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2023 Supreme(Cal) 1250
IN THE HIGH COURT AT CALCUTTA
T.S. SIVAGNANAM, HIRANMAY BHATTACHARYYA, JJ.
Electrosteel Castings Limited and Another – Petitioners
Versus
The Deputy Commissioner of Commercial Taxes and Others – Respondents
WPTT No. 4 of 2022
Decided On : 28-02-2023
Advocate Appeared:
For the Petitioners: Jayanta Mitra, Rahul Dhanuka.
For the Respondents: A. Ray, T.M. Siddiqui, D. Ghosh, Debraj Sahu, Subhojit Roy.
IMPORTANT POINT
The judgment establishes the principle that the State's promise to allow remission of tax is limited to the terms specified in the incentive scheme, and the doctrine of promissory estoppel does not apply to investments made beyond the scheme's duration. It also clarifies the scope of Section 118(c) of the WB VAT Act 2003 and the discretionary power of the State Government to relax provisions for remission of tax.
Headnote:
West Bengal Sales Tax Act - Remission of Tax - West Bengal Value Added Tax, 2003 - [Section 44 of the 1994 Act, Section 118(c) of the WB VAT Act 2003] - The court discussed the provisions under the West Bengal Incentive Scheme 1999 and the promise made by the State Government to allow remission of sales tax to an existing unit for its approved project of expansion. The court also analyzed the doctrine of promissory estoppel and its exceptions. The court further examined the applicability of Section 118(c) of the WB VAT Act 2003 and the power of the State Government to relax certain provisions of the 1994 Act relating to remission of tax. The judgment provides a detailed interpretation of the legal provisions and their influence on the court's decision.
Fact of the Case:
The petitioner, a registered dealer, sought remission of tax under the West Bengal Sales Tax Act and the West Bengal Value Added Tax, 2003. The dispute arose from the refusal to allow remission on the Fixed Capital Investment (FCI) of Rs. 23 crores, leading to a writ petition challenging the decision of the respondent authorities.
Finding of the Court:
The court found that the State had fulfilled its promise by allowing remission on the investment of Rs. 194 crores, as per the West Bengal Incentive Scheme 1999. The court held that the doctrine of promissory estoppel did not apply to the investment made after the scheme's duration. Additionally, the court concluded that the State's action was not arbitrary and dismissed the writ petition.
Issues: The issues revolved around the eligibility for remission of tax on the FCI of Rs. 23 crores, the applicability of the West Bengal Incentive Scheme 1999, and the interpretation of Section 118(c) of the WB VAT Act 2003.
Ratio Decidendi: The court's decision was based on the interpretation of the West Bengal Incentive Scheme 1999, the doctrine of promissory estoppel, and the applicability of Section 118(c) of the WB VAT Act 2003. The court also considered the power of the State Government to relax provisions of the 1994 Act relating to remission of tax.
Final Decision: The writ petition was dismissed as the court found it devoid of merit, without any order as to costs.
JUDGMENT :
HIRANMAY BHATTACHARYYA, J.
1. This writ petition is at the instance of a registered dealer under the West Bengal Sales Tax Act, 1994 (for short “the 1994 Act”) under the West Bengal Value Added Tax, 2003 (for short “WB VAT”) Act praying for a writ of mandamus, commanding the respondents to allow remission of tax after setting aside the order dated 08.02.2022 passed by the West Bengal Taxation Tribunal (for short “The Tribunal”) in Case No. RN-1761/12.
2. The petitioner no. 1 claims to be one of the leading producers of Ductile Iron (for short “DI”) Pipes and has set up its unit at Khardah (for short “the unit”) for the manufacture of DI Pipes with an installed capacity of 60,000 metric ton. The petitioner undertook expansion of the unit from time to time and became eligible for remission of sales tax under various Incentive Schemes of the State. It is the further case of the writ petitioners that the actual investment made up to 31.03.2005 including the expansion programs undertaken by the unit stood at Rs. 250.88 cores i.e. Rs. 251 crores. The petitioners claim to have made a further investment of Rs. 23 crores during the period from 01.04.2005 to 31.12.2005 taking the total investment till 31.12.2005 at Rs. 274 crores. The petitioners claim that the Gross Value of Fixed Capital Assets (for short “GVFCA”) was determined at Rs. 194 crores. Petitioners prayed for enhancement of GVFCA by Rs. 80 crores to include the investment made by the petitioner till 31.12.2005. The Standing committee of the industries of the State Cabinet in its meeting held on 18.03.2006 enhanced the Fixed Capital Investment (for short “FCI”) by Rs. 57 crores instead of 80 crores as prayed for by the petitioner. The Special Secretary to the Government of West Bengal by a letter dated 20.06.2006 informed the petitioner that the investment of Rs. 23 crores made after 31.03.2005 will not be counted.
3. Challenging the decision of the respondent authorities not to allow remission on the FCI of Rs. 23 crores, the writ petititoners filed an application under Section 8 of the West Bengal Taxation Tribunal Act 1987 (for short “the 1987 Act”) giving rise to Case No. R.N. 1761 of 2012.
4. Before the learned Tribunal, the writ petitioners prayed for an order directing the respondents to allow remission of tax to the petitioner covering the GVFCA of 23 crores. The Tribunal, by a judgment and order dated 25.07.2018, dismissed the said application. The writ petitioners challenged the said order of the Tribunal before this Court in WPTT No. 20 of 2018 which was disposed of by a co-ordinate bench by an order dated 28.08.2019 by setting aside the order of the learned Tribunal dated 25.07.2018 and by directing the learned Tribunal to rehear and decide RN 1761/12 by giving an opportunity of being heard to the parties and by passing a reasoned decision within the time limit stipulated therein.
5. After remand the learned Tribunal by a judgment and order dated 08.02.2022 disposed of RN 1761/2012 upon holding that there is no infirmity in the decision making process by the State Government. The Tribunal further observed that the State had exercised discretion and increased further limit of eligible amount of GVFCI for eligible incentives by way of remission of taxes after taking into account all the aspects. The registered dealer has challenged the said decision of the learned Tribunal by filing this writ petition.
6. Mr. Mitra, learned Senior Counsel appearing in support of the writ petition placed the various provisions under the West Bengal Incentive Scheme 1999 (for short “the scheme”) and contended that the said scheme provides that all investments made in land, building, plant and machinery and equipment on or after 01.04.1998 shall be eligible for benefits under the scheme. He further contended that the said scheme does not put any embargo upon the unit to complete the investments within the duration of the scheme. He also contended that the scheme contains a promise
