http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 10  

PETITIONER: M/S. ORISSA SOONGE IRON LTD. & ANR.

       Vs.

RESPONDENT: THE STATE OF ORISSA AD OTHERS

DATE OF JUDGMENT:       09/12/1997

BENCH: S.C. SEN, M. JAGANNADHA RAO.

ACT:

HEADNOTE:

JUDGMENT:                       J U D G M E N T M. JAGANNADHA RAO, J.      Leave granted.      This Civil  Appeal is  directed against the judgment of the Orissa  High Court in O.J.C. No. 4056\1995 dated May 14. 1996, dismissing  the writ petition filed by the appellants. The  appellants  are  aggrieved  by  the  Industrial  Policy Resolution of  1959 of  the State  of Orissa which came into force from 1.12.1989 insofar as it restricted the benefit of deferment/exemption of  sales-tax to  industries  which  had gone into  commercial production  after 1.4.1986  and denied such benefit  to those which had gone into production before 1.4.1986. The  industrial policy  of 1989 in this behalf was notified by  the Orissa  Government under  S.R.O No.  790/90 (Finance) dated  16.8.1990 issued  under Section  7  of  the Orissa Sales Tax Act w.e.f 1.12.1989 to which we shall refer in detail  later. We  are concerned  with medium and large - Scale Industrial units.      The appellant-Company  was incorporated an 9.4.1979 for manufacture of  Sponge Iron  in the District of ********* in the State  of Orissa. The land was acquired and purchased on 4.4.1980  and  the  appellant  proceeded  to  construct  the factory. It went into commercial production w.e.f. 1.4.1954. The Industrial Policies in the State of Orissa with which we are concerned  in this  appeal area  three policies, (1) the Policy of 1980. (ii) the Policy of 1986 and (iii) the Policy of 1989. (I) 1980 POLICY : Interest-free load for Sales tax paid.      In the Industrial Policy of 1980 which came into effect from 1.2.1980 it was stated that Large and Medium industries would  be  entitled  to  reimbursement  of  entire  cost  of preparation  of  project/feasibility  report  subject  to  a certain maximum  if a 25% cost is initially deposited and if the reports  are obtained  from approved agencies. Otherwise reimbursement would  be  after  implementation  of  project. These industries,  whether new  or intending  to  expand  or diversity shall be eligible for interest-free Sales-tax loan equivalent to  the Sales-tax  said   within the State by the units during  the first  five  year  subject  to  an  annual maximum limit of 10 per cent of the capital invested out not

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 10  

exceeding Rs.  20 lakhs  per year.  The loan shall be repaid after 10  years of  each year’s drawl. The Policy deals with various other  benefits given to Large and Medium Industries not only in regard to Sales-tax out in regard to electricity charges. etc. The appellant availed of the above-said Sales-tax incentives when it  went into  commercial production  with effect  from 1.4.1984. In  other words,  the appellant was entitled to an interest-free Sales-tax  loan as  per the  1980 Policy for a period of  5 years  subject to an annual maximum limit of 10 per cant  of the  capital invested  by not  exceeding Rs. 20 lakhs per  year and  the said  loan could be repaid after 10 years each year a drawl. (II) 1986 POLICY : Deferment of Sales Tax/Exemption.      Government of  Orissa came forward with a new Policy in 1986. Under definition A. the State is divided into Zones A. S  and   C  w.e.f.  1.4.1986.  The  effective  date  as  per definition (D) under the said Policy was 1.4.1986. being the date  from   which  the   incentives  available   under  the Industrial Policy  Resolution of  1980  and  other  relevant Policy Resolutions would cease to be ******** except for the continuing industries  to which  the 1980 Policy applied. It was further stated that continuing industries of 1980 policy are those  which have made any kind of investment before the effective case  or have  availed themselves of any incentive or facility under the Industrial Policy of 1980.      Part D  deals with  concessions relating  to Sales-tax. Sub-para (i)  thereof deals  with exemption  of Sales-tax on raw-materials. While  sub-para (11) deals with exemptions of Sales-tax on  finished products produced by all existing and new khadi, village and cottage industries.      So  far  as  medium  and  large  industrial  units  are concerned, sub-clause  (iii) of  part D deals with Sales-tax deferment scheme  while sub-clause (iv) deals with exemption of Sales-tax  on finished products in lieu of deferment. The two sub-paras read as follows:-      " (iii) Sales tax Deferment Scheme:      New  medium  and  large  industrial      units will  be  eligible  to  defer      payment of  Sales Tax  collected on      their  finished   products  for   a      period of  5 years in Zones B and C      and 7 years in Zone A from the cate      of  their   commercial   production      Deferred amount  in respect of each      year would be aid in full after the      expiry of  the period of deferment,      annually."      (iv)  Exemption   of  Sales-Tax  on      finished  products   in   lieu   of      deferment:      In lieu  of the Sales-tax Deferment      Scheme,  new   medium   and   large      industrial  units   can   opt   fro      exemption of  Sales  Tax  on  their      finished products for a period of 3      years if  located in  Zones B and C      and for  a period  of  5  years  if      located in  Zone A from the date of      their commercial production.      But in  view of exclusion of Continuing units of 1980 - units have  either had  investment or availed of incentives/ facilities  of   1980  policy  from  the  1986  policy,  the continuing units  of 1980 policy could not avail of the 1986 policy regarding  deferment/exemption whether they went into

