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Judges : BHAGAVATHI,DUTT,RANGANATH MISRA
Pournami Oil Mills - Appellant
Versus
State of Kerala - Respondent
Case No : C.A. No. 626 of 1986 etc
Decided On : 12/19/1986
Advocates Appeared :
A.S. Nambiar; For Petitioner V.J. Francis; E.M.S. Anam; J. Ramachandran; R.N. Keshwani; For Respondents
Tax Exemption - State Government Orders - S.10 of the Kerala General Sales Tax Act (15 of 1963) - The court held that both the orders are covered by the provisions of S.10 of the Act, and the plea of estoppel is unanswerable in granting tax exemption to industries.
Fact of the Case:
The appeals were against judgments of the Kerala High Court that refused to grant relief in writ petitions filed before it. The State Government issued two notifications/orders granting tax exemptions to industries.
Finding of the Court:
The court found that both orders were covered by the provisions of S.10 of the Act and held that the plea of estoppel is unanswerable in granting tax exemption to industries.
Issues: The main issue was whether the notifications were issued in exercise of the powers under S.10 of the Act.
Ratio Decidendi: The court held that both the orders are covered by the provisions of S.10 of the Act, and the plea of estoppel is unanswerable in granting tax exemption to industries.
Final Decision: Each of the appeals was allowed, and parties were directed to bear their own costs throughout.
1. All these appeals are by special leave and are directed against judgments rendered by the Kerala High Court in Writ Petitions filed before it. The High Court in each case refused to grant relief.
2. Two Notifications/ Orders issued by the State Government are relevant. The first one is dated 11-4-1979 and the second is dated 29-9-1980 which was published in the State Gazette on 21-10-1980. For convenience, the texts of the two Notifications /Orders are extracted below.
"Order dated 11-4-1979:
The incentives now given to the industries in the State are too meagre and inadequate to attract industries to this State when compared to the incentives available for the industries in many other States. Further there are certain inherent disincentives also peculiar to this State such as high wage rates, minimum wages for certain sections, lack of availability of raw materials, etc. The question of offering some incentives by the State to attract new industries has been under consideration of the Government.
The question whether any additional incentive can be given to the industrial concern the State plans to consider in detail and it was felt that the question of strengthening the traditional industries which are labour-intensive, rehabilitation of sick units and the promotional activities for the growth of new industries should be examined in depth for identifying the problems and adoption of various measures necessary to promote industrial growth in the State. A Committee consisting of the following officers was therefore set up to study the various problems and submit report "
The Committee finalised its report on 20th March 1979. The Government has considered the recommendations and suggestions of the Committee in detail and they are pleased to approve the following package of measures for promoting industrial development in Kerala: SMALL SCALE INDUSTRIES: Sales-Tax Concession:
New industrial units under small-scale industries set up after 1-4-1979 will be exempted from the payment of sales-tax for a period of five years from the date of production..."
The relevant portion of the second notification reads thus:
"In exercise of the power conferred by S.10 of the Kerala General Sales Tax Act (15 of 1963) the Government of Kerala have considered it necessary in the public interest so to do, hereby make an exemption in respect of the tax payable under the said Act on the turnover of the sale of goods produced and sold by the new industrial units under the small-scale industries for a period of five years from the date of commencement of sale of such goods by the said units subject to the conditions that if the tax collected by any such units by way of tax on their sales shall be paid over to Government and that the sales tax, if any, already paid by such units to Government shall not be refunded.
Provided that such units shall produce proceedings of the General Manager, District Industries Centre, declaring the eligibility of the units for claiming exemption from sales-tax.
Provided further that the cumulative sales tax concessions granted to a unit at any point of time within this period shall not exceed 90 per cent of the cumulative gross fixed capital investment of the unit.
EXPLANATION:- For the purpose of this notification new industrial units under the Small-scale Industries shall mean undertakings set up on or after 1st April, 1979 and registered with the Department of Industries and Commerce as a small-scale industrial unit.
This notification shall be deemed to have come into force with effect from 1st April, 1979".
3. S.10 of the Kerala General Sales Tax Act at the time the two orders were made ran thus: "Power of Government to grant exemption and reduction in rate of tax.
(1) The Government may, if they consider it necessary in the public interest, by notification in the Gazette, make an exemption or reduction in rate (either prospectively or retrospectively) in respect of any tax payable under this Act;
(i) on the sale or p
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