Calcutta High Court (Appellete Side)
Acc Limited vs The Assistant Commissioner on 17 June, 2011
Author: Bhaskar Bhattacharya
Bench: Bhaskar Bhattacharya
1
Form No. J(2)
IN THE HIGH COURT AT CALCUTTA
Appellate/Revisional/Civil Jurisdiction
Present:
The Hon'ble Mr. Justice Bhaskar Bhattacharya
And
The Hon'ble Mr. Justice Sambuddha Chakrabarti
W.P.T.T No.315 of 2007
ACC Limited
Versus
The Assistant Commissioner, Commercial Taxes, Corporate Division, West
Bengal & Ors.
For the Petitioner: Dr. Debi Pal,
Mr. Amar Nath Sen.
For the State/Respondents: Mrs. Seba Roy,
Mr. Soma Kar Ghosh.
Heard on: 12.05.2011.
Judgment on: 17th June, 2011.
Bhaskar Bhattacharya, J.:
This application under Article 226 of the Constitution of India is at the instance of the applicant No.2 in an application under Section 8 of the West Bengal Taxation Tribunal Act and is directed against an order dated July 11, 2006 passed by the West Bengal Taxation Tribunal in Case No.584 of 2003 thereby dismissing the said application under Section 8 of the Act.
By the said application under Section 8 of the Act, the writ-petitioner along with others prayed for declaration that Section 16B of the West Bengal Sales Tax Act, 1994 is illegal and ultra vires the Constitution of India in so far as it purported to withdraw and/or frustrate and /or nullify the remission of Sales 2 Tax allowed to the applicant No.1, Damodhar Cement & 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 and also for a direction upon 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 the said Damodhar Cement & Slag Ltd. by letter dated February 6,1997 as modified by the letter dated April 27, 1997 read with the Scheme sanctioned by BIFR in case No.502 of 1994 and/or on the basis of the Eligibility Certificate and for direction upon the Assistant Commissioner of Commercial Tax, Corporate Division, West Bengal, to cancel and/or rescind and/or withdraw the decision contained in the Memo No.80 dated September 23, 2003 and the Memo. No.83(CD) 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 said Damodhar Cement & Slag Ltd. had been directed to pay turnover tax under Section 16 B of the West Bengal Sales Tax Act, 1994 and for directing the Government to act as per the Incentive Scheme of 1993.
Being dissatisfied, the writ-petitioner who was the applicant No.2 before the Tribunal, has come up with the present writ-application and prayed for setting aside the order passed by the Tribunal and for granting the substantial relief claimed in the application under Section 8 of the Act. The prayer for declaring the provision contained in Section 16B of the West Bengal Sales Tax 3 Act, 1994 as ultra vires the Constitution was, however, not agitated in this application.
The facts giving rise to filing of the application before the Tribunal may be epitomised thus:
On 18th November, 1977, Damodhar Cement & Slag Limited [hereinafter referred to as Damodhar Cement] was incorporated under the Companies Act, 1956. Damodhar Cement had set up a Cement Grinding Plant at Madhukunda with a capacity of 2.6 lakh tonnes per annum and Slag Granulation Plant within the premises of Indian Iron & Steel Company Limited with a capacity of 5 lakh tonnes per annum. In the year 1981, all the shares of Damodhar Cement were purchased by the West Bengal Industrial Development Corporation (hereinafter referred to as WBIDC] and as such, Damodhar Cement became a 100% subsidiary of WBIDC. In the month of July, 1983, the Cement Corporation of India Limited, a Government of India Undertaking, purchased from WBIDC, the 58% shares of Damodhar Cement and WBIDC retained the balance 42% shares in Damodhar Cement.
In spite of the fact that the entire undertaking of Damodhar Cement was taken over and/or controlled by Cement Corporation of India Limited, a Government of India Undertaking, as also by WBIDC, a Government of West Bengal Undertaking, due to total mismanagement, Damodhar Cement became a sick company. By an order dated 21st April, 1994 issued under Section 3(1)(o) of 4 the Sick Industrial Companies (Special Provisions) Act, 1985 (hereinafter referred to as the SICA), the BIFR declared Damodhar Cement as a sick industrial unit. At the time when Damodhar Cement was declared a sick industrial unit by the BIFR, the company was suffering huge losses of several crore of rupees apart from other liabilities which Damodhar Cement had incurred towards various financial institutions and other persons as would appear from sanctioned scheme of BIFR issued on 16th August, 1996. At the time when Damodhar Cement was declared a sick industrial unit by the BIFR, 58% shares were held by Cement Corporation of India, a Government of India undertaking and 42% shares was held by WBIDC, a State Government undertaking.
Efforts were made by the BIFR to revive Damodhar Cement for which several discussions took place between the representatives of the writ-petitioner company viz. ACC Ltd. and Damodhar Cement along with the representatives of the Government of West Bengal and the Central Government, Industrial Reconstruction Department, Government of West Bengal, Kolkata, West Bengal Industrial Development Corporation Limited and various financial institutions who gave various loans and advances to Damodhar Cement apart from other interested persons. The details facts are set out in para 5 of the writ-petition.
In the meantime, the West Bengal Incentive Scheme, 1993 was issued by the Government of West Bengal. The said scheme was approved by the Government of West Bengal for large and medium scale industries. Under the 5 said Scheme of 1993, para 14.1.1 lays down that a new unit for its approved project shall be eligible for deferred payment of sales tax due for payment by it or alternatively, for remission of sales tax due for payment for periods and subject to ceilings as mentioned in the said para. The area in which Damodhar Cement was situated for the manufacture of cement was admissible for the benefit of remission of sales tax for a period of 9 years as it falls under Group "D" category and the remission will be 100% of the sales tax due for payment. Under para 14.1.2 of the said scheme, an existing unit for its approved projects of expansion shall be eligible for deferred payment of sales tax due for payment by it or alternatively remission of sales tax due for payment for periods and ceilings as mentioned in the said para.
Para 18 of the said scheme makes provision for closed and sick units. Para 18.1 provides that with the approval of the State Government, a portion 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 the incentive, 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.
According to the writ-petitioner, on the basis of the said representation and/or promise and/or assurance provided under the Incentive Scheme, it had 6 invested large sums of money to the tune of Rs.52 crore approximately for purchasing all the shares of Cement Corporation of India Ltd. and also WBIDC and became the new owner of Damodhar Cement. The Incentive Scheme as already pointed out was approved by the State Government. Moreover, pursuant to the provisions of Section 15(1) of the SICA, Damodhar Cement made a reference to the BIFR for determination of measures to be adopted in respect of said company and the BIFR after enquiry and after hearing on 21st April, 1994 held that the company had become a sick industrial company in terms of Section 3(1)(o) of the SICA and Industrial Development Bank of India was appointed as the operating agent and under the rehabilitation scheme which was prepared in respect of sick unit with the consent of all parties including the Government of West Bengal. The Government of West Bengal agreed to exempt Damodar Cement from any payment of sales tax both local and CST and purchase tax payable for a period of 9 years from the date of taking over without any ceiling on the amount thereof. It was further stipulated that in case the above were substituted by the Central/State Government by any other levies, Damodhar Cement would be exempted from the same.
The writ-petitioner claims that the Government of West Bengal being one of the parties to the said scheme has agreed to the terms of the said scheme. The scheme was declared to come into force immediately and will be implemented by all concerned including the Government of West Bengal. The implementation 7 schedule also provides that the Government of West Bengal has agreed to exempt Damodhar Cement from payment of sales tax (both local and CST) and purchase tax payable for a period of 9 years from the date of takeover by the petitioner without any ceiling or CAP on the amount thereof [see page 58 clause "E" and page 53 clause "D"].
