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1989 Supreme(J&K) 14
IN THE HIGH COURT OF JAMMU AND KASHMIR AT JAMMU
A.S. Anand,Mazhar Ali Shah, JJ.
K.C. Vanaspati - Appellant
Versus
Assessing Authority & Anr. - Respondent
Writ Petition No. 52/1982 & 822/1984 And 711/1987
Decided On : 22 February, 1989
Advocate For Appellant: V.K. Gupta
Advocate For Respondent: Altaf Ahmed
Advocate For Respondent: D.C. Raina
The doctrine of promissory estoppel is not attracted where the party claiming the benefit of the doctrine has not acted upon the alleged promise or representation.
Headnote:
SALES TAX - Exemption - Govt. orders - Whether an order of exemption - Doctrine of promissory estoppel - Applicability - Maintainability of petition - Held, Govt. orders are not orders of exemption - Doctrine of promissory estoppel not attracted - Petitions not maintainable.
Fact of the Case:
Petitioner, a manufacturer of Vanaspati, challenged the assessment orders issued by the respondents, claiming exemption from payment of sales tax on the basis of two Govt. orders and the doctrine of promissory estoppel. The respondents resisted the claim, contending that the Govt. orders were not orders of exemption and that the petitioner had collected sales tax from the consumers.
Finding of the Court:
The Court held that the Govt. orders were not orders of exemption, as they did not specifically exempt the petitioner's products from sales tax. The Court also held that the doctrine of promissory estoppel was not attracted to the facts of the case, as the petitioner had not acted upon the alleged promise or representation made by the respondents and had, in fact, collected sales tax from the consumers.
Issues: 1. Whether the Govt. orders were orders of exemption? 2. Whether the doctrine of promissory estoppel was attracted to the facts of the case? 3. Whether the petitions were maintainable?
Ratio Decidendi: 1. The Court held that the Govt. orders were not orders of exemption, as they did not specifically exempt the petitioner's products from sales tax. The Court relied on the plain reading of Section 5 of the Jammu and Kashmir General Sales Tax Act, which empowers the Government to grant exemption from payment of sales tax, but only subject to such restrictions and conditions as may be prescribed. The Court also relied on a previous decision of the Division Bench of the High Court, which held that the Govt. orders in question were not orders of exemption, but only a policy decision to be followed by the party claiming exemption. 2. The Court held that the doctrine of promissory estoppel was not attracted to the facts of the case, as the petitioner had not acted upon the alleged promise or representation made by the respondents and had, in fact, collected sales tax from the consumers. The Court relied on the Supreme Court decision in Union of India Vs. Godfuny Philips India Ltd, which held that the true principle of promissory estoppel is that where a party has made a clear and unequivocal promise or representation to another party, which is intended to create or affect a legal relationship, and the other party has acted upon that promise or representation, the party making the promise or representation is bound by it and cannot be allowed to do anything that would be inconsistent with the promise or representation. In the present case, the Court found that the petitioner had been informed by the respondents, even before its unit went into production, that the Govt. orders were not orders of exemption and that it was required to obtain a notification under Section 5 of the Act in order to avail of exemption. Despite this, the petitioner went ahead with the production and charged and collected sales tax from the customers. Therefore, the Court held that the petitioner had not acted upon the alleged promise or representation and, consequently, the doctrine of promissory estoppel was not attracted.
Final Decision: The Court dismissed all three writ petitions filed by the petitioner, holding that the Govt. orders were not orders of exemption, that the doctrine of promissory estoppel was not attracted to the facts of the case, and that the petitions were not maintainable.
2. In writ petition No. 52 of 1982. Order No: STG/168 dated 16. 1. 1982 passed by respondent No. 1 assessing the petitioner to the safes-tax for the period ending September. 1981, is sought to be quashed, interalia, on the grounds that Govt. Order No. 159-lnd of 1971 dated 26. 3. 1971 read with Govt. order No. 414-lnd of 1971 dated 25-8-1971, is by itself an outright exemption from payment of sales-tax and consequently the assessment made and the order for recovery of sales-tax made by the assessing authority cannot be allowed to stand. Alternatively, It has been pleaded that even if for any reason the 1971 orders are not held to be the orders of exemption under Sec. 5 of the Act, the same unmistakably contain a representation, holding a clear promise for grant of exemption from the payment of sales tax for the period of five years from the date the unit of the petitioner went into production and the respondents are on the basis of the doctrine of promissory estopped, estopped from claiming payment of sales tax being bound by the representation. To invoke the doctrine of promissory estoppel, the plea put forward in nutshell is that but for the promised concessions as contained in the 1971 orders, to exempt the products manufactured by the petitioner, as also the raw material used there in, from levy of sales-tax, the petitioner would not have ventured to set up the factory after making huge investments and since the petitioner had altered its position, it was entitled to bind the respondents by the doctrine and was not liable to pay the sales-tax.
3. This petition has been resisted by the State on various pleas including the pleas that the inter-pretation placed on the Govt. orders under reference is not correct as the orders of 1971 cannot be construed to be orders of exemption issued under Sec. 5 of the Act ; that the doctrine of promissory estoppel is not attracted to the facts and circumstances of the case as the petitioner has, in fact, been found to have collected sales-tax from the consumers on the sales of its product from the very beginning it went into production and, therefore under Section 8-B of the Act it was under a statutory obligation to deposit the some. It also maintained that the factory was set up by the petitioner de-hors the alleged representation and relying upon the correspondence between the petitioner and the sales-tax authorities, ending with the letter dated 12-8-1981, it is avered that the petitioner understood the position very well and collected the sales-tax from the very beginning, It is further pleaded that as no order of exemption has been issued under Sec. 5 of the Act, the petitioner could not escape its liability to account for the sales-tax found due from it. These averments have not been countered by any rejoinder.
4. In writ petition No. 822 of 1884, the challenge is again to the assessment order dated 1.10. 1934, whereby the petitioner has been assessed to sales-tax, surcharge, interest and penalty. However, some cement in the grounds on which writ petition No. 52 of 1982, was based, to attract the doctrine of promisory estoppel were also incorporated.
5. Controverting the ave
