Gujarat High Court
Pragna R. Jambusaria vs State Of Gujarat And Ors. on 22 February, 1996
Author: C.K. Thakker
Bench: C.K. Thakker
JUDGMENT C.K. Thakker, J.
1. In this group of petitions, common questions of fact and law arise for our determination and, it is, therefore, appropriate to decide all the petitions by a common judgment.
2. For appreciating the questions raised in the present group of petitions, few facts of the first petition, being Special Civil Application No. 7138 of 1988 may now be stated :
The petitioner of this petition is doing business of manufacturing melemine table-wares, electrical components, switch-gears, etc., at the Sun Electrical Components. C1-B, 3702, GIDC, Sachin, Surat. She is a dealer registered under the Gujarat Sales Tax Act, 1969 (hereinafter referred to as "the Act") having registration certificate No. 4694008 dated December 6, 1985. It is the case of the petitioner that she was tempted to establish small-scale industries in a backward area of Sachin by investing by huge amount of capital on account of being informed by the resolution dated August 27, 1980 issued by the Industries, Mines and Power Department of respondent No. 1, that a scheme of the sales tax incentive from June 1, 1980 for a period of five years has been introduced and the sales tax exemption incentive has been granted by entry No. 118, vide notification dated February 5, 1981 issued under the provisions of section 49(2) of the Act. The petitioner took steps to obtain shed of the Gujarat Industrial Development Corporation, the Government of Gujarat undertaking ("GIDC", for short) at Sachin on April 4, 1984 and obtained possession of a shed being C1-B 3702 from GIDC by incurring cost of Rs. 2,97,760. Thereafter she invested huge amount towards construction of factory building, plant and machinery with electrical installations by investing more than Rs. 10 lacs. It is her case that the area of the factory shed is beyond 10 kms. of the municipal limit of Surat and as such she is entitled to benefit of the Government resolution. She complied with all the requirements and conditions to make herself eligible for sales tax exemption incentives envisaged by the Government resolution read with entry No. 118 of the notification issued under section 49(2) of the Act. She made an application to respondent No. 2, General Manager, District Industries Centre, Surat, on December 17, 1985 for granting eligibility certificate. She also submitted necessary certificate issued by the GIDC showing that the shed of the petitioner was situated beyond 10 kms. from Surat. After receiving the application of the petitioner necessary inquiries were made by the authorities, the facts were verified by respondent No. 2 and eligibility certificate was granted in favour of the petitioner by granting sales tax exemption of 50 per cent to the extent of Rs. 5,43,827.50 (50 per cent of Rs. 10,87,655). It was granted on February 12, 1987. It is asserted by the petitioner that it was made effective from April 4, 1987. It is her case that in spite of the fact that everything was in accordance with law and the petitioner had rightly got exemption certificate as per Government policy, without assigning any ground, without issuing notice and applying principles of natural justice and without there being any earthly reason by an order dated April 27, 1988 the second respondent reduced sales tax exemption limit to the extent to 25 per cent, i.e., from Rs. 5,43,827.50 to Rs. 2,71,913.75. It is this action which is challenged by the petitioners in the present petition.
3. An identical challenge is made by other petitioners of Special Civil Application Nos. 7139, 7140 and 7141 of 1988. Necessary facts regarding distance, etc., as shown by the petitioner are as under :
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S. Spl. Distance Original exemption Reduced exemption No. C.A.
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1. 7138/88 10 kms. Rs. 5,43,827.50 Rs. 2,71,913.75 A/2 p.40 A/3 : p. 41 A/4; p. 45 dated 27-4-1988.
dated 12-2-1987
2. 7139/88 10 kms. Rs. 4,05,144 Rs. 2,02,572 A/1 p. 20 A/2; p. 25 A/3; p. 25 dated 12-2-1987 dated 27-4-1988.
3. 7140/88 10 kms. Rs. 3,30,768 Rs. 1,65,384 A/1 p. 20 A/2 p. 25 A/3; p. 2 dated 12-2-1987 dated 27-4-1988.
4. 7141/88 10 kms. Rs. 4,66,024.50 Rs. 2,33,012.50 A/1 p. 20 A/2; p. 25 dated A/3; p. 25 12-2-1987 dated 27-4-1988.
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4. These petitions were admitted on November 17, 1988 and now they have been placed for final hearing.
5. It appears that a petition being Special Civil Application No. 3823 of 1989 was filed by one Khukri Packaging Private Ltd. and another. That petition was admitted and it was ordered to be heard along with this group of petitions, namely, Special Civil Application Nos. 7738 to 7741 of 1988. That petition (Special Civil Application No. 3823 of 1989) came up for hearing before us and by a judgment and order dated April 4, 1995 [Khukri Packaging Private Ltd. v. State of Gujarat [1998] 109 STC 117 (Guj)], it was allowed and rule was made absolute by quashing revised eligibility certificate and holding that action of tax incentive benefit was illegal and unlawful.
