State Taxation Tribunal - West Bengal
Damodhar Cement And Slag Ltd. And Ors. vs Assistant Commissioner, Commercial ... on 11 July, 2006
Equivalent citations: (2007)8VST475(NULL)
JUDGMENT
R.K. Datta Chaudhuri, Judicial Member
1. In this application under Section 8 of the West Bengal Taxation Tribunal Act, 1987 filed on December 2003, applicants No. 1 Damodhar Cement and Slag Ltd., No. 2 the Associated Cement Companies Ltd., both public limited companies registered under the Companies Act, 1956, No. 3 Muthuswamy Balaji and Kousik Gupta both shareholders of the petitioner Nos. 1 and 2 companies, respectively, prayed for declaration that Section 16B of the West Bengal Sales Tax Act, 1994 is illegal and ultra vires the Constitution of India insofar as it purports to withdraw and/or frustrate and/or nullify the remission of sales tax allowed to petitioner No. 1 Damodhar Cement and Slag Ltd., under the West Bengal Incentive Scheme, 1993 and also under Section 41 read with Section 44 of the West Bengal Sales Tax Act, 1994 ; direction compelling the Government of West Bengal to honour its promise contained in the aforesaid Scheme particularly Clause 14 thereof and the remission of tax allowed to petitioner No. 1 Damodhar Cement and Slag Ltd., by letter dated February 6, 1997 as modified by the letter dated April 23, 1997 read with the scheme sanctioned by BIFR in the case No. 502 of 1994 and/or on the basis of the eligibility certificate ; directing respondent No. 1, Assistant Commissioner of Commercial Tax, Corporate Division, West Bengal to councel and/ or rescind and/or withdraw the decision contained in the memo No. 80 dated September 23, 2003 and the memo No. 83 (CD) 301 dated October 15, 2003 and the view taken by the Joint Secretary to the Government of West Bengal contained in his letter dated September 29, 2003 and/or direction by which the aforesaid petitioner No. 1-company had been directed to pay turnover tax under Section 16B of the Act and for directing the respondent to act as per the aforesaid Incentive Scheme of 1993 and cost.
2. The fact as made out in the application is this : (a) The business of petitioner No. 1 Damodhar Cement and Slag Ltd., is to manufacture portland cement in its factory at Madhukunda in a notified backward region in the district of Purulia in West Bengal. The petitioner No. 2 the Associate Cement Companies Ltd., is also a cement manufacturing company and holding along with its six nominees 98 per cent shares in the petitioner No. 1 company under a scheme of rehabilitation sanctioned by BIFR in case No. 502/94 issued on August 16, 1996.
(b) Originally the business of petitioner No. 1 was controlled by Ashoka Cement Ltd., the company registered under the Companies Act, 1956 and the West Bengal Industrial Development Corporation Ltd., i.e., WBIDC. In 1981 all the shares of petitioner No. 1-company were purchased by WBIDC and thus petitioner No. 1 company became a full subsidiary of WBIDC Ltd. In July 1993 the Cement Corporation of India Ltd., a Government of India undertaking, purchased 58 per cent share of petitioner No. 1 company and WBIDC retained balance 42 per cent share but petitioner No. 1 company became sick and under order dated April 21, 1994 issued under Section 3(1)(o) of the Sick Industrial Companies (Special Provisions) Act, 1985, the BIFR declared petitioner No. 1 company as a sick industrial unit. The BIFR sanctioned the scheme for revival of petitioner No. 1 company on August 16, 1996. The said BIFR Scheme, inter alia, provides that the Government of West Bengal would exempt the said sick petitioner No. 1-company from payment of sales tax both local and Central as well as purchase tax for nine years from the date of taking over without any ceiling on the amount thereof and in case the above are substituted by any other levies, petitioner No. 1 shall be exempted from the same.
(c) Relying upon the aforesaid representation contained in the same scheme of BIFR and acting upon the said scheme petitioner No. 2, Associated Cement Companies Ltd., purchased 90 per cent shares of petitioner No. 1-company from the Cement Corporation of India Ltd. Petitioner No. 2-company also accordingly invested Rs. 27 crores for taking over the entire management and the units of petitioner No. 1 company. In pursuance of the aforesaid sanctioned scheme of BIFR petitioner No. 1 company also invested a further sum of Rs. 20 crores for expansion of the capacity of petitioner No. 1 company. Petitioner No. 2 is holding 98 per cent shares in petitioner No. 1 and the WBIDC Ltd., holding two per cent shares therein.
