Madras High Court
Sulochana Cotton Spinning Mills (P) ... vs State Of Tamil Nadu And Others on 16 December, 1994
JUDGMENT K.A. Swami, C.J.
1. In Writ Petition No. 5183 of 1993, the petitioner has sought for quashing the proceedings bearing number TNGST 254157/92-93 dated February 23, 1993 and also for issuing a further direction to the respondents to give relief in respect of purchase tax also under the deferral scheme as per the agreement already entered into with the petitioner and to pass further orders as may be deemed fit and proper in the facts and circumstances of the case. In the other connected petitions, though the prayers are not similarly worded, the substance of the matter in all these petitions relates to the scope of the Government Order Ms. No. 500, Industries (MIG-II) Department dated May 14, 1990 and also the subsequent orders issued on December 4, 1990 and the effect of the Government Order Ms. No. 92 dated February 22, 1991 or the Government Order Ms. No. 500 dated May 14, 1990. Therefore, we have heard all these petitions together and decide them by this common order.
2. The State Government with a view to encourage all new industries and the expansion of the existing industries in the backward and most backward areas of the State, has been giving incentives for establishment of new industries and also for expansion and diversification of the existing industries. Though such a programme of the State starts from the year 1971, we need not trace the incentive given by the State Government for establishment of industries from the year 1971. For our purpose, it is sufficient if we refer the various orders issued by the State Government from G.O. Ms. No. 305 dated May 22, 1989 onwards. G.O. Ms. No. 305 dated May 22, 1989, was issued in exercise of the power under article 162 of the Constitution offering interest-free sales tax loan scheme for existing units undertaking expansion or diversification and also interest-free sales tax loan scheme to new units other than the existing units and not for expansion or diversification. It was done as a long term strategy to stimulate industrial growth in the State of Tamil Nadu. However, the conventional industries like cement, sugar, textiles, mining/quarrying, flour mills, hotels, edible oils and solvent extraction, rice mills, distilleries, breweries and malt extraction and power intensive units were excluded from the benefit of the G.O. Ms. No. 305 dated May 22, 1989. Thereafter, the State Government issued another G.O. Ms. No. 423, Industries dated July 7, 1989, under which certain taluks were identified as industrially under-developed areas for the purpose of power tariff concession with consequent reduction in rates. Under that order, the Government also identified certain areas as backward for the purpose of extending interest-free sales tax loan scheme and the State capital subsidy scheme. Under the aforesaid G.O., the following reliefs were granted as an incentive for industrialisation :
"2. Government of India have not extended the capital investment subsidy scheme beyond September 30, 1988. The Long Term Strategic Planning Committee constituted by this Government to suggest measures to stimulate industrial growth in the State has also reviewed this aspect and suggested issue of a revised order in this regard. As there will be no categories of A, B or C areas as per the Central Government policy for purposes of grant of Central Investment Subsidy, the State Government have decided to identify backward taluks on the basis of existing industrial investments in medium and large industries in each taluk and the industrial employment figures of the taluks.
3. In supersession of the earlier orders on classification of certain taluks as backward, the Government now direct that 105 taluks of this State as indicated in the annexure to this order, be declared as industrially backward for purposes of grant of concessions like power tariff concessions, interest-free sales tax loans, deferral of sales tax, State capital subsidy and special subsidy for pioneer industries.
4(i). This order will take immediate effect in so far as it relates to the power tariff concessions. All the eligible new industries obtaining power connections on or after the date of issue of this order in any one of the 105 taluks mentioned in the annexure will be eligible for the power tariff concessions at such rates and for such periods as are in force at the time of effecting the power concessions.
(ii) In respect of the concessions like interest-free sales tax loans, deferral of sales tax, State capital subsidy and special subsidy for pioneer industries, eligible industries in the taluks now declared backward will be eligible for these concessions with effect from May 22, 1989, i.e., the date of issue of the order in the Government Orders seventh and eighth read above.
5. The declaration of backward taluks made in para 3 above is meant for medium, major as well as small-scale industries.
6. This order issues with the concurrence of Public Works and Finance Departments vide their U.O. No. 143/SP/D/9-1 dated June 30, 1989 and U.O. No. 2007/FS/P/89 dated July 7, 1989."