The writ-petitioner has referred to the letter written by the Deputy Secretary, Government of West Bengal dated 6th February, 1997 to the Directors of Industries, West Bengal, Managing Director, West Bengal Industrial Development Corporation and to the Commissioner of Commercial Taxes that in pursuance of the decision of the State Government to extend financial support to Damodar Cement for their revival, the High Powered Committee on industrial development in the meeting held on July 27, 1995 decided, inter alia, that the company might be allowed as a special case 100% exemption from any sales tax payment on the quantity of cement sold in West Bengal without applying any CAP for a period of 9 years from the date of commencement of the commercial production. The Governor of West Bengal in exercise of the powers conferred under para 18 (II) of the West Bengal Incentive Scheme, 1993 was pleased in terms of provision of para 18.1 of the said Scheme to sanction in relaxation of the provisions of para 14.1.1 of that Scheme full (100%) exemption of the payment of sales tax on the sale of cement by the said company in West Bengal for a period of 9 years from the date of commencement of commercial production without applying any CAP [see page 63 of the writ petition].
8
The writ-petitioner has also referred to another letter dated 17th March, 1997 written by the Deputy Secretary, Government of West Bengal to the Directors of Industries, West Bengal, Managing Director, West Bengal Industrial Development Corporation and the Commissioner of Commercial Taxes, West Bengal wherein it was again reaffirmed that in continuation of the letter dated 4th February, 1997 regarding sanction of benefits to Damodhar Cement under West Bengal Incentive Scheme, 1993 he was directed to state in clarification that the benefit sanctioned in favour of the company should be applicable for a period of 9 years from the date of commencement of commercial production after the unit is taken over by the new promoter [page 64 of the writ petition].
By another letter dated 23rd April, 1997 the Deputy Secretary, Government of West Bengal, Commerce and Industries Department, informed the Managing Director of Damodhar Cement & Slag Ltd. that he had been directed to inform that the High Powered Committee on Industrial Development had since taken decision in the meeting held on 4th April, 1997 for giving the company the benefit of exemption in sales tax payment in the quantity of cement manufactured and sold by it and exemption for the payment of sales tax on purchase of raw materials for a period of 9 years from the date of commencement of commercial production without any CAP [see page 65 of the writ petition]. 9
As indicated earlier, the Tribunal below has dismissed the application. In dismissing the said application, the Tribunal was of the view that the turnover tax was / is no substitute for Sales Tax and Purchase Tax and the same was a separate tax in addition to the Sales Tax and Purchase Tax and that the Government never made any promise to exempt the Sick Company from the payment of turnover tax which was introduced subsequently nor was there any promise that all kind of future taxes that might be imposed under the Sales Tax Act would be exempted excepting the provisions in the Revival Scheme that no tax substituting sales tax and purchase tax would be realised during the period of exemption.
Being dissatisfied, the writ-petitioner, the present owner of the Damodhar Cement, has come up with the present writ-application.
Dr. Pal, the learned Senior Advocate appearing on behalf of the petitioner has severely criticized the order passed by the Tribunal and has contended that both on the ground of promissory estoppel and in view of the scheme framed by the BIFR, his client is entitled to the exemption of payment of any type of tax based on sale of the products in West Bengal in whatever name such tax is levied.
10
Dr. Pal contends that on the basis of the scheme for exemption from sales tax due for payment for a period of 9 years without any CAP, his client is entitled to claim exemption on the basis of the principle of promissory estoppel. Dr. Pal points out that under the Incentive Scheme of 1993, para 18 specifically provides that with the approval of the State Government a portion 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 incentive if any disbursed to the closed unit shall be deducted from the corresponding incentive admissible under the 1993 scheme. By referring to para 14 which will be applicable in terms of para 18 to the petitioner company, Dr. Pal contends that that the remission of sales tax due for payment was allowed for a period of 9 years as the location of the said unit within Group "D" area and the Governor of West Bengal in exercise of the powers conferred under para 18(II) of the West Bengal Incentive Scheme, 1993 was pleased in terms of provision of para 18.1 of the said Scheme to sanction in relaxation of the provisions of para 14.1.1 of that Scheme full (100%) exemption of the payment of sales tax on the sale of cement by the said company in West Bengal for a period of 9 years from the date of commencement of commercial production without applying any CAP. Dr. Pal further contends that the exemption also from payment of sales tax due for payment has been allowed by the Governor in terms of para 18.1 of the said scheme of 1993 and the subsequent letters written by the Deputy Secretary, Government of West Bengal which has been referred to at page 63 to 65 of the writ-application clearly show that unmistakably there has been a clear 11 representation or promise or assurance that the petitioner company having taken over the ownership/management of Damodhar Cement will be allowed exemption from payment of sales tax for a period of 9 years without any CAP. On the basis of the said representation, Dr. Pal continues, the petitioner had not only invested near about Rs.29 crore for acquiring the ownership/management of Damodhar Cement by purchasing all the shares of Cement Corporation of India, a Central Government undertaking and also the shares of WBIDC, a State Government undertaking as in spite of the management of Damodhar Cement taken over earlier by the said two companies was running at a huge losses. According to Dr. Pal, the petitioner company would not have taken the said decision and the risk involved in taking over ownership/management of such a loss-making-unit unless such representation was made by the West Bengal Government in terms of Incentive Scheme of 1993 and also the sanction of the Governor made in exercise of his power under para 18.1 of the said Incentive Scheme. Dr. Pal further submits that the petitioner company on the basis of the said representation and/or promise and/or assurance had invested a further sum of Rs. 23 crore for the expansion of its unit and in these circumstances, the doctrine of promissory estoppel obliges the Government of West Bengal to honour its promise and/or assurance and/or representation.
In answer to the reason assigned by the Tribunal that what was allowed in the form of exemption and/or remission was the sales tax due for payment and not the turnover tax which was introduced under Section 16B of the West 12 Bengal Sales Tax Act, 1994, Dr. Pal contends that such reasoning is patently not sustainable in law as well as on the facts of the case. Dr. Pal points out that the Incentive Scheme in its definition at para 3(xxi) clearly states that Sales Tax Act means West Bengal Sales Tax Act, 1994 and Central Sales Tax Act, 1956 as amended from time to time and Para 3(xxii) provides that sales tax due for payment means sales tax and turnover tax due for payment by an eligible unit to the State Government on sales of finished goods and tax payable on purchases of inputs, if any, under the Act mentioned in clause (xxi) of para 3.
Dr. Pal submits that the Incentive Scheme of 1993 was issued, the turnover tax was leviable under Section 6B of the Bengal Finance (Sales Tax) Act, 1941 and therefore, turnover tax was specifically referred to in para 3(xxii) and at the same time, when the West Bengal Sales Tax Act, 1994 was enacted repealing, inter alia, the Bengal Finance (Sales Tax) Act, 1941, the saving clause i.e. Section 106(2) provided that notwithstanding the repeal of the Bengal Finance (Sales Tax) Act, 1941, such repeal should not affect any right, privilege, obligation or liability acquired, accrued or incurred under the Bengal Finance (Sales Tax) Act so repealed. According to Dr. Pal, when the West Bengal Sales Tax Act, 1994 came into force from 23rd March, 1995, the Bengal Finance (Sales Tax) Act, 1941 was operative and the turnover tax introduced under Section 6B of the said Act was also in force.
13
At this juncture, Dr. Pal submits that under Section 2(35) of the West Bengal Sales Tax Act, 1994, 'tax' has been defined to mean tax payable under this Act i.e. under the West Bengal Sales Tax Act, 1994 and includes surcharge payable under Section 16, additional surcharge payable under Section 16A, turnover tax payable under Section 16B and additional sales tax payable under Section 18A. Therefore, according to Dr. Pal, both under the Bengal Finance (Sales Tax) Act, 1941 and under the West Bengal Sales Tax Act, 1994, 'tax' means sales tax payable under the Act of 1941 as also under the Act of 1994 and includes surcharge, additional surcharge, turnover tax and additional sales tax.
