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TMI Blog2009 (9) TMI 886X X X X Extracts X X X X X X X X Extracts X X X X ..... on from payment of purchase tax on purchase of raw materials for manufacture of its products in Bihar, and sold in Bihar or outside Bihar. The petitioner shall be entitled to refund of the amount, if any, deposited by it along with interest at 15 per cent from the date of deposit(s) till the date of payment - - - - - Dated:- 9-9-2009 - SUDHIR KUMAR KATRIAR AND JYOTI SARAN , JJ. SUDHIR KUMAR KATRIAR J. This writ petition has been preferred with the prayer to set aside the order dated March 7, 2000 (annexure 5), passed by the Commercial Tax Tribunal, Bihar, Patna, in Revision Case No. PT193/99 (Shakti Tubes Ltd. v. State of Bihar), whereby the order passed by the authorities under the provisions of the Bihar Finance Act (hereinafter referred to as, the Act ), has been upheld, and it has been held that the petitioner is not entitled to the benefit of exemption from payment of purchase tax on raw materials used for manufacture of the products to the extent of sales effected by the petitioner outside the State of Bihar by stock transfer, in terms of the Industrial Incentive Policy, 1993. It relates to the assessment year 1994-95. A brief statement of facts essential for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure 12), declaring therein that it shall be exempted from levy of sales tax and purchase tax on the items mentioned in paragraph 4 therein. The petitioner submitted its returns and, inter alia, in view of clause 10.4 of the 1993 Policy, claimed the benefit of exemption from payment of purchase tax on raw materials used for manufacture of its products. The learned assessing officer, namely, the Deputy Commissioner of Commercial Taxes, Patna West Circle, passed the order of assessment on July 15, 1997 (annexure 3), whereby he, inter alia, held that the petitioner is not entitled to the benefit of exemption from payment of purchase tax on the purchase of raw materials to the extent the finished products were sold outside the State of Bihar by stock transfer. Aggrieved by the order, the petitioner preferred a revision application which was rejected by order dated February 3, 1999 (annexure 4), passed by the learned Commissioner of Commercial Taxes in Revision Case No. CCS (S) 361 and 361A/1997-98. Aggrieved by the same, the petitioner preferred a second revision application before the Tribunal which has been rejected by the impugned order. The two revisional authorities have concu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect to the persons or companies covered by the Industrial Policy. He relied on the judgment of the Supreme Court in Associated Cement Companies Ltd. v. State of Bihar [2004] 137 STC 389; [2004] 7 SCC 642. He lastly submitted that S.O. No. 95 was in the nature of sub-delegated legislation, and cannot be repugnant to the dominant policy. The learned Additional Advocate General III submitted that the writ petition is not maintainable because the petitioner had already moved this court earlier by preferring CWJC No. 7467 of 1994 (Shakti Tubes Ltd. v. State of Bihar), [1999] 112 STC 258 at 259; [1995] 2 PLJR 536, where the petitioner had the opportunity to raise this issue. The writ petition is barred by the provisions of order 2, rule 2, CPC. He submitted in the same vein that the petitioner is, therefore, precluded from challenging the validity of S.O. No. 95. He relied on the judgment of the Supreme Court in Inacio Martins v. Narayan Hari Nayak [1993] 3 SCC 123 (para 6). He next submitted that S.O. No. 95 has been framed with the object to promote industrial growth in this State for the benefit of the people of the State and enhance Government revenue. The petitioner has transferr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n and framed the Industrial Policy. Its preamble and the relevant provisions are reproduced hereinbelow: With the objective of accelerating the industrial progress in the State the industrial incentive policy was announced by the State Government vide its resolution No. 13730 dated September 1, 1986, the period of which was extended up to March 31, 1993 vide its resolution No. 10441 dated December 28, 1992, Resolution No. 46 AIDC dated September 6, 1989, resolution No. 1810 dated February 21, 1990. It has been experienced that desired industrial progress has not been achieved in all the districts of this State. It has also been felt that in the context of new Industrial Policy, 1991 of the Centre and with the withdrawal of freight equalization policy, these industrial incentives require new dimensions to achieve balanced industrial growth in a planned manner so that the natural and human resources of the State are fully utilized and developed and the opportunities for employment are progressively increased. In the light of abovementioned facts, the State Government has decided to introduce a new Industrial Policy. The provisions of this policy are as