The impugned Act and the levy of the Cess are ultra vires the Constitution as they violate the provisions of Article 266, and the plea of equitable estoppel based on exemption is rejected.

JAWAHAR LAL GUPTA, J.

1. Are the provisions of the Punjab Social Security Act, 2000 , ultra vires the Constitution as there is no Entry authorizing the State Legislature to levy Cess for Social Security and the proceeds do not go to the Consolidated Fund of the State? This is the core of the controversy in this bunch of 23 Writ Petitions. Counsel for the parties have referred to the facts in CWP No. 992 of 2001. These may be briefly noticed.

2. The first petitioner is a company. The second is a shareholder. The company was incorporated under the Companies Act, 195 6/01/1993. It was registered under the Punjab General Sales Tax Act, 1948 and the Central Sales Tax Act, 195 6/03/1993.

3. The Punjab Government notified a package of incentives for the growth of Industry in the State. On 1/02/1993, the incentives were notified as the Punjab Industrial Incentive Code 1992. A copy of this notification is at Annexure P. 3 with the writ petition. One of the incentives envisaged under the Code was exemption from payment of sales tax during a period of 7 to 10 years. On 5/09/1994, the petitioner was granted exemption. A copy of the certificate is at Annexure P. 4 with the writ petition.

4. On 11/04/2000, the Punjab Social Security Act (No. 11 of 2000) was enacted. By this Act, a Social Security Cess was imposed. This Cess was to be levied on ad valorem basis at the rate of 10% on the sale or purchase of goods. A copy is at Annexure P. 5 with the writ petition. On 20/09/2000, Sec. 3 of the Act was amended w.e.f. 11/04/2000 by Punjab Act No. 18 of 2000. By the amendment, the rate of Cess was fixed at 10% of the sale/purchase tax, which was leviable under the provisions of the Punjab General Sales Tax Act, 1948.

5. Aggrieved by the levy of the Cess, the petitioners in these cases have approached this Court through this set of writ petitions. It is alleged that no tax can be levied or collected by the State"except by the authority of law". Entries 45 to 63 in List II of Schedule VII do not permit the levy of the impugned Cess. Thus, the levy is unconstitutional and beyond the legislative competence of the State. Even List III"does not have any entry under which the impugned Cess can be levied." Still further, the Cess violates the petitionersright"to carry on business under Sec. 19 (1) (g) of the Constitution." It is arbitrary. The petitioners having been granted exemption from payment of sales/purchase tax under the 1992 Code and the 1991 rules, the Cess"which is in the nature of tax on sales or purchases cannot be levied on exempted sales and purchases....... by giving it a different name and imposing it under a different act."

6. The petitioners further allege that Entries 9 and 42 of List II and Entry 23 of the Concurrent List permit the State to enact a law with regard to Social Security. However, these entries do not permit the imposition of a Cess. Under Entry 54,"a tax/tax on sale/purchase of goods could be levied but that would have to be under the Punjab General Sales Tax Act, 1948 and the proceeds could not be set apart for social security as these would have to be credited to the Consolidated Fund of the State and could be allocated for Social Security only through the Budget." The State has resorted to the device of enacting the impugned provisions"to avoid the proceeds of the Cess being credited to the Consolidated Fund of the State and the budgetary discipline imposed by the Constitution............." The action is violative of Articles 202, 203, 204 and 266 of the Constitution.

7. The petitioners maintain that on the faith of the representation made by the State regarding exemption from payment of Sales Tax, they have invested crores of rupees and borrowed huge amounts from the Financial Institutions for setting up the projects. By way of instance, the Pioneer Agro claims to have invested Rs. 4.35 crores of its own funds and raised loans to the extent of Rs.9.48 crores. This having happened, the respondents are estoppe