Dr. Pal contends that sales tax payable by every dealer whose gross turnover during the year exceeds the taxable quantum [vide section 4 of the Bengal Finance (Sales Tax) Act, 1941]. Similarly under Section 6B of the Bengal Finance (Sales Tax) Act, 1941 every dealer whose aggregate of the gross turnover under this Act and the gross turnover under the West Bengal Sales Tax Act, 1954 exceeds Rs. 25 lakh shall in addition to the tax payable by him under the Act be liable to pay a turnover tax at the rate specified in sub-section (3) of such part of his turnover as specified in sub-section (2) and therefore, both the sales tax payable under the Bengal Finance (Sales Tax) Act, 1941and turnover tax payable under Section 6B of the Act was on the basis of and in respect of the turnover of sales. Dr. Pal points out that the turnover of sales in relation to any period under Section 2(40) means the aggregate of the sale prices or parts of sale prices receivable by a dealer or if a dealer so elects, actually received by the dealer, 14 during such period after deducting there from the amounts, if any, refunded by the dealer in respect of any goods returned by the purchaser within such period. Therefore, according to Dr. Pal, both sales tax and turnover tax or additional sales tax are levied on the turnover of sales subject to such a deduction which may be allowed under the Act and thus, the nature, quality and character of sales tax and turnover tax are the same and the yardstick by which such turnover tax is levied is by reference to the turnover of sales exceeding a certain specified amount.
Dr. Pal submits that similar also is the position under the West Bengal Sales Tax Act, 1994 and as would appear from the said Act, 'tax' has been defined under Section 2(35) of the West Bengal Sales Tax Act, 1994 to mean the tax payable under this Act i.e. West Bengal Sales Tax Act, 1994 and includes surcharge payable under Section 16, additional surcharge payable under Section 16A, turnover tax payable under Section 16B and additional sales tax payable under Section 18A of the Act and the liability to pay sales tax is under Section 9. Both under Section 9(1) and 9(2), sales tax liability arises if the gross turnover of a dealer exceeds the taxable quantum at any time during the relevant year. The liability to turnover tax is cast upon every dealer who had incurred liability to pay sales tax under Section 9 or 10 and shall be liable to pay turnover tax at the rates specified in column 3 of schedule VIIIB of the Act against goods specified in column 2 of the said Schedule on the turnover of sales of such goods in West Bengal except such part of the turnover as represents sales in the course of 15 interstate trade or commerce within the meaning of Section 3 of the CST Act or in the course of import of goods into and export out of the territory of India within the meaning of Section 5 of that Act. Dr. Pal submits that taxable turnover is payable in addition to the general sales tax which is levied under Section 9 or 10 of the West Bengal Sales Tax Act, 1994 and the taxable event under section 9, 10 and 16B of the West Bengal Sales Tax Act, 1994 is the quantum of sales aggregate of which constitute the turnover. It will, therefore, appear that under the Act of 1994, both sales tax payable under Section 9 and 10 and turnover tax payable under Section 16B are in respect of turnover of a dealer. In this connection, Dr. Pal relies upon the definition of 'turnover of sales' in relation to any period which means the aggregate of the sale prices or parts of sale prices receivable by a dealer or if a dealer so elects, actually received by the dealer, during such period after deducting there from the various items referred to in Section 2(40) of the Act of 1994. Dr. Pal, therefore, contends that under the Bengal Act of 1941 turnover tax under Section 6B was levied on the turnover of sales and the liability would arise if the turnover of sales exceeded the sum of Rs. 25 lakh in a year and under the Act of 1994, the liability to sales tax under Section 9 is on the basis of the turnover of sales. Similar also is the position of the turnover tax under Section 16B where the liability to pay turnover tax is on the turnover of sales but the turnover tax is levied in respect of goods or articles which are referred to in Schedule VIIIB of the Act and Schedule VIIIB refers to mostly the luxury goods and also cement. Therefore, the turnover tax is not levied upon all types of goods which are liable to sales tax under Section 9 or 10 16 of the 1994 Act but the turnover tax is levied only in respect of turnover of sales on certain specified goods referred to in Schedule VIIIB of the 1994 Act.
In support of his contention that the turnover tax is also in essence a sale tax, Dr. Pal relied upon the following decisions:
1) Century Spinning and Manufacturing Company and others Vs. The State of West Bengal and others reported in 73 STC 277;
2) Province of Madras Vs. Boddu Paidanna and Sons reported in (1942) 1 STC 104;
3) Deputy Commissioner of Sales Tax Vs. Aysha Hosiery Factory (P.) Ltd.
reported in 85 STC 106 (SC) = AIR 1992 SC 874;
4) Pournami Oil Mills, etc., Appellants Vs. State of Kerala and another reported in AIR 1987 SC 590= 65 STC 1;
5) Kodar Vs. State of Kerala reported in AIR 1974 SC 2272= (1974) 34 STC 73;
6) State of Karnataka Vs. Sunagar Brothers reported in (1993) 3 SCC 16= 89 STC 532;
7) Addepalli Surya Ramchandra Rao and Company Vs. The State of Andhra Pradesh reported in 24 STC 133 (AP);
As regards the doctrine of Promissory Estoppel, Dr. Pal contends that where the Government makes a promise knowing or intending that it would be acted on by the promisee and in fact, the promisee, acting in reliance on it alters his position, the Government would be held bound by the promise and the 17 promise would be enforceable against the Government at the instance of the promisee. This principle has been reiterated in the several decisions as would appear from the case of Union of India Vs. Godfrey Philips India Ltd., reported in 158 ITR 574 (SC) at pages 589, 590 and 591 = AIR 1986 SC 806 at para 11 & 15.
Dr. Pal submits that the doctrine of promissory estoppel has been explained by the Apex Court in the case of Union of India Vs. Anglo-Afghan Agencies reported in AIR 1968 SC 718. In that case, the Court pointed out that the order which the Central Government had issued in exercise of the power conferred by Section 3 of the Imports and Exports Control Act might be executive or legislative and in exercise of that power, the order that was issued on 7th December, 1955 was clearly legislative in character. The Supreme Court pointed out that in spite of the said order which was legislative in character and which was issued in 1962, the promise made by the Textile Commissioner in the year 1955 in respect of export of woolen goods to Afganisthan was to be in force on the basis of the doctrine of promissory estoppel and the Court applied the principle of promissory estoppel even when subsequently the Import Control Order was passed in 1962. The said judgment has been quoted with full approval in the case reported in 118 ITR 326 at pages 361, 368 and 369. The Supreme Court at page 361 observed that the law may, therefore, now be taken to be settled that where the Government makes a promise knowing or intending that it would be acted on by the promisee and in fact, the promisee acting in reliance on it, alters his position, the Government would be held bound by the promise and the 18 promise would be enforceable against the Government at the instance of the promisee. The Supreme Court at page 362 observed that since the doctrine of promissory estoppel is an equitable doctrine, it must yield when the equity so requires. If it can be shown by the Government that having regard to the facts as they have subsequently transpired, it would be inequitable to hold the Government to the promise made by it, the Court would not raise equity in favour of the promisee and enforce the promise against the Government. But the Court made it clear at page 363 that it would not be enough for the Government just to say that public interest requires that the Government should not be compelled to carry out the promise or that the public interest would suffer if the Government were required to honour it. The Government cannot, as Justice Shah pointed out in the Anglo-Afghan Agencies Case reported in AIR 1968 SC 718, claim to be exempt from the liability to carry out the promise 'on some indefinite and undisclosed ground of necessity or expediency', nor can the Government claim to be the sole judge of its liability and repudiate it 'on an ex- parte appraisement of the circumstances'. If the Government wants to resist the liability, it will have to disclose to the Court what are the subsequent events, on account of which, the Government claims to be exempt from the liability and it would be for the Court to decide whether those events are such as to render it inequitable to enforce the liability against the Government. Mere claim of change of policy would not be sufficient to exonerate the Government from the liability. 19
Dr. Pal, therefore, prays for setting aside the order impugned and for granting the relief claimed in this application.
