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2011 (2) Supreme 135
SUPREME COURT OF INDIA
Dr. Mukundakam Sharma and Anil R. Dave, JJ.
State of Haryana & Others — Appellants
versus
M/s. Mahabir Vegetable Oils Pvt. Ltd. — Respondent
Civil Appeal No. 1977 of 2011
[Arising out of SLP (C) No. 16227 of 2009]
Decided on : 21-2-2011
(2006) 3 SCC 620 – Relied upon
(b) Interpretation of Statutes – Statutes cannot be construed to have retrospective operation unless it is in consonance with the terms of the Statues – Rule making being delegated legislation, no rule can made having retrospective effect unless the main Act provides therefor. (Para 15)
(c) Haryana General Sales Tax Act, 1973 – Section 64 r/w rule 28A, Haryana Sales Tax Rules – Act providing for retrospective operation by amendment in 2001 – Therefore amendments in Rule 28A made in 1996 and prior to amendment of the Act in 2001 could not take away vested rights from retrospective effect. (Para 15)
(d) Promissory estoppel – Where the Government makes a promise and, the promisee acting in reliance on it, alters his position, the Government would be held bound by the promise – Such promise would be enforceable against the Government at the instance of the promise. (Para 23)
(1979) 2 SCC 409 – Relied upon
(e) Administration of Justice – Judicial Propriety – Withdrawal of exemption “in public interest” is a matter of policy – Courts should not bind the government in its policy decision – Courts should not normally interfere with fiscal policy of the government more so when such decisions are taken in public interest and where no fraud nor lack of bona fide is alleged much less established. (Para 25)
(f) Haryana General Sales Tax Act, 1973 – Section 64 r/w rule 28A, Haryana Sales Tax Rules – Beneficiary of a concession like exemption has no legally enforceable right against the government to grant a concession except to enjoy the benefits of the concession during the period of its grant – Government would be fully empowered to withdraw such concession. (Para 26)
Facts of the case:
This case concerns interpretation of Haryana Sales Tax Rules as regards exemption.
Finding of the Court:
Respondent is entitled to exemption only on investments made up to 16.12.1996.
JUDGMENT
Dr. Mukundakam Sharma, J. —
1. Leave granted.
2. The issue that falls for our consideration in this appeal is whether the Respondent is entitled to the benefit of Sales Tax exemption on the entire investment made by them in setting up the industrial unit i.e. Solvent Extraction Plant, or on the investments made up till 16.12.1996, the date on which the exemption granted under Rule 28A of the Haryana Sales Tax Rules (“HSTR” for short) was withdrawn by the State by putting the Solvent extraction plant in the negative list.
3. The basic facts which are not in dispute, are as follows:-
The State enacted the Haryana General Sales Tax Act, 1973 (for short “the Act”). Section 64 of the Act provides for rule-making power. The said provision was amended by inserting sub-section (2-A) therein which reads as under:
“64. (2-A) The power to make rules under sub-sections (1) and (2) with respect to clauses (ff) and (oo) of sub-section (2) shall include the power to give retrospective effect to such rules i.e. from the date on which policy for incentives to industry is announced by the State and for this purpose Rules 28-A, 28-B and 28-C of the Haryana General Sales Tax Rules, 1975, shall have retrospective effect i.e. with effect from 1st April, 1988, 1st August, 1997 and 15th November, 1999 respectively, but such retrospective operation shall not prejudicially affect the interest of any person to whom such rules may be applicable.”
4. Clause (ff) of sub-section (2) of Section 64 of the Act provides for the class of industries, period of exemption and conditions of such exemption, under Section 13-B; whereas clause (oo) thereof provides for class of industries, period of deferment and the conditions to be imposed for such deferment under Section 25-A.
5. Pursuant to or in furtherance of the said rule-making power, the State made rules known as the Haryana General Sales Tax Rules, 1975 (for short “the Rules”). Rule 28-A occurring in Chapter IV-A of the Rules provide for the class of industries, period and other conditions for exemption/deferment from payment of tax as envisaged both under Sections 13-B and 25-A of the Act.
“Operative period” has been defined in sub-rule (2)(a) of Rule 28-A of the Rules to mean “the period starting from the 1st day of April, 1988 and ending on the 31st day of March, 1997”. Sub-rule (2)(c) thereof defines “New industrial unit” to mean:
“a unit which is or has been set up in the State of Haryana and comes or has come into commercial production for the first time during the operative period and has not been or is not formed as a result of purchase or transfer of old machinery except when purchased in the course of import into the territory of India, or when the cost of old machinery does not exceed 25% of the total cost of machinery re-establishment, amalgamation, change of lease, change of ownership, change in constitution, transfer of business, reconstruction or revival of the existing unit”.
6. “Negative list” has been defined in sub-rule (2)(o) to mean “a list of class of industries as specified in Schedule III appended to these Rules”.
7. The State of Haryana announced an industrial policy for the period 1-4-1988 to 31-3-1997 wherein inter alia incentive by way of sales tax exemption was to be given for the industries set up in backward areas in the State. Schedule III appended to the Rules provides for a negative list of the industries and/or class of industries which were not to be included therein. At the initial stage the Solvent extraction plant was admittedly not included in the negative list.
8. On or about 3-1-1996, notice was given as regards the intention of the State to amend the Rules in respect whereof a draft was circulated for information of persons likely to be affected thereby so as to enable them to file objections and suggestions thereto. Amendments in the terms of the said draft rules were notified on 16-12-1996 substituting Schedule III appended to the Rules whereby and whereun
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