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TMI Blog2020 (8) TMI 606X X X X Extracts X X X X X X X X Extracts X X X X ..... on thereof admittedly postulates that incentive would not be payable on the amount imposed as penalty and the difference of amount between tax assessed and accepted under the Central Sales Tax/Bihar Value Added Tax Act, 2005 and Bihar Entry Tax Act, meaning thereby that the incentive would be payable on the rest of the amount under the aforesaid three types of taxes i.e. Central Sales Tax, Bihar Value Added Tax and the Bihar Entry Tax. Moreover, Annexure-III to the Industrial Incentive Policy, 2006 contains the format of pass-book to be maintained for the purposes of claiming the incentive under clause-2(vi) and the same takes into consideration the amount of tax admitted under the Bihar Value Added Tax Act as also the amount paid against the amount of tax admitted under the Bihar Entry Tax Act, hence, there is nothing left for either speculation or determination or adjudication and the plain meaning thereof would definitely have only one connotation i.e. subsidy/ incentive would not only be available on VAT but also on Entry Tax. It is amply demonstrable that the State Government has envisaged to give subsidy/incentive, under the Industrial Incentive Policy, 2006, qua the amou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y way of subsidy in terms of the Industrial Incentive Policy, 2006 and immediately transfer the funds on the head of subsidy towards admitted tax paid on account of Bihar VAT Act, Bihar Entry Tax Act as also the Central Sales Tax Act to the Sales Tax Department, in order to enable it to disburse the amount of such subsidy to the petitioner herein. The brief facts of the case according to the petitioner is that it is engaged in the business of manufacturing M.S. Billets TMT Steel Bars Industrial Oxygen Gas. The petitioner is stated to have commenced commercial production at Bihta Unit with effect from 11.01.2009, as per the certificate issued by the Director, Technical Department, Bihar, Patna vide letter dated 22.10.2009. It is the further case of the petitioner that the respondent State of Bihar had announced Industrial Policy, 2006 wherein various incentives were promised for the purposes of attracting investment in the State of Bihar. The said Industrial Incentive Policy, 2006 was published in the official gazette of the State Government on 25.07.2006. The learned senior counsel appearing for the petitioner has drawn the attention of this Court to the relevant clauses of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Programme. Such intimation should be accompanied by detailed expansion / modernisation / diversification proposal giving the specific period of proposed additional investment. Annexure-III FORMAT OF PASSBOOK AS DETAILED IN PARA 2(VI) OF THE INDUSTRIAL INCENTIVE POLICY 2006. 1 2 3 4 5 6 7 8 Sl.No. Month Amount of Tax admitted under VATA*/CSTA*/BETA* Amount paid against the amount admitted under BVATA*/CS TA*/BETA* Main/Subsidiary headings under which admitted amount deposited Challan no. date with Name of Treasury Name Designation of certifying officer Signature with date seal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taxes admitted under the Bihar VAT Act, Central Sales Tax Act, 1956 and Bihar Entry Tax Act, 1993. Similarly, in Column 4 of the Annexure-III to the Industrial Incentive Policy, 2006, where the amount paid against the amount of admitted tax has to be specified, again all three types of taxes i.e Bihar VAT, Central Sales Tax and Bihar Entry Tax Act have been mentioned, which has been further clarified, just after the table by putting an asterisk mark before the said three types of taxes. Thus, it is stated that the policy document becomes complete only by taking into consideration all the Annexures in the policy document. It is further stated that Annexure-I of the Policy document lays down the definitions for the purposes of the policy whereas Annexure-II contains a list of Industries which the Government has deprived from getting any benefit under the Industrial Policy. Thus, it becomes further evident that without consideration of the aforesaid three Annexures, the policy document will not only become vague but shall also be rendered non-functional and non-workable, thus every provision and every part of the policy document are equally important and mandatory for drawing any conc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d senior counsel for the petitioner has further contended that the Principal Secretary-cum-Commissioner of Commercial Taxes, Bihar, Patna vide Memo No. 188 dated 31.09.2007 has unilaterally changed the format of the pass-book, contained in Annexure-III to the Industrial Incentive Policy, 2006, as notified in the gazette on 25.07.2006, and has excluded the Entry Tax component, without the necessary approval of the Council of Ministers, Bihar, as also without the