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PETITIONER: STATE OF MADHYA PRADESH AND ANR.

       Vs.

RESPONDENT: G.S. DALL AND FLOUR MILLS

DATE OF JUDGMENT19/09/1990

BENCH: RANGNATHAN, S. BENCH: RANGNATHAN, S. MUKHARJI, SABYASACHI (CJ) SAIKIA, K.N. (J)

CITATION:  1991 AIR  772            1990 SCR  Supl. (1) 590  1992 SCC  Supl.  (1) 150 JT 1990 (4)   430  1990 SCALE  (2)756  CITATOR INFO :  E&D        1992 SC2014  (23)

ACT:     M.P.  Sales Tax Act, 1958/M.P. (Deferment of payment  of Tax) Rules, 1983. Section 12/Rule 13--Sales Tax--Eligibility for exemption --Effect of Notification dated July 3, 1987.

HEADNOTE:     In exercise of the powers conferred by section 12 of the Madhya Pradesh General Sales Tax Act, 1958 the State Govern- ment  issued a notification dated 23.10.1981  exempting  the specified class of dealers who had set up industry in any of the specified districts of Madhya Pradesh and had  commenced production  after 1st April, 1981 from payment of tax  under the  said  Act  for a specified period  subject  to  certain restrictions  and  conditions. However,  when  the  assesses approached the Director of Industries for the certificate of exemption,  it  was denied to them on the  ground  that  the industries  run by them were "traditional industries"  which were not eligible for exemption.     The  assesses went to the court and urged that the  con- cept of "traditional industries" was one unspecified in  the notification,  and that the authorities had no  jurisdiction to  travel outside the terms of the notification and  import extraneous considerations to deny the assesses an  exemption they were entitled to under the notification.     The State on the other hand, relied on the provisions of the M.P. (Deferment of payment of Tax) Rules, 1983. notified on  1.9.83 (in particular, rule 13 thereof) and  on  certain instructions  that  had  been issued by  the  Government  on 12.1.1983 pertaining to the "grant of certificate of  eligi- bility  to new industrial units claiming exemption  from  or deferment of payment of sales tax".     The  assessee’s claim for exemption from sales  tax  was accepted by the Division Bench of the High Court in the case of  G.S. Dhall & Flour Mills and, following it, in the  case of Mohd. Ismail. The Division Bench took the view that these rules  and  instructions had no relevance to the  claim  for exemption  put forward under the notification of  23.10.1981 and that, in any event, the executive instructions could not

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override the provisions of the statutory notification. 591     Subsequent  to the decision of the Division  Bench,  the State Government issued a notification on 3.7.1987, intended obviously to overcome the effect of the said decision.     Subsequently,  however, a Full Bench of the High  Court, in  the  case of Jagadamba Industries disapproved  the  view taken  by  the Division Bench in G.S. Dhall case.  The  Full Bench  attached  importance to the  rules  and  instructions referred to above and relied considerably on his history  of the  sales-tax  levy in the State as furnishing  proper  and necessary background in which the terms of the  notification of 23.10.1981 had to be read and interpreted.     The  Full  Bench, after considering the scheme  and  in- structions  of the Government, came to the  conclusion  that the  scope  of the exemption notification of  1981  was  not intended  to be wider than that of the  concessions  granted earlier,  and  that the 1981 notification  was  intended  to bring about only a change in the mode of relief to the  same categories  of  industries as were covered  by  the  earlier schemes.     The  contention that "instructions" could  not  override the effect of the statutory notification was repelled by the Full Bench on the ground that the validity and effectiveness of  the  instructions  could be supported  by  reference  to Article  162  of the Constitution as filling up  a  lack  of guidelines in the notification.     The  Full Bench considered the 1983 instructions  to  be conclusive  on two grounds on the doctrine of  contemporanea exposition and on the principle that executive  instructions could  always be issued to supplement statutory  instruments so as to fill up areas on which the latter were silent.     The  State,  aggrieved by the judgment of  the  Division Bench in the two cases, and the assessee by the judgment  of the Full Bench in the other case, have filed the appeals and Special Leave Petitions.     Before  this Court the parties reiterated their  submis- sions  in support of either of the two judgments.  The  main submission  on behalf of the State was that, since the  1981 notification  did not set out the conditions on  which,  and the  procedure  in  accordance with which  the  Director  of Industries  was  to issue the eligibility  certificate,  the earlier  scheme of subsidy/loan and its procedure should  be read into the notification for this purpose. This contention was contested by the assesses inter alia on the ground  that the earlier scheme and the exemption now 592 proposed were totally different in their object and scope.     Dismissing  the appeals of the State, and  allowing  the appeals preferred by the assesses, this Court while  observ- ing  that the Division Bench laid down the correct  law  and not the Full Bench,     HELD:  (1) The 1981 notification does not expressly,  or even by necessary implication, exclude "traditional"  indus- tries from its scope.     (2)  Prima  facie,  the Director  of  Industries  cannot refuse the exemption on a consideration not specified in the notification.  All the conditions for exemption have to  be, and are, set out in the notification itself and all that the Director of Industries has to do is to satisfy himself  that those conditions are fulfilled; he cannot travel beyond  the terms of the notification.     (3)  Even granting that the 1981 policy was  to  replace the earlier subsidy/loan by an exemption, it does not neces- sarily  follow that the units intended to be covered by  the

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new scheme were only those that were covered by the  earlier scheme and that no wider exemption was contemplated.     (4) No factual foundation has been laid to establish the hypothesis that the exemption conferred in 1981 was to be  a mere  extension  or substitution of the  benefits  conferred earlier.     (5) The notification does not authorise the Director  of Industries  to  say that, though the applicant  fulfill  the terms of the notification. he will not grant the eligibility certificate because,Under the previously prevalent  schemes, he could not issue an eligibility certificate to "tradition- al  industries". For granting a certificate that the  appli- cant  is eligible for exemption under the notification,  the director has to look to the conditions set out in the  noti- fication and nowhere else.       Changing definition of eligibility for exemption  also shows that there was no common or identical group of benefi- ciaries intended under the various instructions or notifica- tions  and  that each set of  instructions  or  notification issued from time to time defined only the categories exempt- ed  from  its purview and nothing else. The  exemption  list under one was not meant to be carried over into another. Hans Gordon Dan v .H.H. Dave, [1969] 2 NCR 253. referred to. 593     (7)    The   1983   document   is   not   a    statutory instrument--neither  a notification nor a rule framed  under the statute.     (8)  It  is  true that the  principle  of  contemporanea exposition  is invoked where a statute is ambiguous  but  is shown  to have been clearly and consistently understood  and explained  by the administrators of the law in a  particular manner. But. to apply the doctrine to widen the ambit of the statutory  language would, however, virtually mean that  the State  can determine the interpretation of a statute by  its ipsi dixit. That, certainly, is not, and cannot be the scope of  the doctrine. The doctrine can be applied to  limit  the State  to its own narrower interpretation to favour  of  the subject  but  not  to claim its interpretation  in  its  own favour as conclusive.     Varghese  v. 1. T.O., [1982] 1 SCR 629 and Doypack  Sys- tems  P. Ltd. v. Union of India, [1988] 2 SCC 299,  referred to.     (9)  Executive instructions can supplement a statute  or cover  areas to which the statute does not extend. But  they cannot run contrary to statutory provisions or whittle  down their effect.     (10)  There is nothing in the language of the  notifica- tion  to suggest that anything further is needed  to  enable the  Director of Industries to grant the exemption.  Without the guidelines, the requirement for an exemption certificate would not become an "empty formality".     (11)  If  the  statutory notification  is  construed  as permitting  the State by rules or executive instructions  to prescribe  other  conditions for exemption, whether  new  or based  on past practice. it is liable to be struck  down  on the ground of impermissible delegation of legislative  power to the executive. This, certainly, they cannot do.     (12)  The 3/7/87 notification cannot be treated  as  one merely clarifying an ambiguity in the earlier one and  hence capable  of being retrospectively; it enacts the  rescission of  the earlier exemption and, hence, can operate only  pro- spectively.  It cannot take away the exemption conferred  by the earlier notification.

