K C PAINT FACTORY Vs. STATE OF J&K

JUDGEMENT

(1.) WE have heard Mr. Subash Dutta, learned counsel for the appellant, in extenso.

(2.) AT all material times, the appellant was Small Scale Industrial Unit engaged in the manufacture of rosin and turpentine. The unit standard manufacturing the product on 25 -03 -1982 by taking additional line during the period SRO -671 dated 18.12.1979 issued by the Government provided that exemption for a period of ten years from the date of commencement of the manufacture of the goods to the goods to the SSI units. The appellant, thus enjoyed Sales Tax exemption in terms of the aforesaid notification on the sales locally effected in the State. The appellant was also exempted from payment of Sales Tax on its inter -state sale of rosin and turpentine vide notification SRO -489 issued by the Government on 18 -8 -1977, which further came to be extended from time to time by issuing various notifications and giving them retrospective effect upto September, 1982. On 31 -3 -1984. Government issued notifications SROs -118 and 119 whereby exemption was granted to SSI Units retrospectively from 1st October, 1982 on their inter -state sales except on the items placed in the Negative List, which also included rosin and turpentine manufactured by the appellantâ„¢s SSI Unit. Since the item manufactured by the appellant in its SSI Unit was put on Negative List the grant of exemption of inter -state sales of rosin and turpentine from payment of Central Sales Tax for the period effective from 01 -10 -1982 to 31 -03 -1984 was refused. Further case of the appellant is that, on its local sales, exemption has been granted from payment of Sales Tax from the period 01 -10 -1982 to 31 -03 -1984 and clearly shows that the goods manufacture by the appellant were admitted as entitled to exemption in public interest. The denial of exemption, in such circumstances, for the period from 01.10.1982 to 31.03.1984 on inter -State sales from payment of Central Sales Tax is clearly not in public interest. It is also pleaded by the appellant that by issuing notification No.86 dated 04 -04 -1995 the Government again granted exemption on inter -State sales of rosin and turpentine which evidently shows that such exemption was granted in public interest. The action of the Government in putting the rosin and turpentine on Negative List by SRO -119 when sold on inter -state basis, according to the appellant, is without any justification. According to the appellant. The exemptions are being granted under the State Taxation Law under various notifications in the manner and to the extent and for the period as specified therein.

(3.) FURTHER fact putforth by the appellant is that, when exemption has been granted under the General Sales Tax Act, neither there was any ground nor any justification to not grant similar exemption under the Central Sales Tax Act/Laws. That the exemptions were earlier granted also not to the Central Sales Tax and the petitioner acting on a bonafide plea reasonably expected that the said exemption would be ranted for the period for which the exemption was granted under the General Sales Tax Act and, thus, cannot be saddled with the tax liability. Appellant further stated with the tax liability. Appellant further stated to have when acted upon assurances and promises and the notifications issued by the Government from time to time, set up an SSI Unit and started production of reson and turpentine oil, the State is bound by the Doctrine of promissory Estoppel and also on the ground that SRO -267 dated 15 -05 -1997 in which it was specifically provided that the exemption would be available to the SSI Units for a period of ten years, and cannot withdraw such exemption regarding Sales Tax on rosin and turpentine, as the appellant had changed its position to its detriment on being induced by such assurances and promises given by the Government. It is also stated that the decision of the Government putting the goods manufactured by SSI Unit of the appellant in Negative List and holding not entitled to exemption during the period from 01 -10 -1982 to 31 -03 -1984 by issuing SROs -118 and 119, is arbitrary without basis and cannot be sustained.