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High Court Of Orissa
R. C. PATNAIK, D. P. MOHAPATRA
JAGANNATH ROLLER FLOUR MILL - Appellant
Versus
STATE - Respondent
O. J. 1854 Of 1983
Decided On : 02/12/1986
INDUSTRIAL POLICY - CONCESSIONS - ENTITLEMENT - PROMISSORY ESTOPPEL - APPLICABILITY - FACTUAL MATRIX - STATE GOVERNMENT'S INDUSTRIAL POLICY RESOLUTION OFFERING CONCESSIONS TO ENTREPRENEURS SETTING UP NEW INDUSTRIAL UNITS - PETITIONERS ESTABLISHING ROLLING MILLS RELYING ON THE POLICY - SUBSEQUENT REVISION OF POLICY DENYING CONCESSIONS - COURT HELD THAT THE STATE GOVERNMENT WAS BOUND TO ENFORCE THE PROMISE OF EXEMPTION FROM OCTROI AND SALES TAX IN RESPECT OF UNITS ESTABLISHED DURING THE POLICY PERIOD - DOCTRINE OF PROMISSORY ESTOPPEL APPLIED.
Fact of the Case:
Petitioners, entrepreneurs who set up rolling mills, challenged the State Government's revision of its Industrial Policy Resolution, which denied them concessions, including exemption from octroi and sales tax, promised in the earlier resolution. They argued that they had relied on the initial policy and changed their position by setting up their units, and thus the State was estopped from going back on its promise.
Finding of the Court:
The Court held that the State Government was competent to make the promise of exemption from octroi and sales tax and was bound to enforce it for units established during the policy period. The subsequent revision of the policy was hit by promissory estoppel.
Issues: 1. Whether the State Government's revised Industrial Policy Resolution, denying concessions to certain industries, including flour mills, was valid and enforceable against the petitioners who had set up their units relying on the earlier policy offering concessions? 2. Whether the doctrine of promissory estoppel applied to the facts and circumstances of the case, where the petitioners had changed their position in reliance on the State's promise of concessions?
Ratio Decidendi: 1. The Court held that the State Government had the power to exempt new industries from octroi and sales tax under the Orissa Municipal Act, 1950. The promise of exemption in the Industrial Policy Resolution was within the State's competence and was not prohibited by any law. 2. The Court applied the doctrine of promissory estoppel, holding that the State Government was bound by its promise of concessions to the petitioners, who had relied on it and changed their position by setting up their units. The subsequent revision of the policy was not justified by any change in circumstances or public interest.
Final Decision: The Court allowed the petitions and directed the State Government to exempt the petitioners' units from octroi and sales tax in accordance with the Industrial Policy Resolution dated 1st April 1979, despite its subsequent revision.
D. P. MOHAPATRA, J.
( 1 ) THE core question for consideration in all these writ applications is whether, in the facts and circumstances of these cases, the petitioners are entitled to the concession enumerated in the industrial policy Resolution dated 18th July, 1979 operative during the period 1979 to 1983, despite its revision on 31-7-1980.
( 2 ) THE petitioners are entrepreneurs who lave set up rolling mills at different places in he State. They have filed these writ applications being aggrieved by the acts/omissions of the opposite parties in not granting them the concession relating to the octroi and sales tax for a period of five years commencing from the dates their unit went into commercial production. From the pleadings of the parties, it is clear that there is no controversy regarding the material facts in these cases. The grievance of all the petitioners is of similar nature and they raise similar questions of law. In these circumstances, with the consent of the parties, the writ applications were heard together and are disposed of by this common judgment. The Secretaries of the Department of Industries, the Department of Housing and Urban Development and the State Government have been impleaded as opposite parties in the writ applications. In addition, the Regional Manager, Food Corporation of India, the District Manager, Food Corporation of India, the Director of Industries, the Executive Officer of the concerned Municipality, the Managing Director of the State Civil Supplies Corporation and in some cases the Octroi Superintendent and the Chairman of the Municipality concerned have also been impleaded as opposite parties.
( 3 ) THE gist of the case of the petitioners is that the State Government in the Industries Department announced its Industrial Policy effective from the first April 1977 up to March, 1979 by resolution dt. 1st April, 1977. In the said resolution the State Government, in order to attract entrepreneurs to set up new industrial units in the State offered several concessions. To state a few of them, it was declared that in view of the fact that the entire State was industrially backward, the State Government would provide a cash subsidy of 10% of the capital cost of the project or Rs. 10 lakhs whichever was less, for all new as well as for expansion of the existing units all over the State, but this subsidy would not be available for the units set up in the districts already declared by the Government of India as specially backward as these units would be eligible for 15% cash subsidy from the Central Government. Item No. 6 of the concessions referred to sales tax loan, it was stated therein that the new industrial units including expansion of the existing units would be eligible for an interest-free sales tax loan every year for 5 years of production, i. e. , from the 2nd year of production to the 6th year of production and the loan amount would be equal to the sales tax paid by them on their finished products to the State Government during the previous year subject to the condition that the loan amount in any one year should not exceed 8% of the gross fixed assets of the units. In respect of large industries, however, the applicability of this scheme would be declared by the State Government on the merits of each case. Item No. 7, relating to octroi duty stated that machinery brought for the purpose of setting up new industries or expansion and renovation of the existing industries shall be exempted from payment of octroi tax. Raw materials would also be exempted from payment of octroi duty in respect of the new industries for a period of five years. The above resolution was followed by another Policy Resolution issued by the same department on 1st April, 1979 which was to remain operative for the period 1979-1983. The concessions mentioned in the earlier resolution particularly those relating to exemptions from octroi duty and sales tax were repeated in the subsequent resolution. According to
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