(d) By a letter dated February 6, 1997, the Deputy Secretary to the Government of West Bengal, Commerce and Industry Department, informed the Director of the Industries, West Bengal and others that in pursuance of the resolution adopted in the meeting of the High Power Committee held on July 27, 1995, the State Government decided to extend financial support to petitioner No. 1 company and accordingly it was decided that petitioner No. 1 company might be allowed as a special case 100 per cent exemption to sales tax payment on the quantity of cement sold in West Bengal without applying any cap for a period up to nine years from the date of commencement of commercial production. The said Deputy Secretary further informed that by order of the Governor in exercise of power conferred under para 18(ii) of the West Bengal Incentive Scheme, 1993, the Governor was pleased, in terms of para 18.1 of the said scheme, to sanction in relaxation of the provisions of para 14.1.1. of that scheme full exemption of the payment of sales tax on the sale of cement by said petitioner No. 1-company in West Bengal for nine years from the date of commencing of commercial production without applying any cap. Thereafter under letter dated March 17, 1997, the aforesaid Deputy Secretary intimated petitioner No. 1 that he was directed to state any clarification that the benefit sanctioned to petitioner No. 1-company under the aforesaid West Bengal Incentive Scheme, 1993 would be applicable for nine years from the date of commencement of commercial production after the unit was taken over by the new promoter, i.e., petitioner No. 2 Associated Cement Companies Ltd. This concession was reiterated in the letter dated April 23, 1997 written by the aforesaid Deputy Secretary to the petitioner No. 1 company.
(e) By the Memo No. 305/Intel/Regn/584/87 dated October 17, 1997, the Director of Industries, West Bengal, informed petitioner No. 1-company that the registration was duly allowed for expansion project and the registration certificate under the Incentive Scheme, 1993 was issued vide the Commerce and Industries Department's letter No. 489 (3)-CI/H/4F-23/93 Pt. I dated May 5, 1997 and the expansion project would enjoy exemption of sales tax as well as purchase tax for a period of nine years from the date of commencing of commercial production without any cap. The said registration was also renewed from time to time up to September 30, 2004. Petitioner No. 1 also received a certificate of eligibility for remission of sales tax under Section 41 of the Sales Tax Act, 1994 in form 24 indicating that petitioner No. 1-company was eligible for remission of tax without any cap for a period of nine years commencing from October 30, 1996. This certificate was originally valid from October 30, 1986 to October 29, 1997 and on renewal it was extended up to September 30, 2003.
The Section 6(2) of the West Bengal Taxation Laws (Amendment) Act, 2003 inserted a Section 16B to the Act introducing a new tax with effect from August 5, 2003 whereunder every dealer who has incurred liability to pay tax under Section 9 or 10 of the Act shall be liable to pay turnover tax. Thereafter, under memo dated October 15, 2003, the Assistant Commissioner of Commercial Tax, Corporate Division, informed petitioner No. 1 to clear off the turnover tax for the month of August of 2003 at the earliest.
(f) The petitioners contended that the demand of turnover tax being barred by promissory estoppel, is illegal. When petitioner No. 1 was allowed the remission of tax in terms of Section 41 read with Section 44 of the same Act, the remission of tax under Section 41 would apply in respect of the tax payable under the said Act inclusive of the turnover tax. The provision of Section 16B of the 1994 Act was not intended to apply and that the imposition of turnover tax on the sale of cement by the petitioners during the relevant period is violative of articles 14 and 19(1)(g) of the Constitution of India as it doesn't make out a rational classification and that the imposition of turnover tax on the petitioners is inconsistent with the provisions of the Sick Industrial Companies (Special Provisions) Act, 1985.' There having been no other alternative efficacious remedy available to the petitioners, the petitioners challenged the vires of the provision of Section 16B of the West Bengal Sales Tax Act, 1994. Respondent No. 1, Assistant Commissioner of Commercial Taxes, Corporate Division, West Bengal, contested the application by filing affidavit-in-opposition supporting the demand of turnover tax and disputing the petitioner's contention as regards applicability of the principle of promissory estoppel and illegality of the provision of Section 16B of the West Bengal Sales Tax Act, 1994. He contended that the turnover tax is a separate tax and though the petitioner-dealer was enjoying exemption from payment of sales tax on the basis of the promise, there was no promise for grant of exemption of turnover tax. At the time of allowing remission of tax to the petitioner-dealer there was no turnover tax and that the turnover tax was introduced with effect from August 5, 2003. It is further contended that the provisions of the SICA are irrelevant as regards the taxation law. In the affidavit-in-reply the petitioners reiterated what they stated in the application itself. The points for decision are:
(i) Whether the provision of Section 16B of the West Bengal Sales Tax Act, 1994 is violative of articles 14 and 19(1)(g) of the Constitution of India ?
(ii) Whether the respondents made promise for remission of turnover tax ? and
(iii) Whether demand of turnover tax on the petitioners is barred by the principle of promissory estoppel ?