Again, on August 19, 1989, another G.O. Ms. No. 564, Industries Department, was issued under which all new small-scale industries were made eligible for deferment of payment of sales tax for five years for a total amount, which shall be the least of (a) the actual sales tax payable for five years, (b) Rs. 10 lacs for five years together and (c) 80 per cent of the capital invested for the units located at State Industries Promotion Corporation of Tamil Nadu Complex and growth centres or 70 per cent of the capital invested in respect of the units located at other places. It was further stated therein as follows :
"(ii) Units located in towns of more than 3 lakhs population as per 1981 census and Madras city agglomeration with a 15 k.m. belt area and Trichy, Coimbatore, Madurai and Salem Urban Agglomerations with an 8 k.m. belt area would not be eligible for this scheme at all.
(iii) The application for interest-free sales tax deferral should be filed before the General Manager, District Industries Centre, concerned before the implementation of the project.
(iv) The above scheme will come into effect from the date of issue of this order in respect of units which take steps for implementation of the project for this date.
(v) The General Manager, District Industries Centre will be the competent authority to issue eligibility certificate under this scheme based on the norms in para 2(i) above. The respective sales tax assessing authority will assess the sales tax liability of the unit for each year. For the first, second, third, fourth and fifth years, after commencement of production by the unit, based on the assessments made by the authority, demands will be raised. But the tax payable for the year will be deducted to the extent for which eligibility certificate is issued by the authority. This amount will be deemed to be a deferred instalment. These five annual deferred instalments will be repayable by the assessee during the 6th, 7th, 8th, 9th and 10th year respectively without any interest thereon.
(vi) All eligible new units which have commenced production till the date of issue of this order and those units which are in various stages of implementation as on this date will be eligible for interest-free sales tax deferral loan as per the then existing orders.
(vii) Second hand machinery purchased will be totally excluded for consideration under this scheme."
In addition to this, another order G.O. Ms. No. 564, Industries Department dated August 19, 1989, was also issued under article 162 of the Constitution, under which certain conditions as detailed below were prescribed for eligibility to avail the reliefs stated therein :
"2. The following will be the conditions for eligibility of assistance under the scheme.
(a) The existing units which carry out expansion or diversification by increasing the production level by 25 per cent in quantity in the case of existing production and in the case of new products, an increase of 25 per cent over the best annual production achieved during the last 3 years;
(b) The sales tax deferment will be for a period of 3 years and the total amount will be the least of -
(i) 25 per cent of the fixed assets added during the expansion programme.
(ii) Rs. 10 lakhs over the entire 3 years during which deferral is allowed under this scheme.
(iii) Increase in sales tax assessed per annum over and above the 3 years average sales tax assessed before the expansion for a period of 3 years.
(c) The eligible amount shall be deferred for a period of 3 years from the date of completion of the expansion project.
(d) These three annual deferred instalments will be repayable by the assessee during the 6th, 7th and 8th year respectively.
(e) The application for interest-free sales tax loan should be submitted before implementation of expansion scheme to the General Manager, District Industries Centres concerned.
(f) During the lifetime of any small-scale industries unit, interest-free sales tax deferred would be granted only for one substantial expansion apart from that for the original project.
(g) Second hand machinery purchased for substantial expansion will be totally excluded for consideration under this scheme.
(h) The above scheme will come into effect from the date of issue of this order in respect of units which take steps for implementation of the project.
(i) The General Manager, District Industries Centre, will be the competent authority to issue eligibility certificate under this scheme based on the norms in para 2(b) above. The respective sales tax assessing authority will work out the sales tax liability of the unit. For the first, second and third years after implementation of expansion by the unit based on the assessment made by the authority the demand will be raised. But, the tax payable for the year will be deducted to the extent for which eligibility certificate is issued by the authority and this amount is deemed to be a deferred instalment. These three annual deferred instalments will be repayable by the assessee during the 6th, 7th and 8th year respectively without any interest therein.
(j) The above scheme will come into force with effect from the date of issue of this order."
On referring to all the aforesaid orders. G.O. Ms. No. 500 dated May 14, 1990, has been issued, which is the subject-matter of these writ petitions. Pursuant to the aforesaid G.O. Ms. No. 500 dated May 14, 1990, another G.O. Ms. No. 1394 dated December 4, 1990, has also been issued which clarifies the scheme comprised in G.O. Ms. No. 500 dated May 14, 1990. Thereafter, a notification has been issued under section 17A of the Tamil Nadu General Sales Tax Act for deferral payment of tax payable by the new industries in 75 backward areas and also the existing industries in the same area which have commenced production from May 14, 1990. There is another G.O. Ms. No. 83 dated February 14, 1993 and also G.O. Ms. No. 48 dated February 11, 1994, pursuant to and explaining the G.O. Ms. No. 500 dated May 14, 1990.