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JUDGMENT:     CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2211 (NT) of 1988 etc. etc.     From  the  Judgment  and Order dated  7.10.1986  of  the Madhya Pradesh High Court in M.P. No. 1861 of 1983. 594     Prithvi Raj, R.B. Mishra, Uma Nath Singh, S.K.  Gambhir, Vivek  Gambhir,  Satish K. Agnihotri, Ashok Singh  and  Mrs. V.D. Khanna for the Appellants.     Harish N. Salve, Ms. Lira Goswami and D.N. Misra for the Respondent. The Judgment of the Court was delivered by     RANGANATHAN, J. The Civil Appeal and S.L.P. 12054/87 are by  the State of Madhya Pradesh (M.P.). The  respondents  in these  two  matters and the petitioners in  the  other  five Special Leave Petitions are certain concerns in M.P. assess- able to sales tax (hereinafter compendiously referred to  as the  assesses’). All these matters can be conveniently  dis- posed of by a common judgment as they raise a common issue.     The  assesses’  claim for exemption from sales  tax  for certain  periods in question was accepted by the High  Court in  the case of G.S. Dhall & Flour Mills and, following  it, in  the  case of Mohd. Ismail (a case  where  the  exemption sought for was originally granted but subsequently revoked). However,  subsequently, a Full Bench of the High  Court,  in the case of Jagadamba Industries, disapproved the view taken by  the Division Bench in the G.S. Dhall & Flour Mills  case and,  following the Full Bench, the writ petitions filed  by certain other assesses were dismissed by the High Court. The State  is aggrieved by the judgment in the first  two  cases and  the assesses by the High Court’s decision in the  other cases. Hence these appeals and special leave petitions.     Before dealing with the appeals on merits, an  important circumstance  needs  to be referred to, which is  this:  The judgment  of the Full Bench in the case of Jagadamba  Indus- tries  was itself the subject matter of Special Leave  Peti- tions in this Court but those petitions (S.L.P. Nos.  15688- 90/87)  were dismissed, at the stage of admission,  on  9.2. 1988,  with the observations: "We are in agreement with  the views  expressed by the High Court. The Special Leave  Peti- tions  are  dismissed". In view of this, the  State  submits that C.A. 22 11/87 should be allowed and that the  assesses’ S.L.Ps.  should be dismissed in limine. On the  other  hand, counsel  for the assesses seek to distinguish the  Jagadamba case by contending that this Court had refused leave against the Full Bench judgment on account of certain special  facts which were considered sufficient to disentwine the  assesses in those 595 cases  from  claiming the exemption. They contend  that,  in view of this and the fact that the G.S. Dhall & Flour  Mills case  is in appeal before we may grant leave in the  S.L.Ps. and  dispose  of all the appeals on merits. We  accept  this plea and grant leave in the S.L.Ps. condoning a delay in the filing of S.L.P. 12054/87. We shall, however, touch upon the above aspect of the matter in the course of our judgment.     The issue raised is, at first blush, a simple one. S. 12 of  the M.P. Sales Tax Act (hereinafter referred to as  ‘the Act’)  enables the State Government to grant exemption  from the levy of sales tax in certain circumstances. It says:           12.  Saving:  (1)  The State  Government  may,  by notification,  and subject to such restrictions  and  condi- tions as may be specified therein, exempt, whether  prospec-

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tively or retrospectively, in whole or in part-- (i) any class of dealers or any goods or class of goods from the payment of tax under this Act for such period as may  be specified in the notification; (ii)  any dealer or class of dealers from any  provision  of the Act for such period as may be specified in the notifica- tion. (2)  Any notification issued under this section may  be  re- scinded before the expiry of the period for which it was  to have remained in force and on such rescission such notifica- tion  shall cease to be in force. A notification  rescinding an earlier notification shall have prospective effect." In  exercise of this power, the State Government issued  the following  notification on 23/26.10.1981 which it is  neces- sary  to  extract in full here along with its  Annexure.  It reads:     "In  exercise of the powers conferred by section  12  of the  Madhya  Pradesh General Sales Tax Act, 1958 (No.  2  of 1959)  the  State  Government hereby exempts  the  class  of dealers  specified in column (1) of the Schedule  below  who have  set  up  industry in any of the  districts  of  Madhya Pradesh  specified in the annexure to this notification  and have  commenced production after 1st April, 1981, from  pay- ment  of tax under the said Act for the period specified  in column  (2),  subject  to the  restrictions  and  conditions specified in column (3) of the said schedule: 596 ------------------------------------------------------------ Class of dealers     Period      Restrictions and conditions                                  subject to which exemption                                  has been granted         1               2                    3 ------------------------------------------------------------ 1. dealers who--     Two years    The dealer specified in (a) hold a certifi-    from the   column (1) shall continue cate of regis-       date of      to furnish the pres- tration under The    commence-    cribed returns under the M.P. General Sales   ment of      M.P. General Sales Tax Tax Act, 1958:       production   Act, 1958 and shall pro-                                   duce before the assessing (b) are registered                authority at the time of small scale indus-                his assessment a certifi- trial units with                  cate issued by the Direc- the Industries Dep-               tor of Industries, Madhya artment of Govt. of               Pradesh or any officer au- M.P., and                         thorised by him for the                                   purpose, certifying that (c) have set up ind-              such dealer is eligible to ustry in any of the               claim the exemption and districts specified               that he has not opted for in part I of the                  the scheme of deferring Annexure                          the payment of tax under                                   the rules framed for this                                   purposes. 2. Dealer who--                   --do-- (a) hold certifi-   (a) 3 years cate of registra-   in case of an tion under the      industry loca- M.P. General Sales  ted in a district Tax Act, 1958       specified in ‘A’ (No.2 of 1959);     of part II of the                     Annexure. (b) are registered  (b) 4 years, in the as Small scale Ind- case of an industry ustrial units with  located in category

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the Industries De-  ‘B’ of Part II of partment of Govt. of of the Annexure; M.P. or are regis-   and tered with the Di- rector General of Technical Develop- ment as an indus- trial unit or are registered 597 as industrial units by any authority duly empowered to do so by the State Govt. or Cen- tral Govt. or hold a licence under the In- dustries (Development & Regulation) Act 1951 (No.65 of 1951); and (c) have set up indus- (c) 5 years, in        --do-- try in any of the dis- the case of an tricts specified in    industry located part II of the Anne-   in a district spe- xure.                  cified in category                        ‘C’ of part II of                        the Annexure; from                        the date of commen-                        cement of production. 3. Dealers who--- (a) hold certificate  (a) 3 years in   The dealer speci- of registration under the case of an   fied in column (1) the M.P.General Sales Industry loca-   shall produce be- Tax 1958 (No.2 of     ted in any of    fore the assessing 1959);                the tehsils of   authority at the                       a district spe-  time of his assess-                       fied in part I   ment a certificate                       of the Annexure; issued by the Direc-                                        tor of Industries,                                        Madhya Pradesh or any (b) are registered    (b) 5 years in   officer authorised by as industrial units   the case of an   him for the purpose with the Director     industry located of certifying that General of Technical  in any of the    the dealer is eligi- Development or by any tehsils of a     ble to claim such authority duly em-    a district spe-  exemption under the powered to do so by   cified in cate-  scheme of the Indus- State or Central      gory ‘A’ of Part tries.  Department Government or hold    II of the Anne-  being a first dealer licence under the     xure;            to have commenced Industries (Develop                    production in the ment and Regula-                       industry set up by                                        him in the tehsils                                        referred to in col-                                        umn (2) and that                                        such dealer has not                                        opted for the scheme                                        of deferring the pay-                                        ment of tax under the                                        rules framed for this                                        purpose. 598 tion) Act, 1951 (No.65 of 1951) have fixed a capital in- vestment between

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Rs.1 crore and Rs.10 crores and; (c) are the first to    (c) 7 years in set up the industry     the case of an in any tehsil of the    industry loca- district of Madhya      ted in any of Pradesh specified in    the tehsils of the Annexure.           a district spe-                         cified in cate-                         gory ‘B’ of Part                         II of the Anne-                         xure;                         (d) 3 years in the                         case of an industry                         located in any of                         the tehsils to a                         district specified                         in category ‘C’ of                         Part II of the Annexure;                         from the date of                         commencement of                         production.                          ANNEXURE                            Part I 1. Indore 2. Ujjain 3. Bhopal 4. Jabalpur 5. Gwalior 6. Durg                           Part II Category ‘A’ 1. Bilaspur       2. Raipur          3. Dewas 4. Handsaur       5. Morena          6. Vidisha 7. Hoshangabad    8. Ratlam          9. Khandwa 10. Satna         11. Shahdol 599 Category ‘B’  1.   Geoni         2. Balaghat        3. Betul  4.   Raigharh      5. Guna            6. Chindwara  7.   Damoh         8. Sagar           9. Narsimhpur  10.  Senor         11. Rajmandgoo Category ‘C’ 1. Panna           2. Sidhi          3. Rewa 4. Chhatarpur      5. Tikamgarh      6. Khargone 7. Surguja         8.Mandla          9. Bhind 10. Shivpuri       11. Datia         12. Raisen 13. Shajapur       14. Dhar          15. Rajgarh 16. Jhooua         17. Bastar     It is not in dispute that the assessees before us fulfil the  qualifications mentioned in the notification.  However, when  they  approached the Director of  Industries  for  the certificate  of exemption envisaged under column (3) of  the notification,  it was denied to them on the ground that  the industries  run by them are "traditional  industries"  which were not eligible for exemption. The assessees went to Court contending that this was totally unjustified. They said, the concept  of "traditional industries" was one unspecified  in the  notification.  The authorities had no  jurisdiction  to travel  outside  the terms of the  notification  and  import extraneous considerations to deny the assessees an exemption they  were  entitled to under the notification. It  is  this contention  that  was accepted in the G.S. Dhall  and  Flour Mills  case. The State had relied on the provisions  of  the M.P. (Deferment of Payment of Tax) Rules, 1983, notified  on 1.9.83  (in  particular,  rule 13 thereof)  and  on  certain instructions  that  had  been issued by  the  Government  on 12.1.1983 pertaining to the "grant of certificate of  eligi- bility   to   new  industrial   units   claiming   exemption from/deferment of payment of sales tax". The High Court took

