Full Judgment Text
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PETITIONER:
ARVIND INDUSTRIES AND OTHER
Vs.
RESPONDENT:
THE STATE OF GUJARAT AND OTHERS
DATE OF JUDGMENT23/08/1995
BENCH:
SEN, S.C. (J)
BENCH:
SEN, S.C. (J)
AHMADI A.M. (CJ)
PARIPOORNAN, K.S.(J)
CITATION:
1995 AIR 2477 1995 SCC (6) 53
JT 1995 (7) 220 1995 SCALE (4)843
ACT:
HEADNOTE:
JUDGMENT:
A N D
CIVIL APPEAL NO.1011 OF 1977
Vijay Oil Mills Co.
Versus
The Assistant Commissioner of Sales Tax and others
J U D G M E N T
SEN, J.
CIVIL APPEAL NO.951 OF 1976
The appellants are manufactures of edible oil and have
their own solvent extraction plants at Junagadh. The case of
the appellants is that on or about September 9, 1969, a
press note issued by the State Government that New
Industries will be granted exemption from Sales Tax for a
period of five years from the date of commencement of
production. The then Chief Minister as well as the Finance
Minister of the State Government of Gujarat also made
statements on March 3, 1970 on the floor of the Legislative
Assembly that New Industries will be granted exemption from
Sales Tax for a period of five years. The press note has not
been annexed to the petition. Copies of the alleged
statements made by the Chief Minister and the Finance
Minister in the Legislative Assembly have also not been
produced in court.
However, a copy of the Notification dated April 29,
1970, issued under Section 49 (2) of the Gujarat Sales Tax
Act, 1963, has been included in the paper-book. This
Notification contains a recital that the Government of
Gujarat is satisfied that circumstances exist which render
it necessary to take immediate action action to amend the
Gujarat Sales Tax Rules, 1970 and to dispense with the
previous publication thereof. This Notification does not
make any reference to any previous press note or assurance
given by anybody on behalf of the Government. It merely
provides that in exercise of the powers conferred by Section
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86 of the Gujarat Sales Tax Act, 1969, the rules were being
framed to amend the Gujarat Sales Tax Rules, 1970. Rule 42A
was introduced in the Gujrat Sales Tax Rules, 1970, whereby
on fulfilment of certain conditions, a New Industry granted
drawback, set off or refund of the whole or any part of the
tax in respect of the purchase of raw material, processing
materials and machinery or packing materials used in
manufacture of goods for sales. Certain conditions were laid
down which had to be fulfilled before a New Industry could
avail of this benefit of the amended Rule 42A. ’New
Industry’ was defined to mean and include an industry which
has been commissioned at any time during the period from 1st
April, 1970 to 31st March, 1975. One of the conditions laid
down in the Notification was that the assessee had to obtain
an eligibility certificate from the Commissioner of
Industries, Gujarat State, to the effect that the new
industry had been commissioned in an area beyond 24
kilometres from the municipal limits of cities of Ahmedabad
and Baroda and 16 kilometres from the municipal limits of
Surat, Bhavnagar, Rajkot and Jamnagar. A new industry would
enjoy the benefit of this notification for a period of five
years from the date of commissioning of the industry as
stated in the eligibility certificate.
On 11th November, 1970, a further notification was
issued amending the earlier notification dated 29th April,
1970. It was specifically provided that ’New Industry’ will
not include industries engaged in, inter alia:-
(12) decoraticating expelling, crushing, roasting,
paching, frying of oil seeds and colouring, decolouring
scenting of oil;
(13) solvent extraction of oil from oil-seeds and oil-
cakes.
The contention made on behalf of the appellants is that
the solvent extraction plant at Junagadh was set up by the
appellant on the strength of assurance made out by the
Government in the press statement, the speeches made by the
Chief Minister and the Finance Minister on the floor of the
Legislative Assembly, and also the Notification issued on
11.11.1970. The appellant would not have set up this
industry at Junagadh but for the aforesaid assurances given
by the Government. It is not open to the Government now to
withdraw the benefits of this Notification by a subsequent
Notification issued on 17.7.1971. Since the appellant had
changed his position to his detriment on the strength of the
earlier assurance held out by the Government, the appellant
is entitled to continue to enjoy the benefits given by
Notification dated 11th November, 1970 for a period of five
years from the date of commissioning of its plant. The
Government was estopped from withdrawing the benefits by
removing the appellant from the list of eligible industries
by the subsequent Notification dated 17th July, 1971.
Elaborate arguments were advanced as to the scope and
effect of the doctrine of promissory estoppel and under what
circumstances could this doctrine be invoked. It was argued
that the two Notifications issued by the Government were not
in exercise of legislative power delegated by the Statute.
