Allahabad High Court
Hindustan Reprographics Limited And ... vs The State Of Uttar Pradesh And Ors. on 2 September, 1988
Equivalent citations: [1989]72STC424(ALL)
JUDGMENT B.N. Misra, J.
1. The writ petition arises in the following circumstances :
The petitioner-company is a registered dealer under the Uttar Pradesh as well as the Central Sales Tax Acts. It has invested about rupees five crores and established a unit in the district of Dehradun for manufacture of photo-copier, microfilm, reader-cum-printer, etc. It is registered as a medium scale industry. The petitioner's unit having been established in the district of Dehradun with capital investment exceeding three lacs rupees was entitled to exemption from payment of tax for a period of five years from the date of starting production under column 3(b) at serial No. 3 of Government notification dated 27th August, 1984. Accordingly on the application of the petitioner for grant of eligibility certificate under Section 4-A of the U.P. Sales Tax Act (hereinafter referred to as "the Act"), the Director of Industries, respondent No. 2, by order dated 9th December, 1984 granted to the petitioner the eligibility certificate (annexure 1) for a period of five years with effect from 14th January, 1983, the date of starting production. Next came Government notification, dated 29th January, 1985, superseding the earlier notification, dated 27th August, 1984 and it, inter alia, provided that for units with capital investment exceeding three lacs rupees and the date of production whereof falls on or after 1st October, 1982 but not later than 11th January, 1990, the period of exemption in the district of Dehradun shall be seven years which shall be reckoned from the date of first sale, if such sale takes place not later than six months from the date of starting production, or in other cases, from the date following the expiration of six months from the date of starting production subject to the condition that the said industrial unit has not discontinued production of such goods for a period exceeding six months at a stretch in any assessment year. A similar notification under Sub-section (5) of Section 8 of the Central Sales Tax Act, 1956, was also issued by the Government on 29th January, 1985 extending the period of exemption from five years to seven years in respect of units in the district of Dehradun, the date of starting production whereof falls on or after 1st October, 1982, but not later than 31st March, 1990, with capital investment exceeding three lacs rupees. Thereafter, another notification was issued by the Government on 26th December, 1985 superseding the notification, dated 29th January, 1985 and it also, inter alia, provided that the period of exemption for units in the district of Dehradun with capital investment exceeding three lacs rupees and the date of starting production whereof falls on or after 1st October, 1982 but not later than 3lst March, 1990, shall be seven years. A similar notification was issued on 26th December, 1985 under the Central Sales Tax Act superseding the notification, dated 29th January, 1985 and it also, inter alia, provided that in respect of units in the district of Dehradun with capital investment exceeding three lacs rupees and the date of starting production whereof falls on or after 1st October, 1982 but not later than 31st March, 1990, the period of exemption shall be seven years. On 17th June, 1987 the petitioner applied for exemption for a period of seven years on the strength of notifications, dated 29th January, 1985 and 26th December, 1985 and respondent No. 2 by his order, dated 17th June, 1987, extended the period of exemption from five years to seven years with effect from 14th January, 1983, the date of starting production (annexure 6). However, by order dated 23rd May, 1988 (annexure 8), respondent No. 2 reduced the period of exemption from seven years to five years on the ground that by virtue of clarifications received under Government letters, dated 17th March, 1988 and 23rd March, 1988 the defined date of production of the petitioner's unit being prior to 29th January, 1985, the petitioner was entitled to exemption only for a period of five years under the Government notification, dated 27th August, 1984. It is this order, dated 23rd May, 1988, which is challenged in this writ petition.
2. In the counter filed on behalf of respondent No. 2, it is not disputed that the petitioner's unit is a "new unit" as defined under Section 4-A of the Act and that the date of starting production was 14th January, 1983. It is explained that though it was provided in the notification, dated 29th January, 1985, that units in the district of Dehradun with capital investment of more than three lacs rupees, would be entitled to exemption for a period of seven years if their date of starting production falls between 1st October, 1982 and 31st March, 1990, the Government later on clarified that units whose date of production fell prior to 29th January, 1985 shall be given exemption only for a period of five years from the defined date of production under Government notification, dated 27th August, 1984. Photostat copies of the Government letters, dated 17th March, 1988 and 23rd March, 1988, have been filed. The relevant Government instructions contained in these two letters are that units whose defined date of production fell after 1st October, 1982 but prior to 29th January, 1985, would be entitled to exemption under notification, dated 27th August, 1984 and units whose denned date of production fell between 29th January, 1985 and 25th December, 1985 would be entitled to exemption contained in the notification dated 29th January, 1985 and lastly units whose defined date of production fell after 26th December, 1985, would be entitled to exemption according to notification, dated 26th December, 1985.
