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TMI Blog2017 (11) TMI 1888X X X X Extracts X X X X X X X X Extracts X X X X ..... has to be read strictly with respect to applicability of the policy, once the policy is found applicable the industrial establishment is covered under that policy then benefit arising from that policy has to be given its full effect - The statute or the policy or any document should not be read in such a manner which should not lead to absurdity. It should not be interpreted to defeat the purpose, aims and object for bringing the legislation or the policy. The interpretation which led to its destructiveness must be avoided. If any policy comes forward with promise in the shape of grant of certain benefit and, on the basis of commitment, any party or industrial (sic--industry?) taking to be a solemn declaration, acts on the basis of promise, the State cannot be allowed to resile and refuse to give benefit which has been extended by framing the statute or the policy or by declaration. Thus, the interpretation of the policy should be normal and plain so that real purpose should be derived - On giving a plain reading it is completely clear the facility of exemption from monthly minimum charges has been stipulated for five years and there is no dispute that these industries (petitio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p with the Bihar Industrial Incentive Policy of 2011. For attracting the investors, certain benefits have been extended to the establishment which fall under the parameter of the Industrial Policy. In terms of the 2011 Industrial Policy, different types of benefits have been conferred under different heads having been mentioned in Clause-2 of the Industrial Policy, 2011 which includes benefit such as exemption for Monthly Minimum Charges/Minimum Base Energy Charge/Demand/Billing Demand and the benefit has been conferred for five years. It will be relevant to extract the sub-clause (vi) of Clause 2 which reads as follows:-- 4. The Industrial Policy provides capital subsidy and has conferred tax incentive and different period has been provided in different nature of incentive, so far the benefit for the electric charges is concerned, it has been limited to five years and under the heading of tax, the benefit for certain class of the industries have been given 10 years with certain conditions which provides that the Brewery and Distillery will be reimbursed as maximum only 25% of the VAT charges applicable to 10 years and the ceiling will be 300% of the capital investment. So, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the Executive Engineer accordingly. The dispute has arisen when the life of Industrial Policy 2011 Scheme came to an end after enforcement of the Bihar Industrial Investment Promotion Policy, 2016 for promoting the industrial development in the State. As per averment made in the writ application, the petitioner from time to time continued to pay the bill as per its liability but, the North Bihar Power Distribution Company has raised a bill including those charges which the unit was entitled for remission under the Industrial Policy, 2011. Being aggrieved by the same, the petitioner company filed a representation on 28.2.2015 to the Superintending Electric Engineer, North Bihar Power Distribution Company to correct the electric bill in terms of 2011 Industrial Policy. As the petitioner company has come in commercial production in the year 2014 and, in terms of the Industrial Policy, it is not dependent on the life of the Industrial Policy but, the period of relief mentioned in the Industry Policy, will govern the field but, no action was taken by the Power Company. Further a representation was made on 20.4.2015 to the Superintending Electrical Engineer, High Tension (HT), North Bi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etter dated 2.8.2017 issued by the Director, Technical Development, Technical Development Directorate, Bihar, Patna wherein it has been quoted verbatim the opinion of the Finance Department: and finally the Samadhan Samiti has arrived to a finding that after considering the opinion of Finance Department as well as of the Law Department gave final decision is reflective from the letter dated 22.8.2017 issued by the Principal Secretary, Industry Department is as follows:-- 9. So on the basis of opinion of Finance Department, finally the Industry Department has arrived to a finding that the benefit will be deemed to have been ceased on termination of the life of the Industrial Policy, 2011 i.e. on 30.6.2016. 10. Learned counsel for the petitioner submits that the refusal of grant of benefit for the period mentioned in the Industrial Policy is not sustainable in law in view of the fact that by issuance of industrial policy, they have issued invitation to the industrialists to set up industry for the purpose of industrialization of State of Bihar. Once they have set up the industry on the basis of the offer which has been mentioned in the resolution of the Industrial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11. Per contra, learned counsel for the State has taken a plea that the benefit cannot be extended beyond the life of the Industrial Policy, it will automatically would come to an end on the termination of life of 2011 Industrial Policy whereas learned counsel for the Electricity Board has submitted that the Board is ready to give benefit provided it is interpreted in favour of the petitioner. 12. In the present case, the issue has been raised of aims and object of Policy, 2011 reflects clearly that the policy was/is meant for attracting the domestic and foreign investors as well as local investors to establish the industry. From time to time, the industrial policy has been framed and brought into force with certain changes to make it more attractive. Industrial Policy has basic approach and purpose of inviting investors to set up the industry so that the financial conditions of the people of the State will improve and also generate opportunity of employment, the industrial policy should be read in such a manner that it would subserve its purpose, advance justice and suppress mischief. It requires a purposive construction while interpreting the policy, it has to be read strictl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... everything is in its place. It is by looking at the definition as a whole in the setting of the entire Act and by reference to what preceded the enactment and the reasons for it that the Court construed the expression Prize Chit in Srinivasa and we find no reason to depart from the Court's construction. 