Industries and Other Vs. The State of Gujarat & Ors  INSC 415 (23 August 1995)
S.C. (J) Sen, S.C. (J) Ahmadi A.M. (Cj) Paripoornan, K.S.(J) Sen, J.
1995 AIR 2477 1995 SCC (6) 53 JT 1995 (7) 220 1995 SCALE (4)843
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CIVIL APPEAL NO.1011 OF 1977 Vijay Oil Mills Co. Versus The Assistant
Commissioner of Sales Tax and others
APPEAL NO.951 OF 1976 The appellants are manufactures of edible oil and have
their own solvent extraction plants at Junagadh. The case of the appellants is
that on or about September
9, 1969, a press note
issued by the State Government that New Industries will be granted exemption
from Sales Tax for a period of five years from the date of commencement of
production. The then Chief Minister as well as the Finance Minister of the
State Government of Gujarat also made statements on March 3, 1970 on the floor
of the Legislative Assembly that New Industries will be granted exemption from
Sales Tax for a period of five years. The press note has not been annexed to
the petition. Copies of the alleged statements made by the Chief Minister and
the Finance Minister in the Legislative Assembly have also not been produced in
a copy of the Notification dated April 29, 1970, issued under Section 49 (2) of the Gujarat Sales Tax Act,
1963, has been included in the paper-book. This Notification contains a recital
that the Government of Gujarat is satisfied that circumstances exist which
render it necessary to take immediate action action to amend the Gujarat Sales
Tax Rules, 1970 and to dispense with the previous publication thereof. This
Notification does not make any reference to any previous press note or
assurance given by anybody on behalf of the Government. It merely provides that
in exercise of the powers conferred by Section 86 of the Gujarat Sales Tax Act,
1969, the rules were being framed to amend the Gujarat Sales Tax Rules, 1970.
Rule 42A was introduced in the Gujrat Sales Tax Rules, 1970, whereby on fulfilment
of certain conditions, a New Industry granted drawback, set off or refund of
the whole or any part of the tax in respect of the purchase of raw material,
processing materials and machinery or packing materials used in manufacture of
goods for sales. Certain conditions were laid down which had to be fulfilled
before a New Industry could avail of this benefit of the amended Rule 42A. 'New
Industry' was defined to mean and include an industry which has been
commissioned at any time during the period from 1st April, 1970 to 31st
March, 1975. One of
the conditions laid down in the Notification was that the assessee had to
obtain an eligibility certificate from the Commissioner of Industries, Gujarat
State, to the effect that the new industry had been commissioned in an area
beyond 24 kilometres from the municipal limits of cities of Ahmedabad and
Baroda and 16 kilometres from the municipal limits of Surat, Bhavnagar, Rajkot
and Jamnagar. A new industry would enjoy the benefit of this notification for a
period of five years from the date of commissioning of the industry as stated
in the eligibility certificate.
On 11th November, 1970, a further notification was issued
amending the earlier notification dated 29th April, 1970. It was specifically provided that
'New Industry' will not include industries engaged in, inter alia:- (12) decoraticating
expelling, crushing, roasting, paching, frying of oil seeds and colouring, decolouring
scenting of oil;
extraction of oil from oil-seeds and oil- cakes.
contention made on behalf of the appellants is that the solvent extraction
plant at Junagadh was set up by the appellant on the strength of assurance made
out by the Government in the press statement, the speeches made by the Chief
Minister and the Finance Minister on the floor of the Legislative Assembly, and
also the Notification issued on 11.11.1970. The appellant would not have set up
this industry at Junagadh but for the aforesaid assurances given by the
Government. It is not open to the Government now to withdraw the benefits of
this Notification by a subsequent Notification issued on 17.7.1971. Since the
appellant had changed his position to his detriment on the strength of the
earlier assurance held out by the Government, the appellant is entitled to
continue to enjoy the benefits given by Notification dated 11th November, 1970 for a period of five years from the
date of commissioning of its plant. The Government was estopped from
withdrawing the benefits by removing the appellant from the list of eligible
industries by the subsequent Notification dated 17th July, 1971.
arguments were advanced as to the scope and effect of the doctrine of
promissory estoppel and under what circumstances could this doctrine be
invoked. It was argued that the two Notifications issued by the Government were
not in exercise of legislative power delegated by the Statute.