same being published in the official gazette. In this regard, the learned senior counsel has drawn the attention of this Court to the various file notings made by the government officials as also the concerned Minister, who have raised a question as to under what authority and under what circumstances, the said letter dated 31.09.2007 was issued without the approval of the cabinet. The learned senior counsel for the petitioner has submitted that the term Bihar VAT or admitted VAT has been taken from the provisions of the Bihar VAT Act, 2005 and the rules framed thereunder. Since the entry tax legislation had come into force earlier to the Bihar VAT Act, 2005, therefore, when the Bihar VAT Act, 2005 was drafted, it had ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as submitted that in clear terms it has been provided that the Industrial Incentive Policy shall be applicable to those industrial units which would go into production from 1.4.1993 to 31.3.1998. According to the learned Advocate General, this was conclusive and permitted no argument. On the other hand, counsel for the petitioners submitted that the Preamble is not always determinative in the matter of interpretation. The language of the provision must be looked at, and if the language employed is clear and unambiguous, it must be given effect, notwithstanding the fact that there is something in the Preamble which may be inconsistent with the substantive provision in a legislation. Counsel relied upon the decisions of the Supreme Court, reported in AIR 1961 SC 954 (M/s Burrakur Coal Co. Ltd. v. Union of India) and AIR 1970 SC 540 (Tribhuban Parkash vs. Union of India). In my view, it is not possible to accept the rival contentions in a case of this nature where the Court is concerned with an Industrial Incentive Policy. Such policy decisions are not drafted with the same skill as is required while enacting a legislation. The precision and accuracy expected in a legislation is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .4.93 shall be entitled to this facility for a period of seven years from 1.4.93 . Obviously, therefore, the Policy makes a distinction between new industrial units covered by sub-paragraph (a) and old industrial units covered by sub-paragraph (b). It cannot, therefore, be said that the old industrial units were not entitled to this facility at all. In fact, even the impugned Notification dated 4.4.1994 provides that the facility of sales tax exemption on the purchase of raw material shall be extended to such old industrial units, but lays down a condition that the facility shall be made available only if such old industrial units had not availed of incentive under any earlier Industrial Incentive Policy. It is to this condition that the petitioners object. It is their submission that the Policy does not lay down any such condition and, therefore, the said policy could not be modified by the issuance of the Notification dated 4.4.1994. The Commissioner was bound to issue a notification with a view to give effect to the policy decision of the Government, and not to deprive the old industrial units of the limited facility granted under the new scheme under the Policy of 1993. 14 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the old policy or under the new policy package for package, and could not select a few benefits here and a few benefits there. 16. Reading the Industrial Incentive Policy, 1993 asa whole, it appears to me that the industrial policy formulated by the Government was essentially meant for the industrial units going into production between the period 1.4.1993 and 31.3.1998. With regard to industrial units which had come into production before 1.4.1993, their entitlement to incentive under the earlier policy was protected. With regard to industrial units which were established before 1.4.1993, but came into production in or after 1.4.1993, option was given to them to elect to be governed by the old policy or the new policy package for package. Under the Policy of 1993 the industrial units coming into production between 1.4.1993 and 31.3.1998 were entitled to several benefits, such as subsidy of different types, financial assistance in many matters as also facility of sales tax exemption and deferment on finished products. These facilities/benefits were not extended to other units. However, in paragraph 10.4 where the policy dealt with the grant of sales tax exemption on the purcha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... could lay down by issuing such order or notification could be conditions which were essentially to be imposed with a view to keep a check on the persons availing of the benefits and to ensure that the facility was not being misused. They could require the industrial units to furnish such particulars about their purchases and production as was considered necessary, and for that purpose could have prescribed forms and declarations as was considered necessary