Judgment

HIDAYATULLAH, J. : (Majority judgment: B. P. Sinha, C.J.I., Hidayatullah, Shah and Mudholkar, JJ.) The appellants are a firm of general merchants, which sells, among other goods, manufactured tobacco as defined in the Punjab Tobacco Vend Fees Act, 1954 (12 of 1954), which came into force in the State of Punjab from April 1, 1954. The firm is also a registered dealer under S. 7 of the East Punjab General Sales Tax Act, 1948, and till the end of March, 1954, was paying sales tax on manufactured tobacco also. Indeed, the firm paid sales-tax on manufactured tobacco, also for the next quarter ending on June 30, 1954, but did not pay in the succeeding quarter in view of certain events, to which a detailed reference will be made presently. On September 27, 1954, the State Government issued a Notification (No. 4556-E & T (Ch) -54/957) by which the schedule of exemptions under S. 6 of the Sales Tax Act, was amended by the inclusion of item 51, which reads as follows:

Item 51 "Manufactured tobacco as defined in the Punjab Tobacco Vend Fees Act, 1954."

This Notification was preceded by a Notification of May, 7, 1954 (No. 427-E &T (Ch)54/369), by which the State Government had given notice, as required by law, of its intention to add the said item in the schedule of exemptions. In June, 1954, the State Government issued a Press Note by which it was intended to convey to the dealers that though the Tobacco Vend Fees Act had come into force from April 1, 1954, it was not intended to levy both the sales tax as well as the fee for any period. The Press Note reads as follows :

"There is some misapprehension in the minds of dealers in manufactured tobacco as to whether sales tax is also chargeable in respect of manufactured tobacco after the 1st April, 1954, in addition to the license fees under the Tobacco Vend Fees Act. Government would like to make it clear that although the Tobacco Vend Fees Act has come into force with effect from 1st April, 1954, no license fees for dealers have yet been prescribed under the Act. Therefore, the levy of sales tax continues till the Vend Fee licences come into operation. It is to be clearly understood that the Vend Fee will be proportionately reduced for the current financial year to adjust the period for which sales tax will have been charged. Manufactured tobacco will be exempted from sales tax simultaneously with the enforcement of the Vend Fees."

2. On August 2, 1954, the State Government issued another Press Note, in which the decision was altered. The Press Note said :

"Government recently announced through a press note that the levy of Sales Tax on manufactured tobacco would be continued till the Vend Fee Licences came into operation and that the Vend Fee would be proportionately reduced for the current financial year in respect of the period for which Sales Tax would have been charged. In order to avoid double taxation, Government have since reconsidered the matter and have, in supersession of the previous decision, decided that the Sales Tax, if any, recovered from the dealers would be refunded and that no Sales Tax would be charged during the current financial year in respect of sales of tobacco which fall under the Tobacco Vend Fees Act. Tobacco Vend Fees will be recovered at full rates for the whole year as and when rules under the Punjab Tobacco Vend Fees Act are finalised."

It appears that the Rules under the Tobacco Vend Fees Act were not promulgated; nor were the forms and licences prescribed during the financial year ending on March 31, 1955. In the meantime, the appellants, as already stated, paid sales tax on sale of manufactured tobacco for the first quarter ending June 30, 1954, and the Notification exempting manufactured tobacco from sales tax was issued on September 27,1954. The appellants had made enquiries from the Excise and Taxation Commissioner, Purjab, about the Press Note of August 2, 1954, and had been assured that the Notification as printed in the Newspapers was accurate,