Decision:
3. (i) The petitioner contended that the provision of 16B of the West Bengal Sales Tax Act, 1994 imposing turnover tax on the sales of cement by the petitioner during the relevant period is violative of articles 14 and 19(1)(g) of the Constitution of India because it does not make a rationale classification. The Section 16B as aforesaid provides:
(1) Every dealer who has incurred liability to pay tax under Section 9, or Section 10, shall be liable to pay a turnover tax, at the rate specified in column (3) of Schedule VIIIB against goods specified in column (2) of that Schedule, on the turnover of sales of such goods in West Bengal except such part of turnover
(a) as represents sales in the course of inter-State trade or commerce within the meaning of Section 3 of the Central Sales Tax Act, 1956 (74 of 1956), or in the course of import of the goods into, or export out of, the territory of India within the meaning of Section 5 of that Act;
(b) as represents such other sales as may be prescribed.
(2) The dealer liable to pay turnover tax under Sub-section (1) shall, notwithstanding anything to the contrary contained in Section 39, Section 40, Section 41, Section 42 or Section 43, make payment of the turnover tax in the manner referred to in Section 30.
(ii) The article 14 of the Constitution of India provides that the State shall not deny to any person equality before the law or the equal protection of the laws within the territory of India. The article 19(1)(g) provides that all citizens shall have the right to practice any profession or to any occupation, trade or business. The learned advocate appearing for the petitioner did not argue on this point. I am at one with the learned Senior State Representative Mr. Gupta that the fact asserted in the position, does not suggest violation of the Constitutional provisions as contended in the petition and that this contention is baseless.
4. (i) The fact of grant of exemption from payment of sales tax under Section 41 of the West Bengal Sales Tax Act, 1994 for nine years from October 30, 1996 without applying any cap under the industrial Scheme 1993 is not disputed. By the letter No. 120(3)--CI/H/4F--23/95 dated February 6, 1997 the Deputy Secretary to the Government of West Bengal, Commerce and Industries Department, Group H, intimated the Commissioner of the Commercial Taxes, West Bengal and others that in pursuance of the decision of the State Government to extend financial support to M/s. Damodhar Cement and Slag Ltd., for its revival, the high power committee of industrial development at its meeting held on July 27, 1995 provided, inter alia, that the company might be allowed as a special case 100 per cent exemption to "any sales tax" payment on the cement sold in West Bengal without any cap for a period of nine years from the date of commencement of commercial production and that in the exercise of the power conferred under para 18(ii) of the West Bengal Incentive Scheme, 1993 the honourable Governor was pleased in terms of the provision of para 18.1 of the said Scheme to sanction, in relaxation of the provision of para 14.1.1 of that Scheme, 100 per cent exemption from the payment of sales tax on the sale of cement by the said company in West Bengal for nine years from the date of commencement of commercial production without any cap. Under letter No. 304(3)-CI/H/4F-23/95(Pt I) dated March 17, 1997, the aforesaid Deputy Secretary intimated that the aforesaid concession for a period of nine years would be applicable from the date of commencement of commercial production after the unit was taken over by the new promoter. A copy of this letter was endorsed to the petitioner-Damodhar Cement and Slag Ltd., under letter No. 458-CI/H/ 4F-23/95 dated April 23, 1997. The aforesaid Deputy Secretary intimated the petitioner-Damodhar Cement and Slag Ltd., that the high power committee on industrial development at its meeting held on April 4, 1997 decided to grant exemption from the payment of sales tax on purchase of raw materials for a period up to nine years from the date of commencement of commercial production without any cap in addition to the exemption from the payment of sales tax on sale of cement which had already been communicated. The trouble cropped up when the Revenue Department made demand for payment of "turnover tax" before expiry of the said period of nine years with the reintroduction of turnover tax under Section 16B in the West Bengal Sales Tax Act, 1994 by the West Bengal Act 11 of 2003 with effect from August 5, 2003 in the letter No. 83 (CD) 301 dated October 15, 2003 the Assistant Commissioner of Commercial Tax, Corporate Division, West Bengal intimated the petitioner-Damodhar Cement and Slag Ltd., that the remission was granted to the petitioner under Section 41 which was totally an independent provision and that under Section 16B of the Act, every dealer who had incurred the liability to pay tax under Section 9 or under Section 10 would be liable to pay turnover tax and in the case of the petitioner turnover tax had to be made in the manner referred to in Section 30 of the said Act. It was also clarified that Section 44 of the WBST Act of 1994 empowered the State Government to relax certain conditions and restrictions in respect of deferment of payment of tax or remission of tax but it neither granted any tax benefit nor covered Section 16B. By the letter dated August 5, 1995, the Executive Director (II) of WBIDC Ltd., intimated the ACC Ltd., petitioner No. 2, that as a part of the revival package of Damodhar Cement and Slag Ltd. (DCSL), the State Government agreed 100 per cent exemption of any sales tax payment for nine years from the date of commencement of commercial production.