3. The question which arises for consideration is whether the period of exemption of seven years granted to the petitioner under notifications dated 29th January, 1985 and 26th December, 1985, could be modified by the Government as per Government instructions contained in letters dated 17th March, 1988 and 23rd March, 1988. Sri Bharatji Agrawal, learned counsel appearing for the petitioner, vehemently urged that notifications dated 29th January, 1985 and 26th December, 1985, were statutory notifications and, therefore, they could not be modified by administrative instructions issued by the Government in the letters dated 17th March, 1988 and 23rd March, 1988. Sri P.C. Srivastava, learned Standing Counsel, appearing for the respondents, on the other hand, submitted that the instructions contained in Government letters dated 17th March, 1988 and 23rd March, 1988, were nothing more than clarification of the actual position.
4. In this context it would be useful to refer to a decision of the Supreme Court reported in AIR 1985 SC 956 (K.M. Chikkaputtaswamy v. State of Andhra Pradesh), In which while dealing with the question of requirement of statutory notification under Section 9 of the Andhra Pradesh Motor Vehicles Taxation Act, 1963, the Supreme Court observed as follows:
It is unfortunate that the High Court while deciding the above question overlooked the relevant provisions contained in Section 9 of the Act. Section 9 of the Act reads thus :
'9. (1) The Government may, by notification,-
(a) grant an exemption, make a reduction in the rate or order other modification not involving an enhancement in the rate, of the tax payable-
(i) by any person or class of persons, or
(ii) in respect of any motor vehicle or class of motor vehicles or motor vehicles running in any particular areas ; and
(b) cancel or vary such exemption, reduction or other modification.
(2) Any notification issued under Sub-section (1) shall be laid, as soon as may be after it is issued, on the table of the Legislative Assembly of the State while it is in session for a total period of fourteen days which may be comprised in one session or in two successive sessions.
Section 9 of the Act provides that the Government may by notification grant an exemption of the tax payable by any person or class of persons and it may cancel or vary such exemption, reduction or other modification. Any notification issued under Sub-section (1) of Section 9 of the Act either granting any exemption or cancelling it is required to be laid, as soon as may be after it is issued, on the table of the Legislative Assembly of the State. The expression 'notification' is defined by Section 2(d) of the Act as a notification published in the Andhra Pradesh Gazette. The State Government by Section 3 of the Act is authorised to levy, by issuing a notification, tax on every motor vehicle used or kept for use in a public place in the State of Andhra Pradesh. When once a notification is issued under Section 3 of the Act in respect of any motor vehicle, the tax becomes payable by the registered owner of the motor vehicle or any other person having possession or control thereof. Such person can be exempted from the payment of the tax so levied only by a notification issued under Section 9(1) of the Act. A notification issued under Section 9 being a statutory instrument can be cancelled or modified in the manner prescribed by the Act and in no other way. It is significant that any notification issued under Section 9(1) of the Act either granting exemption or cancelling or varying such exemption has got to be placed on the table of the Legislative Assembly. Both the notification issued under Section 3 of the Act and the notification issued under Section 9(1) thereof fall within the meaning of the expression 'law' referred to in Article 265 of the Constitution. The State Government can grant exemption from payment of tax or cancel an exemption already granted only in accordance with Section 9(1) of the Act. That is the legislative mandate. In the instant case, admittedly no notification is issued as provided by Clause (b) of Section 9(1) of the Act either cancelling or withdrawing or varying the exemption granted earlier by the notification issued under Section 9(1). The High Court erred in holding that the learned counsel for the appellants had not drawn its attention to any statutory provision or rule which provided that a concession of this nature could be given only under a notification. A mere perusal of the provisions of Section 9 and the notification which is issued thereunder, would have made it very clear that no exemption from the payment of the tax due under the Act could be granted except by the issue of a notification. It is hazardous to depend on one's memory while construing a statutory provision and this case serves as a good illustration of this statement. Having held that it was not necessary to issue a notification for granting an exemption, the High Court misled itself into thinking that the issue of a notification for the purpose of withdrawing the concession already granted was also unnecessary. The reason given by the High Court for rejecting this contention of the appellants is, therefore, wholly untenable.
