HARI RAM SHARMA Vs. STATE OF ASSAM

JUDGEMENT

(1.) In this writ petition under Article 226 of the Constitution the petitioner has made a grievance that sales tax on sale of tea processed in its Tea Industrial Unit has been levied and demanded contrary to the Industrial Policy Resolution of the Government of Assam dated 12th October, 1982.

(2.) The facts briefly are that by Industrial Policy Resolution dated 12th October, 1982 of the Government of Assam, Department of Industries some incentives were announced to encourage local entrepreneurs to set up industries in the State of Assam. One of such incentives announced in the said Industrial Policy Resolution was that a new industrial unit will not be required to pay sales tax payable under Local Sales Tax Laws on purchase of raw materials and on sale of finished products for, 5 years from the date of commencement of production. The Policy Resolution further provided that the Implementing Agencies will issue Eligibility Certificate under the 1982 scheme with effect from the date of commencement of production and such Eligibility Certificates would be a pre-conditions for granting sales tax exemption, After the aforesaid Industrial Policy Resolution, the petitioner set up a smaller scale industrial unit for tea grading and blending and as per the Permanent Registration Certificate issued by the Directorate of Industries, the date of production of the aforesaid smaller scale industrial unit of the petitioner was 15.4.1984. The Udyog Vikash, District Industries Centre, Kamrup, Guwahati, thereafter issued an Eligibility Certificate which inter alia stated that the Industrial Unit of the petitioner, namely, M/s Bajrang Udyog was eligible for exemption of sales tax from 15.4.84 to 14.4.89. Accordingly, the petitioner claimed exemption of sales tax on the sales of its finished produces in its returns for the periods ending 31.3.86, 30.9.86, 31.3.87, 30.9.87, 31.3.88, 30,9.88, 31.3.89 and 30.9.93. But the Superintendent of Taxes, Guwahati Unit B, held that the guidelines regarding grant of tax exemplion by the Government had excluded Tea industries from the purview of tax exemption and as such the petitioner was liable to pay tax under the Assam Sales Tax Act for the sales made and accordingly assessed the sale of finished products by the petitioner during the aforesaid periods to sales tax under the Assam Sales Tax Act by separate orders of assessment annexed to this writ petition as Annexure D to J. Aggrieved by the said orders of assessment, the petitioner filed revisions but by order dated 23rd April, 1996, the Joint Commissioner of Taxes, Assam, Guwahati refused to interfere with the assessment orders made by the Superintendent of Taxes on the ground that Tea was excluded from the raw materials to be used in manufacture of finished products. The petitioner has challenged the said orders of assessment as well as the order of the Joint Commissioner of Taxes, Assam rejecting the 8 revision petitions of the petitioner against the orders of assessment. The petitioner has also prayed for declaring the notification dated 1.8.88 of the Govt. of Assam under Section 3 A of the Assam Sales Tax Act, 1947 as ultra vires.

(3.) Mr O.P. Bhati, learned counsel for the petitioner submitted that the petitioner set up its Industrial Unit investing a huge amount on the assurances and promises made by the State Government in the Industrial Policy Resolution dated 12th October, 1982 that finished products of the petitioner will be exempted from sales tax for a period of 5 years from the date of commencement of production and an Eligibility Certificate was also granted by the Udyog Vikash, District Industries Centre, Kamrup, Guwahati declaring that the petitioner was entitled to exemption from sales tax from 15.4.84 to 14.4.89 i.e. for the period of 5 years from the date of commercial production by the petitioner. Mr Bhati further submitted that in the Industrial Policy Resolution dated 12th October, 1982 there is no mention at all that processing and blending tea will not be exempted from sales tax on the finished products. He pointed out that in the appendix to the Industrial Policy Resolution dated 12th October, 1982 food processing industries were also included as industries eligible for incentives in the Industrial Policy Resolution, 1982. The State Government is bound by the principles of promissory estoppel to grant the said exemption from sales tax on finished products of the petitioner. In support of his said submission, Mr Bhati cited the decisions of the Supreme Court in the case of Motilal Padampat Sugar Mills-Vs-State of U.P. (1979) 2 SCC 409 and in the case of Pournami Oil Mills-Vs-State of Kerala, 1986 (Supp) SCC 728. Mr Bhati further submitted that by the notification dated 1.8.88 of the State Government under Section 3 A of the Assam Sales Tax Act, 1947, tax under the said Act in respect of sales of goods produced by dealer in any new Industrial Unit in Assam for the period of 5 years from the date of commencement of production in such Industrial Unit has been exempted subject to some conditions and one of the conditions prescribed in the said notification is that the notification shall not apply to sales made during the period from 15.10.82 to 31.7.88 unless the dealer produces certificate of eligibility from the authority specified under sub-rule (a) of Rule 4 of Assam Industries (Sales Tax Concessions) Rules, 1988 (for short "the Rules, 1988") to the effect that the Industrial Unit is eligible for sales tax under the State Government Policy Resolution dated 12th October, 1982. Mr Bhati submitted that although the petitioner has been furnished with an Eligibility Certificate by the Udyo'g Vikash that the petitioner is entitled to exemption from sales tax with effect from 15.4.84 to 14.4.89 i.e. 5 years from the date of commercial production by the petitioner, the said Eligibility Certificate is not in the form prescribed under the Rules, 1988. He further pointed out that although the Form in which the certificate was to be issued under sub-rule (a) of Rule 4 of the said Rules' 1988 is different from the Form in which the petitioner has been issued Eligibility Certificate as annexed to this petition as Annexure-B, the authority who is competent to issue the certificate under sub- rule (a) of Rule 4 of the Rules, 1988 is the same as the authority who has issued Eligibility Certificate in favour of the petitioner in Annexure-B to the writ petition, namely, Udyog Vikash. According to Mr Bhati there is, therefore, a substantial compliance with the provisions of the notification dated 1.8.88 issued under Section 3 A of the Assam Sales Tax Act, 1947 and the petitioner should be allowed the exemption of sales tax on the sale of finished products from 15.10.84 to 31.7.88 in terms of the said notification of exemption. Alternatively, Mr Bhati submitted that the aforesaid conditions in the notification dated 1.8.88 that exemption of sales made during the period from 15.10.82 to 31.7.88 will not be allowed unless the dealer produces a certificate of eligibility from the authority specified in sub-rule (a) of Rule 4 of the said Rules, 1988 in so far as it is inconsistent with the provision of Industrial Policy Resolution, dated 12th October, 1982 is ultra vires.