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PETITIONER: ARVIND INDUSTRIES AND OTHER

       Vs.

RESPONDENT: THE STATE OF GUJARAT AND OTHERS

DATE OF JUDGMENT23/08/1995

BENCH: SEN, S.C. (J) BENCH: SEN, S.C. (J) AHMADI A.M. (CJ) PARIPOORNAN, K.S.(J)

CITATION:  1995 AIR 2477            1995 SCC  (6)  53  JT 1995 (7)   220        1995 SCALE  (4)843

ACT:

HEADNOTE:

JUDGMENT:                            A N D                 CIVIL APPEAL NO.1011 OF 1977 Vijay Oil Mills Co.                            Versus The Assistant Commissioner of Sales Tax and others                       J U D G M E N T SEN, J.                 CIVIL APPEAL NO.951 OF 1976      The appellants  are manufactures of edible oil and have their own solvent extraction plants at Junagadh. The case of the appellants  is that  on or  about September  9, 1969,  a press  note   issued  by   the  State  Government  that  New Industries will  be granted  exemption from  Sales Tax for a period of  five years  from  the  date  of  commencement  of production. The  then Chief  Minister as well as the Finance Minister of  the  State  Government  of  Gujarat  also  made statements on  March 3, 1970 on the floor of the Legislative Assembly that  New Industries will be granted exemption from Sales Tax for a period of five years. The press note has not been  annexed   to  the  petition.  Copies  of  the  alleged statements made  by  the  Chief  Minister  and  the  Finance Minister in  the Legislative  Assembly have  also  not  been produced in court.      However, a  copy of  the Notification  dated April  29, 1970, issued  under Section  49 (2) of the Gujarat Sales Tax Act,  1963,  has  been  included  in  the  paper-book.  This Notification contains  a  recital  that  the  Government  of Gujarat is  satisfied that  circumstances exist which render it necessary  to take  immediate action  action to amend the Gujarat Sales  Tax Rules,  1970 and  to  dispense  with  the previous publication  thereof. This  Notification  does  not make any  reference to  any previous press note or assurance given by  anybody on  behalf of  the Government.  It  merely provides that in exercise of the powers conferred by Section

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86 of  the Gujarat Sales Tax Act, 1969, the rules were being framed to  amend the Gujarat Sales Tax Rules, 1970. Rule 42A was introduced  in the Gujrat Sales Tax Rules, 1970, whereby on fulfilment  of certain conditions, a New Industry granted drawback, set  off or refund of the whole or any part of the tax in  respect of  the purchase of raw material, processing materials  and   machinery  or  packing  materials  used  in manufacture of goods for sales. Certain conditions were laid down which  had to  be fulfilled before a New Industry could avail  of  this  benefit  of  the  amended  Rule  42A.  ’New Industry’ was  defined to mean and include an industry which has been commissioned at any time during the period from 1st April, 1970  to 31st March, 1975. One of the conditions laid down in the Notification was that the assessee had to obtain an  eligibility   certificate  from   the  Commissioner   of Industries, Gujarat  State,  to  the  effect  that  the  new industry  had   been  commissioned  in  an  area  beyond  24 kilometres from  the municipal limits of cities of Ahmedabad and Baroda  and 16  kilometres from  the municipal limits of Surat, Bhavnagar,  Rajkot and Jamnagar. A new industry would enjoy the  benefit of this notification for a period of five years from  the date  of commissioning  of the  industry  as stated in the eligibility certificate.      On 11th  November, 1970,  a  further  notification  was issued amending  the earlier  notification dated 29th April, 1970. It  was specifically provided that ’New Industry’ will not include industries engaged in, inter alia:-      (12)  decoraticating   expelling,  crushing,  roasting, paching, frying  of oil  seeds  and  colouring,  decolouring scenting of oil;      (13) solvent  extraction of oil from oil-seeds and oil- cakes.      The contention made on behalf of the appellants is that the solvent  extraction plant  at Junagadh was set up by the appellant on  the strength  of assurance  made  out  by  the Government in  the press statement, the speeches made by the Chief Minister  and the Finance Minister on the floor of the Legislative Assembly,  and also  the Notification  issued on 11.11.1970.  The  appellant  would  not  have  set  up  this industry at  Junagadh but for the aforesaid assurances given by the  Government. It  is not open to the Government now to withdraw the  benefits of  this Notification by a subsequent Notification issued  on 17.7.1971.  Since the  appellant had changed his position to his detriment on the strength of the earlier assurance  held out by the Government, the appellant is entitled  to continue  to enjoy  the  benefits  given  by Notification dated  11th November, 1970 for a period of five years from  the date  of commissioning  of  its  plant.  The Government was  estopped from  withdrawing the  benefits  by removing the  appellant from the list of eligible industries by the subsequent Notification dated 17th July, 1971.      Elaborate arguments  were advanced  as to the scope and effect of the doctrine of promissory estoppel and under what circumstances could  this doctrine be invoked. It was argued that the two Notifications issued by the Government were not in exercise  of legislative  power delegated by the Statute. The Government  could not unilaterally withdraw the benefits conferred by  the earlier Notification from Industries which had stared  production after  the  Notification  dated  11th November, 1970  came into  force. Having regard to the facts of  the   case,  it   is  not  necessary  to  go  into  this controversy.  The   date  of   commencement  of   appellants industry, according  to the eligibility certificate obtained by the appellant from the Commissioner of Industries, is 3rd December, 1970.  It is  difficult  to  believe  that  the  a