Mrs. Seba Roy, the learned Advocate appearing on behalf of the State Respondent, has, on the other hand, opposed the aforesaid contentions of Dr. Pal and has made fivefold submission in opposing the application.
The first contention of Mrs. Roy is that that after receiving the eligibility Certificate, which is annexure P5 annexed at pages 67-68 of the writ-petition, petitioner's company enjoyed 100% Sales Tax exemption for 9 years since October 30, 1996 and it was renewed year to year and up to October 30, 2003. But on August 5, 2003 when by an amendment, Section 16B came into effect, the petitioner's company made a prayer through letters dated September 19, 2003 and August 22, 2003 to the Principal Secretary, Commerce and Industries Department to exempt it from the payment of Turnover Tax and there was no whisper in those letters that the said company had got remission from payment of Sales Tax as well as from payment of turnover tax. By those letters, petitioner- company admitted that the turnover tax is a fresh one and not exempted.
The second contention of Mrs. Roy is that B.I.F.R. by its revival scheme had sanctioned exemption to the sick company from of Sales Tax and purchase tax, but there was no exemption from payment of turnover tax. According to Mrs Roy, turnover tax is not the substitute of Sales and Purchase tax and there is no manner of doubt that Tax levied upon Sales goods is the Sales Tax whereas the 20 tax levied upon on the turnover of Sales tax is turnover tax. Mrs. Roy submits that turnover tax is an additional Sales Tax and such turnover tax is a fresh tax and separate from the tax that was exempted and which is a separate tax imposed by legislature in addition of Sales Tax and purchase tax. Mrs. Roy points out that the Legislature itself has referred to two forms of impost under the Act and Section 16B is self-contained provision. The turnover tax is, according to Mrs. Roy, after all, in the nature of additional of Sales tax and the legislature thought it fit to levy tax under the same entry being entry no.54 in different ways and under different provisions and under different nomenclature and yardsticks and Section 16B is a completely separate self-contained provision for an additional tax in the name of turnover tax. Reliance, in this connection, was placed on following judgments :
(1) State of West Bengal and others Vs. Deekay Cocoanut Oil Industries and another reported 110 STC 136 (Cal);
(2) M/s. Sun Oil Co. (P) Ltd. and another Vs. State of W.B. and others reported in AIR 1998 S.C. 3232.
The third contention of Mrs. Roy is that according to the definition clause of 1993 scheme, "Sales Tax due payable" means Sales Tax and turnover tax. Though the remission of 100% payment of Sales Tax and purchase tax was granted in terms of 1993 scheme, in spite of that it can be said that when the Government sanctioned the remission of 100% payment of Sales Tax, marked as annexure 'P2', page 63 of the writ-petition on February 6, 1997, but on that date 21 i.e. February 6, 1997 there was no imposition of turnover tax. This provision of "turnover tax" came into effect since August 5, 2003. At the time of granting remission of Sales Tax and purchase tax in year 1997, there was no existence of turnover tax for which the question remission of turnover tax did not arise.
The fourth contention of the Respondent is that the benefit of section 32 of SICA Act, 1985 is not applicable in this case and the B.I.F.R. did not allow the exemption of turnover tax.
Lastly, Mrs. Roy contends that neither the sanctioned scheme of 1993, nor the revival scheme of B.I.F.R., allowed the petitioner- company to enjoy the benefit of exemption of turnover tax nor was there any promise made by the Government with regard to exemption from the payment of turnover tax. Despite such provision in the scheme, if the Hon'ble Court proceeded to hold that there was a promise made by the government with regarding to liability of payment of turnover tax, in that event, the court should bear in mind that there is a bar under sub-section 2 of section 16B of the 1994 Act. Government, according to Mrs. Roy, cannot afford to act in a way which is prohibited by law and there can also be no promissory estoppel against the exercise of its legislative function of the State. Reliance, in this connection, was placed on judgments reported in -
(1) Bangalore Development Authority and others, Appellants Vs. R. Hanumaiah and others reported in AIR 2005 S.C. 3631 (Para 32); 22 (2) M/s. Motilal Padampat Sugar Mills Co. Ltd., Appellant Vs. The State of U.P. and others reported in AIR 1979 S.C 621 (Para 28).
Mrs. Roy, thus, prays for dismissal of this writ-application. Therefore, the only question that arises for determination in this appeal is whether the appellant is entitled to the benefit of the exemption from the payment of turnover tax as contemplated under Section 16B of the West Bengal Sales Tax Act, 1994 by virtue of the remission granted under the Scheme of 1993 and also with the aid of the order passed by the BIFR notwithstanding the specific bar created by sub-section 2 of Section 16B of the Act.
The fact that the appellant is entitled to the benefit of exemption of payment of Sales Tax is not in dispute. The only dispute is whether within the scope of the scheme of 1993 and in view of the fact that the State of West Bengal was a party to the proceedings before the BIFR and by the order of the BIFR, the appellant is entitled to the benefit of exemption of payment of Sales Tax, such benefit includes exemption from the payment of Turnover Tax introduced by the State by way of subsequent piece of legislation in Section 16B of the West Bengal Sales Tax Act, 1994 in the year 2003 which was not in existence in the year 1997 when the appellant was brought under the Scheme of 1993 as amended.
In order to appreciate the question, at the very outset, we propose to consider the various relevant provisions of the Scheme of 1993 and its subsequent amendments.
23
Para 3(xxi) of the scheme provides that Sales Tax Act means- a. The Bengal Finance (Sales Tax) Act, 1941, b. West Bengal Sales Tax Act, 1954, c. Central Sales Tax Act, 1956 as amended from time to time.
Para 3(xxii) of the scheme defines 'sales tax due for payment' to mean 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) of para 3.
When the said scheme of 1993 was issued, the turnover tax under Section 6B of the Bengal Finance (Sales Tax) Act, 1941 as also the turnover tax under the West Bengal Sales Tax Act, 1954 was in force. With the introduction of West Bengal Sales Tax Act, 1994, the West Bengal Incentive Scheme of 1993 was suitably amended with the result that para 3(xxi) defined Sales Tax Act means-
a) West Bengal Sales Tax Act, 1994,
b) Central Sales Tax Act, 1956 as amended from time to time.
Para 3(xxii) was also suitably amended. Under the said para, sales tax due for payment means sales tax and turnover tax due for payment by an eligible unit to the State Government on sales of finished goods and tax payable on purchases of inputs, if any, under the Act mentioned in clause (xxi) of para 3. 24
Para 14 and 18 of the Incentive Scheme of 1993 remains unamended or unaltered and continues to operate under the Incentive Scheme of 1993 as amended.
The Incentive Scheme of 1993 as amended in 1994 also provides incentive of new owner/management from a closed unit equivalent to that to a new unit available under para 14 of the Incentive Scheme.
Next, it will be appropriate to consider the real nature of the turnover tax introduced by way of insertion through amendment in Section 16B of the West Bengal Sales Tax Act, 1994 as also the position which existed under Section 6B of the Bengal Finance (Sales Tax) Act, 1941 which was in force when the Scheme of 1993 was introduced.