(ii) The petitioner's contention is that remission of "sales tax" includes the subsequent imposition of turnover tax under Section 16B within the meaning "tax" under Section 2(35) as well as Section 41 of the WBST Act, 1994. The learned State Representative in disputing this contention submitted that the tax proposed to be remitted did not include the turnover tax. The decision for the grant of exemption from payment of sales tax was taken on April 4, 1997. On those dates, the tax was payable on turnover of sales under the provision of the West Bengal Sales Tax Act, 1994. On those dates as aforesaid, the word "tax" as defined as payable under Sections 11, 14, 17, 20, 21 or 23 included surcharge payable under Section 16. After insertion of Section 16B in the Act with effect from August 5, 2003 the word "tax" under Section 2(35) as defined as the tax payable included, amongst others, turnover tax payable under Section 16B of the Act. Section 41 is the provision for remission of tax on sales payable by new and existing industrial units. The West Bengal Incentive Scheme, 1993 provided remission of "sales tax due for payment" in Clause 3(xxii) as sales tax and turnover tax due for payment by an eligible unit to the State Government on the sales of finished goods and tax payable on purchases of inputs, if any, under the Acts mentioned in Clause (xxi). The said Acts in Clause (xxi) as aforesaid are the Bengal Finance (Sales Tax) Act, 1941, the West Bengal Sales Tax Act, 1954 and the Central Sales Tax Act, 1956. The "turnover tax" is not defined in this Scheme but the word "turnover" is defined in Clause 3(xxvii) as the turnover defined under the Bengal Finance (Sales Tax) Act, 1941 or the West Bengal Sales Tax Act, 1954. In Section 2(i) of the Bengal Finance (Sales Tax) Act, 1941 the word "turnover" is defined as the aggregate of sale prices or parts of the sale prices receivable. The West Bengal Incentive Scheme, 1993 was contained in the Notification No. 188-CI/C dated March 30, 1993 and it came into force on April 1, 1993 for five years. On the date of its coming into force the provision of Section 6B in the Bengal Finance (Sales Tax) Act, 1941 was there and this provision provided for the liability of every dealer to pay turnover tax.
(iii) The Incentive Scheme, 1993 provides for remission of "sales tax due for payment" and as per Clause 3(xxii) it means sales and turnover tax. At the time of introduction of this Scheme of 1993, the Bengal Finance (Sales Tax) Act, 1941 was in force and this Act contained the provision of turnover tax but at the time of the grant of exemption to the petitioner, the West Bengal Sales Tax Act, 1994 came into force repealing the earlier Act of 1941 and it did not contain the provision of turnover tax until it was re-introduced with the introduction of the provision of Section 16B with effect from August 5, 2003. Mr. Gupta, the learned Senior Advocate in his written notes of argument, contended, "the 1994 Act did not contain at the relevant time any impost known as 'turnover tax'. Thus the exemption granted was from payment of sales tax. The definition of 'tax' in Section 2(35) of the 1994 Act did not include turnover tax until its amendment in 2003". He submitted that when there was no provision for charging turnover tax in the statute, the Government could not also make promise for exemption therefrom. Dr. Debi Pal, the learned Senior Advocate for the petitioner, in his written notes of argument contended, in fact under the West Bengal Sales Tax Act, 1994 although turnover tax payable under the Bengal Finance (Sales Tax) Act, 1941 was withdrawn but surcharge and additional surcharge were imposed in addition to the sales tax under the West Bengal Sales Tax Act, 1994. Hence, the definition of "tax" means tax payable under the Act of 1994. When turnover tax was again introduced by introduction of Section 16B of the West Bengal Sales Tax Act, 1994, the definition of "tax" was amended so as to include surcharge payable under Section 16, additional surcharge payable under Section 16A and turnover tax payable under Section 16B. He further contended, "when incentive Scheme announced exemption of sales tax paid or payable, the Incentive Scheme, in clear terms, announced for the exemption of sales and turnover tax. Whenever such turnover tax is payable it may be that for some years turnover tax was not payable but when it was re-introduced and when the Incentive Scheme was operative even during that period the sales tax payable would necessarily include not only sales tax but also turnover tax payable."
(iv) Mr. Gupta, the learned Senior Advocate, argued that the turnover tax under Section 16B of the 1994 Act was a fresh tax separate from the tax which was exempted. In support of his contention he cited the decision of the division Bench of the honourable Calcutta High Court in the case of State of West Bengal v. Deekay Coconut Oil Industries reported in [1998] 110 STC 136. In this case the honourable court held that the "turnover tax" under Section 6B which was inserted in the Bengal Finance (Sales Tax) Act, 1941 with retrospective effect from April 1, 1979 was a separate tax. I agree that the same view can be taken in the insertion of Section 16B in the West Bengal Sales Tax Act, 1994 with effect from August 5, 2003.