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pellant,  after   the  exemption   Notification  dated  11th November, 1970  was issued and on the basis of it, set up an oil extraction plant which commenced production within three weeks’ time  on 3rd December, 1970. No particulars have been given as  to when  the land was purchased, or when the plant and machinery for the industry were procured.      Moreover, the  Notification dated  11.11.1970 does  not contain  any   promise  that   the  benefits  given  to  new Industries will  not be  altered  from  time  to  time.  The Government is  entitled to  grant  exemption  to  industries having regard  to the  industrial policy  of the Government. The Government  is equally  free to  modify  its  industrial policy and  grant, withdraw  or modify  fiscal benefits from time to  time. There  is nothing  in the  notification dated 11.11.1970 by  which any  assurance  was  held  out  to  any industry. This was an usual Government Notification relating to purchase  and sales  tax,  granting  reliefs  to  certain industries on  fulfilment of  the  conditions  laid  in  the notification.      Even otherwise,  the Notification  dated 11th November, 1970 grants  exemption to  New Industry  which    ’has  been commissioned on  or after  1st April,  1970,  in  the  areas beyond 24  kilometres from the Municipal limits of cities of Ahmedabad and  Baroda and  16 kilometres  from the Municipal limit of  Surat, Bhavnagar,  Rajkot and  Jamnagar. In  other words, the  Government wanted to encourage industries set up beyond the  specified distance  from the municipal limits of the aforesaid  towns. This  cannot be construed to mean that the Government was contamplating to encourage industries set up in  other cities  of Gujarat  which were  far  away  from Ahmedabad, Baroda,  Surat, Bhavnagar,  Rajkot and  Jamnagar. The appellant  had set up its industry at Junagadh, which is a large city. It is doubtful whether such an industry was at all entitled  to any  benefit of the Notification dated 11th November, 1970.  However, we  need  not  express  any  final opinion on  this aspect of the case, because no argument was advanced on this issue at the hearing of the case.      There is  also a  further point  to be  noted.  In  the Special Leave Petition, it has been stated that some time in April,  1970,  the  then  chief  Minister  and  the  Finance Minister had  announced that  the Government had adopted the policy  of   giving  incentives   to  establishment  of  new industries. It  has further  been stated  that  petitioner’s total investment  in the  oil extraction plant is roughly 23 lakhs out  of which  about Rs.14  lakhs was  for the cost of machinery,  about   Rs.8   lakhs   was   towards   erection, construction of  necessary sheds  and  buildings  and  about Rs.68,000/- we  towards the cost of land. The appellant is a partnership firm.  It has  not been  stated at what point of time the  partners decided to set up this plant and when and how the  fund required  for setting  up  of  the  plant  was raised.      The appellant  has been entirely unable to make out any factual  basis  for  a  case  of  promissory  estoppel.  The appellant cannot claim that merely because it had set up its industrial unit  at Junagadh at a certain point of time, the fiscal laws  of the  State must  remain unaltered  from that date. The  appellant has  not been  able to  show that  some definite promise  was made by or on behalf of the Government and the  appellant  had  acted  upon  that  promise  to  its detriment  and   thereafter  the  changes  effected  by  the Notification dated  17th    July,  1971  have  caused  great prejudice to the appellant.      In the  premises, it  is not  necessary to  go into the question of  applicability of  the  doctrine  of  promissory

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estoppel in the field of fiscal legislation. The appeal is dismissed. There will be no order as to costs.                 CIVIL APPEAL NO 1011 OF 1977      The facts  of this case are similar to the facts in the case of Arvind Industries and others v. The State of Gujarat and others  (Civil Appeal  No. 951 of 1976). Here again, the contention of the promissory estoppel has been raised.      The appellant  has set  up a  factory at Ambavadi Road, Dhoraji. The  industrial  undertaking  was  commissioned  on 31.12.1970, i.e.  within seven  weeks from  the date  of the Notification dated  11.11.1970. The  appellant had stated in the petition  that on  31st August,  1970, it had set up the factory  premisses at Dhoraji at a cost of Rs.38,000/-. This was  long  before  the  exemption  Notification  dated  11th November, 1970. No dated have been given for the purchase of machinery and spare-parts worth Rs.45,000/-. But it has been stated that  the production in the factory started from 31st December, 1970.  Having regard  to the facts of the case and also  nature   of  the   two  Notifications  issued  by  the Government dated 11th November, 1970 and 17th July, 1971, we are of  the view  that the  factual  basis  for  a  case  of promissory estoppel has not been made out. It is unnecessary to deal  with elaborate  arguments advanced  on the scope of the doctrine  of promissory  estoppel  in the facts of case. The appeal is dismissed. There will be no order as to costs.