The State Government had the power to grant and withdraw exemptions, and was bound to comply with the decision in Shree Mahavir Oil Mills.

Judgment

( 1 ) THIS batch of appeals has been preferred by small-scale industrial units which carry on the business of manufacturing edible oils in the State of jammu and Kashmir. The manufacture of edible oils was exempted from payment of sales tax under Exemption Notification No. SRO-93 dated 27-3-1991 which granted exemption to small-scale industrial units for the period 1-7-1990 onwards from payment of general sales tax under the Jammu and Kashmir General Sales Tax Act, 1962, provided that the goods manufactured were not of the kind specified in Annexure a to the notification. Annexure a consisted of two parts. The first contained details of the period for which exemption was to be granted and the extent of exemption. Thus 100% exemption was granted up to 31-3-1995, 50% till 31-3-1998 and 25% till 31-3-2000. The second part specified the excluded industries (which is referred to hereinafter as "the Negative List") which did not include edible oils. Consequently, the appellants before us were entitled to exemption under Notification No. SRO-93 of 1991.

( 2 ) ON 19-1-1995 a government order was issued, being GO No. 10 of 1995, which enunciated the States policy in respect of new units in the tiny/ small/medium/large-scale sector which would be established after the announcement of the new policy. Existing units were also given the option to continue with the package of incentive to the extent applicable for the remaining period of entitlement. The package of incentives included para 7 which reads as follows:

"7. GST/cst/additional toll tax on SSI Units, medium and largescale units (i) The purchase of raw materials by small-scale units shall be exempted from general sales tax except for the items which are on the negative List. (ii) GST exemption is also available to small-scale units on sale of finished goods till 31-3-2000 except for the items which are on the negative List. (iii) No GST would be charged on sale of finished goods manufactured by SSI Units. This concession is also available up to 31-3-2000. (vii) negative List referred to in the above paras may be altered by the Government in the Industries and Commerce Department in consultation with the Finance Department. "

( 3 ) IN other words instead of granting exemption at reducing percentages till 31-3-2000, the policy was to grant 100% exemption till that date. Para 19 of the government order, however, provided that the policy would come into force from the date of a notification.

( 4 ) THE relevant notification was issued on 4-4-1995. The notification, which is numbered as SRO-87, gave effect to the government policy by directing that for the Schedule forming the first part of Annexure A to notification No. SRO-93 dated 27-3-1991, the following would be substituted, namely,

( 5 ) THE notification was to come into force with effect from 1-4-1995.

( 6 ) IN the meanwhile, according to the appellants they had set up their industrial units on the basis of the government policy. They claimed for and were granted 100% exemption on the edible oils manufactured by them. Their grievance is that this benefit which should have continued at least up to 2000 was suddenly withdrawn on 31-3-1997 with effect from 1-3-1997 by notification No. SRO-122. The exemption was withdrawn by amending notification No. SRO-93 and adding edible oils to the Negative List of industries in Annexure a. The reason given by the Government for including edible oils in the Negative List and denying further exemption to this commodity was a decision of this Court in Shree Mahavir Oil Mills v. State of Jandk.

( 7 ) THE appellants filed writ petitions in the High Court challenging the withdrawal of the exemption basically on two grounds (7) that the State was bound by the principle of promissory estoppel by the government order in 1995 granting exemption from general sales tax uptil 2000 and (2) that the reason given by the State Government for issuing Notification No. SRO-122 was incorrect in the sense that t