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the view that these rules and instructions had no  relevance to  the claim for exemption put forward under the  notifica- tion  of  23.10.1981 and that, in any event,  the  executive instructions could not override the provisions of the statu- tory notification. This judgment was delivered on  7.10.1986 by Sohani, C.J. and Faizanuddin, J.     The  Full  Bench, in its judgment of  2.11.1987  took  a different  view. It has, in effect, attached  importance  to the  rules  and instructions referred to  above  and  relied considerably on the history of the 600 sales-tax  levy  in  the State as furnishing  a  proper  and necessary background in which the terms of the  notification of 23.10.1981 have to be read and interpreted. This  history has, therefore, to be set out now in order to appreciate the validity of the conclusions of the Full Bench. Before  doing this,  it may be mentioned that the Full Bench comprised  of Ojha  C.J.,  Faizanuddin, J. and Adhikari, J. In  fact,  the judgment was written by Faizanuddin, J. who has explained in detail  the reasons for his change in view. It may  also  be mentioned,  as a matter of record, that, subsequent  to  the decision  of  the  Division Bench in G.S.  Dhall  and  Flour Mills, the State Government appears to have issued a notifi- cation  on  3.7. 1987, intended obviously  to  overcome  the effect of the said decision. We shall refer to this later in this judgment.     Now, to turn to the history relied on by the Full Bench, we  start with a "scheme for the grant  of  subsidy/interest free  loan to new industries set up in Madhya Pradesh".  The scheme was to be effective from 15.9.69 and till the end  of the  Fourth  Five Year Plan period (1970) "or  such  further period as may be extended by the State Government from  time to time". It would appear that the scheme was being adminis- tered  informally under executive instructions  even  beyond 1970. Though certain "rules" appear to have been framed  for the first time on 30.8.73, these rules, it would seem,  were not  statutory  but  were only in the  nature  of  executive instructions.  We shall, however, refer to them as  "rules". Rule 3 was clear as to the persons eligible to avail of  it. It read: "Rule 3--"It shall be applicable to all new industrial units except  traditional  industries like oil mill,  flour  mill, dall  mill, rice mill, ginning and printing  factories,  who set up in Madhya Pradesh, provided further that such  appli- cants register themselves with the department after  15.9.69 but before 31.3.74 and in case of SSI units go into  produc- tion  within a period of one year and in case of  Large  and Medium Industries go into production within 3 years of their date of registration provided further that in case of  delay in  going  into  production the period  of  availability  of subsidy or concession will be reduced by the period of delay in  going  into production. This will come into  force  from 1.4.74. Note:--Small  Scale  Industries who are  already  registered with  the department need not register separately  for  this concession." 601 It  would also appear that the districts of the  State  were divided into two categories--advanced and backward--and  the latter  into three categories ‘A’, ‘B’, ‘C’. The amount  and period of the subsidy/loan depended upon this classification and  was  elaborately set out in para 8 which  need  not  be extracted here. A note added to para 8 had this to say: Note:--(1) Unit who is otherwise entitled to subsidy may  on his request be considered for grant of interest free loan to

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the extent of entitlement of the subsidy. (2)  No unit available concession under the scheme  will  be allowed  to change the location of the whole or any part  of the  industrial unit or effect any substantial part  of  its total fixed capital investment within a period of five  year after its going in to production. (3)  In case the ownership of a new unit changed during  the period  of  availability of this concession, the  new  owner would be entitled to this concession for the balance period.       (4) A closed unit, which is re-started by an entrepre- neur will not be considered to be a new unit for the purpose of this concession."     Another set of "rules" came into force with effect  from 1.4.1977  and  superseded the earlier rules. These  were  on more or less the same lines as the earlier ones and were  to apply  to "new industrial units", and  "existing  industrial units", as defined in rules 2(a) and (b), on fulfillment  of certain  terms and conditions but industries  enumerated  in rule  3 were specifically excluded from the purview  of  the definition. Rule 3 made it clear that the rules shall not be applicable  to "the following traditional  industries".  The list  of such industries, in addition to those mentioned  in the  earlier set of rules (excluding roller flour mills  and solvent  extraction plants in oil mills), took in  also  saw mills,  ice factories and "such other industries as  may  be notified  by the Government from time to time".  The  period and extent of the subsidy/ loan here again depended upon the district--advanced  or backward, and in the latter  category ‘A’  or ‘B’ or ‘C’--in which the industry was set up Rule  7 is of some relevance and may be set out: "7.  An  industrial unit eligible for this  concession  will apply 602 to  the  Asst. Director of Industries of the  district  con- cerned for verification of the date of going into commercial production  and other particulars of new industrial unit  or substantial expansion in respect of which the concession  is sought. The Asst. Director of Industries will make verifica- tion  in accordance with rules 5(1) and send within 15  days of  the receipt of the application his report to  the  sanc- tioning authorities, Dy. Director of Industries or  Director of  Industries indicating the date of going into  commercial production  of  the unit. A copy will be  furnished  to  the applicant." The  form of the certificate to be issued by the  office  of the Director of Industries read thus: "No.                       -Date         The         particulars         furnished         by M/s  .........  ........      ............   have  been  checked  and  verified  from records including  those of consumption of power and  raw  materials and output of finished products. The date of commencement of commercial production by the industrial unit is The  date from which the unit has exceeded, on  a  sustained basis production over the licensed or installed capacity  of the unit is  ..............                            Asst. Director of                               Industries"     It  appears that the Government had  announced  "conces- sions" regarding the payment of sales tax by new  industrial units  including pioneer units going into  production  after 1-4-1981 not only under the notification dated 23/10/81  but also under other notifications dated 1-5-82 and 29-6-82. Two of  these  notifications  are on record before  us.  It  is,

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however, unnecessary to extract them here. It is  sufficient to set out their purport, quoting from the "instructions" of 12-1-83, referred to a little later: "According  to  the first notification, the  new  industrial units  are  exempted  from the payment of  sales  tax.  This notification  covered  sales  tax payable  by  them  on  the products manufactured by them. It entitled them to exemption 603 from  payment of purchase tax on purchase made by them  from unregistered  dealers. According to the second  notification an industrial unit making purchases of its raw material from a registered dealer is exempted from payment of sales tax on the  raw materials so purchased by him from  the  registered dealer.  In  other  words, registered  dealers  selling  raw materials  to  a  new industrial unit are  not  required  to charge  any sales tax from the new industrial unit on  sales made  by them to such unit. The third  notification  exempts the goods manufactured by the new industrial units from  the levy  of  sales tax even when these goods are  sold  by  the dealers  who have purchased these goods from the new  indus- trial units. In other words, by issue of this  notification, the goods manufactured by the new industrial units are fully exempted from the payment of sales tax right upto the  stage they reach the consumer. These three notifications only deal with the grant of exemption from payment of sales tax  under the  M.P.  General Sales Tax Act. that is to  say  from  the payment of the State Sales Tax.           The fourth notification exempts the new industrial units  from payment of the Central Sales Tax on the sale  of goods manufactured by them in the course of interstate trade or  commerce. This notification has exempted the  new  units from payment of sales tax w.e.f. 1-7-82." In view of these notifications, the Government considered it necessary  to issue certain instructions "for the  grant  of certificate of eligibility to new industrial units  claiming exemption  from/deferment of payment of sales tax" on  12-1- 1983.  These instructions also proceed on the same lines  as the  earlier  ones. "Traditional" industries, as  listed  in para  5. are said to be outside the purview of  the  scheme. Para 5 enumerated the following as "traditional industries": flour  mills  (excluding  roller  flour  mills),  oil  mills (excluding solvent extraction plants, dall mills. saw mills, rice  mills, printing presses of all types,  cotton  ginning and  pressing factories, in factories and such other  indus- tries  as may be notified from time to time. It also  stated (a)  that "industrial units undertaking  expansion/modifica- tion  or  diversification  will not be  eligible  for  these concessions, (b) that a closed unit revived by the entrepre- neur will not be considered as a new unit for the purpose of availing  of  these concession and (c) that  units  claiming interest free loans as an existing unit will not be eligible for  these concessions. A certificate of eligibility had  to be obtained in the prescribed manner 604 and  this procedure was made more elaborate. District  Level Committees and a State Level Committee were constituted  for this purpose and they took a decision on the application  of the  unit read with the comments thereon by the Director  of Industries,  though the certificate was actually  issued  by the  Director  of Industries or the General Manager  of  the District Industries Centre in a prescribed form.     The  Full  Bench, after considering the scheme  and  in- structions  of the Government discussed above, came  to  the conclusion  that the scope of the exemption notification  of 1981  was not intended to be wider than that of the  conces-