When the Incentive Scheme of 1993 was introduced, the turnover tax was very much in existence under Section 6B of the Bengal Finance (Sales Tax) Act, 1941 and for that reason, the reference to turnover tax was specifically found in para 3(xxii) of the Scheme and at the same time, when the West Bengal Sales Tax Act, 1994 was enacted repealing, inter alia, the Bengal Finance (Sales Tax) Act, 1941, the saving clause of the 1994 Act i.e. Section 106(2) provided that notwithstanding the repeal of the Bengal Finance (Sales Tax) Act, 1941, such repeal should not affect any right, privilege, obligation or liability acquired, accrued or incurred under the Bengal Finance (Sales Tax) Act so repealed. It is 25 needless to mention that subsequently, when the West Bengal Sales Tax Act, 1994 came into force from 23rd March, 1995, Bengal Finance (Sales Tax) Act, 1941 was operative and the turnover tax introduced under Section 6B of the said Act was also in force.
At this stage, it would be apposite to refer to the provision contained in Section 2(35) of the West Bengal Sales Tax Act, 1994, where the word 'tax' has been defined to mean tax payable under this Act i.e. under the West Bengal Sales Tax Act, 1994 and includes surcharge payable under Section 16, additional surcharge payable under Section 16A, turnover tax payable under Section 16B and the additional sales tax payable under Section 18A. Therefore, it is apparent that both under the Bengal Finance (Sales Tax) Act, 1941 and under the West Bengal Sales Tax Act, 1994, 'tax' means sales tax payable under the Act of 1941 as also under the Act of 1994 and includes surcharge, additional surcharge, turnover tax and additional sales tax.
Now sales tax was payable by every dealer whose gross turnover during the year exceeded the taxable quantum [Section 4 of the Bengal Finance (Sales Tax) Act, 1941]. Similarly, under Section 6B of the Bengal Finance (Sales Tax) Act, 1941 every dealer whose aggregate of the gross turnover under this Act and the gross turnover under the West Bengal Sales Tax Act, 1954 exceeded Rs. 25 lakh should in addition to the tax payable by him under the Act be liable to pay a turnover tax at the rate specified in sub-section (3) of such part of his turnover as 26 specified in sub-section (2) and therefore, both the sales tax payable under the Bengal Finance (Sales Tax) Act, 1941and turnover tax payable under Section 6B of the Act were fixed on the basis of and in respect of the turnover of sales. According to Section 2(40), the turnover of sales in relation to any period under Section means the aggregate of the sale prices or parts of sale prices receivable by a dealer or if a dealer so elected, actually received by the dealer, during such period after deducting there from the amounts, if any, refunded by the dealer in respect of any goods returned by the purchaser within such period. Consequently, the sales tax and turnover tax or additional sales tax are levied on the turnover of sales subject to such a deduction which may be allowed under the Act and thus, there is no difference between the quality and character of sales tax and turnover tax and the yardstick by which such turnover tax is levied is by reference to the turnover of sales exceeding a certain specified amount.
Similar is the position under the West Bengal Sales Tax Act, 1994 and as would appear from the said Act, 'tax' has been defined under Section 2(35) of the West Bengal Sales Tax Act, 1994 to mean the tax payable under this Act i.e. West Bengal Sales Tax Act, 1994 and includes surcharge payable under Section 16, additional surcharge payable under Section 16A, turnover tax payable under Section 16B and additional sales tax payable under Section 18A and the liability to pay sales tax is provided under Section 9. Both under Section 9(1) and 9(2), sales tax liability arises if the gross turnover of a dealer exceeds the taxable quantum at any time during the relevant year. The liability to pay turnover tax is 27 cast upon every dealer who had incurred liability to pay sales tax under Sections 9 or 10 and shall be liable to pay turnover tax at the rates specified in column 3 of schedule VIIIB of the Act against goods specified in column 2 of the said Schedule on the turnover of sales of such goods in West Bengal except such part of the turnover as represents sales in the course of interstate trade or commerce within the meaning of Section 3 of the CST Act or in the course of import of goods into and export out of the territory of India within the meaning of Section 5 of that Act. There is no dispute that taxable turnover is payable in addition to the general sales tax which is levied under Section 9 or 10 of the West Bengal Sales Tax Act, 1994 and the taxable event under Sections 9, 10 and 16B of the West Bengal Sales Tax Act, 1994 is the quantum of sales aggregate of which constitute the turnover. It will, therefore, appear that under the Act of 1994, both sales tax payable under Sections 9 and 10 and turnover tax payable under Section 16B are in respect of turnover of a dealer. If we look at the definition of 'turnover of sales' in relation to any period, it would appear that the said phrase means the aggregate of the sale prices or parts of sale prices receivable by a dealer or if a dealer so elects, the amount actually received by the dealer, during such period after deducting there from the various items referred to in Section 2(40) of the Act of 1994. It thus appears that under the Bengal Act of 1941, turnover tax under Section 6B was levied on the turnover of sales and the liability would arise if the turnover of sales exceeded the sum of Rs.25 lakh in a year whereas under the Act of 1994, the liability to sales tax under Section 9 is on the basis of the turnover of sales. Similar also is the position of the turnover tax under Section 16B where 28 the liability to pay turnover tax is on the turnover of sales but the turnover tax is levied only in respect of goods or articles which are mentioned in Schedule VIIIB of the Act and Schedule VIIIB refers to mostly the luxury goods and also cement, the item dealt with by the appellant. Therefore, the turnover tax is not levied upon all types of goods which are liable to sales tax under Sections 9 or 10 of the 1994 Act but the turnover tax is levied only in respect of turnover of sales on certain specified goods referred to in Schedule VIIIB of the 1994 Act.
We now propose to consider various decisions of the Courts to find out the scope of turnover tax or similar type of tax in addition to the Sales Tax in the eye of law.
A Division Bench of this Court in the case of the Century Spinning and Manufacturing Company and others Vs. The State of West Bengal and others reported in 73 STC 277 had the occasion to consider the question of legality and validity of the provision of Section 6B of Bengal Finance (Sales Tax) Act and Section 4AAA of the West Bengal Sales Tax Act, 1954 providing levy of turnover tax on the dealers whose turnover exceeded the prescribed limit. In that context, while approving the power of imposition, the Division Bench observed as follows:
"In our opinion, in the ultimate analysis, turnover tax is a tax on sales and not on income. What constitutes the gross annual turnover of a dealer is the sale proceeds of individual sale transactions effected during the accounting period and therefore, the turnover tax which is imposable on taxable turnover of a dealer is a tax on each sale transaction of a dealer and is, 29 therefore pure and simple sales tax and nothing else. It would be a misnomer to call it a tax on income.
...............
Once it is held that turnover tax is a tax on sales imposed in addition to the tax on sales envisaged by the main taxing provision of Section 5 then the argument questioning the legislative competence of the State Legislature on the ground that the subject matter does not fall within Entry No. 54 of List II would be of no avail."
In making such observations, the said Division Bench of this Court relied upon the decision of the Federal Court in the case of Province of Madras Vs. Boddu Paidanna and Sons reported in (1942) 1 STC 104 and decision of the Supreme Court in the case of Kodar Vs. State of Kerala reported in AIR 1974 SC 2272= (1974) 34 STC 73.
In the case of Deputy Commissioner of Sales Tax Vs. Aysha Hosiery Factory (P.) Ltd. reported in AIR 1992 SC 874, the Supreme Court was considering the provisions of the Kerala Additional Sales Tax Act which provided that "the tax payable under Kerala General Sales Tax Act, 1963 (15 of 1963) for every financial year commencing from the Financial Year 1978-79 shall be increased by 10 per cent of such tax" instead of increasing the rate of tax for each of the commodities which are covered by the Kerala General Sales Tax Act and by one comprehensive provision, the tax was increased by 10% over the rate provided under the original Act in respect of all the commodities the sale or purchase of which are taxable.