follows: (a) This I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eaning has to be given and, in case of doubt or difficulty, the courts would lean in favour of a liberal approach, and in favour of the entrepreneur. The admitted position in the present case is that the petitioner-company qualified for the incentives under clause (b) set out hereinabove. In other words, the petitioner-company had commenced production before April 1, 1993, and its investment was less than 15 crores. It is nobody's case that the petitioner had already availed of the incentives under 1986 Policy. We, therefore, proceed to examine whether or not the petitioner is entitled to the incentives under the Industrial Policy. The petitioner claims exemption from levy of purchase tax as contemplated by paragraph 10.4 of the policy. Paragraph 10.4 and paragraph 10.5 of the Industrial Policy are reproduced hereinbelow: 10.4 Sales tax exemption on the purchase of raw material. (i) The facility will be admissible to the industrial units mentioned in annexure V in the following manner: (a) Industrial units coming into production between April 1, 1993 to March 31, 1998 whose investment on plant and machinery does not exceed Rs. 15.00 crores shall be entitled for this f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s on which it seeks exemption from payment of purchase tax during the period in question was used for manufacture of finished products. We are of the view that the condition sought to be imposed by the respondents that, in order to qualify for exemption, the finished products must necessarily be sold within the State of Bihar, or during the course of inter-State sale, is not discernible from the preamble, the aims and objects, the other provisions of the Industrial Policy, and the Act. We see no such restriction in the notification dated April 4, 1994. We must also notice the relevant provisions of the Act. Section 4 is headed Levy of purchase tax , and is reproduced hereinbelow: 4. Levy of purchase tax. Subject to the provisions of sections 5, 6 and 7 of this part, every dealer liable to pay tax under section 3, who purchases goods in circumstances in which no sales tax is payable or has been paid on the sale price of such goods and either consumes such goods in the manufacture of other goods for sale or otherwise disposes of such goods in any manner other than by way of sale in the State or sale in the course of inter-State trade or commerce, shall be liable to pay tax on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l 1, 1993 to March 31, 1998, or even older units, but in both cases its investment must not exceed Rs. 15 crores as on April 1, 1993, and manufacture of its products must have taken place in the State, for the purpose of sale. We see no such restrictions in the said notification of April 4, 1994, as is sought to be canvassed on behalf of the respondents. Neither do we see any such condition in the preamble of the notification dated April 4, 1994, issued in terms of section 7(3)(b) of the Act, nor in paragraph 10.4 of the policy. In that view of the matter, the terms of section 7(1)(b) of the Act, i.e., sales outside the State, must be allowed to have its full play, and the benefit of exemption shall be available to the entrepreneur even if the sale of goods takes place outside the State of Bihar, may be after stock transfer. The learned counsel for the petitioner has rightly relied on the judgment of a Division Bench of this court in Suprabhat Steel Ltd. v. State of Bihar [1999] 112 STC 258 at 259; [1995] 2 PLJR 536, wherein the Division Bench interpreted the Industrial Policy. The following observations are particularly relevant in the present context and indeed support the pet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... avy investment on the basis of the promise held in the Industrial Incentive Policy, 1993, that they shall be given the facility of sales tax exemption on the purchase of raw material. Having done all these, they cannot be deprived of the facility which they were promised under the Industrial Incentive Policy, 1993 and that too by the issuance of notification which is inconsistent with the policy decision, and seeks to modify the same without authority of law. In exercise of his power under the Bihar Finance Act, the Commissioner should have issued appropriate notification granting exemption in the matter of payment of sales tax consistent with the Industrial Incentive Policy decision of 1993, which bound the State. 