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 10  

production before 1.4.1986 or after 1.4.1986. It was only in the 1989  policy, that  the units  of 1980 policy which went into production  after  1.4.1986  were  granted  benefit  of deferment/exemption of sales tax, as shown below. (III) 1989 POLICY : Deferment of Sales Tax/Exemption.      We than  come to  1929 Policy  Resolution for which the effective date  is 1.4.1989. Para 2.7 defines New Industrial Unit as  Industrial Units there fixed capital investment has been made only on or after 1.4.1989 Para 2.9 defines Pioneer units and Special Class Entrepreneur, in para 2.11. (a)  Para 2.17  defines Continuing  Units of  1986 Policy as follows:-      "Continuing Units  of  1986  Policy      means  any  industrial  unit  where      fixed capital  investment commenced      on or after the Ist April, 1986 and      prior to  the effective  date  and,      the unit  has  gone  or  goes  into      commercial production after the Ist      April, 1986." (b)  Para 2.18  defines "Continuing Units of 1980 Policy" as follows :      "Continuing units  of 1980  Policy"      means any  industrial  unit,  where      fixed capital  investment commenced      on or  after the  Ist August,  1980      and prior to the Ist April 1986 and      the unit  has  gone  or  goes  into      commercial product  after  the  Ist      April, 1986.      The offending  part is the underlines portion above and the main prievance of the appellant is that in the abovesaid Para 2.18  while defining "Continuing Units of 1980 Policy". the State  ought not to have restricted Sales-tax benefit to units which  had gone  into production  after  1.4.1986  and should not  have denied  the same  to those  units which had gone into  production  before  1.4.1986.  The  appellant  is aggrieved  decease   the  appellants   unit  has  gone  into production before 1.4.1986 i.e. on 1.4.1984.      We shall refer to the incentives granted under the 1989 policy. The scheme of 1989 divides the incentives into three Parts as part I. II and III. (a)  Part I  deals with  incentives  of  deferment/exemption from dales  tax in  respects of  new industries  established after 1.12.1989.  Provision is made for deferment of payment of Sales  tax upto  9 years  or 7 years depending on whether they were located in different geographical areas Zones A.B. & C.  If one  opts for  the benefit of deferment. It will be for 9/7  years as  the case  may be  while if  one pots  for exemption it will be for 7/5 years. (b)  Part II  of  the  1929  Policy  deals  with  incentives granted in  favour of  the  Continuing  units  of  the  1986 Policy. i.e.  as stated  in para  2.17, where investment has been made  after 1.4.1986  and price  to 2.12.1989 and where production stated  after 1.4.1986.  They get  the same sales tax incentives as in part I. applicable to new industries of 1985 Policy. (c)  Part III  of the  1989  Policy  deals  with  incentives granted in favour of the Continuing units of the 1980 Policy i.e. as stated in para 2.18. Where investment has been after 1.8.1980 and prior to 1.4.1986 but where prosecution started after 1.4.1986.  They are  again given  the  same  sales-tax incentives as  in Part-I,  applicable to  new industries  of 1989 policy,  subject however  to the  provision relating to surrender of  loan or other benefits received under the 1980

