble of the Government notification bearing S.O. No. 95, dated April 4, 1994 (annexure 2), the same does not create any new condition so as to deprive the petitioner of the benefits of paragraph 10.4 of the Industrial Policy with respect to its sale of finished products outside the State of Bihar. If any such indication is to be found in the notification or the forms thereto, the same would be clearly ultra vires the scheme of things. He also submitted that S.O. No. 95, dated April 4, 1994, cannot act in contravention of the Industrial Policy because it has to be subservient to the same and is only meant to help achieve the goals set out in the policy. He relied on the judgment of the Supreme Court in case of State of Orissa v. Tata Sponge Iron Ltd. [2007] 9 VST 415; [2007] 8 SCC 189 (paragraph 13). He submitted in the alternative that, if any such condition is to be found in S.O. No. 95, the same falls foul of paragraph 10.4 of the Policy and has to be ignored. He relied on the judgment reported in the case of Suprabhat Steel Ltd. v. State of Bihar [1999] 112 STC 258 at 259; [1995] 2 PLJR 536, which was upheld by the Su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed of its revenues like Bihar sales tax or Central sales tax. He next submitted that paragraph 10.5 of the Industrial Policy fully authorizes the Sales Tax Department to put conditions to prevent misuse of the benefits thereunder. Section 7(3) of the Act contemplates exemption with respect to sales. Transfer of stock from this State to another State is not sale. He relied on the judgment of the Supreme Court in Collector of Central Excise v. Parle Exports (P.) Ltd. [1989] 75 STC 105; [1989] 1 SCC 345 (para 17). He also submitted that the decision in Suprabhat Steel Ltd. is inapplicable in the present case because the factual position in that case was different. That was a case of complete deprivation of the benefits which is not the situation here, and is instead a case of imposing reasonable restrictions to prevent misuse. He relied on the following reported judgments of the Supreme Court: (i) Union of India v. Dhanwanti Devi [1996] 6 SCC 44 (para 9). (ii) Goodyear India Ltd. v. State of Haryana [1990] 76 STC 71 (SC); [1990] 2 SCC 71 (para 22). He next submitted that section 4 of the Act is subject to sections 5, 6 and 7. If a case is covered by the terms of the notification un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the date of production of small industrial units, the certificate issued by the respective General Manager, District Industry Centre or Managing Director, Industrial Area Development Authority will be considered. In case of any dispute in the date of production the decision of the Director of Industries shall be final. In the case of large and medium industries the certificate issued by the Director, Technical Development/Director of Industries shall be considered. (b) Units coming into production before April 1, 1993 shall be entitled to the benefits for the period as announced by the previous incentive policy. The entrepreneurs who have invested capital for the establishment of industry on the basis of previously announced incentive benefits before April 1, 1993, but could not begin production till March 31, 1993 will have to give in writing to the Director of Industries within 30 days from the date of issue of this resolution, whether they want to avail of the benefits as announced by the previous incentive policy or the benefits of the new Industrial Policy, which has come into effect from April 1, 1993. These entrepreneurs shall be entitled either for the complete package of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5 crores on April 1, 1993 shall be entitled for this facility for a period of seven years from April 1, 1993. (ii) All other industrial units shall continue to enjoy the existing facility of purchase of raw material on concessional rate of tax as announced and made applicable by the Sales Tax Department as before. 10.5 A separate order/notification for sales tax exemption will be issued by the Commercial Tax Department and the condition mentioned in that order/notification shall be binding in final terms." The admitted position is that the petitioner is covered by clause (b). The petitioner-company has used the raw materials for manufacture of steel and iron products. Equally admitted position is that a substantial portion of its end-products was transferred to other State(s) by stock transfer, and a comparatively small portion was sold in the State of Bihar. The statutory authorities under the Act granted exemption from payment of purchase tax on purchase of its raw materials to the extent the end-products were sold in Bihar. But the benefit of exemption has been declined on the raw materials used to the extent the manufactured products were sent outside the State of Bihar by s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tante clause and states that the provisions of section 4 are subject to sections 5, 6 and 7. Section 7 is particularly relevant and is reproduced hereinbelow: "7. Exemption.-(1) No tax shall be payable under this part on sales or purchases of goods which have taken place- (a) in the course of inter-State trade or commerce; (b) outside the State; (c) in the course of import of goods into, or export of the goods out of the territory of India. (2) The provisions of the Central Sales Tax Act, 1956 (LXXIV of 1956) shall apply for determining when a sale or purchase of goods shall be deemed to have taken place in any of the ways mentioned in clause (a), (b) or (c) of sub-section (1). (3) The State Government may, by notification and subject to such conditions or restrictions as it may impose, exempt from the sales tax or purchase tax- (a) sales of any goods or class or description of goods; (b) sales of any goods or class or description of goods to or by any class of dealers; (c) any sale or category or description of sales; and (d) purchase of any goods by any class of dealers or any purchase or category or description of purchases of such goods. (4) Where exemption from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mption on the purchase of raw material, this facility was extended to the industrial units coming into production between April 1, 1993 and March 31, 1998, and also such old industrial units whose investment on plant and machinery did not exceed Rs. 15 crores on April 1, 1993. To the extent of this facility alone a facility was sought to be conferred even on old industrial units. So far as the policy goes, there is no other condition attached to the grant of this facility except that the investment on plant and machinery as on April 1, 1993 must not exceed Rs. 15 crores. The clear and unequivocal words employed in the said paragraph of the policy decision permit of no other meaning being given to the policy. 