5. (i) In the present case there has been recommendation for exemption of sales tax and purchase tax or any other tax substituting these taxes for nine years in the BIFR Scheme. The Government of West Bengal granted the exemption from payment of sales tax in exercise of the power contained in para 18.2 of the West Bengal Incentive Scheme, 1993. So I accept the view of Dr. Pal that the remission of sales tax was granted under the provisions of the West Bengal Incentive Scheme, 1993 which provides that sales tax due for payment means sales tax and turnover tax due for payment and that the respondent-Government of West Bengal made a promise for remission of turnover tax but I accept the view of Mr. Gupta that on the date of making such promise on February 6, 1997 or even on July 27, 1995 when the respondent had decided remission of sales tax, the provision of charging turnover tax not being in the taxing statute, the promise of exemption from the payment of "sales tax" does not include exemption from payment of "turnover tax" which was introduced subsequent to the time of making promise.
(ii) It is not disputed that the doctrine of promissory estoppel applies against the Government. The issue in our case is as to whether the doctrine of promissory estoppel applies against the Legislature because in our case the turnover tax was demanded as per enactment of the provision of Section 16B in the West Bengal Sales Tax Act, 1994 with effect from August 5, 2003. The learned Senior Advocate Dr. Pal for the petitioner contended that it is settled law in India that though there is no estoppel against the Legislature but the State Government may be compelled to honour its promise and not to give effect to a legislative provision for the said purpose. In support of his contention he referred to the decision of the honourable Supreme Court in the cases Motilal Padampat Sugar Mills Co. Ltd. v. State of Uttar Pradesh , Union of India v. Godfrey Philips India Ltd. (at paras 11 and 15), Pournami Oil Mills v. State of Kerala reported in [1987] 65 STC 1 (at page 5). State of Bihar v. Usha Martin Industries Ltd. reported in [1987] 65 STC 430 (SC) affirming the honourable Patna High Court judgment in the case Usha Martin Industries Ltd. v. Additional Superintendent of Commercial Taxes [1984] 55 STC 380, Union of India v. Anglo Afghan Agencies reported in AIR 1968 SC 718, State of Punjab v. Nestle India Ltd. reported in [, Mahabir Vegetable Oils Pvt. Ltd. v. State of Haryana and also relied on a decision of the Special Bench and this Tribunal in the case Pacific Health Care Pvt. Ltd. v. State of West Bengal reported in [2001] 123 STC 305 (WBTT).
(iii) In the cases of Motilal Padampat Sugar Mills Co. Ltd. v. State of Uttar Pradesh , Union of India v. Godfrey Philips India Ltd. , Pournami Oil Mills v. State of Kerala reported in [1987] 65 STC 1 (SC), State of Bihar v. Usha Martin Industries Ltd. reported in [1987] 65 STC 430 (SC), Union of India v. Anglo Afghan Agencies reported in AIR 1968 SC 718, Vij Resins Pvt. Ltd. v. State of Jammu & Kashmir reported in AIR 1989 SC 1629, State of Punjab v. Nestle India Ltd. all cited by Dr. Pal, the honourable Supreme Court held that the doctrine of promissory estoppel operates against the Government unless there is overriding public interest. In the case of Pacific Health Care Pvt. Ltd. v. State of West Bengal reported in [2001] 123 STC 305 (WBTT) as cited by Dr. Pal, this Tribunal also held similar view. In our case, the respondents do not claim that the public interest required that the Government should not be held bound by the promise. This legal position is not also disputed by Mr. Gupta, the learned Senior State Representative. In view of the decisions as aforesaid I accept the contention of Dr. Pal that the promissory estoppel operates against the Government in appropriate cases.