5. Keeping in view the aforesaid principles laid down by the Honourable Supreme Court, we may proceed to consider Sub-sections (1) and (2) of Section 4-A of the Act which are relevant in the present context and reads thus :
Section 4-A. (1) Notwithstanding anything contained in Section 3 or Section 3-A, where the State Government is of the opinion that it is necessary so to do for increasing the production of any goods or for promoting the development of industry in the State generally or in any districts or parts of districts in particular, it may on application or otherwise, in any particular case or generally, by notification, declare that the turnover of sales in respect of such goods by the manufacturer thereof shall, during such period not exceeding seven years from such date on or after the date of starting production as may be specified by the State Government in such notification which may be the date of the notification or a date prior or subsequent to the date of such notification and where no date is so specified from the date of first sale by such manufacturer, if such sale takes place within six months from the date of starting production and in any other case from the date following the expiration of six months from the date of starting production and subject to such conditions, as may be specified, be exempt from sales tax or be liable to tax at such reduced rate as it may fix.
(2) It shall be lawful for the State Government to specify in the notification under Sub-section (1) that the exemption from, or reduction in the rate of tax, shall be admissible-
(a) generally in respect of all such goods manufactured subsequent to the date of such notification ; or
(b) in respect of such of those goods only as are manufactured in a new unit, the date of starting production whereof falls on or after the first day of October, 1982 ; or
(c) only if the manufacturer had not discontinued production of such goods for a period exceeding six months at a stretch ;
(d) only if the manufacturer furnishes to the assessing authority an eligibility certificate granted by such officer, in accordance with such procedure as may be specified."
6. Thus, the legislative mandate under Sub-sections (1) and (2) of Section 4-A of the Act is that the exercise of powers by the State Government must be by notification only and in no other way. "Notification" is defined under Section 4(29-A) of the Uttar Pradesh General Clauses Act, 1904 as follows :
(29-A) 'Notification' or 'public notification' shall mean a notification published in the Gazette of the State and the word 'notified' shall be construed accordingly.
7. Further, it is worthy of note that notifications dated 29th January, 1985 (annexure 2) and 26th December, 1985 (annexure 4) were issued by the State Government in exercise of powers under Section 4-A of the Act read with Section 21 of the Uttar Pradesh General Clauses Act and notifications dated 29th January, 1985 (annexure 3) and 26th December, 1985 (annexure 5) were issued by the State Government in exercise of powers under Sub-section (5) of Section 8 of the Central Sales Tax Act, 1956 read with Section 21 of the General Clauses Act. These notifications have been duly published in the Gazette of the State. The four notifications clearly provide that exemption, in respect of units in the district of Dehradun with capital investment exceeding three lacs rupees and the date of starting production whereof falls on or after 1st October, 1982 and not later than 31st March, 1990, shall be for a period of seven years which shall be reckoned from the date of first sale, if such sale takes place not later than six months from the date of starting production, or in other cases, from the date following the expiration of six months from the date of starting production subject to the condition that the said industrial unit has not discontinued production of such goods for a period exceeding six months at a stretch in any assessment year. Thus the period of exemption of seven years having been specified by the State Government notification and the said notification being a statutory instrument, could not be modified or reduced to a lesser period by administrative instructions or clarifications issued by the Government under letters, dated 17th March, 1988 and 23rd March, 1988.
8. For the reasons stated above, this writ petition succeeds and is allowed. The order, dated 23rd May, 1988, copy of which has been filed as 8 to the writ petition is set aside and the administrative instructions contained in Government letters dated 17th March, 1988 and 23rd March, 1988, to the extent they provide that the period of exemption for units whose defined date of production fell after 1st October, 1982 but prior to 29th January, 1985 shall be governed under notification dated 27th August, 1984, units whose defined date of production fell between 29th January, 1985 and 25th December, 1985 shall be governed by notification dated 29th January, 1985 and units whose defined date of production falls after 26th December, 1985, shall be governed by notification dated 26th December, 1985, are quashed as they are contrary to the period of exemption indicated in the statutory notifications, contained in annexures 2 and 4 and 3 and 5. The petitioner is entitled to exemption for a period of seven years as provided in the aforesaid notifications dated 29th January, 1985 and 26th December, 1985. In the facts of this case there shall be no order as to costs.