3. It is the contention of the petitioners that G.O. Ms. No. 92 dated February 22, 1991, cannot affect those who have either started a new unit or expanded or diversified the existing units pursuant to the incentive offered under G.O. Ms. No. 500 dated May 14, 1990, as such the benefits available under the said G.O. for such of those industries cannot at all be curtailed by G.O. Ms. No. 92 dated February 22, 1991, that even if it is held that G.O. Ms. No. 92 dated February 22, 1991, having been issued under section 17A of the Tamil Nadu General Sales Tax Act (hereinafter referred to as "the Act") modifies G.O. Ms. No. 500 dated May 14. 1990 and other Government Orders issued prior to February 22, 1991, such result or consequence would be only prospective and applicable to such of those industries, which have been established subsequent to February 22, 1991 or such of those existing industries which have gone in for expansion or diversification subsequent to February 22, 1991, that the State Government is competent to offer incentive for establishment of new industries and also expansion and diversification of existing industries for the purpose of ensuring industrial growth in the State in exercise of its executive power under article 162 of the Constitution and that such offering of incentives is not prohibited under any law, much less under the Tamil Nadu General Sales Tax Act which specifically provides under section 17A for deferring the payment by any new industrial unit or sick unit or sick textile mill of the whole or any part of the tax payable in respect of any period either prospectively or retrospectively. Apart from that, there is no prohibition contained in the Act, therefore the orders of the State Government in G.O. Ms. No. 500 dated May 14, 1990 and G.O. Ms. No. 1394 dated December 4, 1990, are valid and the promise flowing from those orders is a promise made in accordance with law and acting upon such promise or representation of the State Government, the petitioners have altered their position either by establishing new industries in the areas to which those orders are applicable or by expanding or diversifying the existing industrial units situate in those areas, that the incentive granted under G.O. Ms. No. 500 dated May 14, 1990, covers not only the sales tax payable by the petitioners on the purchase of raw materials for finished products but also on the sales tax payable on the sale of goods manufactured by them.
4. On the contrary, it is contended by learned Additional Government Pleader for Taxes that the intention of the State Government in issuing G.O. Ms. No. 500 dated May 14, 1990, can very well be gathered from the files pertaining to the said G.O., which reveal that it was never intended by the State Government to grant relief regarding the sales tax payable on the purchase of raw materials for manufacturing finished products, that what was intended was only to grant relief for the sales tax payable on the sale of finished products and that intention has also been clearly brought out in G.O. Ms. No. 92 dated February 22, 1991. Learned Additional Government Pleader has placed all the files before us and has pointed out several notings made by the concerned officials of the Secretariat and also the correspondence that has gone on between the Department of Commercial Taxes and the Industries Department. It is contended that the industries will get a real benefit only if the relief is to be granted on the sales tax payable by the sale of finished products and in that event, they will be retaining the sales tax payable by them on the finished products as substantial sums for the period mentioned in the G.Os. in question and that would give them the real benefit and that was what was intended by the State Government.
5. In the light of these contentions, the following points arise for consideration :
(i) What is the true scope and ambit of the Government Order, G.O. Ms. No. 500 dated May 14, 1990 ?
(ii) What is the effect of the Government Order, G.O. Ms. No. 92 dated February 22, 1991, on the G.O. Ms. No. 500 dated May 14, 1990 and also on the new industries commenced pursuant to G.O. Ms. No. 500 dated May 14, 1990 and the expansion and diversification undertaken by the existing industries pursuant to the aforesaid G.O. Ms. No. 500 ?
(iii) If the answer to point (ii) is to the effect that G.O. Ms. No. 92 dated February 22, 1991 affects the operation of G.O. Ms. No. 500 dated May 14, 1990, whether the State Government can be estopped from giving effect to the same in respect of the new industries commenced pursuant to G.O. Ms. No. 500 and the diversification and expansion undertaken by the existing industries pursuant thereto ?
Point (i) :
6. G.O. Ms. No. 500 dated May 14, 1990, reads thus :
"The Government in the order second read above declared 105 taluks of the State as industrially backward for the purposes of grant of interest-free sales tax loan, interest-free sales tax deferral, State capital subsidy, etc.
2. With a view to correct regional imbalances in the industrialisation in the State by giving further incentives to more backward areas, the Government direct that 30 taluks from among the 105 industrially backward taluks be declared as industrially most backward taluks. The names of 30 taluks are annexed to this order.