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sions granted earlier. The 1981 notification was intended to bring about only a change in the mode of relief to the  same categories  of  industries as were covered  by  the  earlier schemes. The Court observed:       "It   appears that the mode of concessions granted  by the  aforesaid instructions involved some  inconvenience  to the  industrial units and duplication of procedure  inasmuch as  the industrial unit had to first collect the  sales  tax and  the  tax so collected and paid along with  the  returns were  later on refunded to the industrial unit in the  shape of subsidy. To avoid the duplication of procedure the  State Government thought it fit to altogether exempt the industri- al  units from payment of sales tax or defer the payment  of sales tax." The  Court  observed.  vis-a-vis  the  various  instructions referred to above: "12   .........  These instructions also contain a  complete procedure for application and grant of eligibility  certifi- cate  by  the Industries Department. Thus it is  clear  from these instructions that the question of grant of eligibility certificate  by  the Industries Department is not  an  empty formality but before granting the certificate the Industries Department  has to see whether all the requirements as  con- tained  in the instructions are fulfilled and complied  with or not. 13. All the Government Instructions discussed above,  issued from time to time right from 1973 onwards till 1983  (Annex- ure R-I, II and III) clearly indicate not only the  consist- ent Government policy in the matter of grant of 605 Sales  Tax concessions to the New Industrial Units but  also the  consistent practice that has been  followed  throughout whereby  these concessions were not at any time made  avail- able to the Traditional Industries like Flour Mills and Dall Mills  etc. Not a single instance is available to show  that any  of  these concessions were ever made available  to  any Traditional Industries. It may be pointed out that all these facts  and the Government policy as also all  the  aforesaid Government  Instructions  on  the subject  were  not  placed before  the  Division Bench which heard  and  decided  Misc. Petition  No.  1861 of 1983 (G. S. Dall Mills  v.  State  of M.P.).  However, after the decision of M.P. No. 1861/83  the State Government while issuing a Notification No. 351  dated 21st October, 1986 under section 12 of the Act, a  photostat copy  of which has been filed on record of M.P. No.  2710/87 (See at page 94 of the paper book) exempting the  Industrial Units specified therein from payment of tax under section  6 and  7-AA of the Act again specifically provided  in  clause (xiii)  of  the said Notification that  the  said  exemption shall  not be available to the Industrial  Units  enumerated therein including Flour Mills and Dall Mills etc." It  was  true,  the Court agreed, that  a  notification  has generally to be construed on its plain language. But, here: "as  pointed out earlier, column 3 of the 1981  Notification (Annexure B) does not contain any guidelines or a  procedure in the matter of grant of eligibility certificate or refusal thereof  by  the Industries Department and as the  grant  or refusal  of  such certificate cannot be an  empty  formality and,  therefore, in order to avoid the possibility of  arbi- trariness and injustice to any one the State Government  was justified in issuing executive instructions laying down  the guidelines and procedure for the same." The Full Bench, therefore, observed: "16.  From  what has been stated and discussed above  it  is clear  that at no point of time any concession or  exemption

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from. payment of sales tax was ever given to the Traditional Industries and not a single example to that effect is avail- able. The State Government while issuing instruction from 606 time to time have been specifically excluding the Tradition- al Industries. Thus the executive authorities and the  high- est  agency and its officers charged with the duty  for  the administration and enforcement of the said Notification  are not  only conversant with the underlying policy of the  Gov- ernment  but  they are also intimately acquainted  with  the economic  significance of the tax in question and  exemption thereof. The interpretation of the Government regarding  the construction of 1981 Notification read with the instructions (Annexure R. I, II and III) excluding the Traditional Indus- tries,  which has been consistently followed and acted  upon accordingly  for  a period over a decade cannot be  given  a go-by but has to be accepted. 17.  In view of the above discussion the impugned  Notifica- tion  dated  4-7-1987 (Annexure G) is hardly of  any  conse- quence. More or less it is a clarification of 1981 Notifica- tion and not rescission of any grant." The  contention that "instructions" could not  override  the effect  of  the statutory notification was repelled  by  the Court  on the ground that the validity and effectiveness  of the  instructions can be supported by reference  to  Article 162  of the Constitution as filling up a lack of  guidelines in  the notification. An argument based on the  doctrine  of promissory  estoppel was also rejected as  "the  petitioners were  well  aware  of the fact that the  exemption  was  not available  to their new units and they had  not  established their  units because of the exemption". The Court  explained the position thus: "20.  In this behalf firstly it may be pointed out that  all the petitioners had established their Industrial Units after the  Government issued the executive instructions  (Annexure R.  III) dated 12-1-1983, of which clause 5(b)  specifically speaks that the concessions will not be available to  Tradi- tional  Industries like Flour Mills and Dall Mills  etc.  To say  that the petitioners were not aware of these  executive instructions  would be incorrect because clause 6  of  these instructions contemplates that New Industrial Units desirous of availing the said concessions shall have to apply in Form I accompanied with a declaration in Form II appended to  the said Instructions and the petitioners applied in Form I with declaration in Form II (See Annexure D, D/I and D/2 in  M.P. No. 2710/87). Further these 607 applications for exemption were made by the petitioners only after  the  order dated 7-10-1986 was passed in  G.S.  Flour Mills  v. State (M.P.) No.  1861 of 1983) which  shows  that the  petitioners were aware of the fact that they  were  not entitled  to exemption and it was only after  the  aforesaid decisions that they considered to apply for exemption.  This fact is further fortified from the conduct of the  petition- ers  themselves  as they continued to submit  returns  right from  1983 onwards and continued to pay the tax as  assessed against them without taking any steps to claim exemption. In this  behalf paragraphs 8 and 9 of the petitions   are  self explanatory.  Thus  having regard to all these  facts,  the. question of application of principle of promissory  estoppel in the present case does not arise and the petitions deserve to be dismissed."     Sri  Harish Salve, appearing for the G.S. Dhall &  Flour Mills, apart from pleading that the view taken in this  case is  the  correct  one and not that enunciated  by  the  Full

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Bench, also raised an alternative contention on the  footing that,  at best, the notification of 1981 was  ambiguous  and lent itself to two plausible interpretations. Assuming  that there was initially some ambiguity regarding the applicabil- ity  of the Notification of 23.10.81 to  traditional  indus- tries,  it  had been dispelled by the  instructions  of  12, 1.83.  Once these instructions were published, any  assessee setting up a traditional industry took a calculated risk  on the issue as to whether the Notification should be confined, on proper interpretation, only to non-traditional industries and  could not rely on the doctrine of  equitable  estoppel. Pointing  out that the assesses in the Full Bench case  were persons  who  had set up their industry after  12.1.83,  Sri Salve  argued that the dismissal of the Special Leave  Peti- tion  against  the Full Bench judgment will not  affect  his case  as this assessee had set up its industry,  admittedly, before  12.1. 1983. The position is similar in the  case  of Mohan.  Ismail. Learned counsel, therefore, submitted  that, even if the 1983 instructions were rightly held by the  High Court  to  have validly supplemented the terms of  the  1981 Notification, they can have no application to the two earli- er cases which had to be decided solely on the terms of  the 1981 Notification.     To  answer these contentions, one has to look  first  at the statutory instruments in this case viz. S. 12 of the Act and the notification thereunder. S. 12(1)(i), with which  we are concerned, lays down four requirements for the grant  of exemption from the provisions of the Act: 608 (i)  that any exemption to be granted under the section  has to be by a notification; (ii)  that the notification may exempt any class of  dealers or any goods or class of goods from the payment of tax under the  Act in whole or in part but only for a definite  period to be specified in the notification; (iii)  that the exemption will be subject to  such  restric- tions  and conditions as may be specified in  the  notifica- tion; (iv) that such exemption could be prospective or  retrospec- tive.     We  are concerned here with the scope of the second  and third  requirements mentioned above. So far as the class  of dealers entitled to the exemption are concerned, the notifi- cation spells out the following requisites: (i) they must belong to one of the classes Of dealers speci- fied in column No. (1) of the schedule; (ii) they must have set up industry in any of the  districts of Madhya Pradesh specified in the annexure; (iii)  they must have commenced production after 1.4.  1981. The  period of exemption is also specified in the  notifica- tion. So far as the "restrictions and conditions" subject to which  the  exemption  has been granted, they  are,  as  per column No. (3) of the Schedule: (a)  that  the dealer should continue to  furnish  the  pre- scribed  returns under the Sales Tax Act; and (b) that  they should produce, at the time of their assessment, a  certifi- cate  from the Director of Industries certifying  that  such dealer is eligible to claim exemption and has not opted  for the "scheme of deferring the payment of tax under the  rules framed for the purpose". It is not anybody’s case that the assesses before us did not fall within the class of dealers specified in column (1)  or that  they  did not comply with (a) above or that  they  had opted for the scheme of deferment of tax. This being so, the assesses  claim  that they are eligible  for  the  exemption

