GEEKAY HYGENICS PVT LTD Vs. STATE OF KERALA

JUDGEMENT

(1.) The appellants have approached this Court impugning Ext. P8 marked in O.P. No. 17633/05, whereby the exemption from payment of sales tax granted as per Ext. P10 had been cancelled. The learned single Judge did not accept the challenge. Therefore, these appeals.

(2.) The appellants are manufacturers of bottled drinking water. There were several such units. There was dispute, including up to this Court and the Supreme Court, as to the taxability of the package of drinking water. This Court and the Supreme Court found that they were not entitled for the exemption, as allowed to the small scale industries. In spite of that, Government issued Ext. PIO notification marked in W.P. (C) No. 23111/05 as S.R.O. No. 731/04 on 17.7.2004 exempting these units from payment of sales tax during the period from 1.1.1994 to 9.2.2002. This was issued exercising the power conferred on Government in terms of Section 10(1) of the Kerala General Sales Tax Act, 1963 (for short 'the Act')- Later, it came as a bolt from the blue when Government issued Ext. P8 notification as S.R.O.No. 377/05 dated 19.4.2005 whereby Ext. 10 has been cancelled, thereby tax liability is cast on them retrospectively. It was contended by them before the learned single Judge that Ext. P.8 was vitiated on two counts: (1) The Statutory provisions empowering such cancellation as contained in Sub-section (3) of Section 10 of the Act did not confer a power to cancel retrospectively a benefit, which had been granted. The effect of Ext. P8 is to cancel the benefit which has been granted for the period from 1.1.1994 to 9.4.2002; and (2) that the Government was estopped from issuing Ext. P8 because of the promise that they have already represented to the appellants and other unit holders in Ext. P10 that the units have been exempted from payment of tax during the said period. Withdrawal of this promise visits them with adverse consequences. Government cannot do so based on the doctrine of promissory estoppel.

(3.) The learned single Judge did not consider either of these contentions. According to the learned single Judge, Ext. 10 happened to be passed as the Government was posted with wrong data regarding the tax effected and the earlier decisions taken and because of the misplaced sympathy. Therefore, cancellation of Ext. P10 was justified.