17.. . . . The petitioners are, therefore, right in contending that the notification of April 4, 1994 in so far as it imposes a condition that the old industrial units should not have taken benefit under any earlier industrial incentive policy of the Government is inconsistent with the policy decision. In exercise of authority vested in the Commercial Taxes Department under paragraph 10.5 of the Industrial Incentive Policy, 1993, the Commercial Taxes Department could not add o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to give effect to the policy decision announced by the State, it is not permissible to the Commissioner of Sales Tax to make a further classification by imposing a condition not warranted by the policy. If the policy intended to give a benefit or facility, to a class of industries, he could not impose a further condition so as to create another class of industries out of the industries to whom the benefit or facility was intended, as that would be arbitrary and unreasonable." The aforesaid judgment was upheld by the Supreme Court in State of Bihar v. Suprabhat Steel Ltd. [1999] 112 STC 258; [1999] 1 SCC 31. The following portion of the judgment is relevant (at page 273 of STC): "6. . . We are entirely in agreement with the conclusion arrived at by the High Court in this regard and we do not find any error committed by the High Court in granting the benefits of the said clause 10.4(i)(b) of the policy to the respondents' industrial units. We accordingly have no hesitation to affirm the conclusion of the High Court on this score and reject the submission of Mr. Dwivedi, the learned senior counsel, appearing for the appellant. 7.. Coming to the second question, namely, the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to be taken recourse to. It is further true that framing of rule under section 7 of the Bihar Finance Act is necessary to entitle the industrial units to avail the incentives and benefits declared by the State Government in its Industrial Policy. But in exercise of such power, it would not be permissible for the State Government to deny any benefit given in the Industrial Policy declared by it. Rule framed by the State Government in exercise of the power framed under section 7 of the Bihar Finance Act is to give effect to the Industrial Policy and if found repugnant to the Industrial Policy declared in the Government resolution then to that extent the rule is rendered illegal and in such circumstance the Industrial Policy shall prevail. . . ." The learned counsel for the petitioner is right in his submission that a narrow interpretation of the policy and the notification will defeat the aims and objects of the policy. As noticed hereinabove, the preamble of the policy noted the near-failure situation produced by the 1986 Policy, and the State Government on a thoughtful review of the matter, intended to liberalize the incentives under the Industrial Policy. The policy seeks to a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he himself has so introduced. This doctrine, which is derived from a principle of equity enunciated in 1877, has been the subject of considerable recent development and is still expanding. It differs from estoppel in pais in that the representation relied upon need not be one of present fact. The doctrine cannot create any new cause of action where none existed before, and it is subject to the qualification (1) that the other party has altered his position; (2) that the promisor can resile from his promise on giving reasonable notice, which need not be a formal notice, giving the promisee a reasonable opportunity of resuming his position; (3) the promise only becomes final and irrevocable if the promisee cannot resume his position. The doctrine is known variously as 'equitable' or 'promissory' or 'quasi' estoppel." The principle so clearly and authoritatively enunciated fully supports the petitioner's case. The notification of the Sales Tax Department cannot act in contravention of the Industrial Policy. Once the policy defines the purpose, aims, objects, and the sweep, the notification of the Sales Tax Department must in a subservient manner en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s deprived of the sales tax. In view of the foregoing discussion, it is evident that the framers of the Industrial Policy as well as the notification issued in terms of section 7(3) of the Act, never intended to restrict the exemption to sales within the State of Bihar or in the course of the interState trade. Such a restriction were possible if the Industrial Policy itself so stipulated, which is wholly absent therein, and is equally absent in the notification. The only possible requirement is that the goods so manufactured within the State of Bihar, should be for the purpose of sale. In such a situation, the provisions of section 7(1)(b) are attracted in the present case, and come to the aid of the petitioner. The contention is rejected. The learned Government counsel next contended that paragraph 10.5 of the 1993 Policy fully authorized the Sales Tax Department to introduce conditions to prevent misuse of the policy. We have held hereinabove that no such condition is to be found in the policy, or the notification. The respondents are trying to read into the same conditions of the nature not intended to be added by the Sales Tax Department. No such condition can be permitted whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Division Bench relevant in the present context have been reproduced hereinabove, and we have taken therefrom only what has actually been decided. The contention is rejected. The learned Government counsel has also submitted that once it is held that the restriction is within the meaning of section 7(3) of the Act, then the rigors of section 4 are applicable. The contention is rejected, inter alia, for the reason that we have held hereinabove that S.O. No. 95 does not spell out any restrictions as has been canvassed by the respondents. The learned Government counsel has also relied on the judgment of the Supreme Court in Commissioner of Sales Tax v. Crown Re-Roller (P) Ltd. reported in [2007] 6 VST 331; [2007] 3 SCC 659 (para 17), in an effort to highlight the purpose of exemption. The purpose of exemption has been discussed hereinabove. The contention runs counter to the very aims and objects which the Industrial Incentive Policy, 1993, which it intends to achieve. The contention is rejected. In the result, the writ petition is allowed. The impugned order dated March 7, 2000 (annexure 5), passed by the learned Commercial Tax Tribunal, is set aside. It is held that the petiti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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