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TMI Blog2013 (1) TMI 695X X X X Extracts X X X X X X X X Extracts X X X X ..... ase is as follows: The appellant-company, a medium scale industrial undertaking which was set up for re-refining and repossessing of waste lubricating oil into various grades of useful oil, fell sick due to initial problems like shortage of raw materials, ban on import of used oil, want of clearance from local bodies, pollution control board, etc., and the lowering of import duty on waste oil from 85 per cent to 30 per cent in February, 1994 which resulted in the back out of other companies from their commitment to buy locally produced re-refined base stock. For the reasons aforesaid and the consequential underutilization of capacity, the appellant-company could avail of only one third of the sales tax and Central sales tax exemption limit of the Rs. 366.44 lakhs which was fixed as per exhibit P1 order of the Board of Revenue, Government of Kerala. 3. BIFR, to which the company was referred under section 15 of the Sick Industrial Companies (Special Provisions) Act, 1985, for short, the Act, after making necessary enquiries into the matter declared the company sick vide exhibit P2 order and placed the company under the control of the Board from the date of exhibit P2 order. Though ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he appellant-company is that taking note of reluctance on the part of the sales tax authority to extend the relief envisaged in the sanctioned scheme, BIFR Bench vide exhibit P7 order dated June 20, 2005 issued the following revised direction under sections 22A and 22(3) of the Act, for compliance.- "The ST authorities, Government of Kerala, in order to ensure long-term viability of the company, would consider granting the reliefs, as envisaged from them in para 13.9(a), page 13 of the SS for the period commencing from October 1, 2000 to March 31, 2005 (instead of up to March 31, 2006) and would also not raise any further demand/claim on the company for the said period. The company would, however, continue to pay the new value added sales tax introduced by the Government of Kerala with effect from April 1, 2005 onwards." 7. While reviewing the implementation of the sanctioned scheme, BIFR Bench vide exhibit P8 order dated June 20, 2006 re-iterated that unimplemented provisions of the sanctioned scheme and the unimplemented portions of subsequent directions issued by the Board vide exhibit P7 would continue to remain in full force. 8. The case of the appellant-company is that tho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt notices are illegal and arbitrary in so far as they have been issued in gross violation of the direction contained in the order of the BIFR dated June 20, 2006 (exhibit P7). It was argued that the State Government cannot, in the absence of an appeal against the order of the BIFR, proceed to act in a manner contrary to the direction contained in the BIFR's order, after having participated in the proceedings before the BIFR. 14. The learned Special Government Pleader (Taxes), per contra, would argue that the beneficiary of a concession has no legally enforceable right against the Government to grant a concession except to enjoy the benefits of the concession during the period of its grant. In support of the argument, the learned Special Government Pleader invited our attention to the decision of the apex court in State of Haryana v. Mahabir Vegetable Oils Pvt. Ltd. [2011] 38 VST 514 (SC); [2011] 19 KTR 221 (SC). 15. Before we proceed to examine the merit of the said argument, we would like to refer to the decision of this court in Prima Industries Ltd. v. State of Kerala [2008] 11 VST 806 (Ker) [2005] 4 KLT 253 relied on by the learned single judge. In that case the petition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peal by the Department to the Supreme Court, it was held that the withdrawal of exemption "in public interest" is a matter of policy and the courts should not bind the Government in its policy decision. Unfortunately, the said decision cannot be read into the present case. The reason for not interfering with the policy of the Government by the apex court in that case was that it has never been the case of the dealer that the solvent extraction plant was a non-polluting industry. Moreover, there was no allegation that the decision to put the solvent extraction plant in the negative list was actuated by fraud or that the said decision was not bona fide. 17. During the course of argument, we had the good fortune to come across with the decision of the apex court in State of Punjab v. Nestle India Ltd. [2004] 136 STC 35 (SC); [2004] 269 ITR 97 (SC); [2004] 6 SCC 465, pointed out by Mr. Jayasankar Nambiar, the learned senior counsel appearing for the appellant-company. In that case the highest State authorities, including Finance Minister in the budget speech for 1996-97 made representation to the effect that the State Government had abolished the purchase tax on milk. The manufacturer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeal. It is also crucial to note that in view of the sales tax exemption envisaged in paragraph (13.9A) of exhibit P6 scheme, the company had not collected any sales tax on its products from October 1, 2000 onwards. This has not been denied. 21. If exhibit P9 and the consequential demand notices are allowed to stand, the same would put things out of gear and the entire efforts taken so far by the BIFR for reviving the appellant-company from sickness would terribly be watered down. The burden is heavily on the Government to establish that it would be inequitable to hold the Government bound by the promise on account of public interest. That is the settled law. The respondent-State has been unable to establish overriding public interest, which makes it inequitable to enforce the estoppel against them. It would, in the circumstances, be inequitable to allow the State Government to act in a manner contrary to the directions contained in exhibit P6 scheme as well as exhibits P7 and P8 orders. We, therefore, have to uphold the plea of promissory estoppel raised by the appellant-company. 22. Though, it was strenuously argued by the Special Government Pleader (Taxes) that the Board as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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