with a view to give effect to the policy decision and to avoid misuse of facilities/benefits conferred thereby. Such conditions could not be imposed which in effect amended the policy decision itself by depriving industrial units of the benefits/facilities granted by the policy decision. The petitioners on the basis of the Industrial Incentive Policy of 1993 have made purchases of raw materials in the State of Bihar with a view to avail of such facility. Counsel for the petitioners explained that otherwise it could have been beneficial for such industrial units to make purchases outside the State of Bihar so as to avoid the incidence of local taxes. The petitioners have also asserted, which is not denied by the State, that they ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 77; 15.00 crores on 1.4.1993, and who had not availed of any facility/benefit under the earlier incentive policy. It is further declared that the petitioners are entitled to the facility of sales tax exemption on the purchase of raw material under paragraph 10.4(i)(b) of the Industrial Incentive Policy, 1993. II. (1999)1 SCC 31 (State of Bihar ors. Vs. Suprabhat Steel Limited Ors), paragraph nos. 5 to 7 whereof are reproduced herein below:- 5. We have carefully considered both the contentions raised by the learned counsel for the appellant, but we do not find force in any one of them. It is no doubt true that Clause (a) of the Policy early indicates that the policy would be applicable to those industrial units which would come into production from 1.4.93 to 31.3.98. But in enumerating the benefits which would be available under the Policy, the policy makers have indicated different heads of the benefit dealing with subsidy, financial assistance, exemption in sales tax/deferment facility so on and so forth. Clause (10) deals with facility of sales tax deferment. Clause 10.4 deals with the heading 'Sales tax exemption on the purchase of raw material'. It would ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3.98, but so far as sales tax exemption on the purchase of raw material is concerned which is provided under Clause 10.4, even though the old industrial units have started production prior to 1.4.93, but whose investment on plant and machinery do not exceed ₹ 15 Crores on 1.4.93 would be entitled to the facility for a period of seven years from 1.4.93. We are entirely in agreement with the conclusion arrived at 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 issuance of notification by the State Government in exercise of power under Section 7 of the Bihar Finance Act, it is true that issuance of such notifications entitles the industrial units to avail of the incentives and benefits declared by the State Government in its own industrial incentive policy. But in exercise of such power it would not be permissible for the State Government to deny any benefit which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. Ltd. Vs. U.P. State Electricity Board, 1997 (7) SCC 251, held: 10. It is now well settled by a series of decisions of this Court that the State authorities as well as its limbs like the Board covered by the sweep of Article 12 of the Constitution of India being treated as 'State' within the meaning of the said Article, can be made subject to the equitable doctrine of promissory estoppel in cases where because of their representation the party claiming estoppel has changed its position and if such an estoppel does not fly in the face of any statutory prohibition, absence of power and authority of the promisor and is otherwise not opposed to public interest, and also when equity in favour of the promisee does not outweigh equity in favour of the promisor entitling the latter to legally get out of the promise. * * * 24. ..We, therefore, agree with the that by these notifications the Board had clearly held out a promise to these new industries and as these new industries had admittedly got established in the region where the Board was operating, acting on such promise, the same in equity would bind the Board. Such a promise was not contrary to any statutory ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een itself held to be unconstitutional in an earlier case as violative of Articles 301 and 304 of the Constitution of India and, therefore, could not form the basis of any right. The observation made in para 8 of that judgment have to be read in that context. Besides, the State Government in that case had no option except to withdraw the notification. It is so observed in that judgment in para 9: The State Government, in view of the decision of this Court had no other option but to place edible oils in the Negative List. The questions whether Shree Mahavir Oil Mills, 1996 (11) SCC 39 has been rightly decided or not and whether it is in conflict with the principles enunciated in Video Electronics, 1990 (3) SCC 87 , are moot. But while the decision stands, the State Government is bound to