BAJAJ PACKWELL Vs. STATE OF UTTAR PRADESH

JUDGEMENT

(1.) Petitioner No. 1 is a proprietorship concern and registered under the U.P. and Central Sales Tax Acts. Pursuant to Government Order No. 8244 dated 30th September, 1982, the petitioner established a new small-scale industrial unit in the district of Meerut for the manufacture and sale of blended tea. The initial investment of the petitioner was less than rupees three lacs. Annexure 1 dated 17th/21st April, 1984, is a copy of the registration certificate granted to the petitioner by the Directorate of Industries. The petitioner was also registered under the Factories Act. On the application of the petitioner, it was granted eligibility certificate on 9th November, 1984, for exemption from payment of sales tax for a period of five years with effect from 1st January, 1984, vide annexure 2. However, the petitioner was served with a notice dated 20th June, 1987 (annexure 3), to show cause why the period of exemption should not be reduced. Annexure 4 dated 1st July, 1987, is a copy of the petitioner's reply to the show cause pleading against the proposed reduction of the period of exemption. By order dated 10th September, 1987, the Additional Director of Industries, respondent No. 2 reduced the period of exemption from five years to three years on the ground that the petitioner's investment in its industrial unit was less than rupees three lacs, vide annexure 5. The petitioner was further informed that the exemption would be effective from 20th March, 1984, the date of its registration under the Factories Act till 22nd December, 1986. This order dated 10th September, 1987, under annexure 5 is under challenge in this writ petition. The petitioner has asserted that it had established its unit on the specific and clear promise made by the State Government for grant of exemption for a period of five years by virtue of Government Order No. 8244 dated 30th September, 1982, and as such on principles of promissory estoppel it was not open to the State Government to reduce the period of exemption subsequently from five years to three years under Notification No. 6468 dated 27th August, 1984.

(2.) In the counter filed on behalf of respondent No. 2 and by respondent No. 3 the stand taken is that the petitioner's unit was not entitled to exemption from payment of sales tax for a period of five years under Government Order No. 8244 dated 30th September, 1982, as its capital investment in land, building, plant and machinery was less than rupees three lacs. In the counter filed by respondent No. 3 it is further stated that the petitioner's unit became entitled to exemption from payment of sales tax for a period of three years under Government Notification dated 27th August, 1984, and as such the period of exemption was rectified from five years to three years by order dated 10th September, 1987, under annexure 5.

(3.) On a reference to Government Order dated 30th September, 1982, and the set of "niyamawali" made under it, it is seen that in paragraph 1 under the heading "prastavna" it is stated that those units which have been established between 1st October, 1982 and 31st May, 1985, and are either registered under the Factories Act or whose investment in land, building, machinery and equipment is more than rupees three lacs, would be entitled to exemption from payment of sales tax from the date of starting production. However, in paragraph 4(1) of the said "niyamawali" under the heading "paribashaen" small-scale industries are defined to be such units whose investment in land, building, machinery and equipment is not less than rupees three lacs and not more than twenty lacs. Thus there was some confusion as to the small-scale units which would be entitled to exemption from payment of sales tax in view of what was stated in paragraph 1 and paragraph 4(1) of the "niyamawali". It appears this confusion was set at rest by letter dated 16th March, 1983 (annexure RA 1), issued by the Directorate of Industries. In paragraph 1 of this letter it was clarified that all those small-scale units which are registered as such with the Directorate of Industries and are also registered under the Factories Act would be entitled to exemption from payment of sales tax and that in addition to such units, those which were not registered under the Factories Act but whose investment in land, building, machinery and equipment was more than three lacs would also be entitled to the same exemption. It has been rightly urged on behalf of the assessee that it is by virtue of this clarification issued by the Director of Industries that it had been given the eligibility certificate on 9th November, 1984, vide annexure 2.