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under  the notification and that the Director of  Industries should have granted them a certificate to this effect. It is the denial of 609 this  certificate which has brought the assesses  to  Court. The  question for consideration is whether the  Director  of Industries can refuse the exemption certificate on a consid- eration not specified in the notification. Prima facie,  no. All  the conditions for exemption have to be. and  are,  set out in the notification itself and all that the Director  of Industries has to do is to satisfy himself that those condi- tions  are fulfilled; he cannot travel beyond the  terms  of the notification. He can see whether the dealer falls  under the  description in column (1), whether he has set up a  new industry in M.P. State, whether he has commenced  production after  1.4.1981  and  whether has opted  for  the  deferment scheme. The condition about the dealer filing returns  regu- larly  would seem to be one under the purview of  the  sales Tax  Officer rather than one under that of the  Director  of industries. If these conditions are fulfilled, the exemption certificate will have to be granted. That seems the straight and simple interpretation of the notification.     But,  it is said for the State, this is not the  intend- ment  or  effect of the notification. It is  said  that  the argument overlooks the reference in column (3) to the  grant of an eligibility certificate by the Director of Industries. This  is  one of the important conditions for the  grant  of this  exemption.  It is pointed out, in this  context,  that there  had  been in force in the State,  for  several  years past, a scheme of subsidy/loan. That scheme was also depend- ant on a certificate of the Director of Industries but  that certificate could be denied to "traditional industries".  It is argued that, since the notification does not set out  the conditions  on which, and the procedure in  accordance  with which the Director of Industries is to issue the eligibility certificate,  that  earlier scheme and procedure  should  be read  into  the  notification. Sri Salve  objected  to  this reading of the notification, infer alia, on the ground  that the earlier scheme and the exemption now proposed are total- ly  different in their object and scope and that, while  the former  scheme was intended as an incentive to any  one  who set  up  a new industry in the State so  that  "traditional" industries  did  not  get  any  benefit,  the   notification presently under consideration was issued with the object  of industrialising  the backward areas of the State and  so  it was  immaterial  what  type of industry went  in  there  and whether the industry proposed to be set up was a "tradition- al" one or not. This contention does not appear to be  quite correct.  It has been pointed earlier that even the  earlier schemes provided for graded incentives for industrialisation effective  for varying periods depending upon the  backward- ness or otherwise of the district in which the industry  was proposed  to  be set up. But, even granting  that  the  1981 policy was to replace the earlier subsidy/loan by an  exemp- tion, it does not necessarily follows that the 610 units  intended  to be covered by the new scheme  were  only those  that were covered by the earlier scheme and  that  no wider  exemption was contemplated. Indeed, there  were  four new concessions introduced in 1981-82 and there is no  mate- rial which would justify these being tied down to the param- eters of the earlier schemes. No factual foundation has been laid  to  establish the hypothesis that the  exemption  con- ferred in 1981 was to be a mere extension or substitution of the benefits conferred earlier. There are other difficulties

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in  reading the provisions of the earlier schemes  into  the notification.  In the first place, the earlier schemes  spe- cifically  provided that "traditional industries" were  out- side their purview. The language of the notification,  which is a piece of subsequent legislation, is silent about  this. This  is itself indicative of a legislative intent to  widen the  scope  of  relief and grant  exemption  to  traditional industries  as  well: vide, G.P.  Singh:  Interpretation  of Statutes,  4th Edition, pp. 767-8. The omission to  specifi- cally  exclude "traditional industries" as was done  in  the earlier schemes the notification gains added significance in view  of S. 12 which specifically requires that  all  condi- tions  and  restrictions governing an  exemption  should  be specified in the notification. Secondly, the attempt of  the State  to  read a further condition  into  the  notification excluding  "traditional  industries" from the  exemption  is based on the words which require that the Director of Indus- tries  should  grant a certificate (a) that  the  dealer  is entitled  to  claim the exemption and (b) that  he  has  not opted  for the scheme of deferring the payment of tax  under the  rules  framed for the purpose. But these words  do  not carry  the  State’s case further, for what the  Director  of Industries  has  to do is to certify that the  applicant  is entitled  to the exemption on the terms and  conditions  set out in the notification and not on the basis of any  further requirements  not  so  set out. The  notification  does  not authorise him to say that, though the applicant fulfills the terms of the notification, he will not grant the eligibility certificate because, under the previously prevalent schemes, he could not issue an eligibility certificate to "tradition- al  industries". He could not grant an eligibility  certifi- cate  under  the earlier schemes  because  the  instructions which outlined the scheme specifically excluded  traditional industries.  Actually, even under the earlier schemes,  nei- ther the application form nor the form of certificate, which have  been  extracted  earlier, make any  reference  to  the assessee  concerned not being a ‘traditional  industry’.  Be that  as it may, for granting a certificate that the  appli- cant  is eligible for exemption under the notification,  the director has to look to the conditions set out in the  noti- fication  and nowhere else. To say that, when the  notifica- tion  requires an eligibility certificate from the  Director it  means  a certificate on the terms prescribed  under  the earlier scheme is to read into 611 the notification something which is not there. Thirdly,  the interpretation advocate by the State really narrows down the class  of dealers entitled to the exemption as set  down  in column (1) of the notification. It amounts to  substituting, for  the word "dealers" in column 1 of the notification  the words  "dealers  other than those  carrying  on  traditional industries".  Such an interpretation also virtually  amounts to  allowing  certain  executive instructions  issued  in  a different  context  to  cut down the scope  of  a  statutory notification. This cannot clearly be done. Lastly, a perusal of  the  earlier  schemes would show  that  the  concept  of "traditional industries" is a vague one. The nomenclature of these  industries has varied from time to time. The note  in the 1977, and the definition in the 1983, instructions  show the  eligibility  under the earlier schemes was  denied  not only  to  "traditional industries" but  also  certain  other industries  such as revived or reconstructed industries.  We may   also  mention  in  this  context  a  notification   of 21.10.1986  referred to by the High Court  outlining  exemp- tions  under Ss. 6 and 7AA. It excludes, from exemption,  in