comply with it. 38. The principle underlying legitimate expectation which is based on Article 14 and the rule of fairness has been re-stated by this Court in Bannari Amman Sugars Ltd. Vs. Commercial Tax Officer, 2005 (1) SCC 625 . It was observed in paras 8 9: 8. A person may have a 'legitimate expectation' of being treated in a certain way by an administrative author ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ically 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. IV. (2015) 9 SCC 132 (Devi Multiplex Anr. vs. The State of Gajarat Ors.), paragraphs no. 20, 25 and 26 whereof are reproduced herein below:- 20. The law on the subject of Promissory Estoppel was recapitulated and succinctly dealt with by this Court in State of Punjab Vs. Nestle India Ltd.[1] It found the foundation of the doctrine laid in the decision in Collector of Bombay Vs. Municipal Corporation of the City of Bombay[2] , the principle built upon in Union of India Vs. Anglo Afghan Agencies[3] and the superstructure of the doctrine, with its pre-conditions, strengths and limitations outlined in the decision in Motilal Padampat Sugar Mills Co. Ltd. Vs. State of UP[4]. This Court then dealt with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inistrative or statutory. To put it in the words of the Court: The law may, therefore, now be taken to be settled as a result of this decision, that where the Government makes a promise knowing or intending that it would be acted on by the promisee and, in fact, the promisee, acting in reliance on it, alters his position, the Government would be held bound by the promise and the promise would be enforceable against the Government at the instance of the promisee, notwithstanding that there is no consideration for the promise and the promise is not recorded in the form of a formal contract as required by Article 299 of the Constitution. * * * [E]quity will, in a given case where justice and fairness demand, prevent a person from insisting on strict legal rights, even where they arise, not under any contract, but on his own title deeds or under statute. (SCC p.425, para 8) * * * Whatever be the nature of the function which the Government is discharging, the Government is subject to the rule of promissory estoppel [pic]and if the essential ingredients of this rule are satisfied, the Government can be compelled to carry out the promise made by it. (SCC p. 453, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y to carry out a representation or promise which is contrary to law or which was outside the authority or power of the officer of the Government or of the public authority to make. We may also point out that the doctrine of promissory estoppel being an equitable doctrine, it must yield when the equity so requires; if it can be shown by the Government or public authority that having regard to the facts as they have transpired, it would be inequitable to hold the Government or public authority to the promise or representation made by it, the Court would not raise an equity in favour [pic]of the person to whom the promise or representation is made and enforce the promise or representation against the Government or public authority. 25.The record indicates that the progress of the project of the appellants was greatly hampered as a result of major earth quake in the State on 26.01.2001 and large scale communal riots in the State in February 2002. The State Level Committee was satisfied that the commencement and continuation of the project was so affected as a result of these major difficulties and had granted initial extension of six months but the appellants had benefit of only ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the account of the government for a period of 10 years. Hence, it is clear that the Industrial Incentive Policy, 2006 envisages reimbursement of only VAT and Luxury Tax and no other tax. It is further submitted that Annexure-III of the Industrial Incentive Policy, 2006 calls for the details of CST and Entry Tax apart from VAT tax, which was done with a purpose i.e. to ascertain the exact amount of VAT paid by the dealers and the said Annexure-III was later on amended in order to avoid any ambiguity. It has been further submitted that the claim of the petitioner on the basis of pass-book for reimbursement of the Entry Tax amount paid by it is not worth consideration inasmuch as the prescribed format of pass-book is only an annexure to the policy. Thus it is the case of the respondents that the Industrial Incentive Policy, 2006 envisages reimbursement of no other tax except VAT and luxury tax. It has been further submitted that the 2006 Industrial Policy was reviewed and the State Government came out with the 2011 Industrial Policy, wherein grant of subsidy/incentive was also extended on the payment of Entry Tax, however, there is nothing to suggest that the said subsidy/incentive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... add that internal notings are not meant for outside exposure. Notings in the file culminate into an executable order, affecting the rights of the parties, only when it reaches the final decision making authority in the department; gets his approval and the final order is communicated to the person concerned. 