3. The Government direct that the new industries to be set up in the 30 most backward taluks covered in para 2 above and also in the three industrial complexes of State Industries Promotion Corporation of Tamil Nadu at Pudukottai, Cuddalore and Manamadurai be eligible apart from other existing concessions, for full waiver of sales tax dues for a period of five years up to a ceiling of the total investment made in fixed assets. Existing industries in the most backward taluks and in the three State Industries Promotion Corporation of Tamil Nadu (SIPCOT) complexes, undertaking expansion/diversification are also eligible for full waiver of sales tax dues for a period of five years subject to a ceiling of the total investment made in fixed assets under expansion/diversification.
4. With a view to encourage more industries in Tamil Nadu, the Government direct that the following concessions also be made available to the industries :
(a) For the industries to be started in the 75 backward taluks, i.e., other than the 30 most backward taluks, from among the 105 backward taluks and in the industrial estates developed by any of the Government agencies including Madras Export Processing Zone, Madras Metropolitan Development Authority, the scheme of interest-free sales tax loan/deferral ordered in the Government Order first, third and fourth read above is modified as follows :
(i) For the existing units undertaking expansion or diversification, deferral of sales tax will be given for nine years and the total amount thus given shall not exceed 80 per cent of the additional investment made in fixed assets.
(ii) For the new units, the total amount of deferral of sales tax will be given for nine years to the full extent of the total investment made in fixed assets.
(b) The interest-free sales tax deferred scheme is extended to the expansion (part I) as well as to the starting of new industries (part II) in the other areas also where this scheme was not in vogue hitherto. The deferral of sales tax for the industries in these areas will be for five years subject to a minimum of 60 per cent of the total investment made in fixed assets in the case of new industries and 50 per cent of the additional investment in fixed assets made in the case of expansion/diversification of the existing industries.
(c) As a gesture to the industries to be set up in any part of Tamil Nadu with an investment in fixed assets of more than Rs. 50 crores, a special incentive of deferral of sales tax for a period of 9 years to the extent of total investment made in fixed assets will be given. This deferral concession will also be available to the existing industries going in for expansion/diversification with an additional investment in fixed assets for more than Rs. 50 crores.
5. The sales tax deferral/waiver of expansion/diversification ordered in paras 3-4 above is subject to the sales tax payable on products manufactured by the capacity created by expansion/diversification units only.
6. The industries in the most backward taluks and in the SIPCOT complexes at Cuddalore, Manamadurai and Pudukottai can opt either for the full waiver of sales tax for the period of five years ordered in para 3 above or for the deferral of sales tax for nine years as applicable to the industries in the backward taluks ordered in para 4(a) above. The option should be exercised along with the application to be submitted to the authority for issuing eligibility certificate. The option once exercised and accepted will be final and cannot be changed.
7. The application for interest-free sales tax deferral should be filed before the General Manager, District Industries Centre concerned in the case of small-scale industries and before SIPCOT in the case of medium and major industries before the commencement of commercial production.
8. The above scheme will be applicable to small, medium and major industries as the case may be. The deferral/waiver period will commence from the date of commencement of commercial production after the completion of the envisaged project. Such commencement shall be on or after the date of issue of this order for eligible units.
9. The General Manager, District Industries Centre and SIPCOT will be the competent authorities to issue eligibility certificates in respect to small-scale industries and major and medium industries respectively. The respective sales tax assessing authority will assess the sales tax liability of the units for each year. The sales tax authorities concerned, based on the assessments, will raise demands for deferral of sales tax without interest or waiver of sales tax after commencement of production by the units. But the tax payable for the year will be deferred/waived within the overall ceiling for which the eligibility certificate is issued by the authority. The deferred instalments shall be payable by the assessee-units after the completion of the period of deferral together with the sales tax of the current year, without any interest thereon. In case the unit avails the complete deferral/waiver benefit before the completion of specified deferment period of 5 years or 9 years as the case may be, the unit has to pay the normal sales tax immediately after the date of full availment of eligible deferral amount. The assessee of the unit for which the sales tax has been waived will start paying the current sales tax dues after the completion of the waiver period or immediately after the full availment of eligible waiver amount, whichever is earlier. However the deferred amount of sales tax for 5 years or 9 years as the case may be has to be paid after the completion of the deferral period along with the current dues, i.e., in the case of deferral of 9 years the amount deferred in the first year being payable along with the sales tax due in the 10th year, the amount deferred in the second year being payable along with sales tax due in the 11th year and so on.
10. All eligible units which have commenced production before the date of issue of the order will be eligible for interest-free sales tax loan/deferral as per the orders existing on the date of commencement of production. Units which have availed interest-free sales tax loan under existing schemes, may opt for the deferral facility to the extent of uncompleted period and unutilised amount of the earlier scheme.
