METAL FIELD INDUSTRY Vs. STATE OF J&K

JUDGEMENT

(1.) THE only question involved for determination is whether the exemption from payment of sale tax granted in terms of notification No. SLO -671, the benefit of which was extended to the additional goods manufactured by the small scale industrial unit in term of SRO -87 dated 08 -03 -1985 could be withdrawn before the expiry of the period during which it could be availed of by the units. The petitioner is partnership firm engaged in the manufacture and sale of aluminum untensils. According to the petitioner vide notification No. SRO -671 of 1979 the goods manufactured by it were exempted from payment of sale tax for a period of ten years. Since the petitioner -unit was established in 1977 and went into production in October, 1978, therefore, the exemption from payment of sale tax was available to it upto October, 1988 which it did avail. However, vide SRO -87 of 1985 the additional goods manufactured by small scale industrial units registered with the Department of Industries and Commerce were also granted exemption subject to the condition specified in the aforesaid notification. This exemption was also available in the same manner as granted under SRO 671 of 1979. The case of the petitioner is that SRO -87 of 1985 prompted it to increase production. It. therefore, started manufacture of aluminum untensils in moulded form w.e.f. Feb., 1984. Since these goods were manufactured in addition to the capacity and accordingly it applied for exemption from payment of sale tax under SRO -87 of 1985. The respondents, it is admitted accepted the case of the petitioner for exemption from payment of sale tax under SRO 87 of 1985 upto 31 -03 -1989. However, vide notification SRO -135 dated 29 -03 -1989. SRO -671 of 1979 and SRO -87 of 1985 were superseded and the level of exemption from payment of sale tax reduced only uplo 75% of the normal rate of tax. Further vide SRO -136 dated 29 -03 -1989, the procedure for availing the exemption was notified.

(2.) THE grievance of the petitioners is that having availed of the exemption under SRO -87 of 1985 it applied for renewal of the exemption certificate in May, 1989 but respondent -1 informed it that SRO -87 having been superseded, no exemption was available. It was thus refused renewal of exemption certificate but no formal order was passed rejecting the application for renewal of the certificate. The petitioner seeks i) declaration that SRO -136 of 1989 dated 29 -03 -1989 be held not applicable to the petitioner regarding the additional goods manufactured by it as the exemption will be available for 10 years and ii) that the respondents be not allowed to withdraw the exemption a they have held out a promise on the basis of which thc petitioner established the industry. The respondents, It is further pleaded arc bound to honour their commitment on the principle of Promissory Estoppel.

(3.) THE stand of the respondents is that the principal of promissory Estoppel is not attracted because the petitioner did not set up its unit pursuant to any industrial policy. They have also denied that petitioner had commenced manufacturing of additional goods by acting on the promise made in SRO -87 of 1985. Their further plea is that the power to grant exemption under section 5 of the General Sales Tax Act, incides the power to withdraw the exemption as and when not found justified. The power to exempt goods from payment of sales tax being legislative in nature, the notification impugned it is stated cannot be called in question.