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addition  to  saw mills, flour mills etc. (which  the  State calls  traditional  industries)  various  other   industries (total  numbering 26) specified in cl. (xiii) thereof.  This changing definition of eligibility for exemption also  shows that there was no common or identical group of beneficiaries intended under the various instructions or notifications and that  each set of instructions or notification  issued  from time  to time defined only the categories exempted from  its purview  and nothing else. The exemption list under one  was not  meant to be carried over into another. We  are,  there- fore, of opinion that it is not permissible to restrict  the scope of the notification in the manner suggested.     We  may point out that, in construing  the  notification thus, we are only giving effect to a well settled rule  that may be illustrated by a reference to the decision in Hansraj Gordhandas  v.  H.H. Dave, [1969] 2 SCR 253.  In  that  case notifications  had  been issued under S. 8  of  the  Central Excises and Salt Act, 1944 granting exemption to (a) "cotton fabrics produced by any cooperative society formed of owners of  cotton powerlooms  ....." and (b) "cotton  fabrics  pro- duced  on  powerlooms owned by any  cooperative  society  or owned  by or allotted to the members of the  society   ..... ". The appellant had sought exemption from excise duty under these  notifications in respect of cotton fabrics which  had been got manufactured by him on the powerlooms belonging  to a  cooperative society in pursuance of an agreement  entered into  with it. The excise authorities rejected the claim  on the ground that the exemption under the notifications  could be claimed only when the cotton fabrics were manufactured by a cooperative so- 612 ciety for itself. Upholding the assessee’s claim, this Court observed:          "It was contended on behalf of the respondent  that the object of granting exemption was to encourage the forma- tion  of  co-operative  societies which  not  only  produced cotton fabrics but which also consisted of members. not only owning  but  having  actually operated not  more  than  four power-looms  during  the three years  immediately  preceding their having joined the society. The policy was that instead of  each  such  member operating his looms on  his  own.  he should  combine  with  others by forming  a  society  which. through  the  cooperative effort should produce  cloth.  The intention  was that the goods produced for  which  exemption could be claimed must be goods produced on its own behalf by the  society.  We are unable to accept  the  contention  put forward  on behalf of the respondents as correct. On a  true construction  of  the language of the  notifications.  dated July  31, 1959 and April 30. 1960 it is clear that all  that is  required for claiming exemption is that the cotton  fab- rics  must be produced on power-looms owned by the  coopera- tive society. There is no further requirement under the  two notifications  that the cotton fabrics must be  produced  by the Cooperative Society on the power-looms "for itself".  It is  well-established  that in a taxing statute there  is  no room for any intendment but regard must be had to the  clear meaning  of the words. The entire matter is governed  wholly by  the  language of the notification. If the  tax-payer  is within the plain terms of the exemption it cannot be  denied its benefit by calling in aid any supposed intention of  the exempting authority. If such intention can be gathered  from the  construction  of the words of the  notification  or  by necessary  implication therefrom. the matter  is  different, but  that  is not the case here. In this connection  we  may refer  to  the  observations of Lord Watson  in  Salomon  v.

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Salomon & Co., [1897] A.C. 22, 38:              "Intention  of the legislature is a common  but very slippery phrase, which, popularly understood may signi- fy anything from intention embodied in positive enactment to speculative  opinion  as to what  the  legislature  probably would  have  meant although there has been  an  omission  to enact it. In a Court of Law or Equity, what the  Legislature intended to be 613 done or "not to be done can only be legitimately ascertained from  that which it has chosen to enact, either  in  express words or by reasonable and necessary implication." It  is  an application of this principle  that  a  statutory notification  may  not  be extended so as to  meet  a  casus omissus. As appears in the judgment of the Privy Council  in Crawford v. Spooner, 6 Moo. P.C.C. 8.              "   ......   We cannot  aid  the  legislature’s defective phrasing of the Act, we cannot add, and mend, and, by construction, make up deficiencies which are left there." Learned Counsel for the respondents is possibly right in his submission  that the object behind the two notifications  is to  encourage the actual manufacturers of handloom cloth  to switch  over to power-looms by constituting themselves  into Cooperative  Societies. But the operation of  the  notifica- tions has to be judged not by the object which the  rulemak- ing  authority  had in mind but by the words  which  it  has employed to effectuate the legislative intent."     In  our  view,  this principle  applies  here  squarely. Indeed,  even granting that the notification may  be  inter- preted  having regard to the past history and  the  possible intention of the Government while issuing the  notification, the  position  of the assesses here is  much  stronger  for, while  in  the reported case the State was  trying  only  to effectuate the clear object of the notification, here it  is not at all clear, for the reasons discussed above, that  the State  intended  the exemption to be confined  only  to  the cases covered by the subsidy/loan schemes prevalent earlier. The  1981 notification does not expressly, or (for the  rea- sons discussed above) even by necessary implication, exclude "traditional" industries from its scope.     Sri Salve contends that, even if a lenient view is taken and  a more liberal construction is sought to be  placed  on the notification, the best that could be said for the  State would  be  that the notification was  ambiguous.  One  could either  say  that the previous  procedure  and  requirements prevalent  for obtaining an exemption certificate  were  in- tended  to  be incorporated by the words  requiring  such  a certificate  (as  suggested for the appellant or  one  could say, with equal plausibi- 614 lity, that the exemption certificate is to be based only  on the  conditions and requirements mentioned in the  notifica- tion (as contended for by the assesses). In such a state  of law, he contends, one can have regard to the conduct of  the parties and how they understood the notification. His  argu- ment is that the State, by its conduct, had held out to  the assessee  that it would also be eligible for the  exemption. In  this  context, he drew our attention  to  the  following circumstance:       (1) The M.P. Audhyogik Vikas Nigam, a State instrumen- tality, which was administering the notification issued,  in November 1981, a pamphlet setting out the various incentives the State was offering for new industries proposed to be set up  in  the  State. As to "exemption from  sales  tax",  the pamphlet  stated  that  "new industrial  units  coming  into

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production  after 1.4.81" will be entitled to  an  exemption for a period depending upon the district where it is set  up or  could alternatively exercise an option to defer  payment of  sales  tax by a period of 10 years. It did  not  mention anywhere  that  the  industry should not  be  a  traditional industry.        (2)  The Nigam allotted a plot of land of the  extent of  1 acre to enable the assessee to establish its  unit  in the Industrial Area. Mandideep, Dt. Raisen.       (3) Other incentives as to power, interest and capital subsidy  were extended to the assessee. Thus, says  counsel, the  State  "lured"  the assessee to set up a  unit  in  the record  time  of ten months and with a  substantial  capital outlay of over Rs. 10 lakhs in a backward area. These incen- tives  were  meant  to be coextensive  with  the  concession regarding sales tax. He contends that these  representations and  acts  are  sufficient to found a  claim  of  "equitable estoppe"  against  the State. We are unable to  accept  this argument.  The  respondents  have stated  in  their  counter affidavit that the Nigam had acted in error and misconstrued the  notification and was not acting under the authority  of the  Government in issuing the pamphlet. The  other  conces- sions  extended to the assessee pertained to the setting  up of a small scale industry in the State and were unrelated to the exemption from sales tax. In our opinion, there is force in these submissions. The circumstances and material  relied on  by  the assessee do not spell out any clear  promise  of exemption  from sales tax even for  traditional  industries. The notifications or guidelines under which the other facil- ities were granted have not been 615 placed  before us and no material is available on record  to correlate  them to the sales tax exemption or to  show  that all these were inextricably connected so as to form part  of a single "relief packet". We, therefore, reject this conten- tion  of  Sri Salve. However, on the interpretation  of  the notification. we accept the contention of the assesses  that the notification does not warrant denial of exemption solely on  the ground that the applicant is having  a  "traditional industry".     We  have indicated earlier that the assesses whose  writ petitions  were  disposed of by the Full Bench  had  set  up their  industries after 12.1. 1983 by which  time  elaborate instructions had been issued to explain the State’s point of view,  The question is whether this makes a  difference.  We think not. Even the 1983 document is not a statutory instru- ment-neither  a  notification nor a rule  framed  under  the statute. The Full Bench has considered those instructions to be conclusive on two grounds--on the doctrine of contempora- nea exposition and on the principle that executive  instruc- tions  can always be issued to supplement statutory  instru- ments so as to fill up areas on which the latter are silent. In  our opinion, neither of these grounds is tenable. It  is true  that the principle of contemporanea exposition is  in- voked where a statute is ambiguous but is shown to have been clearly  and  consistently understood and explained  by  the administrators  of  the  law in a  particular  manner.  This doctrine  has  been explained and applied in  a  numbers  of cases  of this Court (e.g. See Varghese v. L.T.O., [1982]  1 S.C.R. 629, in addition to the cases referred to by the Full Bench).  As pointed out by Sri Salve, its  applicability  in the  construction  of recent statutes. and that too  in  the first  few  years of their enforcement,  has  been  doubted. vide:  Doypack Systems P. Ltd. v. Union of India.  [1988]  2 S.C.C. 299, para 61. But, this apart, the principle will not