11. The original project in a taluk may go in for expansion/diversification in the same taluk where the original project is located or in any other taluk and avail the interest-free sales tax deferral/waiver concession. However, this concession would be granted for one expansion/diversification only if carried out in the same taluk where the original project is located.
12. Second-hand machinery will not be part of the investment eligible for the computation of deferral or waiver of sales tax.
13. This order modifies all the previous orders available on the subject-matter or to the extent to which the scheme has been covered by this order.
14. This order issues with the concurrence of Commercial Taxes and Religious Endowment and Finance Department vide their U.O. No. 20626/B2/90-1 dated May 2, 1990 and U.O. No. 2674/FS/P/90 dated May 7, 1990, respectively."
By Order of the Governor M. M. Rajendran Chief Secretary to Government.
Annexure to G.O. Ms. No. 500 dated May 14, 1990
(List of most backward taluks)
Districts Taluks
1. Chengai Anna 1. Pallipattu
2. Dharmapuri 2. Pennagaram
3. Dindigul-Quaid-E-Milleth 3. Vedasandur
4. Kamarajar 4. Kodaikanal
5. Tiruchuli
5. Madurai 6. Usilampatti
6. Tirunelveli Kattabomman 7. Tenkasi
8. Radhapuram
7. Periyar 9. Gobichettipalayam
8. Pudukottai 10. Avudayarkoil
9. Salem 11. Yercaud
10. South Arcot 12. Kattumannarkoil
13. Tirukoilur
11. Thanjavur 14. Papanasam
15. Valangaiman
16. Kodavasal
17. Peravurani
18. Nannilam
19. Orthnad
20. Seerkazhi
21. Pattukottai
22. Tiruvarur
23. Tiruthuraipoondi
12. Tiruchirapalli 24. Udayarpalayam
25. Thuraiyur
13. North Arcot Ambedkar 26. Arcot
14. Tiruvannamalai Sambuvarayar 27. Chengam
28. Polur
29. Cheyyar
30. Vandavasi
Note. - Subsequently Paramathi-Velur taluk, Salem District was included in the list of most backward taluks - vide G.O. Ms. No. 1217, dated November 6, 1990.
A close reading of the aforesaid Government Order brings out the following features of that order. Under G.O. Ms. No. 423 dated July 7, 1989, the State Government identified 105 taluks in the State as industrially backward for the purpose of grant of interest-free sales tax loan, interest-free sales tax deferral, State capital subsidy, etc., which resulted according to the Government Order in question in regional imbalances regarding the industrialisation in the State. Therefore, the State Government thought of dividing the area into most backward and backward. Out of 105 taluks covered by G.O. Ms. No. 423 dated July 7, 1989, 30 taluks were identified as most backward and the remaining 75 taluks as backward. The taluks which were identified as most backward, were also mentioned in the annexure to the order. In respect of the new industries to be set up in 30 most backward taluks and also in 3 other industrial complexes of the State Industries Promotion Corporation of Tamil Nadu at Pudukottai, Cuddalore and Manamadurai, in addition to the existing concessions already offered under the earlier Government Orders referred to in the opening portion of this order, the following other incentives were offered :
(i) Waiver of sales tax due for a period of 5 years up to a ceiling of total investments made in fixed assets.
(ii) Regarding the existing industries in the most backward taluks and also in 3 State Industries Promotion Corporation of Tamil Nadu complexes, diversification and expansion undertaken by them were also made eligible for full waiver of sales tax due for a period of 5 years subject to a ceiling of total investment made in fixed assets under expansion or diversification.
Thus, the new industries set up in 30 most backward taluks and the existing industries undertaking expansion and diversification in those areas were given additional incentives in addition to the existing concessions of full waiver of sales tax dues for a period of five years, of course, the upper limit being the total investment made in fixed assets under expansion or diversification. The second part of the Government Order relates to 75 backward taluks, which is in paragraph 4 of the Government Order. According to that, in the industrial estates developed by any one of the Governmental agencies including Madras Export Processing Zone, Madras Metropolitan Development Authority, the scheme of interest-free sales tax loan or deferral ordered in the Government Order 305, Industries dated May 22, 1989 and further modified in the Government Orders 563 dated August 19, 1989 and 564 dated August 19, 1989, will be as mentioned in sub-clauses (i) and (ii) of clause (a) and clauses (b) and (c) of paragraph 4. Thus, paragraph 4 is applicable only to 75 backward taluks identified out of 105 backward taluks excluding the 30 most backward taluks, the incentive for which is covered by paragraph 3 of the Government Order. The main difference of opinion between the Government and the petitioners relates to the scope of paragraph 5 of the Government Order Ms. No. 500 dated May 14, 1990, which states that the sales tax deferral/waiver of expansion/diversification ordered in paragraphs 3 and 4 above is subject to the sales tax payable on products manufactured by the capacity created by expansion/diversification only.
