9911796707
TMI Blog2008 (3) TMI 779X X X X Extracts X X X X X X X X Extracts X X X X ..... depriving the benefit of exemption granted to the petitioner company from August 1, 2001 whether in that case such amendment is violative of Article 14 and Article 19 of the Constitution of India. Facts of the case briefly are as follows: - The company in 1999 set up a small scale industrial unit at Siliguri for preparing the blended and packeted tea and was duly registered as a small scale industrial unit in the Directorate for Small Scale Industries. First sale of goods from the company s unit was made on May 18, 1999. It is to be noted that at that point of time blending of tea was included within the definition of manufacture as defined in Section 2(17) of the 1994 Act. Therefore, at that point of time, the plaintiff became entitled to tax holidays for the prescribed period as provided in Section 39 of the 1994 Act. Accordingly, on July 29, 1999 the Petitioner Company was granted a certificate of eligibility for enjoying the tax holidays for seven years from the date of first sale of the manufactured product i.e. on May 18, 1999. Thereby, the Petitioner Company was exempted from payment of tax on sell of goods manufactured in its industrial unit in accordance with Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ia also contended that the Learned Tribunal did not appreciate the arguments and held discussion on issues not relevant in the context of the aforesaid submissions. He further pointed out that at no point of time the petitioners claim was based on doctrine of promissory estoppel or that the said doctrine applied to specific legislative enactments. There was no such legislative provision abridging or restricting the exemption that accrued by setting up the new unit. In case, it was held that there was any such legislative enactment, then the validity of such law could only be tested on any of the constitutional grounds and that could be done only by the Full Bench of the Learned Tribunal. He further submitted that the petitioners first contention namely, that the merely the amendment of definition of manufacture without any specific provision like Section 39(3) or 39(4) of the said Act could not result in denial of the exemption being enjoyed for the entire prescribed period. Had it been accepted then the matter could be heard by the Hon'ble Division Bench and in that event, the question of vires was not required to be gone into. He further submitted that at no point of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be applicable to the other units which are set up after the said amended definition of manufacture or manufacturing process have come into force. But the petitioner should be entitled to the benefit as was available at the time of obtaining first registration of eligibility certificate. In the case of The State of West Bengal Others Vs. N.S.Text Prints Pvt. Ltd. reported in (2006) 47 STA 161 the Hon'ble Division Bench followed the earlier judgment of this High Court in Health Guard Laboratories Vs. The assistant Commissioner, Commercial Taxes, Special Cell Ors. ( an unreported decision of this Hon'ble Court in WPTT 2 of 1999 dated 12th May, 1999 ). The Hon'ble Division Bench also considered several decisions of the Hon'ble Supreme Court including Kasinka Trading Vs. Union of India reported in (1995) 1 SCC 274, Pournami Oil Mills Vs. State of Kerala reported in AIR 1987 SC 590 and further Bakul Cashew Co. Ors. Vs. Sales Tax Officer, Quilon Anr. reported in (1986) 2 SCC 365 which were considered and the Hon'ble Division Bench held as follows: - In Pournami Oil Mills (AIR 1987 SC 590) (Supra), it was the incentive to set up new indust ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ile considering such question in the case of Health Guard Laboratories (supra) the Court held that the exemption so granted created a vested right and it could not be taken away by reason of the subsequent amendment. We may beneficially quote the expression used in the said decision which is as follows: - We see no reason to differ from the view expressed by the Tribunal. It is a well established principle of statutory construction that every statute is prima facie prospective unless it is expressly or by necessary implication made to have retrospective operation. This Rule is specially applicable where the object of the statute is to affect vested rights (see C.P.Singh s Principle of Statutory Interpretation, 7th Edition, page 367). On the other hand a new enactment affecting matters of procedure only are presumed to be retrospective unless such a construction is contextually inadmissible (at page 370). The right in the petitioner crystalised when, according to Rule 100, the benefit of tax exemption was applied for the petitioner. Once that right had vested it could neither be taken away nor affected by any subsequent amendment of the legislation. It was a fortuitous