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 10  

Policy. This is mentioned in para 7.3.2 as follows:      7.3.2 Exemption\Deferment  of Sales      Tax on finished products. The sales      Tax incentive  on finished products      as is  applicable to new industrial      units  under   Part  I   shall   be      applicable to  continuing units  of      1980 Policy,  after  the  effective      date. provided that Sales Tax Loan,      if any. availed of under the Orissa      Sales Tax  Loan Scheme  Rules, 1980      is  surrendered   within  the  time      limit prescribed in the operational      guidelines/instructions.      Then it  is stated  in Para 7.3.3 that similar benefits are extended  to units  of the  1980 Policy to the extent of increased production  over and  above the installed capacity of  an   existing  industrial   unit  which   has  taken  up expansion/modernisation/diversification after  1.8.1980  and before 31.3.1986  and which  has gone  into production after 1.4.1986.      The grievance of the appellant before the High Court:      The appellant’s  grievance was  that the  definition of continuing units  of 1980  (para 2.19) got incorporated into para 7.3.2  and precluded  units such as the appellant which made investment  under the  1980 policy  out which went into production before  1.4.1986 - from surrendering the benefits of  interest   free  loan   and  obtaining   the  sales  tax deferment/exemption benefits  of the  1989  scheme.  If  the discriminatory pat  of the  definition in  para 2.18  of the 1929 policy  is struck  down, then the appellant could avail the benefit  of para  7.3.2 and surrender and loan. and then claim deferment/exemption  of sales  tax  as  per  the  1989 policy. The High Court’s decision:      The appellant  therefore approached  the High  Court of Orissa contending that the definition of Continuing units of 1980 in  para 2.18  was  violative  of  Article  14  of  the Constitution  and   was  arbitrary  and  unreasonable.  This contention was rejected by the High Court on the ground that while granting  exemption from sales tax the Government must have taken  into account a variety of circumstances and that the Government  has a great latitude in taxation matters and the same could not be interfered with in writ jurisdiction. Contentions in this Court:      In this appeal, it is contended by Shri Shanti Bhushan, the learned  counsel for  the appellant  that the  words  in clause 2.19  of the  1989 policy  "after the Ist April 1986" must be  a crafting  mistake and  the Government  must  have meant "after Ist August 1980". It was also contended that in view of the decision in Nakara vs. U.O.I (1923 (1) SCC 305), the cut  off cate  1.4.1926 in  para 2.18 of the 1989 policy must be declared as pad because the 1989 scheme could not be treated as  a new scheme, out was s continuation of the 1980 scheme. In any event, even treating the 1929 scheme as a new scheme, it was discriminatory inasmuch as the classification of units  into two groups, those which went into prosecution before 1.4.1986  and those  which went into production after 1.4.1986 was  violative of  Article 14.  Finally, Sr. Shanti Bhushan contended  that this  was the  only unit  which  was before us  and we  should grant  relief under Article 142 of the Constitution of India.      On the other hand, Shri Harish Salve contended that the above submissions  are not  correct and  the learned counsel supported the view taken by the High Court.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 10  

Is there a draftsman mistake :      So far  as the  first contention that there was mistake in Para  2.18 of  the  1989 policy by the draftsman in using the words  after the  Ist  April  1986  is  concerned,  this contention, in  our opinion.  has absolutely  no  basis.  We cannot presume  any such  mistake. Further, para 7.3.3 which deals with  expansion of units of 1980 Policy also refers to the same  cut off  date. Moreover  the Gazette  notification (Fiance) dated  16.8.1990  in  S.R.O.  790/90  (referred  to below) issued under Section 7 of the Act to reflect the 1989 policies again  contains the same date 1.4.1986 under item 3 and item 6. It is, therefore, absolutely clear that there is no question  whatsoever of any mistake. On the otherhand, we shall also show, in the further discussion below, that there is not  only  no  mistake  put  there  is  good  reason  for stipulating that said cut off date. Does Nakara apply ?      The other  contention based  on Nakara’s case [1923 (1) SC 305]  is also  not tenable. This argument is based on the theory that  the 1989  policy is  a continuation of the 1980 policy. A  reading of the 1989 policy shows that it is a new policy and  not a  continuation of  the 1980.  It is clearly stated in para 7.32. that unless a unit of 1980 policy which had taken  advantage of  the said 1980 policy surrenders the interest free  loan received by it the said unit can not opt to come  under the  1986 policy.  Further,  while  the  1980 policy was  for granting  "interest free  loan" as  per  the provisions of the Orissa Sales Tax Loan Scheme Rules, 1980 - to cover  sales tax already paid, the 1989 policy dealt with grant  of  "deferment/exemption"  of  sales  tax  duties  as specified in  the notification  under section 7, Inasmuch as the 1989 policy is a new scheme. In our opinion Nakara [1983 (1) SCC  305] cannot  apply. In  Nakara case  certain  rules conferred a  particular benefit  on members  of a particular class and  subsequently, by  another order, the said benefit was denied  to a  section of  that class  based on a cut off date. It  was held that such withdrawal of an existing right was pad since the cut off date had not nexus with the object of the  scheme. This  court in  that case  clearly stated at several claces  that what they were laying down would not be applicable if  a cut  off date was introduce in a new scheme for the first time. It was stated that (at *.333).      "And beware  that it  is not  a new      scheme it  is only  a  revision  of      existing scheme.  It is  not a  new      retrial benefit.  It is  an  upward      revision of an existing benefit. If      it was  a wholly new concept, a new      retrial  benefit.  One  could  have      appreciated an  argument that those      who had  already retired  could not      expect it."      This because whenever any financial benefit is intended to be  conferred on persons or units etc. for the first time from an  anterior date,  the State  has to  fix some cut off date and  could not  be compelled  to do  back into the past without time  limit. If  the State  should confer  financial benefits retrospectively  without any  time limit.  It might indeed be  impossible for the State to come forward with any beneficial scheme.  Every such  beneficial scheme  which  is introduced by  the State  will depend for its implementation upon considerable sacrifice of the finances of the State. In view of  our finding  that the  1989 scheme is a new one. as distinct from  the 1920 scheme, the appellant cannot rely on Nakara [1983 (1) SCC 305].