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be applicable here for two reasons. In the first place,  the instructions of 1983 do not anywhere "expound" the terms  of the  notification. They do not give any indication that  the state  had  applied  its mind to the precise  terms  of  the notification or their interpretation. They do not explain or clarify that, though the notification is silent, it has been intended that the limitations of the previous schemes should be  read into it. Secondly, the cases referred to will  show that  the doctrine applies in cases where the plea is  that, though  the  language of the statute may appear to  be  wide enough to seem applicable against the subject in  particular situations,  the State itself--which was the  progenitor  of the  statute--had  not understood it in that  way.  But,  to apply  the  doctrine to widen the are bit of  the  statutory language  would, however, virtually mean that the State  can determine the interpretation of a statute by its 616 ipsi  dixit.  That, certainly, is not, and  cannot  be,  the scope of the doctrine. The doctrine can be applied to  limit the  State to its own narrower interpretation in  favour  of the  subject but not to claim its interpretation in its  own favour as conclusive.     The second ground on which the Full Bench has sought  to invoke  the  instructions  is also  not  correct.  Executive instructions  can  supplement a statute or  cover  areas  to which  the  statute  does not extend. But  they  cannot  run contrary  to  statutory  provisions or  whittle  down  their effect.  The  Full  Bench seems to think  that,  unless  the instructions  are brought in, the notifications  would  have been in danger of abuse for want of proper guidelines as  to the  grant of exemption certificates. It is  suggested  that the  notification  contemplates rules to be issued  for  the purpose and that, since no rules had been issued,  Directors of Industries were left with no parameters for the issue  of exemption  certificates and might act capriciously or  arbi- trarily  in granting or refusing certificates. The  instruc- tions,  it is said, have been issued to fill in this  lacuna and  are hence valid. There are two misconceptions  in  this line  of reasoning. The first is that. though the  last  few words  in  column (3) of the notification are capable  of  a wider meaning, it would appear that these words govern  only the immediately preceding words; rules envisaged are not  in relation  to the grant of exemption certificates and  condi- tions therefore but in respect of the circumstances in which the  assesses can exercise the option between exemption  and deferment  of sales tax. This view derives support from  the instructions  of 1983. As pointed out earlier, the  instruc- tions  first set out the scope of the various  notifications as  granting  exemption  from sales  tax;  the  instructions thereafter proceed to say:           "The grant of exemption from the payment of  sales tax is contingent upon the issue of a certificate of  eligi- bility  to  the new industrial units.  This  certificate  of eligibility  is  required to be issued by  the  Director  of Industries or an officer authorised by him for this purpose.           In so Jar as the grant of concessions relating  to the  exemption  from payment of sales tax is  concerned,  no further  notifications are required to be issued.  For  ena- bling  the new industrial units to avail of the second  con- cession  viz., that of deferment of payment of sales tax,  a scheme  is  being  issued separately. For  availing  of  the benefit of the deferment of concession too, a certificate of eligibility  is  required to be obtained by  the  industrial unit. However. 617

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pending the issue of the scheme, the grant of certificate of eligibility should not be held up." (underlining ours) Incidentally,  we may point out, the first part of the  para does not clarify that the eligibility certificate is not  to be  granted to "traditional industries". But, so far as  the present point is concerned, it is categorically stated  that no further notifications are required to be issued and  that they  are needed only to define the scheme for deferment  of tax.  Indeed,  rules were framed in order to  implement  the deferment  scheme  which came into force  with  effect  from 1-4-1983.  We  shall refer a little later  to  these  rules. Secondly, there is no warrant for assuming that the  notifi- cation envisages conditions for the issue of the eligibility certificate  other than those specified by itself. There  is nothing in the language of the notification to suggest  that anything further is needed to enable the Director of  Indus- tries  to grant the exemption. Without the  guidelines,  the requirement for an exemption certificate would not become an "empty formality" as suggested by the Full Bench. The Direc- tor  of  Industries has to issue the same  after  satisfying himself  that the applicant industry falls within the  terms of the notification in the following respects-- (a) that the assessee is one of the class of dealers set out in column ( 1); (b) that he has set up an industry in the State; (c) that it has been set up in one of the districts set  out in the annexure and the category to which it belongs; (d) that the industry has commenced production after 1-4-81; (e)  that  the  assessee has not  opted  for  the  deferment scheme. These  conditions  are many and detailed and  do  not  leave anything to the discretion of the Director of Industries. We fail  to  understand  what need there was to  lay  down  any elaborate  procedure therefore. Even if there was,  and  the earlier  procedure by way of application  form,  declaration form and form of certificate were to be adapted, that proce- dure,  by itself, did not, as pointed out  earlier,  contain any  reference to the assessee being a traditional  industry or otherwise. To assume first that the conditions  specified in the notification are not exhaustive or suffi- 618 cient  and may lead to abuse of power by executive  authori- ties  unless canalised by procedural guidelines and then  to say  that such a conclusion is borne out by the mere  refer- ence  to  a  certificate being granted by  the  Director  of Industries because, under some earlier schemes, such certif- icate  was  being granted on a restricted  basis,  does  not appear to be sound logic. We are, therefore, of opinion that the notification is quite clear and leaves no area of vacuum which needs to be supplemented by guidelines. Thirdly, if we read the last part of the entry in column (3) of the notifi- cation as envisaging rules to be framed for the grant of the eligibility  certificate,  no such rules were  flamed.  Only instructions  were issued. These instructions say that  even an assessee, who fulfills all the requirements of the  noti- fication,  will  not  be eligible for  exemption  unless  he fulfills  one more condition outside the notification.  They travel beyond and counter to the notification. They restrict the  scope  of exemption under the notification.  They  deny exemption to a person who qualifies for it under the  statu- tory notification. Indeed, there is force in the  contention that  if the statutory notification is construed as  permit- ting  the State by rules or executive instructions  to  pre- scribe other conditions for exemption, whether new or  based

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on  past  practice, it is liable to be struck  down  on  the ground  of impermissible delegation of legislative power  to the executive. This, certainly, they cannot do.     A  further development which has been relied on  by  the State  but does not really seem to help its case may now  be referred  to. State Act 25 of 1982 inserted S. 22 D  in  the Act in the following terms: "22-D.  Special provisions relating to deferred  payment  of tax by Industrial Units--Notwithstanding anything  contained in  any other provisions of this Act, a  registered  dealer, who is-- (a) registered as a small scale industrial unit with  Indus- trial Department of the Government of Madhya Pradesh;or (b) registered with the Director General of Technical Devel- opment as an industrial unit; or (c)  registered as an industrial unit by any authority  duly empowered  to do so by the Government of Madhya  Pradesh  or the Central Government; or (d) holding a licence under the Industries (Development  and Regulation) Act, 1951 (No. 65 of 1951). 619 and who in each case has or may set up a new industrial unit in  any district of Madhya PradeSh if eligible for grant  of the  facility  of deferred payment of tax under  the  scheme providing  for grant of incentive to enterpreneurs for  set- ting  up  new  industrial units in the state  as  the  State Government may make in this behalf may make deferred payment subject to such restrictions and conditions as may be speci- fied in such scheme." Thereafter,  the State Government framed the M.P.  Deferment of Payment of Tax Rules, 1983 which were gazetted of  1.9.83 but with retrospective effect from 1.4. 1981 (that is,  even anterior to the date of the notification). Rules 3, 4 and 14 are relevant and may be set out here. "3. Eligibility for grant of Facility of Deferred payment of tax--(1)  A new industrial unit other than a unit  specified in rule 14 which is covered by any of the categories  speci- fied  in section 22D and of the Act and which is engaged  in the  manufacture  and sale of any goods  shall  qualify  for deferred  payment  of the tax payable by it provided  it  is eligible  for  grant  of the concession  of  exemption  from payment of tax in terms of notification No. A 3-41-81  (35)- ST-V,  dated  the 23rd October, 1981 and  No.  A-3-41-81(31) ST-V, dated the 29th June, 1982 as amended from time to time subject to the provisions of the act. The period  pertaining to  which  the tax which the new industrial unit  can  defer will  be the same for which it could have obtained the  con- cession  of  the exemption from payment of  tax,  i.e.,  the period  pertaining to which the tax can be deferred will  be the period shown in column (2) of the said notification. (2) The new industrial unit shall be eligible to defer only  the payment of tax which is due from it under the Act. 4.  Application for Scheme of deferred payment and grant  of certificate of eligibility--(1) A new industrial unit opting for  the scheme of deferred payment of tax shall  apply  for and  obtain a certificate of eligibility in accordance  with the instructions issued by State Government in the  Commerce and Industries Department for the said purpose. An  applica- tion in writing shall be submitted within forty five days of the  publication  of these rules or of commencement  of  the production whichever is later. In the application form the 620 new  industrial  unit shall indicate that it has  opted  for scheme of deferred payment of tax. The option once exercised shall be irrevocable. The form of the application as well as