6. It was not disputed by and between the parties that the point agitated in Special Civil Application No. 3823 of 1989 [Khukri Packaging Private Ltd. v. State of Gujarat [1998] 109 STC 117 (Guj)] was of an identical nature. In fact, that petition was ordered to be heard along with this group of petitions but somehow this group of petitions could not be heard with Special Civil Application No. 3823 of 1989. In that petition, after hearing the parties, and considering the expression "designated area" vide entry No. 118 which was added by a notification dated February 5, 1981, we held that the petitioner was entitled to sales tax exemption incentives.
7. It is contended by the respondent-authorities that what is required to be seen is the distance of the growth centre from the municipal limits of certain specified cities and not that of the concerned unit. Hence, if unit is situated or located in a growth centre which falls partly within and partly outside the banned distance, it would not be entitled to incentive benefits. It was conceded that earlier the department had granted exemption by extending benefit of 50 per cent. It was, however, a mistake and the said mistake was corrected subsequently. The petitioner cannot make any grievance against the correction of such mistake.
8. In Special Civil Application No. 3823 of 1989 [Khukri Packaging Private Ltd. v. State of Gujarat [1998] 109 STC 117 (Guj)] also, the similar argument was advanced. After considering rival contentions of the parties, as also considering the relevant provisions of the Act, notification and Government resolutions to which reliance was placed, we observed as under :
"6. Having gone through the record and relevant documents, in our opinion, the petition requires to be allowed. It is undisputed fact that notification is issued in exercise of the powers under section 49(2) of the Act. Sub-section (2) of section 49 provides that subject to such conditions as it may impose, the State Government may, if it considers it necessary so to do in the public interest, by notification in the official Gazette, exempt any specified class of sales or purchases from payment of the whole or any part of the tax payable under the provisions of this Act. Even according to the respondents, notification was 'statutory Government notification' under the Act. The real question, therefore, is as to whether the respondent-authorities are right in depriving the petitioner of that benefit available under the statutory notification on the ground that Sachin is situated within 10 kms. from Surat and, hence the petitioner is not entitled to the benefit of the notification. In our opinion, the submission of the learned counsel for the petitioner is well-founded that the relevant query is not as to whether or not Sachin is situated within 10 kms. from Surat but as to where the unit of the petitioner is located. It is not even the case of the respondent-authorities that other conditions under notification have not been fulfilled by the petitioner. In our view under the notification what is required to be seen for getting benefits under the notification is whether new industry has commissioned in any of the 'designated area'. The notification makes it clear that as to what designated area means. It defined 'designated areas' as an area beyond 10 kms. from the city of Surat. It is the case of the petitioners which is not disputed and really there is sufficient evidence on record including the certificate issued by the Deputy Executive Engineer, GIDC, Sachin at annexure A/3-A dated April 25, 1987 that the shed No. A1/3502 in GIDC of the petitioner is situated beyond 10 kms. boundary line from Surat city. Thus, as per the definition of 'designated area' and the notification granting exemption, the petitioner can be said to be eligible to get benefits. When such benefits have already been granted in favour of the petitioner, it should not have been modified by the department, on the ground that Sachin is situated within 10 kms. from the city of Surat. In our opinion, therefore, action taken by the respondent-authorities is unlawful and all consequential order require to be quashed and set aside.
9. In this connection, Mr. Pathak, drew our attention to a decision of the Division Bench of this Court in Jai Laminart Ltd. v. State of Gujarat (Special Civil Application No. 8803 of 1988 decided on October 21, 1994) to which one of us (Rajesh Balia, J.) was a party. In that case also, it was contended that village Bavala was situated within 24 kms. from Municipal Corporation limit of city of Ahmedabad and, hence the petitioner was not entitled to tax exemption benefits. Holding the notification as statutory and considering the fact that industry of the petitioner was situated beyond 24 kms. from the city of Ahmedabad, this Court held that the petitioner was entitled to tax exemption benefits and the action of the respondent-authorities of not granting exemption was illegal. The respondents no doubt, submitted that Bavala was stated to be one of the areas beyond 24 kms. from the municipal limits of Ahmedabad and that fact was mentioned in the notification itself. Be that as it may, in our opinion, when, notification grants such benefits in favour of new industries situated in 'designated area' and the said expression is defined as 10 kms. from the city of Surat and when it is not disputed that the unit of the petitioner is situated beyond 10 kms. In our opinion, the action of the respondent-authorities in curtailing tax benefits, to the extent of 25 per cent is clearly illegal and contrary to law. From the reply, it is apparent that the respondents want to read the eligibility of scheme to a new industrial unit situated in an area in a 'growth centre' situated beyond banned distance instead of an area situated beyond banned distance from 'municipal limits' differently. That, in our option, is not open to them.