circumsta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid observations of the Learned Tribunal were wholly unjust and were made without appreciating the ratio of the said decisions. Mr. Bajoria further pointed out that Kasinka Trading case (supra) was considered by the Hon'ble Supreme Court in the latest decision of MRF Ltd. Vs. Assistant Commissioner (Assessment) Sales Tax reported in (2006) 148 STC 225 and in the said decision the Hon'ble Supreme Court noted the decisions in the case of Pournami Oil Mills (supra) and in the case of Bakul Oil Industries (supra) and further quoted with the approval an extract from the decision of Pournami Oil Mills (supra) which reproduced hereunder:- Such exemption would continue for the full period of five years from the date they started production. New industries set up after October 21, 1980, obviously would not be entitled to that benefit as they had notice of the curtailment in the exemption before they came to set up their industries. Mr. Bajoria further contended that the Hon'ble Supreme Court observed in the said decision as follows:- Kasinka Trading s case (1995) 1 SCC 274 and Rom Industries Ltd. v. State of Jammu and Kashmir (2005) 7 SCC 348, on which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inspector was a diploma in Automobile Engineering or Mechanical Engineering. Later, amendment was made to the Rules whereby diploma in Mechanical Engineering was omitted as one of the qualifications and those holding diploma in Mechanical Engineering who had applied earlier and had been called for interview were sought to be excluded. The Hon'ble Supreme Court held that since the amending rule did not contain any provision enforcing the amended rule with retrospective effect it could not take away or impair the right of the candidates holding diploma in mechanical engineering. He further contended that the short issue involved is as to the nature of the right that accrued to the petitioner under Section 39(1) of the Act on the setting up of the new small scale industrial unit. It is well settled by several decisions of the Division Bench of this Hon'ble Court in the cases of Health Guard Laboratories (Supra), Prasad Forms (Supra) and M.S.Text Prints (Supra) which are all based on the decisions of the Hon'ble Supreme Court and the latest decision of the Supreme Court in the case of MRF Ltd. (supra) that the right gets crystallized and accrues at the time of setting up ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... endment of eligibility criteria for entitlement to such exemption in future cannot be construed as one seeking to supersede, modify or affect the right which had already accrued under the earlier qualifying criteria for such exemption. Mr. Kar, Learned Advocate appearing on behalf of the respondent nos. 1 to 3 contended that the basic contention of the appellant in this appeal is that by reason of issuance of the Registration Certificate the petitioner has acquired a vested right and since the petitioner has altered its position on the basis of the representation of the State and or its promise, the principle of promissory estoppel would operate against the State, from altering the Registration Certificate and or withdrawing the benefit that the petitioner was enjoying. It is the contention of the appellant that by dint of the registration certificate, the appellant is entitled to enjoy the benefit for a period of 7 years and the State of West Bengal cannot withdraw the said benefit even by amendment of the statutory provisions. Before the Tribunal the petitioner although challenged the vires of the said provision being amendment of Section 2(17) of the West Bengal Sales Tax Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate through subordinate legislation and the State was held to its promise. He also submitted that in all the cases, cited by and/or on behalf of the appellant, the Government made a representation either by way subordinate legislation i.e., issuance of notification etc., or by way of entering into agreement, Memorandum of Understanding etc. This is also apparent by reason of the fact that all these judgments have followed the two judgments in Bakul Cashew Company (supra) and Pournami Oil Mills (supra) case. In both the case the promise was made by the Government in writing either through subordinate legislation or otherwise. In the instant case, however, it is not a case of withdrawal of benefit but by reason of amendment, the petitioner does not continue as a manufacturer but became a trader. He also submitted that where a benefit is derived by reason of a legislation and not by any subordinate legislation or agreement etc. question of Promissory Estoppel or vested right does not arise. In other words, it is submitted that the principles of Promissory Estoppel or vested right does not apply against a statute. This principle is well settled and will appear from the decisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claim