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 6 of 10  

    Is the  classification in para 2.16      of 1984 policy or the corresponding      provision of  SRO 790 of 1990 dated      16.8.1990 violative of Article 14?      We then come to the main point which was strongly urged by the  learned counsel for the appellant, namely, that para 2.12 of  the new  policy of 1989 was violative of Article 14 insofar  as   it  denied  the  benefits  of  the  sales  tax deferment/exemption to  those units which went to production before 1.4.1986.  The Learned  counsel explained  that among those units which made investments after 1.8.1980 under this 1980  policy   some,  like   the  appellant,   were  managed efficiently and  could go  into production  before  1.4.1986 while some others, which were managed badly, could not go to production either before 1.4.1986 (when the 1986 policy came into being)  on before  or after  1.12.1989 (when  the  1989 policy came  into being).  It was  not open  to the State to confer sales tax benefits on those units which, by reason of pad management or inefficiency, could not go into production before 1.4.1986.  To reward the less efficient and to depart the  efficient   from  the  benefits  of  1989  Policy  was, according to the appellant’s counsel. clearly discriminatory and violative. Article 14.      The above  argument is  attractive out  does not  stand close scrutiny.      We shall  presently divide  the units  which have  come under the  1980 policy  into three types, we will show that, for good  reasons, only  two types  of such units were given benefits of  the 1989 policy, while excluding one particular type (like  the appellant),  from the  benefits of  the 1989 Policy.      Before we do so, we shall refer to the relevant portion of the  statutory  notification  dated  16.8.1990  (finance) Orissa Publication  in the  gazette which  reflects the 1989 policy  which   came  into   force  w.e.f   1.12.1989.  This notification was  issued under Section 7 of the Orissa Sales Tax  Act.  1947.  in  relation  to  medium  and  Large-sized industries, to  reflect the  1929 Policy.  Para 1(a) thereof deals with  deferment of  sales tax  and  para  1  (b)  with exemption. Those  who upto  for deferment  would get, as per Column 4,  a benefit of deferment of 9 years of 7 years time for payment of sales tax in different zones. Those who opted for exempting  would get benefit for a period which was less than the  period mentioned  in Col.4. by two years. In other words those  who opt  for deferment  would get benefit for 2 more years as compared to those who got for exemption.      The  gist   of  the   deferment/exemption  notification classifies the  medium and  large-scale units  of  the  1989 Policy (entitled to deferment) as follows : ------------------------------------------------------------     1             2                3              4 ------------------------------------------------------------ Sl.No.  Class of Industrial   Effective         Period         Unit                  date ------------------------------------------------------------  1.  New medium/large       Where fixed     9 yrs. in some      industrial units       capital inve-   Distt. of 7 year      (of 1989 policy)       stment has      in some Distt.                             been made                             only on or                             after 1.12.1989  2.  Continuing medium/     where fixed      large Industrial       capital invest-      set up on or after     ment has been      1.4.1986               made on or after