12. In the case of Union of India and Others vs. Wood Papers Limited and Another since reported in AIR 1991 SC 2049, a case dealing with certain tax incentive for promoting industrial development the Apex Court held thus: In fact an exemption provision is like an exception and on normal principle of construction or interpretation of statutes it is construed strictly either because of legislative intention or on economic justification of inequitable burden or progressive approach of fiscal provisions intended to augment State revenue. But once exception or exemption becomes applicable no rule or principle requires it to be construed strictly. Truly speaking liberal and strict construction of an exception provision are to be invoked at different stages of interpreting it. When the question is whether a subject falls in the notification or in the exemption clause then it b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y for the purpose of attracting investors, later on, the Government withdraw such concession, it will be unsustainable on the principle of promissory estoppel, once the promise has been given and, on that basis, the industrial unit has expanded or established a new industry, that cannot be allowed to be withdrawn, has placed reliance on several judgments of the Hon'ble Apex Court. It will be relevant to quote paragraph Nos. 30, 31, 32; 33, 34, 35, 36, 37 and 38 of the aforesaid judgment which reads as follows:-- 30. High Court in its judgment has recorded a finding that the notifications being statutory no plea of estoppel will be against a statutory notification . This finding of the High Court is erroneous. The doctrine of promissory estoppel has been repeatedly applied by this Court to statutory notifications. Reference may be made to Pournami Oil Mills vs. State of Kerala: 1986 (Supp.) SCC 728. In the said case the Government of Kerala by an order dated 11.4.1979 invited small scale units to set up their industries in the State of Kerala and with a view to boost industrialization, exemption from sales tax and purchase tax was extended as a concession for a period of fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tled to that benefit as they had notice of the curtailment in the exemption before they came to set up their industries. [Emphasis supplied] 31. This decision was followed by a three-Judge Bench in the case of State of Bihar vs. Usha Martin Industries Ltd. 1987 (Supp.) SCC 710 where it was stated that the matter stands concluded by the decision in Pournami Oils Mill's case (supra). In Shri Bakul Oil Industries vs. State of Gujarat: (1987) 1 SCC 31, it was observed in para 11: 11. ...The exemption granted by the Government, as already stated, was only by way of concession for encouraging entrepreneurs to start industries in rural and undeveloped areas and as such it was always open to the State Government to withdraw or revoke the concession. We must, however, observe that the power of revocation or withdrawal would be subject to one limitation viz. the power cannot be exercised in violation of the rule of Promissory Estoppel. In other words, the Government can withdraw an exemption granted by it earlier if such withdrawal could be done without offending the rule of Promissory Estoppel and depriving an industry entitled to claim exemption from payment of tax under the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions thinking that they would be assured of at least three years' period guaranteeing rebate of 10% on the total bill of electricity to be consumed by them as infancy benefit so that they could effectively compete with the old industries operating in the field and their products could effectively compete with their products. On these well-established facts the Board can certainly be pinned down to its promise on the doctrine of promissory estoppel. [Emphasis supplied] 33. In a recent judgment in the case of Mahabir Vegetable Oils (P) Ltd. vs. State of Haryana (2006) 3 SCC 620, this Court in para 25 observed that it is beyond any cavil that the doctrine of promissory estoppel operates even in the legislative field . This was in connection with a statutory notification under the Haryana General Sales Tax Act. 34. In Kasinka Trading's case (supra) and Rom Industries vs. State of Jammu Kashmir, (2005) 7 SCC 348 on which reliance has been placed by the learned Counsel for the respondent do not disturb the settled position in law that where a right has already accrued, for instance, the right to exemption of tax for a fixed period and the conditions for that exemptio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of giving incentive. Both these cases therefore cannot advance the case of the appellant and are distinguishable on facts because the exemption notification under Section 25 of the Act which was issued in this case did not hold out any incentive for setting up of any industry to use PVC resins and on the other hand had been issued in exercise of the statutory powers, in public interest and subsequently withdrawn in exercise of the same powers again in public interest. In our opinion, no justifiable prejudice was caused to the appellants in the absence of any unequivocal promise by the Government not to act and review its policy even if the necessity warranted and the public interest so demanded. Thus, in the facts and circumstances of these cases, the appellants cannot invoke the doctrine of promissory estoppel to question the withdrawal notification issued under Section 25 of the and Act. [Emphasis supplied] 37. The decision in Kasinka Trading (supra) has been distinguished in the later decision by this Court in State of Punjab vs. Nestle India Ltd.: [2004] 269 ITR 97(SC)], on the ground of the inherent nature of an exemption notification issued under Section 25 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terms of Article 14 is that a change in policy must be made fairly and should not give the impression that it was so done arbitrarily or by any ulterior criteria. The wide sweep of Article 14 and the requirement of every State action qualifying for its validity on this touchstone irrespective of the field of activity of the State is an accepted tenet. The basic requirement of Article 14 is fairness in action by the State, and non-arbitrariness in essence and substance is the heart beat of fair play. Actions are amenable, in the panorama of judicial review only to the extent that the State must act validly for discernible reasons, not whimsically for any ulterior purpose. The meaning and true import and concept of arbitrariness is more easily visualized than precisely defined. A question whether the impugned action is arbitrary or not is to be ultimately answered on the facts and circumstances of a given case. A basic and obvious test to apply in such cases is to see whether there is any discernible principle emerging from the impugned action and if so. does it really satisfy the test of reasonableness. [Emphasis supplied] 15. This issue has also been earlier gone into by thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Department, Law Department has given its opinion that once the industry is established during the period mentioned in the Industrial Policy, 2011, they would be given the benefit of incentive for the period mentioned therein and it cannot be curtailed in any manner in mid of its operation, it will not be dependent on the life of the policy but, the Financial Department has turned turtle, has arrived to a finding that incentive will terminate on the day the life of the policy gets terminated. If the view of the Finance Department is accepted, it will lead to an absurd situation. Example can be given in a manner, if the life of the policy comes to an end on 30.6.2016, the Industrial Establishment establishes its industry or do the diversification of the existing industry on the basis of the industrial policy on 30.6.2014 then, in no circumstances, the benefit can be extended to five years as the life of the policy comes just after two years, now take another example of the policy wherein it has been mentioned that certain industry would be given the tax exemption for ten years, in such a situation, if the concession is interpreted and treated to have only the life of five years then ..... X X X X Extracts X X X X X X X X Extracts X X X X
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