The Government could not unilaterally withdraw the benefits
conferred by the earlier Notification from Industries which
had stared production after the Notification dated 11th
November, 1970 came into force. Having regard to the facts
of the case, it is not necessary to go into this
controversy. The date of commencement of appellants
industry, according to the eligibility certificate obtained
by the appellant from the Commissioner of Industries, is 3rd
December, 1970. It is difficult to believe that the a
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pellant, after the exemption Notification dated 11th
November, 1970 was issued and on the basis of it, set up an
oil extraction plant which commenced production within three
weeks’ time on 3rd December, 1970. No particulars have been
given as to when the land was purchased, or when the plant
and machinery for the industry were procured.
Moreover, the Notification dated 11.11.1970 does not
contain any promise that the benefits given to new
Industries will not be altered from time to time. The
Government is entitled to grant exemption to industries
having regard to the industrial policy of the Government.
The Government is equally free to modify its industrial
policy and grant, withdraw or modify fiscal benefits from
time to time. There is nothing in the notification dated
11.11.1970 by which any assurance was held out to any
industry. This was an usual Government Notification relating
to purchase and sales tax, granting reliefs to certain
industries on fulfilment of the conditions laid in the
notification.
Even otherwise, the Notification dated 11th November,
1970 grants exemption to New Industry which ’has been
commissioned on or after 1st April, 1970, in the areas
beyond 24 kilometres from the Municipal limits of cities of
Ahmedabad and Baroda and 16 kilometres from the Municipal
limit of Surat, Bhavnagar, Rajkot and Jamnagar. In other
words, the Government wanted to encourage industries set up
beyond the specified distance from the municipal limits of
the aforesaid towns. This cannot be construed to mean that
the Government was contamplating to encourage industries set
up in other cities of Gujarat which were far away from
Ahmedabad, Baroda, Surat, Bhavnagar, Rajkot and Jamnagar.
The appellant had set up its industry at Junagadh, which is
a large city. It is doubtful whether such an industry was at
all entitled to any benefit of the Notification dated 11th
November, 1970. However, we need not express any final
opinion on this aspect of the case, because no argument was
advanced on this issue at the hearing of the case.
There is also a further point to be noted. In the
Special Leave Petition, it has been stated that some time in
April, 1970, the then chief Minister and the Finance
Minister had announced that the Government had adopted the
policy of giving incentives to establishment of new
industries. It has further been stated that petitioner’s
total investment in the oil extraction plant is roughly 23
lakhs out of which about Rs.14 lakhs was for the cost of
machinery, about Rs.8 lakhs was towards erection,
construction of necessary sheds and buildings and about
Rs.68,000/- we towards the cost of land. The appellant is a
partnership firm. It has not been stated at what point of
time the partners decided to set up this plant and when and
how the fund required for setting up of the plant was
raised.
The appellant has been entirely unable to make out any
factual basis for a case of promissory estoppel. The
appellant cannot claim that merely because it had set up its
industrial unit at Junagadh at a certain point of time, the
fiscal laws of the State must remain unaltered from that
date. The appellant has not been able to show that some
definite promise was made by or on behalf of the Government
and the appellant had acted upon that promise to its
detriment and thereafter the changes effected by the
Notification dated 17th July, 1971 have caused great
prejudice to the appellant.
In the premises, it is not necessary to go into the
question of applicability of the doctrine of promissory
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estoppel in the field of fiscal legislation.
The appeal is dismissed. There will be no order as to costs.
CIVIL APPEAL NO 1011 OF 1977
The facts of this case are similar to the facts in the
case of Arvind Industries and others v. The State of Gujarat
and others (Civil Appeal No. 951 of 1976). Here again, the
contention of the promissory estoppel has been raised.
The appellant has set up a factory at Ambavadi Road,
Dhoraji. The industrial undertaking was commissioned on
31.12.1970, i.e. within seven weeks from the date of the
Notification dated 11.11.1970. The appellant had stated in
the petition that on 31st August, 1970, it had set up the
factory premisses at Dhoraji at a cost of Rs.38,000/-. This
was long before the exemption Notification dated 11th
November, 1970. No dated have been given for the purchase of
machinery and spare-parts worth Rs.45,000/-. But it has been
stated that the production in the factory started from 31st
December, 1970. Having regard to the facts of the case and
also nature of the two Notifications issued by the
Government dated 11th November, 1970 and 17th July, 1971, we
are of the view that the factual basis for a case of
promissory estoppel has not been made out. It is unnecessary
to deal with elaborate arguments advanced on the scope of
the doctrine of promissory estoppel in the facts of case.
The appeal is dismissed. There will be no order as to costs.