30
In that context, the Supreme Court held that both took the form of sales tax and in the case of assessment of local sales, it made no difference whether it was called tax and additional tax or one higher percentage of tax. In truth and effect, the Supreme Court continued, it was a levy of tax on the sales on purchases of the dealers. Incidentally it may be mentioned here that the aforesaid question could not have arisen but for the fact that the additional levy was sought to be imposed under a separate Act. Had the additional sales tax been imposed by simply amending the rates in the original Act, the question would not have arisen. The Supreme Court was of the view that the said fact made no difference and it was merely a matter of style of legislation. The additional sales tax levied under the Additional Sales Tax Act, according to the said decision, was also the sales tax of the same category as in the original Act.
In our opinion, if it is contended that the turnover tax is not sales tax and is not to be treated as sales tax, it will be a suicidal one because in that event, the turnover tax not being a sales tax would not be within the legislative competence of the State Legislature as the State Legislature has been empowered to legislate only the sales tax other than tax on newspaper under Entry No.54 of List II of the Seventh Schedule to the Constitution. Such an interpretation will deprive the State of its power of legislation imposing turnover tax as a different item of tax other than sales tax and hence, the State Legislature has no power to 31 impose any such tax under Entry 54 of List II of Seventh Schedule to the Constitution.
In the case of State of Karnataka vs. Sunagar Brothers, reported in (1993) 3 SCC 16, the Supreme Court was considering the question whether the additional tax leviable under Karnataka Sales Tax Act, 1957 is also required to be deposited along with the Sales Tax in order to prefer an appeal and in that context, made the following observations:
"It is obvious that the additional tax is leviable at the rate of ten paise in the rupee on the sales tax or purchase tax or both, payable by such dealer. The additional tax is computed with reference to the tax payable by the dealer. When once the assessing authority determines the sales tax or purchase tax under the Act the additional tax is levied automatically and becomes part and parcel of the assessment order. The expression "tax" has been defined to mean a tax leviable under the provisions of the Act and as such includes the additional tax levied under Section 6-B of the Act. When Section 20(3) talks of "payment of the tax and penalty not disputed in the appeal" it obviously includes the additional tax. On the plain language of Section 20(3) of the Act it is not possible to make any distinction between the tax and the additional tax and the only conclusion which can be drawn is that the undisputed "tax" which includes additional tax has to be deposited before the appeal is entertained."
(Emphasis supplied by us).
32In the case before us, the expression tax has been defined to include the turnover tax also and thus, the turnover tax is nothing but the Sales tax payable under the Act if we apply the principle laid down in the above decision.
In the case of Addepalli Surya Ramchandra Rao and Company vs. The State of Andhra Pradesh, reported in 24 STC 133, a Division Bench of the Andhra Pradesh High Court held that the mere fact that the additional turnover tax of ¼% levied by Section 5A of the AP General Sales Tax Act, 1956 is a tax on sale, the taxable event is on the sale of goods and tax is levied on the turnover of sales and that the additional turnover tax is provided in an independent section of the Act does not make it any the less a tax on the sale transaction. The taxable event is the sale or purchase of goods and not the turnover. The additional surcharge is a tax on sale even though such additional surcharge cannot be realized from the customer. The Supreme Court in the case of Kodar vs. State of Kerala, reported in AIR 1974 SC 2272 = (1974) 34 STC 73 observed that decision given by the Andhra Pradesh High Court in Addepalli Surya Ramchandra Rao and Company vs. The State of Andhra Pradesh = 24 STC 133 represents the correct view. The Supreme Court further observed affirming the aforesaid decision of the A.P. High Court that Entry 54 in List II authorizes the State Legislature to impose a tax on the sale or purchase of goods. So, the contention of the appellants that the additional sales tax is not a tax on sales but on the income of the dealer is without any basis.
33
Thus, in view of catena of judicial decisions of the Apex Court, the law is settled that the sales tax imposed either under the Bengal Finance Sales Tax Act, 1941 or under the West Bengal Sales Tax Act, 1994 includes also turnover tax, additional surcharge or additional sales tax. In all the aforesaid impositions, the tax is levied on the turnover of sales which represents the aggregate of sale price subject to certain deductions allowed under the respective law. Therefore, when in the Incentive Scheme of 1993 and also the amendment of the said Scheme after the coming into operation of the Act of 1994 by way of adoption, it is specifically made clear that exemption from sales tax due for payment would be allowed in para 14 of the Incentive Scheme of 1993 and also para 18 of the said Scheme and the said scheme was also adopted by including the definition of sales tax in the amendment Act of 1994 and in view of the notification issued by the Governor of West Bengal allowing exemption in terms of para 18 of the Incentive Scheme for a period of 9 years from the date of commencement of the commercial production, there is a clear promise and/or assurance and/or representation on the faith of which the petitioner has altered its position to its disadvantage by investing huge sums of money, the principle of promissory estoppel is clearly applicable and the Government is bound to honour its obligation made by the aforesaid promise and/or representation and/or assurance.
We, therefore, find no substance in the first contention of Mrs. Roy that in view of the prayer of the writ-petitioner to exempt it from payment of turnover 34 tax as reflected in the letters dated September 19, 2003 and August 22, 2003 to the Principal Secretary, Commerce and Industries Department where there was no whisper that the said company had got remission from payment of Sales Tax as well as from payment of turnover tax, it should be presumed that the petitioner-company admitted that the turnover tax is a fresh one and not exempted. If according to the law of the land, turnover tax is another name of Sales Tax under an additional circumstances and the State extended the benefit of exemption of Sales Tax by virtue of the scheme of 1993 and the tax payable included turnover taxes in addition to the sales tax, it is absurd to suggest that no benefit of exemption from payment of sale tax was given if the same is recovered in the form of turnover tax by virtue of the same legislation or even by a separate legislation as discussed above.
We now propose to deal with the submission of Dr. Pal on the question of the application of the doctrine of promissory estoppel. The law relating to the application of the doctrine of promissory estoppel is now well settled. More than forty years ago, a Three-Judge-Bench of the Supreme Court in the case of the case of Union of India vs. - Anglo-Afghan Agencies reported in AIR 1968 SC 718 had the occasion to deal with the said question in detail. In the said case, the Supreme Court made the following observations:
"Under our jurisprudence the Government is not exempt from liability to carry out the representation made by it as to its future conduct and it cannot on some undefined and undisclosed ground of necessity or 35 expediency fail to carry out the promise solemnly made by it, nor claim to be the judge of its own obligation to the citizen on an ex parte appraisement of the circumstances in which the obligation has arisen."
Subsequently, another Three-Judge-Bench in the case of Union of India and others vs. Godfrey Philips India Ltd, reported in AIR 1986 SC 806 took into consideration various subsequent decisions on the point and strongly relied upon the following observations of the said court in the case of Motilal Sugar Mills vs. State of Uttar Pradesh (AIR 1979 SC 621):
"The law may therefore now be taken to be settled as a result of this decision that where the Government makes a promise knowing or intending that it would be acted on by the promises and, in fact, the promisee, acting in reliance on it, alters his position the Government would be held bound by the promise and the promise would be enforceable against the Government at the instance of the promisee, notwithstanding that there is no consideration for the promise and the promise is not recorded in the form of a formal contract as required by Article 299 of the Constitution. It is elementary that in Republic governed by the rule of law, no one, howsoever high or low, is above the law. Everyone is subject to the law as fully and completely as any other and, the Government is no exception. It is indeed the pride of constitutional democracy and rule of law that the government stands on the same footing as a private individual so far as the obligation of the law is concerned: the former is equally bound as the latter. It is indeed difficult to see on what principle can a government, committed to the rule of law, claim immunity from the doctrine of promissory estoppel. Can the government say that it is under no obligation to act in a manner fair and just or that it is not bound by the considerations of "honesty and good faith"? Why should the government not be held to a high "standard of 36 rectangular rectitude while dealing with its citizens"? There was a time when the doctrine of executive necessity was regarded as sufficient justification for the government to repudiate even its contractual obligations, but let it be said to the eternal glory of this court, this doctrine was emphatically negatived in the, Indo-Afghan Agencies case and the supremacy of the rule of law was established. It was laid down by this Court that the government cannot claim to be immune from the applicability of the rule of promissory estoppel and repudiate a promise made by it on the ground that such promise may fetter its future executive action."
