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1994 Supreme(Mad) 1072
High Court of Judicature at Madras
THE HONOURABLE CHIEF JUSTICE MR. K.A. SWAMI & THE HONOURABLE MR. JUSTICE SOMASUNDARAM
Sulochana Cotton Spinning Mills Private Limited - Appellant
Versus
State of Tamil Nadu and Others. (And Others Cases) - Respondents
W.P. Nos. 2405 of 1990, 14321 to 14323, 17562, 19777, 19795 of 1992, 913, 5183, 6997, 7302, 9111, 9279, 9807 to 9809, 10066, 10067, 11243, 13185, 13517, 14749 and 15237 of 1993, and W.M.P. No. 8342 of 1993 in W.P. No. 5183 of 1993, etc
Decided On : 16 December 1994
Headnote:
SALES TAX - DEFERMENT OF PAYMENT - SCOPE OF G.O. MS. NO. 500 DATED MAY 14, 1990 - EFFECT OF G.O. MS. NO. 92 DATED FEBRUARY 22, 1991 - ESTOPPEL AGAINST THE STATE GOVERNMENT - G.O. MS. NO. 500 DATED MAY 14, 1990, AS INTERPRETED BY THE COURT, APPLIES TO INDUSTRIES SET UP PURSUANT TO THE SAID G.O. AND COMMENCED COMMERCIAL PRODUCTION BEFORE APRIL 24, 1991 - G.O.P. NO. 92 DATED FEBRUARY 22, 1991, APPLIES TO INDUSTRIES SET UP SUBSEQUENT TO APRIL 24, 1991.
Fact of the Case:
The petitioners, who are industrialists, challenged the validity of G.O.P. No. 92 dated February 22, 1991, issued under section 17-A of the Tamil Nadu General Sales Tax Act, which restricted the scope of G.O. Ms. No. 500 dated May 14, 1990, issued by the State Government offering certain incentives to new industries and expansion and diversification of existing industries. The petitioners contended that G.O. Ms. No. 500 dated May 14, 1990, granted full waiver of sales tax for a period of five years from the date of commencement of commercial production on the sale of finished products as well as on the purchase of raw materials, and that G.O.P. No. 92 dated February 22, 1991, which restricted the concession to sales tax payable only on the sale of finished products, could not affect the industries which had already been set up pursuant to G.O. Ms. No. 500 dated May 14, 1990, as such modification would be retrospective and violative of the principle of promissory estoppel.
Finding of the Court:
The court held that G.O. Ms. No. 500 dated May 14, 1990, granted full waiver of sales tax for a period of five years from the date of commencement of commercial production on the sale of finished products as well as on the purchase of raw materials, and that G.O.P. No. 92 dated February 22, 1991, which restricted the concession to sales tax payable only on the sale of finished products, could not affect the industries which had already been set up pursuant to G.O. Ms. No. 500 dated May 14, 1990, as such modification would be retrospective and violative of the principle of promissory estoppel. The court further held that the State Government was estopped from applying G.O.P. No. 92 dated February 22, 1991, to the industries which had been set up pursuant to G.O. Ms. No. 500 dated May 14, 1990 and started commercial production before April 24, 1991, and that those industries were entitled to have the full benefit of G.O. Ms. No. 500 dated May 14, 1990, for the period mentioned therein irrespective of G.O.P. No. 92 dated February 22, 1991.
Issues: 1. Whether G.O. Ms. No. 500 dated May 14, 1990, granted full waiver of sales tax for a period of five years from the date of commencement of commercial production on the sale of finished products as well as on the purchase of raw materials? 2. Whether G.O.P. No. 92 dated February 22, 1991, which restricted the concession to sales tax payable only on the sale of finished products, could affect the industries which had already been set up pursuant to G.O. Ms. No. 500 dated May 14, 1990? 3. Whether the State Government was estopped from applying G.O.P. No. 92 dated February 22, 1991, to the industries which had been set up pursuant to G.O. Ms. No. 500 dated May 14, 1990 and started commercial production before April 24, 1991?