10. There is one reason also on which the petition should be allowed. Admittedly, the notification A/3 is 'statutory' in character. That statutory notification defines 'designated area' as an area beyond 10 kms. from the city of Surat. The said definition must hold the field and should be given effect until it is clarified, modified or amended by issuing a similar notification under section 49(2) of the Act. It is not open to the Government by a letter (executive fiat) to 'clarify' the expression 'designated area' when it has been defined statutorily. The so-called clarification of the Government in view of settled legal position cannot override statutory definition and the case must be decided on the basis of notification of February 5, 1981. It is pertinent to note in this connection that according to the respondents that the definition of 'designated area' under the scheme was understood by all concerned in the same way as discussed above and in fact benefit thereof was allowed to all concerned who had, taken effective steps to set up a new industrial unit before June 15, 1982 as per clarificatory letter, dated May 16, 1982, annexure III to the affidavit-in-reply. Definition of 'designated area' has not been altered in the scheme. Without amending the scheme which is in the nature of subordinate legislation, the meaning of definition cannot be altered by executive fiat."
11. In our opinion, the point is directly concluded by our earlier decision in Khukri Packaging Pvt. Ltd. [1998] 109 STC 117 (Guj). Mr. M. G. Doshit, learned counsel for the respondents, submitted that in his opinion even earlier case could not have been decided in favour of the petitioner. He maintained the stand taken by the respondent-authorities that the "designated area" referred in the notification must be interpreted as the "area" and not the "unit". According to him, therefore, earlier decision requires reconsideration. Virtually, his submission is that earlier judgment requires to be reviewed.
12. Mr. Pathak, in this connection, drew our attention to a decision of the honourable Supreme Court in Gannon Dunkerley & Co. v. State of Rajasthan [1993] 88 STC 204. In that case also, an argument was advanced before the honourable Supreme Court that earlier case decided by the court required reconsideration. Dealing with that point, their Lordships of the honourable Supreme Court referred to the observations in Lt. Col. Khajoor Singh v. Union of India AIR 1961 SC 532 : "This Court should not, except when it is demonstrated beyond all reasonable doubt that its previous ruling given after due deliberation and full hearing was erroneous, go back upon its previous ruling, particularly on a constitutional issue". In Keshav Mills Co. Ltd. v. Commissioner of Income-tax AIR 1965 SC 1636, also the court observed :
"When this court decides questions of law, its decisions are, under article 141, binding on all courts within the territory of India, and so, it must be the constant endeavour and concern of this Court to introduce and maintain and element of certainly and continuity in the interpretation of law in the country. Frequent exercise by this Court of its power to review its earlier decisions on the ground that the view pressed before it later appears to the court to be more reasonable, may incidentally tend to make law uncertain and introduce confusion which must be consistently avoided. That is not to say that if on a subsequent occasion, the court is satisfied that its earlier decision was clearly erroneous, it should hesitate to correct the error; but before a previous decision is pronounced to be plainly erroneous, the court must be satisfied with a fair amount of unanimity amongst its members that a revision of the said view is fully justified."
13. Reference was made to the observations of the Supreme Court of the United States in Smith v. Allwright (1944) 321 US 649, wherein it was stated that "that adjudications of the court were rapidly gravitating 'into the same class as a restricted railroad ticket, good for this day and train only'". Thus, according to the Supreme Court, it would not be proper to reopen the issues which were covered by earlier decisions unless the court is of the view that the earlier decision was completely and totally erroneous.
14. In our opinion, the question raised in the present group of petitions is directly covered by our earlier decision is Special Civil Application No. 3823 of 1989 [Khukri Packaging Private Ltd. v. State of Gujarat [1998] 109 STC 117 (Guj)]. In that case also a similar contention was raised and after due deliberation, we negatived the contention of the department and held that in the light of relevant provisions of the Act, resolutions and the notification, which is of statutory nature, the petitioner was entitled to tax benefit incentives to the extent of 50 per cent. We do not see any justifiable reason to take a contrary view. As per earlier view, the petitioners are entitled to 50 per cent on the sales tax incentives which was granted in their favour. The impugned action of reducing the said benefit to 25 per cent is, therefore, contrary to law and requires to be quashed and set aside.
15. For the aforesaid reasons, the petitions require to be allowed and are accordingly allowed. Rule is made absolute. The impugned orders revising eligibility certificates and of curtailing tax benefits are hereby quashed and set aside and it is directed that the respondent-authorities will continue to grant benefit of tax exemption as granted in their favour in February, 1987. There will be no order as to costs.
16. Petitions allowed.