7. Learned Additional Government Pleader for Taxes contends that paragraph 5 modifies paragraphs 3 and 4, consequently it is applicable to new industries as well as the expansion and diversification of the existing industries, thereby the incentive that is available to both is in respect of the sales tax payable on the sale of products manufactured by them. As far as the new industries established in 30 most backward taluks and 75 backward taluks are concerned, it is not possible to accept the contention of the learned Additional Government Pleader for Taxes. She is correct in contending that in order to ascertain the intention of the Government in issuing G.O. Ms. No. 500 dated April 14, 1990, court has to look into the file pertaining to the said G.O. and the correspondence that has gone on before the G.O. came to be issued. Such a course can be adopted only when the Government Order is vague and it is not possible to find out the true scope and ambit of the order. However the G.O. Ms. No. 500 is not vague and ambiguous. It contains clear terms. We have already pointed out that the object of G.O. Ms. No. 500 is to first identify the 30 most backward taluks out of 105 taluks and the remaining 75 taluks as backward and give additional incentives for establishment of new industries and the expansion and diversification of the existing industries by extending full waiver of sales tax dues for a period of 5 years up to a certain ceiling as specified in paragraphs 3 and 4. If that be the object of the Government Order and if the Government intended to restrict the incentive in respect of new industries, it could have very well included the new industries also in paragraph 5 of the order. Though paragraph 3 is referred to in paragraph 5 of the order, it is referred to only in respect of deferral or waiver of expansion/diversification as contemplated in paragraphs 3 and 4 of the order. Paragraph 4 of the order also deals with establishment of new industries as well as expansion and diversification of the existing industries in 75 backward taluks. That being so, when the Government Order, in paragraph 5, specifically deals with only the expansion/diversification of the existing units and does not include the new industries, it is not possible to interpret paragraph 5 of the Government Order as modifying the incentives offered in paragraphs 3 and 4 of the said order in respect of the industries newly established pursuant to the aforesaid Government Order. Paragraph 6 also relates to the industries in the most backward taluks, meaning thereby the 30 most backward taluks referred to earlier and also the industries in SIPCOT complexes at Cuddalore, Manamadurai and Pudukottai and enables them to opt either for the full waiver of sales tax for a period of 5 years as ordered in paragraph 3 of the order or for the deferral of sales tax for 9 years as applicable to the industries in the backward taluks ordered in paragraph 4(a) of the order. It also further states that the option will be exercised along with the application submitted to the authority for issuing the eligibility certificate. The option once exercised and accepted is final and it cannot be changed. Paragraphs 7, 8, 9 and up to 11 deal with the modalities of the availment of the benefits and other matters related thereto, such as payment of sales tax in the event the industry opts for deferral payment, etc. It is not necessary for our purpose to refer them.
8. It may also be pointed out here that this is how the officers of the Government connected with the Industries Department as well as the Sales Tax and Commercial Taxes Departments have understood G.O. Ms. No. 500 dated May 14, 1990. Of course, we must make it clear that our interpretation is not based upon as to how they understood. It is based upon the actual and clear wordings contained in the Government Order Ms. No. 500 dated May 14, 1990. But, the understanding of the Government Order in the aforesaid manner by the Industries Department and the Commercial Taxes Department has a bearing on the question of promissory estoppel. The Industries Department has issued in May, 1991, a booklet titled as "Major incentives offered by the Government of Tamil Nadu". The Secretary to the Government has also written an introduction to the said booklet. It deals with the previous orders of the Government as well as the Government Order Ms. No. 500 dated May 14, 1990. On page 9 at paragraph 12.6, while dealing with G.O. Ms. No. 500 dated May 14, 1990, it has been specifically stated thus :
"Sales tax deferral and waiver will include TNGST, CST, surcharge, additional surcharge and additional sales tax (turnover tax)."
Not only this, there is also another very very attractive and colourful booklet issued by the SIPCOT with the title as "Turning the Wheels of Fortune for Industries". This colourful booklet echoes what is stated in the booklet titled as "Major Incentives offered by the Government of Tamil Nadu."
