JUDGMENT

Hrishikesh Roy, J.

Leave granted.

1. Heard Mr. Ritin Rai, the learned Senior Counsel representing the appellant. Also heard Mr. C.K. Sasi, the learned counsel representing the respondents.

2. The issue to be considered here is whether the benefit of tax exemption in respect of works contract granted in the process of revival of the industry, under the relevant provisions of the Sick Industrial Companies Act, 1985 (for short “the SICA”) based on the Kerala Government communication dated 20.3.2004 (Ext. P-2) can be withdrawn, by the subsequent government order dated 21.11.2006 (Ext. P-3).

3. It was the appellant’s say that they had taken over a sick industrial unit by the name of M/s Teak Tex Processing Complex Ltd., which was engaged in dyeing of clothes. The Kerala based unit was not operational for a considerable period when attempt was made, for revival of the unit under SICA. In the proceedings that were pending before the Board for Industrial and Financial Reconstruction (for short “BIFR”), the authorities were assessing the possibility of revival of the unit. At that stage, the appellant offered to make investment for revival of the company following which, discussions were held amongst the stakeholders and various concessions were offered to the appellant.

4.1 In tune with the recommendation of the Empowered Committee constituted for the purpose, the Government Order was issued on 20.3.2004 whereby the recommendations of the Committee were accepted. The relevant clause incorporating the measures relating to Sales Tax/Works Contract Tax, are as under:-

“Sales Tax/Works Contract Tax

(a) The past arrears of Sales Tax/Works contract tax will be completely waived.

(b) Works contract Tax on processing of Fabrics like bleaching and dyeing etc. will be exempted in the State”

4.2 In furtherance of the 2004 Government Order, the revival proposal envisaged the taking over by the appellant entire assets of the sick unit for a sum of Rs.10 crores and the BIFR Sanctioned Scheme dated 17.01.2005 mentioned the relief measures under clause 7.2.1 pertaining to sales tax/works contract tax. They read as follows:-

“7.2.1 Sales Tax/Works Contract Tax

(a) To waive past arrears of Sale Tax Works Contract Tax completely

(b) To exempt works contract tax on processing of fabrics like bleaching and dyeing etc. in future.”

5. The appellant availed the waiver benefit of past tax arrears of the sick unit on the basis of the BIFR Sanctioned Scheme dated 17.01.2005 (Ext. P-1) which assured waiver of Works Contract Tax on processing of fabrics like bleaching and dyeing etc. After about 30 months of such arrangement, the Government issued another Order on 21.11.2006 exercising the power under Section 10(3) of the Kerala General Sales Tax Act, 1963 (for short “the KGST Act”) where it was said that the benefit of exemption can only be granted to a specified class of goods or a particular class of persons, and the appellant who is one amongst several industrial units doing similar nature of work within the State of Kerala, cannot be allowed the benefits of exemption of Works Contract Tax. After issuance of G.O. order dated 21.11.2006, withdrawing the concession in question, on 1.10.2007, the Government has withdrawn G.O.No.110/06/1D dated 21.11.2006, as the concession was one already allowed in the rehabilitation scheme of the BIFR of the company. However, on 29.02.2008 again, the Government in the Tax Department requested to cancel the GO dated 01.10.2007 as it did not have any legally binding effect and thereupon GO dated 01.10.2007 in turn was cancelled with immediate effect. Accordingly, it was decided to withdraw the tax waiver/exemption granted to the appellant which prompted them to file the W.P.(C) No. 5677 of 2007 before the High Court of Kerala.

6. It was contended by the appellant that they attempted to revive and nurse back a sick company under BIFR and with due deliberations and the recommendations of the Empowered Committee, the incentive measure