In the aforesaid case of Godfrey Philips India Ltd. the Three-Judge-Bench made the following further observations:
"Of course we must make it clear, and that is also laid down in Motilal Sugar Mills case (AIR 1978 SC 62 1) (supra), that there can be no promissory estoppel against the legislature in the exercise of its legislative functions nor can the Government or public authority be debarred by promissory estoppel from enforcing a statutory prohibition. It is equally true that promissory estoppel cannot be used to compel the Government or a 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. We may also point out that the doctrine of promissory estoppel being an equitable doctrine, it must yield when the equity so requires, if it can be shown by the Government or public authority that having regard to the facts as they have transpired, it would be inequitable to hold the Government or public authority to the promise or representation made by it, the court would not raise an equity in favour of the person to whom the promise or representation is made and enforce the promise or representation against the 37 Government or public authority. The doctrine of promissory estoppel would be displaced in such a case, because on the facts, equity would not require that the Government or public authority should be held bound by the promise or representation made by it. This aspect has been dealt with fully in Motilal Sugar Mills case (supra) and we find ourselves wholly in agreement with what has been said in that decision on this point."
Applying the aforesaid principles to the facts of the present case, we find that in the present case, the Incentive Scheme of 1993 was issued by the Government as it was of the opinion that it was necessary and expedient in the public interest to extend incentives for promotion of industries in the case of large and medium scale industries. Therefore, the Incentive Scheme was introduced in the public interest. When the turnover tax was reintroduced in the year 2003 by inserting Section 16B of the West Bengal Sales Tax Act, 1994, there is no reason disclosed as to whether there is any larger public interest on which earlier promise and/or assurance given in the Incentive Scheme of 1993 required to be amended and/or altered. Even in the affidavit filed by the Respondent Government it has not been disclosed for what larger public interest the Incentive Scheme granted in 1993 is now sought to be withdrawn regarding the payment of turnover tax. Therefore, the promise and/or assurance given in the Incentive Scheme of 1993 as amended also in 1994 is sought to be withdrawn on undisclosed and indefinite policy and no material is given before the Court so that the Court can judge whether such withdrawal can be supported by a larger public interest. As already pointed out by the Supreme Court, the Government is 38 not the sole Judge to decide whether it can withdraw promise and/or assurance on which citizens have acted by such undisclosed and undefined policy.
At this stage, it will not be inappropriate to refer to the case of M/s. Vij Resins Pvt. Ltd. vs. State of J & K, reported in AIR 1989 SC 1629, where the petitioner was granted certain exemptions on the rights of extraction of resin from the inaccessible forests of the State for a period of 10 years on terms and conditions as set out in the Government order. The Government by a subsequent Act of 1986 came to terminate all the existing rights and the Act sought to create a monopoly with reference to resin in favour of the State. There was no provision for any compensation to be given in the said Act. On these facts, the petitioner contended that by invoking the principle of promissory estoppel the Government should be compelled to allow compensation for taking over the property-rights of the petitioner. At paragraph 25 of the report, the Supreme Court pointed out that the petitioners were invited to set up industries by assuring them supply of the raw materials. They changed their position on the basis of representations made by the State and when the factories were ready and they were in a position to utilize the raw materials, the impugned Act came into force to obliterate their rights and enabled the State to get out of the commitments. The Supreme Court on these facts observed that it was inclined to agree with the submissions made on behalf of the petitioners that the circumstances gave rise to a fact situation of estoppel. The Supreme Court further pointed out that it was true that there is no estoppel against the legislature and the vires of the Act could not be tested by 39 invoking the plea but so far as the State Government is concerned, the rule of estoppel did apply and the precedents of the Supreme Court were clear. Thus, the said decision clearly postulates that even though there may not be any promissory estoppel against the legislature, yet, if on the basis of the representation and promise made by the Government, certain concessions have been allowed, the State Government may be compelled to honour its promise and allow the benefit of exemption on the basis of the doctrine of promissory estoppel even though the legislative provision need not be challenged.
The Supreme Court in the case of Mahabir Vegetable Oils (P) Ltd. vs. State of Haryana, reported in (2006) 3 SCC 620 has taken note of almost all the decisions on the question and reiterated that the doctrine of promissory estoppel operates even in the legislative field. (Paragraph 25).
In the case before us, the promise was conveyed through a Scheme framed by the Government and thus, by mere incorporation of Sub-section 2 of Section 16 B of the Act, the State cannot take away the right of the petitioner who altered its position by investment of huge amount of money in a sick industry on the basis of the promise of the Government of remission of Sales tax. Consequently, the said provision which is a device to recover really Sales Tax in the guise of Turnover Tax will not be applicable to the appellant so long the promised period of exemption is not over.
We now propose to deal with the decisions cited by Mrs. Roy.
40In the case of M/s. Sun Oil Co. (P) Ltd. and another vs. State of W.B. and others, reported in AIR 1998 SC 3232, the appellant-company was carrying on business of the manufacture of lubricating oil and grease. It was granted certificate of registration under the West Bengal Sales Tax Act, 1954. A certificate for permanent registration as small scale industry was granted by the Directorate of Cottage and Small Scale Industries, Government of West Bengal. Under the Act, the authorities granted exemption from payment of sales tax for the period commencing from January 14, 1980 to January 14, 1985 by Certificate dated April 1, 1980. Notwithstanding the said certificate of exemption, for the period of four quarters ending on March 31, 1984, the appellant was assessed to turnover tax in a sum of Rs. 1,18,357.66p. and a penalty of Rs. 2,000/- was also imposed under Bengal Finance (Sales Tax) Act, 1941. The appellant filed appeal against the order of assessment before the Assistant Commissioner of Commercial taxes who confirmed the order of the Commercial Tax Officer that the eligibility certificate did not absolve it of the liability to pay turnover tax under Section 4- AAA of the Act. The appellant then assailed the order of the Assistant Commissioner in the West Bengal Taxation Tribunal. By its order dated June 25, 1993, the Full Bench of the Tribunal dismissed the appeal. From the said order of the Tribunal, the matter went to the Supreme Court by special leave.