9. We may also mention here that the expression "sales tax" used in G.O. Ms. No. 500 dated May 14, 1990, includes sales tax payable on the purchase of raw materials as well as sale of finished products. In fact, the very Act itself relates to levy of general tax on the sale or purchase of goods in the State of Tamil Nadu. "Dealer" is defined as meaning any person who carries on the business of buying, selling, supplying or distributing goods directly or otherwise whether for cash or for deferred payment or for commission or other valuable consideration. "Total turnover" means the aggregate amount for which goods are bought or sold or delivered or supplied or otherwise disposed of in any of the ways referred to in clause (n) by a dealer either directly or through another on his own account or on account of others whether for cash or for deferred payment or other valuable consideration, provided that the proceeds of the sale by a person of agricultural or horticultural produce, other than tea and rubber (natural rubber latex and all varieties and grades of raw rubber) grown within the State by himself or on any land in which he has an interest whether as owner, usufructuary mortgagee, tenant or otherwise shall be excluded from his turnover. The Schedule to the Act also provides for the tax payable on the incident of purchase or sale of goods. Therefore, very rightly, it is not contended by the State Government that the expression "sales tax" used in the Government Order Ms. No. 500 dated May 14, 1990, does not include tax on purchase.
10. Accordingly, point (i) is answered as follows : G.O. Ms. No. 500 dated May 14, 1990, gives concession in addition to the existing concession to the new industries established in 30 most backward taluks, of full waiver of sales tax for a period of 5 years from the date of commercial production. As far as expansion/diversification of the existing industries in the 30 most backward taluks are concerned, it gives only the concession of sales tax deferral or waiver as may be opted by the industries in respect of sales tax payable on products manufactured by the capacity created by expansion/diversification in the most backward and backward taluks only, subject to the limit mentioned in paragraph 3.
Points (ii) and (iii) :
11. G.O.P. No. 92 dated February 22, 1991, bearing CTRE 81/91 published in the Gazette on April 24, 1991, relates to 30 most backward taluks and provides for remission of tax payable by new industries set up in 30 most backward taluks and also in 3 industrial complexes of SIPCOT at Pudukottai, Cuddalore and Manamadurai on the sale of products manufactured by those units for a period of 5 years from the date of commencement of production on or after May 14, 1990, up to a ceiling of total investment made in fixed assets after deducting the quantum of tax under the Central Sales Tax Act for the same period subject to the condition that the units produce before the assessing authority the eligibility certificates issued by the General Manager, District Industries Centre in the case of small-scale industries and by the SIPCOT in the case of medium and major industries. It also remits sales tax payable by the existing industries in the aforesaid 30 most backward taluks and also in 3 industrial complexes at SIPCOT in Pudukottai, Cuddalore and Manamadurai on the sale of products manufactured by the capacity created by expansion/diversification only for a period of 5 years from the date of commencement of production on or after May 14, 1990 subject to the ceiling of the initial investment made in fixed assets under expansion/diversification subject to the condition that the units produce before the assessing authority the eligibility certificates. The other notification, viz., G.O. Ms. No. 92 dated February 22, 1991, bearing number CTRE 82/91 deals with new industries and expansion and diversification of the existing industries in the remaining 75 backward taluks. It is also similarly worded. G.O.P. No. 92 dated February 22, 1991, bearing CTRE 83/91 relates to payment of sales tax payable for a period of 5 years by the industrial estates developed by Madras Export Processing Zone and Madras Metropolitan Development Authority on sale of products manufactured by the said units. This G.O. is also similarly worded. The last of the series G.O.P. No. 92 bearing CTRE 84 of 1991 relates to payment of sales tax payable by new or existing industries within the State of Tamil Nadu in 30 or 75 most backward taluks in certain districts notified by Government. In substance, the said Government Order is also to the same effect as the other G.Os. referred to above. Thus, it is clear from the aforesaid 4 G.Os. issued under section 17A of the Act, the concession in the matter of payment of sales tax relates to the sales tax payable only on the sale of finished products. Therefore, these 4 G.Os. issued under section 17A of the Act clearly restrict the operation of G.O. Ms. No. 500 dated May 14, 1990. We have already pointed out the scope and ambit of G.O. Ms. No. 500 dated May 14, 1990. The full waiver of sales tax concession granted under G.O. Ms. No. 500 dated May 14, 1990, has been restricted by G.O.P. No. 92 to sales tax payable on the sale of finished products. Therefore, the question that arises for consideration is whether this modification or restriction of the concession ordered under G.O. Ms. No. 500 dated May 14, 1990, can be held to affect the new industries established pursuant to Government Order Ms. No. 500 dated May 14, 1990, when the commercial production commenced before April 24, 1991, the date on which G.O.P. Nos. 81 to 84 have been published in the Official Gazette.