(iv) Dr. Pal, the learned Senior Advocate for the petitioner, argued that even if the promissory estoppel did not operate against the Legislature the Government is bound to honour the promise because the rule of estoppel applied against it. In support of his contention he cited the decision of the Bench of two honourable Judges of the honourable Supreme Court in the case of Mahabir Vegetable Oils Pvt. Ltd. v. State of Haryana . In this case the honourable Supreme Court observed, "it is beyond any cavil that the doctrine of promissory estoppel operates even in the legislative field". But in the earlier case, Union of India v. Godfrey Philips India Ltd. by Dr. Pal himself, the Bench consisting of the honourable Chief Justice and his companions two honourable Judges observed, "there can be no promissory estoppel against the Legislature in the exercise of its legislative functions nor can the Government or a public authority be debarred by promissory estoppel from enforcing statutory prohibition. It is equally true that promissory estoppel cannot be used to compel the Government or the public authority to carry out a representation or promise which is contrary to law or which was outside the authority or power of the officer of the Government or of the public authority to make". Mr. Gupta, the learned Senior State Representative pointed out that in another earlier case Motilal Padampat Sugar Mills Co. Ltd. v. State of Uttar Pradesh which was also relied on by Dr. Pal, the honourable Supreme Court held the view that the promissory estoppel could not be invoked to compel the Government or even a private party to do an act which was prohibited by law and that there could also be no promissory estoppel against the exercise of legislative power. The earlier decision of the honourable Supreme Court in the case of Union of India v. Godfrey Philips India Ltd. was not considered in the aforesaid case of Mahabir Vegetable Oils Pvt. Ltd. , as aforesaid. The decision that promissory estoppel could not be invoked to compel the Government to do an act prohibited by law as made in the aforesaid case of Motilal Padampat Sugar Mills Co. Ltd. v. State of Uttar Pradesh not having been considered in the later case Mahabir Vegetable Oils Pvt. Ltd. v. State of Haryana as regards application of doctrine of promissory estoppel in the legislative field is per incurium and as such it has no binding effect. In the case of Vij Resins Pvt. Ltd. cited by Dr. Pal, the honourable Supreme Court observed, "it is true that there is no estoppel against the Legislature and the vires of the Act cannot be tested by invoking the plea but so far as the State Government is concerned the rule of estoppel does apply". I do not agree that the honourable Supreme Court held that by operation of the doctrine of promissory estoppel the Government can be permitted to do an act prohibited by law. Dr. Pal further submitted that the Incentive Scheme being a policy decision, could prevail over any subsequent notification which curtails or takes away the benefit of exemption under the Incentive Scheme. His contention is based on the decision of the honourable Supreme Court in the case of State of Bihar v. Suprabhat Steel Ltd. reported in [1999] 112 STC 258 cited by Dr. Pal. But in our case the issue is different. In our case no subsequent notification curtails or takes away the benefit of exemption under the Scheme. So this decision is not relevant in our case.
6. So, if there were promises for exemption from payment of "turnover tax", the doctrine of promissory estoppel applies to the Government but as the provision of Section 16B in the West Bengal Sales Tax Act, 1994 was introduced subsequent to the time of making promise, the Government cannot straightaway grant exemption from payment of the turnover tax under Section 16B of the Act because the doctrine of promissory estoppel does not extend to legislative provision. The "turnover tax" under Section 16B of the West Bengal Sales Tax Act, 1994 has not substituted the "sales tax" referred to in the BIFR Scheme. So, the petitioner is also not entitled to the benefit of the Section 32 of the Sick Industrial Companies (Special Provisions) Act, 1985. The application therefore fails. The application stands dismissed without cost.
Pradipta Ray, J. (Chairman) For myself and honourable B.K. Majumdar (Technical Member)
7. We agree with the conclusion of the honourable Judicial Member. We, however, like to give our reasons for the views expressed in this judgment.
8. Our learned brother in his judgment has stated the facts in detail. Only those facts which are necessary for dealing with the contentions raised by the petitioner are briefly narrated herein.
9. Petitioner No. 1, Damodhar Cement and Slag Limited, a public limited company, was incorporated in 1977. Petitioner No. 1-company became sick. Under the provisions of the Sick Industrial Companies (Special Provisions) Act, 1985 (in short, "the SICA"), the Board for Industrial and Financial Reconstruction (in short, "the BIFR") by its order dated April 21, 1984 declared petitioner No. 1-company a sick industrial unit. At the time when petitioner No. 1-company was declared sick unit, 58 per cent of its share were held by the Cement Corporation of India, a Government of India Undertaking and 42 per cent by West Bengal Industrial Development Corporation of India (in short, "the WBIDC"), a Government of West Bengal Undertaking. In order to revive petitioner No. 1-company, a scheme was framed and sanctioned by BIFR on August 16, 1996 (hereinafter referred to as, "the Scheme"). Under the said sanctioned scheme 90 per cent of the share of petitioner No. 1-company were to be taken over by petitioner No. 2, Associated Cement Company Limited, a well-known and famous company and WBIDC would continue to hold the remaining 10 per cent share. The Scheme also specifically mentioned the help to be rendered by the Government of West Bengal for such revival. One of such specific assistances was:
D. Government of West Bengal (GOWB)
1. To exempt DCSL from payment of sales tax (both local and CST) and purchase tax payable for a period of nine years from the date of takeover without any ceiling on the amount thereof. In case the above are substituted by Central/State Government by any other levies, DCSL shall be exempted from the same.
2. to 4....
10. According to the Implementation Schedule attached to the Scheme, the Government of West Bengal was to exempt petitioner No. 1-company from payment of sales tax and purchase tax for a period of 9 years from the date of taking over, within eight weeks from the date of sanction of the Scheme.