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the certificate of eligibility shall be as specified in  the said  instructions.  The application shall be  made  to  the General Manager, District Industries Centre of the  district where the new industrial unit is or is proposed to be locat- ed  and  shall be processed further in accordance  with  the said instructions. The certificate of eligibility in respect of large and medium scale units shall issued by the Director of Industries (Government of Madhya Pradesh) and in  respect of small scale units by the said General Manager, and  shall carry  a  specific  and district number given  by  the  said officer. (2)  A copy of the certificate of eligibility shall be  for- warded by the officer issuing the certificate to the  appro- priate  Sales  Tax Officer, i.e. the Sales  Tax  Officer  in whose circle the industrial unit is registered as a  dealer. The Sales Tax Officer receiving the copy of the  certificate of  eligibility shall maintain a record of the same in  such form  as may be directed by the Commissioner and  shall  not enforce  recovery of the tax payment whereof has been  shown to have been deferred in the certificate of eligibility. (3)  The new industrial unit shall be entitled to defer  the payment of the tax for a period of ten years. This  entitle- ment  shall be available only on receipt of the  certificate of eligibility to it under sub-rule (1). The certificate  of eligibility shall show the duration for which the payment of the  tax has been deferred. The year in which the  tax  per- taining  to  any accounting year of the industrial  unit  is required  to be paid consequent upon deferment of tax  shall also be shown in the certificate of eligibility. The  entire tax  assessed  pertaining to any accounting  year  shall  be payable by the industrial unit in lump sum on the expiration of  duration of deferment and payment of such tax  shall  be made  within thirty days of the date on which the period  of ten  years  from  the end of the  relevant  accounting  year expires. 14.  Non-availability of facility of deferred  payments--The result of the scheme of deferred payment of tax shall not be available to the following new industrial units, namely: 621 (A) (1) flour mills (Excluding Roller Flour Mills); (2)  Oil mills (excluding Solvent Extraction Plants); (3) dall mills;      (4) saw mills; rice mills;      (6) printing presses of all types;      (7) cotton ginning and pressing factories;      (8) ice factories; (9)  such other industries as may be notified by  Government from time to time. (B) industrial units undertaking expansion, modernisation or diversification; (C) a closed unit revived by an entrepreneur; (D)  units claiming interest free loans as an existing  unit establishing a new unit; (E) an industrial unit set up by transferring or shifting or dismenting an existing industry. A  note  was also published in the  Gazette  explaining  the background of the rules. It reads thus: "NOTE  EXPLAINING THE BACKGROUND OF THE SCHEME  OF  DEFERRED PAYMENTS TAX The Government of Madhya Pradesh, with a view to  accelerat- ing the pace of industrialisation have announced concessions regarding the payment of tax under the Madhya Pradesh Gener- al  Sales Tax Act, 1958 and the Central Sales Tax Act,  1956 by  new  industrial units going into  production  after  1st April, 1981 which contemplate-- (a)  total  exemption from payment of tax whether  State  or

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Central by new industrial units going into production  after 1st  April,  1981  for varying periods  depending  upon  the district in which the new industrial unit is set up; 622 (b)  deferment  of the payment of tax in lieu of  the  above said exemption for a period of ten years. To  give effect to the concession of exemption from  payment of  tax, the Government in the Separate  Revenue  Department have already issued the following notifications: (i) F. No. A3-41-81(35)-ST-V, dated 23rd October, 1981. (ii)F. No. A3-41-81 (25)-ST-V, dated 1st May, 1982. (iii) F. No A3-41-81(24)-ST. V, 1st May, 1982. (iv) F. No. A3-41-81 (31)-ST-V, dated 29th June, 1982. With  a view to enabling those new industrial units who  opt for  the alternative concession of deferment of  payment  of tax,  a special provision in the shape of section  22-D  has been  inserted in the Madhya Pradesh General Sales Tax  Act, 1958  with effect from 1st April, 1981, according  to  which the  facility of deferring the payment of tax  which  become available subject to the provisions of the scheme  providing for the grant of incentives for setting up the new industri- al Units; The aforesaid rules have therefore been framed to  formulate the scheme of deferred payment of tax." It  might appear, at first sight, that since the  relief  by way of deferment of tax is only in the nature of an alterna- tive  to the provision for exemption and the former  is  not available  to  traditional  industries because  of  rule  14 above,  the  same should be the position in  regard  to  the exemption provision also. There are, however, several diffi- culties  in accepting this suggestion. In the  first  place, the rules relate to tax deferment and not tax exemption.  It is open to the State Government, particularly in view of  S. 22D,  to  frame such scheme for the purpose as it  may  deem fit. The provision for exemption, however, needs to be spelt out, under S. 12, in a statutory notification. Secondly  if, as  is  being urged on behalf of the State, it  is  explicit even  on  the  terms of the  notification  that  traditional industries  are excluded, it is not necessary for the  rules of  deferment to specifically provide that they will not  be available  to the industries listed in rule 14  particularly when rule 4 has incorporated the requirement of an eligibil- ity certificate in accordance with 623 the previous instructions for the said purpose. Thirdly rule 14  excludes from the scheme not merely "traditional  indus- tries" covered by para (A) but also industrial units  (which may not be ‘traditional industries’) falling under paras (B) to  (E). Fourthly, the rules are not inconsistent  with  the interpretation  that,  while all industries  fulfilling  the terms of the notification can claim exemption under it, only some  of those units, which do not fall under rule  14,  can opt for the alternative of determent. We are, therefore,  of opinion  that even the retrospective promulgation  of  these rules  provide  no assistance in the interpretation  of  the notification.     A  reference has now to be made to the  notification  of 3/7/87  amending  the 1981 notification  with  retrospective effect  so as to exclude what may be described in  brief  as ‘traditional industries’ though, like rule 14 of the  defer- ment  rules,  the exclusion extends even  to  certain  other non-traditional  units  operating  in  certain   situations. Though  this notification purports to be  retrospective,  it cannot  be  given such effect for a simple reason.  We  have held that the 1981 notification clearly envisages no  exclu-

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sion of any industry which fulfills the terms of the notifi- cation  from availing of the exemption granted under it.  In view  of  this interpretation, the 1987  amendment  has  the effect  of  rescinding  the exemption granted  by  the  1981 notification  in respect of the industries mentioned by  it. S.  12 is clear that, while a notification under it  can  be prospective or retrospective, only prospective operation can be  given to a notification rescinding an exemption  granted earlier. In the interpretation we have placed on the notifi- cation,  the  3/7/87 notification cannot be treated  as  one merely clarifying an ambiguity in the earlier one and  hence capable of being retrospective: it enacts the rescission  of the earlier exemption and, hence, can operate only  prospec- tively.  It cannot take away the exemption conferred by  the earlier notification.     We would like to add that we agree with the view of  the Full Bench that, if the notification is interpreted as  done by it or even hold it to be ambiguous, there is no scope for the assessee to invoke the doctrine of promissory  estoppel. We  have  already dealt with this aspect in  regard  to  the cases  in which the State has appealed. In the  other  cases covered  by the Full Bench decision, the mere fact  that  an exemption  was initially granted and then revoked  would  be insufficient  to  found the claim of  estoppel  particularly when it has been found that the assesses started  production after 12.1. 1983 and claimed exemption very much later.  But since, in our view, the terms of the notification are  clear and  envisage no denial of exemption to  traditional  indus- tries, this question does not survive. 624     Before we conclude, we have to refer to one aspect which we  have touched upon at the very beginning of the  judgment and  that is the dismissal, in limine, of the Special  Leave Petition  filed in this Court by the petitioners before  the Full Bench. It has been pointed out that the above  petition was  dismissed notwithstanding that the Special Leave  Peti- tion  in the case of G.S. Dhall & Flour Mills was also  then pending for admission. It would perhaps have been better  if both the S.L.Ps. had been taken up and dealt with  together. However,  the  S.L.P. against the Full Bench  was  dismissed and,  two of us having been members of the Bench  that  dis- missed it, we may observe that Sri Salve is perhaps right in saying  that  it was the content of paras 20 and 21  of  the Full Bench judgment that persuaded this Court to dismiss the S.L.P.  there against. The Full Bench has there pointed  out that  even if it could be said that two  interpretations  of the  notification  were equally plausible. the  assesses  in those  cases  had set up the industries after  the  explicit instructions of 12.1. 1983 were made public and thus took  a deliberate risk and had only themselves to thank.  Neverthe- less, the fact is that the view taken by us on the scope  of the  notification  runs counter to the Full  Bench  decision which must be treated as overruled.     For  the above reasons, we have come to  the  conclusion that  the  G.S.  Dhall and Flour Mills case  laid  down  the correct  law  and not the Full Bench. We would like  to  add that  we are not quite happy to arrive at this decision.  It does seem likely that the State Government had not  intended the  exemption  to be availed of by  certain  categories  of industries.  But  it has failed to achieve this  purpose  on account of the wide language in which it couched the  exemp- tion notification. We find ourselves unable, for the reasons discussed above, to discover any valid legal basis on  which the  exemption  clearly  granted can be  withheld  from  the assesses  here.  We, therefore, dismiss the appeals  of  the

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State  and allow the appeals preferred by the  assesses  and hold them entitled to the exemption under the 1981 notifica- tion. We, however, make no order regarding costs. R.S.S.                         Appeals                                filed by State dismissed                                and other appeals allowed. 625