18.. The learned Advocate-General did not urge that the principle of estoppel does not apply in the instant case, and in my view, rightly. The impugned notification has been issued with a view to give effect to the policy announced. It does not proceed on the basis that old industrial units which came into production before April 1, 1993 are not entitled to any benefit under the scheme. On the contrary, it concedes that such old industrial units are entitled to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act, if is found to be repugnant to the Industrial Policy declared in a Government resolution, then the said notification must be held to be bad to that extent. . . (emphasis Here italicised. added) The learned counsel for the petitioner has also rightly relied on the unreported judgment dated May 20, 2008, passed by a Division Bench of this court in CWJC No. 2916 of 2000 (Kalyanpur Cement Ltd. v. State of Bihar). That was a case where the court was called upon to declare the explanatory note appended to rule 3 of the Bihar Sales Tax Supplementary (Deferment of Tax) Rules, 1990, as ultra vires and inconsistent with the provisions of the Bihar Finance Act, 1981, and the Industrial Policy Resolution, 1989. The petitioner therein had made the further prayer to quash the order of the State Level Committee, whereby it had held that the petitioner shall be entitled for the incentive of deferment, not on the additional production, but on the incremental production above the installed capacity. The following portion of the judgment is relevant and reproduced hereinbelow: . . . While it is true that the State Government is not expected to give each and every detail in its policy and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submission that the principle of estoppel comes to the aid of the petitioner. In view of the liberal policy, the petitioner purchased more and more of raw materials, and ventured to produce more and more products for sale. If the petitioner were not certain of getting the benefit of exemption, it may not have purchased raw materials in enormous quantities. It must have accordingly organized the manufacturing process and streamlined the marketing and other commercial activities. The judgment of the Supreme Court in State of Punjab v. Nestle India Ltd. [2004] 136 STC 35; [2004] 6 SCC 465 is relevant in the present context, particularly paragraphs 30 to 47, and supports the petitioner's case. Paragraph 1514 at page 1017 of Hallsbusry's Law of England, 4th Edition, volume 16, is headed promissory estoppel , is relevant and reproduced hereinbelow: 1514. Promissory estoppel. When one party has, by his words or conduct, made to the other a clear and unequivocal promise or assurance which was intended to affect the legal relations between them and to be acted on accordingly, then, once the other party has taken him at his word and acted on it, the one who gave the promise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The learned Government counsel has submitted that the writ petition is not maintainable and is hit by the bar engrafted in order 2, rule 3, CPC, for the reason that the petitioner had preferred the previous writ petition bearing CWJC No. 7467 of 1994, which was disposed of by a Division Bench of this court in Suprabhat Steel Ltd. v. State of Bihar [1999] 112 STC 258 at 259; [1995] 2 PLJR 536, wherein the petitioner-company had the opportunity to raise the issues canvassed before us. He relied on the judgment of the Supreme Court in Inacio Martins v. Narayan Hari Nayak [1993] 3 SCC 123 (paragraph 6). That was a case where 1993 Policy was as a whole reviewed and the relevant observations having strong bearing in the present context have been set out hereinabove which fully support the petitioner's case. The provisions of order 2, rule 3, CPC, are not at all attracted in the present case because the issue raised herein have surfaced by reason of the assessment proceedings giving rise to the present writ petition and was not the subject-matter of the previous writ petition. The contention is rejected. The learned Government Counsel has next contended that the 1993 Policy read ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be constrained to declare the notification of the Sales Tax Department to be repugnant to the Industrial Policy. The contention is rejected. The learned Government counsel has further contended that the issue in Suprabhat Steel Ltd. [1999] 112 STC 258 at 259 (Patna); [1995] 2 PLJR 536 was quite different. In his submission, that was a case of complete deprivation of benefits which was disapproved of by the court, whereas the issue in the present case is one of the reasonable restrictions to prevent misuse. The contention amounts to a complete misreading of the judgment. In order to do complete justice to the parties, this court had examined the entire scheme of the Act and spelt out the meaning and content of the same. The judgment has been upheld by the Supreme Court. In that view of the matter, the proposition of law sought to be invoked by the respondents that a decision should be taken to be an authority for what it actually decides, and not what logically follows, is wholly inapplicable to the present case because the Division Bench in order to dispose of the issues arising there, had to examine the scheme of the Industrial Policy and the notification. Neither the petiti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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