11. The State of West Bengal had its own incentive schemes announced from time to time for large and medium scale industries. West Bengal Incentive Scheme, 1993 (in short, "the Incentive Scheme, 1993") sanctioned by notification dated March 30, 1993 replaced Incentive Scheme of 1989 and became operative for five years from April 1, 1993 to March 31, 1998. The said Incentive Scheme was applicable to all large and medium scale industries set up/to be set up and also to expansion projects of existing units after April 1, 1993. Under paragraph 14 of the said Incentive Scheme new units for their approved projects and existing units for their approved projects of expansion were eligible for deferred payment of sales tax due for payment or alternatively remission of sales tax due for payment for different periods and up to different ceilings depending upon location of the units and their expansion projects as mentioned therein. Paragraph 18 of the Incentive Scheme provided for incentives to closed and sick units. Para 18 of the 1993 Scheme is quoted below:
18. Closed and sick units.--18.1. With the approval of the State Government, operation of a unit with fixed assets taken over by a new owner/management from a closed unit, may be granted incentive equivalent to that to a new unit, provided that incentives, if any, disbursed to the closed unit shall be deducted from the corresponding incentive admissible under the 1993 Scheme and that the State Government may also lay down any general or specific conditions in such cases while according their approval.
18.2. With the approval of the State Government, the sick units may be granted incentives equivalent to that to a new unit based on an agreed and approved rehabilitation/revival package, provided that incentives, if any, disbursed to the unit earlier shall be deducted from the corresponding incentives admissible under the 1993 Scheme and that the State Government may also lay down any general or specific conditions in such cases while according their approval.
12. By Government Order dated February 6, 1997 (annexure "B" to the application) Commerce and Industries Department of the Government of West Bengal, in exercise of the power conferred under paragraph 18 of the Incentive Scheme, granted full exemption of the payment of sales tax on the sale of cement by petitioner No. 1-company in West Bengal for a period of nine years from the date of commencement of commercial production.
13. By a subsequent order dated April 23, 1997 benefit of exemption of payment of sales tax was extended to purchase of raw materials for manufacture also.
14. When the revival scheme was approved by the BIFR in August 1996 and the exemptions were granted in 1997, West Bengal Sales Tax Act, 1994 came into operation and at that point of time there was no "turnover tax". Turnover tax was introduced by West Bengal Act of 9 of 2002 by amending the 1994 Act and inserting new Section 16B therein with effect from August 1, 2002.
15. The commercial tax authorities levied turnover tax and demanded payment thereof from petitioner No. 1-company. Against such imposition and demand of turnover tax under Section 16B of the Act 1994 the petitioners have approached this Tribunal.
16. The petitioners seek to resist such imposition and demand by invoking the principles of "promissory estoppel". They have pleaded that petitioner No. 2, Associated Cement Co., agreed to purchase shares of the sick company and invested huge money for revival of petitioner No. 1-company on the basis of representation of the State Government that petitioner No. 1 company would be exempted from payment of taxes under the Sales Tax Act for a period of nine years and that the respondents cannot be permitted to resile from the said promise and impose turnover tax on petitioner No. 1 company.
17. In support of such claim, Dr. Pal, learned Senior Advocate for the peti- tioner, made elaborate and illuminating submissions on the doctrine of promissory estoppel and cited a number of decisions on applicability and enforceability of the said doctrine.
18. Mr. L.K. Gupta, learned Senior Advocate appearing for the respondents, has submitted that there is no question of applying the doctrine of promissory estoppel inasmuch as there was never any promise to exempt payment of turnover tax which was introduced only in August, 2002. Mr. Gupta placed the relevant provisions in the BIFR Revival Scheme of 1996 and the Government Orders granting exemption to show the exemption which was contemplated and actually granted was/is in respect of sales tax and purchase tax only. He has submitted that there could not be any promise with regard to a non-existent tax at the time of promise.
19. A particular Act may impose different kinds of taxes within its scope and ambit. In fact, Act of 1994 has at present, imposed three different taxes, viz., sales tax, purchase tax and turnover tax. It is to be ascertained whether exemption actually granted was in respect of all taxes under the Act or a particular tax or taxes.
20. To counter the submission of the respondents, Dr. Pal has drawn attention to the expression "sales tax due for payment" as defined in the Incentive Scheme, 1993 and submitted that exemption was in respect of both sales tax and turnover tax.
21. An Incentive Scheme permits and authorises grant of different concessions and exemptions as enumerated in the scheme. Competent authority set up by the State Government examines each case of eligible industries and recommends specific incentives to be granted. The State Government upon consideration of the relevant materials and the recommendation issues Government orders granting specific exemption or concessions. Unless such Government orders allowing/granting benefits/concessions/ exemptions are issued no industry, though eligible, can enjoy the benefits permitted under the incentive scheme.
22. Revival Scheme approved by the BIFR required the State Government to exempt the company from payment of sales tax (both local and CST) and purchase tax payable for a period of nine years. If such sales tax or purchase tax was substituted by any other kind of tax during the said period, the State Government was to exempt payment of such substituting tax also. The implication was that no sales tax or purchase tax will be collected from petitioner No. 1-company for a period of nine years.