for promissory estoppel. He further contended that there remains no infirmity in the judgment of the Learned Taxation Tribunal. The Learned Taxation Tribunal has followed the law laid down by the Hon'ble Supreme Court in passing its judgment and other which is impugned in this proceedings. It is humbly submitted that a writ of mandamus cannot be issued directing the Government to act contrary to law. So long the amended provision of Section 2(17) of the Sales Tax Act remains in the Statute, no one can act or claim benefit contrary to the statutory provision. He also relied upon a decision reported in (1994) 2 SCC 718 (LIC Vs. Asha Ramchhandra Ambekar) and in this case an application for compassionate appointment made by the respondent was rejected by the appellant, following statutory provisions. The High Court, however, directed the appellant to give him such appointment. On appeal, the appeal was allowed holding that Courts cannot order appointment on compassionate grounds de hors the provisions of statutory regulations and instructions and the High Court should not have straightaway directed the appellant to give the respondent compassionate appointment. It was furt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t should in writ jurisdiction re-appreciate the evidence as an appeal Court. Accordingly, he submitted that the application should be allowed. After considering the facts and circumstances of this case and after analysing the decisions cited before us it appears to us that the point which has been considered to be urgent by Mr. Bajoria that the amendment had caused retrospective affectation as it seeks to take away a right which accrued prior to the date of the amendment. We have also found from the amendment that the definition of manufacture is prospective and operational with effect from the date of the amendment. We have carefully considered the judgments cited at the Bar. It appears to us that by the amendment benefits already enjoyed by the petitioners were not taken away by giving retrospective effect. It is only the case that an existing continuing right on the basis of the amended Rule has been taken away from the date of the amendment came into effect. We have also considered the judgments of the Hon'ble Supreme Court which were referred to in the Pacific Health Care Pvt. Ltd. and Another Vs. State of West Bengal and Others (reported in (2001) 123 STC 305) w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was decided on the basis if the principles of promissory estoppel and it is also to be noted that the benefits which was granted and subsequently withdrawn by administrative notification and the power of the Legislature was not in question. The question of retrospective withdrawal of exemption was considered by the Hon'ble Supreme Court in State of Punjab Vs. Nestle India Ltd. (reported in (2004) 6 SCC 465). The Hon'ble Apex Court applied the principles of promissory estoppel and upheld the judgment of the Punjab Haryana High Court and directed the State Government to act on the basis of the promise and to grant exemption as promised. In Kasinka Trading (supra) the Hon'ble Supreme Court redefined the principles of promissory estoppel and further pointed out the limitations on application of the said principles and held that an exemption granted in public interest can also be withdrawn in public interest even before the expiry of the period. The Hon'ble Apex Court held as follows :- The withdrawal of exemption in public interest is a matter of policy and the Courts would not bind the Government to its policy decisions for all times to come, irrespectiv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wer to rescind, therefore, such power to rescind is also in the nature of legislative power and it is well settled by a catena of decisions that Rules of estoppel will not be ordinarily be available against exercise of legislative or sovereign powers. The Hon'ble Supreme Court in Sales Tax Officer Another Vs. M/s. Shree Durga Oil Mills Another (reported in AIR 1998 SC 591) held as follows : - Court will not interfere with any action taken by the Government in public interest. Public interest must override any consideration of private loss or gain. After analyzing the decision of the Learned Tribunal it appears to us that the Learned Tribunal correctly held that as an exemption granted by the Legislature or by the Executive is in the nature of concession or an exception to the obligation to pay tax, it is also subject to the right of the Legislature to withdraw such concession by appropriate statutory amendments. Such exemptions cannot amount to an irrevocable vested right since exemptions are liable to be withdrawn or modified at any point of time. In our considered opinion such observation of the Learned Tribunal cannot call for any interference by us since in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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