Ratio Decidendi: 1. G.O. Ms. No. 500 dated May 14, 1990, granted full waiver of sales tax for a period of five years from the date of commencement of commercial production on the sale of finished products as well as on the purchase of raw materials. 2. G.O.P. No. 92 dated February 22, 1991, which restricted the concession to sales tax payable only on the sale of finished products, could not affect the industries which had already been set up pursuant to G.O. Ms. No. 500 dated May 14, 1990, as such modification would be retrospective and violative of the principle of promissory estoppel. 3. The State Government was estopped from applying G.O.P. No. 92 dated February 22, 1991, to the industries which had been set up pursuant to G.O. Ms. No. 500 dated May 14, 1990 and started commercial production before April 24, 1991.
Final Decision: The writ petitions were allowed in terms of the findings recorded on points (i) to (iii) and the directions issued as above. All other contentions, if any, in the individual cases of both sides were left open. However, there was no order as to costs. The W.M.Ps. were also disposed of.
K. A. SWAMI, C.J.
In Writ Petition No. 5183 of 1993, the petitioner has sought for quashing the proceedings bearing number TNGST 254157/92-93 dated February 23, 1993 and also for issuing a further direction to the respondents to give relief in respect of purchase tax also under the deferral scheme as per the agreement already entered into with the petitioner and to pass further orders as may be deemed fit and proper in the facts and circumstances of the case. In the other connected petitions, though the prayers are not similarly worded, the substance of the matter in all these petitions relates to the scope of the Government Order Ms. No. 500, Industries (MIG-II) Department dated May 14, 1990 and also the subsequent orders issued on December 4, 1990 and the effect of the Government Order Ms. No. 92 dated February 22, 1991 or the Government Order Ms. No. 500 dated May 14, 1990. Therefore, we have heard all these petitions together and decide them by this common order.
2. The State Government with a view to encourage all new industries and the expansion of the existing industries in the backward and most backward areas of the State, has been giving incentives for establishment of new industries and also for expansion and diversification of the existing industries. Though such a programme of the State starts from the year 1971, we need not trace the incentive given by the State Government for establishment of industries from the year 1971. For our purpose, it is sufficient if we refer the various orders issued by the State Government from G.O. Ms. No. 305 dated May 22, 1989 onwards. G.O. Ms. No. 305 dated May 22, 1989, was issued in exercise of the power under article 162 of the Constitution offering interest-free sales tax loan scheme for existing units undertaking expansion or diversification and also interest-free sales tax loan scheme to new units other than the existing units and not for expansion or diversification. It was done as a long term strategy to stimulate industrial growth in the State of Tamil Nadu. However, the conventional industries like cement, sugar, textiles, mining/quarrying, flour mills, hotels, edible oils and solvent extraction, rice mills, distilleries, breweries and malt extraction and power intensive units were excluded from the benefit of the G.O. Ms. No. 305 dated May 22, 1989. Thereafter, the State Government issued another G.O. Ms. No. 423, Industries dated July 7, 1989, under which certain taluks were identified as industrially under-developed areas for the purpose of power tariff concession with consequent reduction in rates. Under that order, the Government also identified certain areas as backward for the purpose of extending interest-free sales tax loan scheme and the State capital subsidy scheme. Under the aforesaid G.O., the following reliefs were granted as an incentive for industrialisation :
"2. Government of India have not extended the capital investment subsidy scheme beyond September 30, 1988. The Long Term Strategic Planning Committee constituted by this Government to suggest measures to stimulate industrial growth in the State has also reviewed this aspect and suggested issue of a revised order in this regard. As there will be no categories of A, B or C areas as per the Central Government policy for purposes of grant of Central Investment Subsidy, the State Government have decided to identify backward taluks on the basis of existing industrial investments in medium and large industries in each taluk and the industrial employment figures of the taluks.
3. In supersession of the earlier orders on classification of certain taluks as backward, the Government now direct that 105 taluks of this State as indicated in the annexure to this order, be declared as industrially backward for purposes of grant of concessions like power tariff concessions, interest-free sales tax loans, deferral of sales tax, State capital subsidy and special subsidy for pioneer industries.
4(i). This order