23. The Incentive Scheme, 1993 authorised deferment/remission of "sales tax due for payment". "Sales tax due for payment" has been defined in the Incentive Scheme to mean "sales tax and turnover tax due for payment" by an eligible unit on the sales of finished goods and tax payable on purchases of inputs under the Acts mentioned in Clause (xxi) of the Scheme. Clause (xxi) mentioned three Acts, viz.,
(a) Bengal Finance (Sales Tax) Act, 1941
(b) West Bengal Sales Tax Act, 1954
(c) Central Sales Tax Act, 1956.
24. The incentive Scheme, 1993 originally did not include Act of 1994 as the said Act came into force from March 23, 1995. The two Government orders granted exemption to "any sales tax payment"/"payment of sales tax". The said Government orders did not use the expression "sales tax due for payment".
25. Undisputedly, on the date when the Revival Scheme was finalised and on the dates when Government orders granting exemption were issued there was no existence of "turnover tax". It ceased to exist when Act of 1994 replaced the Bengal Finance (Sales Tax) Act, 1941 on March 23, 1995.
26. Petitioner No. 2-company decided to take over 90 per cent shares of petitioner No. 1-company and to invest money for reconstruction and revival of the company on the basis of the Revival Scheme framed by the BIFR. Initially draft scheme was published and after obtaining consent of the parties revival scheme was finalised by the BIFR. In the Revival Scheme there was no reference to the Incentive Scheme of 1993. The reliefs which were to be given by the State Government of West Bengal under the Revival Scheme, were made available by the State Government by specific Government Orders issued in exercise of the powers under paragraph 18 of the Incentive Scheme, 1993. Assuming that Incentive Scheme contemplated exemption of turnover tax also, an industry was not entitled to all the benefits automatically. It was a discretion of the State Government to allow some reliefs or benefits as it thought fit in appropriate cases.
27. In the present case the State Government granted exemption from sales tax and purchase tax only. We are unable to accept the claim of the petitioner that the promise was to exempt payment of all taxes which might be introduced in future. We have already referred to the language used in the Government orders. In fact, the Government orders did not include any promise that exemption would automatically extend to any tax substituting sales tax or purchase tax. The said condition was available in the Revival Scheme only. However, taking the Revival Scheme and the Government Orders together exemption can be held to be in respect of sales tax, purchase tax and any tax substituting sales tax and purchase tax. But neither the promise nor exemption was extended to all kinds of taxes that might be introduced under the Act of 1994.
28. Dr. Pal has submitted that the turnover tax was nothing but another kind of sales tax in different names. These two types of taxes cannot be said to be the same tax. Sales tax and turnover tax have been defined separately. These two taxes are taxes on sales but cannot be said to be the same tax. Sales tax is an indirect tax which can be realised from the purchasers but turnover tax is a direct tax payable by the dealer on his total turnover. This has turnover tax was not in substitute of sales tax or purchase tax. It was/is a separate tax imposed by the Legislature in addition to sales tax and purchase tax.
29. There is no dispute about the recognised principles of promissory estoppel excepting the controversy whether this doctrine can be applied to prevent implementation of statutory amendments/provisions or to restrain the Government from enforcing or implementing a statutory provision. It is not, however, necessary to delve into the said question for the purpose of deciding the present case.
30. To invoke the doctrine of promissory estoppel there must be a clear, definite and unambiguous promise made by a competent person/authority. Where such clear and definite promise is absent, no question of applying the doctrine of promissory estoppel arises. All the decisions on "promissory estoppel" have restated this principle time and again. We may refer to the recent decision of the Supreme Court in Bangalore Development Authorities v. R. Hanumaiah . The Supreme Court has reminded:
The doctrine of promissory estoppel is not based on the principle of estoppel. It is a doctrine evolved by equity in order to prevent injustice. Where a party by his word or conduct makes a promise to another person in unequivocal and clear terms intending to create legal relations knowing or intending that it would be acted upon by the party to whom the promise is made and it is so acted upon by the other party the promise would be binding on the party making it. It would not be entitled to go back on the promise made.
31. If a promise leaves scope for two or more possible meanings or interpretations, it cannot be said to be clear and unambiguous.
32. We have very carefully read and analysed the Revival Scheme and the Government Orders granting exemption to the petitioner-company. We do not find any promise to exempt from payment of turnover tax which was introduced much later in August, 2002. There was no promise that all kinds of future taxes that might be imposed under the Sales Tax Act would be exempted excepting the provision in the Revival Scheme that no tax substituting sales tax and purchase tax would be realised from petitioner No. 1 during the period of exemption. As already indicated, "turnover tax" was/is no substitute for sales tax and purchase tax. It is a separate tax in addition to sales tax and purchase tax. Accordingly, the petitioners are not entitled to invoke the doctrine of promissory estoppel in the present case.
33. We agree that the present application is liable to be dismissed.