MYSORE CEMENT LTD. Vs. STATE OF M.P.

JUDGEMENT

(1.) THIS is a petition under Articles 226 and 227 of the Constitution of India challenging the letter dated 23/10/1996 (Annexure -P/5) of the respondent No. 3 by which the respondent No. 4 has been directed to charge the commercial tax from the petitioner at full rate on sale of High Speed Diesel oil to the petitioner.

(2.) THE petitioner No. 1 Mysore Cement Limited has established a cement industry in the backward district of Damoh in Madhya Pradesh. It is a registered dealer under the MP. General Sales Tax Act, 1958 (hereinafter referred to as the 'Act of 1958'). In the registration certificate High Speed Diesel Oil has been specified as one of the "raw materials". By virtue of the notification dated 19/2/1991 issued under Section 12 of the Act of 1958 the petitioner was exempted from payment of tax under this Act. The eligibility certificate dated 28/02/1995 (Annexure -P/4) was issued in its favour by the State Level Committee for a period of eleven years from 29/12/1993 to 28/12/2004 in terms of the notification. In this certificate also Diesel is specified as raw -material. The petitioner was purchasing High Speed Diesel from respondent No. 4 Indian Oil Corporation and was submitting the declaration form on the basis of which the petitioner was not being charged any sales tax. It is an admitted fact that the petitioner was not being charged even four percent concessional rate of tax as per Section 6(2) of the Act of 1958. It is also admitted that the petitioner was legally exempted from payment of the concessional rate of tax at the rate of four percent. The selling dealer i.e. Indian Oil Corporation was also exempted from payment of sales tax on the sale of diesel to the petitioner as per notification dated 19/2/1991 (Annexure -P/2).

(3.) THE petitioner's case is that Section 12 of the Act of 1958 (Section 17 of the new Act) is an "overriding provision" and in exercise of this power the petitioner as a dealer has been exempted in whole from payment of tax under the Act on certain goods including diesel oil and therefore it cannot be subjected to tax. It is entitled to exemption from sales tax and also the purchase tax. The right which accrued to the petitioner under the notification under Section 12 of the Act of 1958 has been saved by proviso to Section 81 of the new Act and, therefore, the exception made in Section 9(2) read with Schedule -III would not apply. Having granted the eligibility certificate dated 28/2/1995 in exercise of the statutory power the right which accrued to the petitioner cannot be taken away because of the "rule of estoppel" also. The State Government in the Industrial Policy and Action Plan for 1994 vide para 5.2 had decided to continue the "facilities and concessions" under the existing scheme for the remaining period of eligibility according to the provisions of the scheme in force. Therefore, the impugned letter is against the policy declared by the State Cabinet and that policy has the force of law. The petitioner Company claims that it is entitled to purchase diesel without payment of tax and wants that the impugned letter be quashed. That is also the interpretation of the State Level Appellate Forum as per letter dated 26/2/1997 (Annexure -P/10). That decision is final as per 1986 notification referred in the notification dated 19/2/1991 (Annexure -P/1).