Government could not unilaterally withdraw the benefits conferred by the
earlier Notification from Industries which had stared production after the
Notification dated 11th November, 1970 came into force. Having regard to the
facts of the case, it is not necessary to go into this controversy. The date of
commencement of appellants industry, according to the eligibility certificate
obtained by the appellant from the Commissioner of Industries, is 3rd December, 1970. It is difficult to believe that
the a pellant, after the exemption Notification dated 11th November, 1970 was
issued and on the basis of it, set up an oil extraction plant which commenced
production within three weeks' time on 3rd December, 1970. No particulars have
been given as to when the land was purchased, or when the plant and machinery
for the industry were procured.
the Notification dated 11.11.1970 does not contain any promise that the
benefits given to new Industries will not be altered from time to time. The
Government is entitled to grant exemption to industries having regard to the
industrial policy of the Government.
Government is equally free to modify its industrial policy and grant, withdraw
or modify fiscal benefits from time to time. There is nothing in the
notification dated 11.11.1970 by which any assurance was held out to any
industry. This was an usual Government Notification relating to purchase and
sales tax, granting reliefs to certain industries on fulfilment of the
conditions laid in the notification.
otherwise, the Notification dated 11th November, 1970 grants exemption to New
Industry which 'has been commissioned on or after 1st April, 1970, in the areas
beyond 24 kilometres from the Municipal limits of cities of Ahmedabad and
Baroda and 16 kilometres from the Municipal limit of Surat, Bhavnagar, Rajkot
and Jamnagar. In other words, the Government wanted to encourage industries set
up beyond the specified distance from the municipal limits of the aforesaid
towns. This cannot be construed to mean that the Government was contamplating
to encourage industries set up in other cities of Gujarat which were far away from Ahmedabad,
Baroda, Surat, Bhavnagar, Rajkot and Jamnagar.
appellant had set up its industry at Junagadh, which is a large city. It is
doubtful whether such an industry was at all entitled to any benefit of the
Notification dated 11th
However, we need not express any final opinion on this aspect of the case,
because no argument was advanced on this issue at the hearing of the case.
is also a further point to be noted. In the Special Leave Petition, it has been
stated that some time in April, 1970, the then chief Minister and the Finance
Minister had announced that the Government had adopted the policy of giving
incentives to establishment of new industries. It has further been stated that
petitioner's total investment in the oil extraction plant is roughly 23 lakhs
out of which about Rs.14 lakhs was for the cost of machinery, about Rs.8 lakhs
was towards erection, construction of necessary sheds and buildings and about
Rs.68,000/- we towards the cost of land. The appellant is a partnership firm.
It has not been stated at what point of time the partners decided to set up
this plant and when and how the fund required for setting up of the plant was
appellant has been entirely unable to make out any factual basis for a case of
promissory estoppel. The appellant cannot claim that merely because it had set
up its industrial unit at Junagadh at a certain point of time, the fiscal laws
of the State must remain unaltered from that date. The appellant has not been
able to show that some definite promise was made by or on behalf of the
Government and the appellant had acted upon that promise to its detriment and
thereafter the changes effected by the Notification dated 17th July, 1971 have
caused great prejudice to the appellant.
premises, it is not necessary to go into the question of applicability of the
doctrine of promissory estoppel in the field of fiscal legislation.
appeal is dismissed. There will be no order as to costs.
APPEAL NO 1011 OF 1977 The facts of this case are similar to the facts in the case
of Arvind Industries and others v. The State of Gujarat and others (Civil
Appeal No. 951 of 1976). Here again, the contention of the promissory estoppel
has been raised.
appellant has set up a factory at Ambavadi Road, Dhoraji. The industrial undertaking
was commissioned on 31.12.1970, i.e. within seven weeks from the date of the
Notification dated 11.11.1970. The appellant had stated in the petition that on
31st August, 1970, it had set up the factory premisses at Dhoraji at a cost of
Rs.38,000/-. This was long before the exemption Notification dated 11th
November, 1970. No dated have been given for the purchase of machinery and
spare-parts worth Rs.45,000/-. But it has been stated that the production in
the factory started from 31st December, 1970. Having regard to the facts of the
case and also nature of the two Notifications issued by the Government dated
11th November, 1970 and 17th July, 1971, we are of the view that the factual
basis for a case of promissory estoppel has not been made out. It is
unnecessary to deal with elaborate arguments advanced on the scope of the
doctrine of promissory estoppel in the facts of case.
appeal is dismissed. There will be no order as to costs.