15. In Bachhittar Singh v. The State of Punjab AIR 1963 SC 395 , a Constitution Bench of this Court had the occasion to consider the effect of an order passed by a Minister on a file, which order was not communicated to the person concerned. Referring to the Article 166(1) of the Constitution, the Court held that order of the Minister could not amount to an order by the State Government unless it was expressed in the name of the Rajpramukh, as required by the said Article and was then communicated to the party concerned. The court observed that business of State is a complicated one and has necessarily to be conducted through the agency of a large number of officials and authorities. Before an action is taken by the authority concerned in the name of the Rajpramukh, which formality is a constitutional necessity, nothing done would amount to an order creating rights or cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a) in sharp contradistinction of Clause (c). The learned counsel for the respondent-State has also relied on a judgment rendered by the Hon ble Apex Court in the case of Sarva Shramik Sanghatana (KV) vs. The State of Maharashtra Ors., reported in (2008) 1 SCC 494 , paragraphs no. 14, 15, 16 17 whereof are reproduced herein below:- 14. On the subject of precedents Lord Halsbury, L.C., said in Quinn v. Leathem, 1901 AC 495: Before discussing the case of Allen v. Flood (1898) AC 1 and what was decided therein, there are two observations of a general character which I wish to make, and one is to repeat what I have very often said before, that every judgment must be read as applicable to the particular facts proved, or assumed to be proved, since the generality of the expressions which may be found there are not intended to be expositions of the whole law, but are governed and qualified by the particular facts of the case in which such expressions are to be found. The other is that a case is only an authority for what it actually decides. I entirely deny that it can be quoted for a proposition that may seem to follow logically from it. Such a mode of reasoning ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to be treated as if it was a statute definition; it will require qualification in new circumstances. Megarry, J. in (1971)1 WLR 1062 observed: One must not, of course, construe even a reserved judgment of Russell L. J. as if it were an Act of Parliament. And, in Herrington v. British Railways Board (1972 (2) WLR 537) Lord Morris said: There is always peril in treating the words of a speech or judgment as though they are words in a legislative enactment, and it is to be remembered that judicial utterances are made in the setting of the facts of a particular case. 11. Circumstantial flexibility, one additional or different fact may make a world of difference between conclusions in two cases. Disposal of cases by blindly placing reliance on a decision is not proper. 12. The following words of Lord Denning in the matter of applying precedents have become locus classicus: Each case depends on its own facts and a close similarity between one case and another is not enough because even a single significant detail may alter the entire aspect, in deciding such cases, one should avoid the temptation to decide cases (as said by Cardozo, J.) by matching the colou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no provision in the entire Industrial Incentive Policy, 2006 which postulates exclusion of the amount of Entry Tax from the term admitted VAT , nonetheless, the Policy has specifically excluded the amount of penalty and the amount of difference between the admitted tax and assessed tax under the Central Sales Tax, Bihar Value Added Tax, 2005 and the Bihar Entry Tax. Thus, it is amply demonstrable that the State Government has envisaged to give subsidy/incentive, under the Industrial Incentive Policy, 2006, qua the amount of admitted VAT, which apparently also includes Bihar Entry Tax. This Court is of the view that merely the heading of a provision/clause cannot be relied upon since the same is not always determinative in the matter of interpretation of the policy and the language of the provision coupled with the policy as a whole must be looked into and if the language employed is clear, unambiguous and unequivocal, it must be given effect to, notwithstanding the fact that certain portion of the heading may be inconsistent with the substantive provision. Thus, upon a wholesome reading of the entire Industrial Incentive Policy, 2006 along with its Annexures, this court finds t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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