In the above case the Supreme Court pointed out that having regard to the language used in Section 4 and 4AA of the Act, the exemption was allowed to 41 the tax referred to in Section 4 only. Section 4AA categorically indicated that notwithstanding anything contained in Section 4 of the Act, the exemption might be allowed under certain circumstances by the State Government. Thus, it was clear that the exemption under Section 4AA was restricted to the tax paid under Section 4. The exemption under Section 4AA did not refer to tax which had been levied under Section 4AAA. The Supreme Court, therefore, pointed out at paragraph 5 of the said judgment that on perusal of the provisions of Sections 4, 4AA, and 4AAA which are clear and unambiguous, there was no scope of doubt that the legislature had itself referred to two forms of impost under the Act differently. In Section 4 it was referred to as 'a tax', whereas in Section 4AAA, it is referred to as 'a turnover tax' and the said difference in nomenclature was consistently maintained in the said sections as well as other sections of the Act. The Supreme Court thereafter referred to Section 4AA which opened with a non- obstante clause and provided that despite the provisions of charging section 4, if the State Government was satisfied that it was in the public interest so to do, it might issue notification in the official gazette directing that no tax should be payable by the dealer. Here it may be noticed that the empowerment under this section to notify that no tax should be payable relates to tax, levied under Section
4. The Supreme Court further observed at paragraph 7 that from a perusal of the notification it was evident that the expression used there was that the Governor was pleased to direct that no tax should be payable by a dealer under the said Act which obviously referred to the tax under Section 4 but not to turnover tax imposed under Section 4AAA. In that view of the matter, the Supreme Court held 42 that a small scale industrial unit was not entitled to exemption from payment of turnover tax under Section 4AAA. It will, therefore, appear that the entire judgment of the Supreme Court proceeded on the basis that the exemption under Section 4AA was allowed only to the tax levied under Section 4 but tax levied under Section 4AAA being the turnover tax, Section 4AA did not in any way give exemption to the tax levied under Section 4AAA. Therefore the Supreme Court held that two impositions under Section 4A and 4AAA are different. Thus, the question involved herein has no connection with the principles laid down therein.
In the case of State of West Bengal and others vs. Deekay Cocoanut Oil Industries and another, reported in 110 STC 136 (Cal) (DB), the other case which has been relied upon by Mrs. Roy, the learned Counsel for the State is one where the West Bengal Taxation Laws (Amendment) Act, 1987 to the extent it deleted clause (e) of Section 6B (2) of the Bengal Finance (Sales Tax) Act, 1941 with retrospective effect was challenged. Section 6B(2) provided that turnover tax should be levied on the part of the gross turnover of a dealer during any period which remained after deducting there from his turnover during that period on the factors enumerated therein. Clause (e) of Section 6B (2) referred to sale of goods which were generally exempted from tax under sub-section (vi) of clause (a) of section 5(2). The said clause was deleted by the said Amendment Act with retrospective effect. In the said case it was contended by the writ-petitioner that the amendment which was given retrospective operation by which Section 6B (2)
(e) was deleted was invalid. The Division Bench turned down the said contention. 43 Therefore, in that case, the questions, with which we are faced, were not at all considered and thus, the said decision is not a precedent for the questions dealt with by us.
In the case of Bangalore Development Authority and others vs. R. Hanumaiah and others (supra), the other decision cited by Mrs. Roy, the land acquired for development scheme could not be re-conveyed to the owner by the development authority. There was no power under the Act or Rules with the Bangalore Development Authority to re-convey the acquired land. Therefore, when the land was re-conveyed after acquisition to the private persons, such action was without the authority of law and beyond the power and jurisdiction of the Bangalore Development Authority. It is in this context, that the Supreme Court observed that there was no provision in the Act and the Rules framed enabling Bangalore Development Authority to re-convey the land acquired to implement a scheme for forming of sites and their allotment as per Rules. As the Rules did not provide for re-conveyance, the Supreme Court pointed out that the rule of promissory estoppel could not be availed to permit or condone a breach of law.
In the case before us, the promise was made in terms of the sanctioned Scheme by appropriate authority which specifically exempted payment of sales tax payable by the relevant statute which included turnover tax and thus, it was not a promise to do illegal act at the relevant time and notwithstanding the 44 subsequently legislation taking away the benefit of exemption from payment of turnover tax granted under the scheme, the Government would be bound by the doctrine of promissory estoppel, as the doctrine of promissory estoppel operates even in the legislative field. (Mahabir Vegetable Oils (P) Ltd. vs. State of Haryana reported in (2006) 3 SCC 620 vide paragraph 25 of the judgement.) At this stage, it will be appropriate to refer to the decision of the Supreme Court in the case of Pournami Oil Mills vs. State of Kerala and another (supra), where two Notifications/Orders issued by the State Government are relevant. The first one is dated April 11, 1979 and the second is dated September 29, 1980 which was published in the State Gazette on October 21, 1980. By the first one, the Government gave more of tax exemption than the second one. The second notification withdrew the exemption relating to purchase tax and confined the exemption from sales tax to the limit specified in the proviso of the Notification. In such circumstances the Supreme Court passed the following order:
"All parties before us who in response to the Order of April 11, 1979 set up their industries prior to 21-10-1980 within the State of Kerala would thus be entitled to the exemption extended and/or promised under that Order. Such exemption would continue for the full period of five years from the date they started production. New industries set up after 21-10-1980 obviously would not be entitled to that benefit as they had notice of the curtailment in the exemption before they came to set up their industries."45
Applying the said principles to the facts of the present case, we adopt the same view that the subsequent legislation would not affect the right of the petitioner who invested huge amount of money before incorporation of the provision of amended provisions of Section 16 B and would continue to get the earlier benefit for the period of exemption.
Apart from the question of promissory estoppel, there being a specific order passed by the BIFR, the writ-petition should succeed for an additional reason. As pointed out earlier, if the sales tax includes turnover tax, which undoubtedly is the law as laid down by the Apex Court and also the Division Bench of this Court indicated earlier, then the exemption granted by BIFR will also includes sales tax as well as turnover tax and the exemption which is allowed by BIFR shall be enforceable under Section 32 of SICA and any condition or provision under the West Bengal Sales Tax Act, 1994 which is inconsistent with or repugnant to the SICA, being a Central Act, will have to yield to the Central Act. There is no dispute that the statutory provision of Section 32 of SICA overrides all State laws viz. Sales Tax Laws enacted under Entry 54 of List II of Seventh Schedule. The claim of exemption from sales tax allowed on the basis of the order made by BIFR is to be applicable notwithstanding anything contained in any other law to the contrary excepting the Foreign Exchange Regulation Act and Urban Land Ceiling Act. Therefore, under Section 32 of the SICA, the exemption that has been allowed in respect of sales tax will override any other provisions of the local Sales Tax Act which may contain any provision to the 46 contrary. It is relevant to note that BIFR refers to exemption of sales tax without referring to any statute and it does not refer to sales tax under the Bengal Finance (Sales Tax) Act, 1941 or West Bengal Sales Tax Act, 1994. Sales tax, as already indicated, includes turnover tax and if the said proposition is not accepted, as mentioned earlier, the State Legislature then will have no power to impose any tax in the name of turnover tax as the same would not fall under Entry 54 of List II of the Seventh Schedule.
We, consequently, find that the Second, third, fourth and fifth contentions of Mrs. Roy are not tenable in the eye of law.
We, therefore, find that the learned Tribunal below erred in law in holding that there was no promise to exempt from the payment of Turnover tax and consequently, refused to exercise jurisdiction vested in it by law in refusing the just relief to the petitioner on total misinterpretation of the materials on record.
We, hence, set aside the order impugned and direct the respondent not to realise turnover tax from the petitioner for the sale of the cement in the State of West Bengal for the period of exemption. If the amount has already been realized, the same should be refunded with interest at the rate of 12% per annum from the date of receipt till the date of return. The refund, in that case, be made within two months from today.
The writ-application is, thus, allowed to the extent indicated. 47 In the facts and circumstances, there will be, however, no order as to costs.
(Bhaskar Bhattacharya, J.) I agree.
(Sambuddha Chakrabarti, J.) Later:
After this order is passed, Mrs. Roy, learned Advocate appearing on behalf of the respondents prays for stay of operation of the aforesaid order.
In view of what have been stated above, we find no reason to stay the operation of the aforesaid order. Moreover, we have granted two months' time for taking step. Further stay is not necessary.
(Bhaskar Bhattacharya, J.) 48 (Sambuddha Chakrabarti, J.)