12. In this context, the question of promissory estoppel as pleaded by the petitioners requires to be considered. It is not disputed and it cannot be disputed at all that irrespective of the provisions contained in section 17A of the Tamil Nadu General Sales Tax Act, which only enable the State Government to provide for payment of deferral tax under certain circumstances, it is open to the State Government in exercise of its executive power under article 162 of the Constitution to lay down an industrial policy and implement it and in order to give effect to such industrial policy to order certain concessions such as waiver or deferment of sales tax, concessional rate of energy consumed by the industries and several other such matters as incentives to the industrialists to set up their new industries so that the industries can come up in the State, resulting in more production and more employment, which will add to the welfare of the State and thereby the welfare of the people. G.O. Ms. No. 500 dated May 14, 1990, has been issued in the name of, and under the order of, the Governor. Therefore it is clear that it is issued in exercise of the executive power under article 162 and that it is so, is not disputed before us. As long as it is permissible in law and there is no prohibition contained either under any Act or under the Constitution or under any other law prohibiting the State Government to offer such an incentive as the one under consideration, the representation made by the State Government through G.O. Ms. No. 500 dated May 14, 1990 to the industrialists to take advantage of those concessions and establish industries can in unequivocal terms be construed as a lawful promise made by the State Government to the industrialists. It is also not in dispute that the industrialists acting upon such promise, established new industries and also commenced production before April 24, 1991. There is no illegality, no lack of bona fides on the part of industries. Everything has been fair and proper. If that be so, the State Government cannot turn back and cannot withdraw the concession or restrict it. In view of the fact that the State Government is entitled to exercise the power under section 17A of the Act which even if construed as an act of the delegatee, in other words, exercise of the legislative power, the State Government cannot escape from the promise made by it. What applies to the Legislature, does not apply to the State Government, in other words, there is no estoppel against law, but there is estoppel against the State Government. That it is so, is well established by the catena of decisions of the Supreme Court, viz.. Union of India v. Angle Afghan Agencies AIR 1968 SC 718, Century Spinning & Manufacturing Co. Ltd. v. Ulhasnagar Municipal Council , Turner Morrison and Co. Ltd. v. Hungerford Investment Trust Ltd. , Radhakrishna Agarwal v. State of Bihar , Motilal Padampat Sugar Mills Co. Ltd. v. State of Uttar Pradesh , Shri Bakul Oil Industries v. State of Gujarat , Bhim Singh v. State of Haryana , Gujarat State Financial Corporation v. Lotus Hotel Pvt. Ltd. , Union of India v. Godfrey Philips India Ltd. , Express Newspapers Ltd. v. Union of India and Pournami Oil Milts v. State of Kerala as referred to in P.P.P. Industries v. Commissioner of Industries . Therefore, it is clear that the State Government is estopped from applying the G.O.P. No. 92 dated February 22, 1991, published in the Government Gazette on April 24, 1991, to the industries which have been set up pursuant to G.O. Ms. No. 500 dated May 14, 1990 and started commercial production before April 24, 1991. Those industries are entitled to have the full benefit of G.O. Ms. No. 500 dated May 14, 1990, for the period mentioned therein irrespective of G.O.P. No. 92 dated February 22, 1991. As far as the industries set up subsequent to April 24, 1991, they cannot claim the full benefit of G.O. Ms. No. 500 dated May 14, 1990. They will be entitled to the benefit of that G.O. as restricted by G.O.P. No. 92 dated February 22, 1991. The action taken by the State Government and its officers against the industries which have been set up pursuant to G.O. Ms. No. 500 dated May 14, 1990 and commenced commercial production before April 24, 1991 have to be annulled and they have to take action in accordance with G.O. Ms. No. 500 as interpreted by us and issue fresh orders as to the waiver/deferment of sales tax as the case may be. They have to review their action in accordance with G.O. Ms. No. 500 dated May 14, 1990, as interpreted by this order. In such process, pursuant to G.O. Ms. No. 500 dated May 14, 1990, such of those who are entitled to deferral payments and nevertheless, the tax is recovered from them before the period of deferment is over, they are entitled to restitution or re-scheduling as may be considered just and appropriate in the facts and circumstances of the case, as and when they approach the concerned authorities. In the light of the conclusion arrived at by us, we do not consider it necessary to refer to the various decisions relied upon by both sides.
13. Points (ii) and (iii) are answered accordingly.
14. The writ petitions are allowed in terms of findings recorded on points (i) to (iii) and the directions issued as above. All other contentions, if any, in the individual cases of both sides are left open. However, there will be no order as to costs. The W.M.Ps. are also disposed of.
15. Writ petitions allowed.