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 7 of 10  

    (after 1986 policy)    1.4.1986 but         -do-                             before 1.12.1989                             and the unit had                             gone into                             commercial produc-                             tion after 1.4.1986.  3.  Continuing medium/     where fixed capital      large industrial       investments commenc-      units set up on        ed on or after        -do-      or after 1.8.1980      1.8.1980 and prior      (after 1980 policy)    to 1.4.1986 and the                             units had gone into                             commercial                             production after 1.4.86. [Note: Serial  Nos. 4  to 6  peal with similar concessing to expanding all  industries and there also Sl. No.6 deals with 1980 policy units.] ------------------------------------------------------------      We are  concerned in the case before us with Serial No. 3 above  relating to  the Continuing  units of  1980 and the alleged discrimination  thereunder denying  benefit  of  the 1989 Policy to such units of the 1980 policy which went into production before, 1.4.1986.      Under  the   1980  Policy,   where  units   have   made investments after  1.8.1980. there  could be  three types of units :  firstly, those which made investment after 1.8.1980 put which,  like the  appellant, went into production before 1.4.1986:  secondly, those units which made investment after 1.8.1980 and  before 1.4.86  put had  gone  into  production after 1.4.1986  and before  1.12.1989; thirdly,  those units which made  investments after  1.8.1980 and  before 1.4.1986 but when  had gone into production after 1.12.1989, Now, out of these  three types,  only the second and third, were made eligible to take benefits of column 3 of the Serial No.3 and not the  first type.  Units of type two and three along were permitted to  surrender benefits  of 1980  policy  and  come under the 1989 policy as per para 7.3.3 of the 1989 policy.      We shall  be comparing Serial Nos. 2 (relating to units of 1986 policy) and Serial Nos. 3 (relating to units of 1980 policy) in  the above  said notification  for finding out if there was  any justification  for conferring benefit of 1989 policy on units of types two and three of 1980 and excluding type one  of 1980  Policy from  the  benefits  of  the  1989 Policy.      Firstly, So  far as  the 1989  policy is  concerned, it extended the  benefit of  deferment/exemption of  sales  tax under serial  No.2 to the new units of the 1986 policy which went into  production after  1.4.1986. Then  the 1989 policy extended its  benefits under  Serial No.3  to the second and third type  of units of the 1980 policy where the investment was made after 1.5.80 and before 1.4.1986 provided the units have gone  into production  after 1.4.1986.  Obviously,  the Government which  is the  delegated authority,  felt that in all these  cases, i.e.  those falling  under the 1986 Policy and type two and three of the 1980 Policy, the common factor was the  factum of production after 1.4.1986, Such as common treatment, in  fact, ought  to have  been brought into being even when the 1986 policy was introduce. The State realised, when it  come to  the 1989  policy, that so far as types two and three  of the  1980 after  1.4.1986,  those  units  were entitled to  the same benefits of deferment/exemption as the new 1986  units, Obviously, the first type of unit under the 1980 policy where even though the unit made investment after 1.8.1980  and   before  1.4.1986  the  unit  had  gone  into production before 1.4.1986, could not and would not fit into

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 8 of 10  

such  a  scheme.  At  the  same  time,  if  the  benefit  of deferment/exemption which  came into being for the new units under the  1986 policy  was not  extended to  the second and third type  of units  of the 1980 policy, both of which went into production  after 1.4.1986,  then perhaps  there was  a good case  for a  plea by the second and third type of units of  1980   policy  to   contence  that   they   were   being discriminated as  compared to  the new units of 1986 Policy. It could  perhaps be legitimately contended by them that the fact that  investment was  made by  the between 1.8.1980 and 1.4.1986 and  the fact  that so  far the  new units  of 1986 scheme were concerned, they made investment after 1.4.1986,- was irrelevant  and  what  was  relevant  was  the  date  of production. So  far as  the first  type of  unit of the 1980 Policy,  where  the  investment  was  between  1.8.1980  and 1.4.1986 but  where the  unit (like  the appellant) had gone into production  before  1.4.1986,  those  units  could  not therefore stand  comparison  with  the  new  units  of  1986 policy, or  the second and third type units of 1980 policy - for the  date of production by latter units was a date on or after   1.4.1986.    After    all,    the    principle    of deferment/exemption  was  introduced  only  under  the  1986 policy and was continued under the 1989 policy and there was nothing wrong in extending benefits to type two and three of the 1980  policy so  as to  avoid discrimination  as far  as possible, between  them and the new units of 1986 policy. In that context,  there was  good reason  for leaving  but  the first type  of units  of the  1980 policy.  In addition,  as stated by  us earlier  the scheme  of interest free loan and deferment/exemption were  different concepts,  what was done under the 1989 Policy was to bring uniformity of approach in the  deferment/exemption  scheme  and  avoid  discrimination between units  which were  similarly circumstance, as far as possible. For  the aforesaid  reasons, we  find that the cut off  date   of  1.4.1986  has  amble  significance  and  the exclusion of  type one  of the 1980 scheme to which category the appellant  belonged and  the inclusion of the second and third type  of units of the 1980 scheme into the 1989 scheme was for  good and  valid reasons. The appellant’s contention is therefore not acceptable.      A similar  distinction between  new units and old units while granting  exemption from  sales-tax was upheld by this Court in M/s. Bharat General and Textile Industries Ltd. vs. State of  Maharashtra 1989  Suppl. (1).  SCC 153, One of the arguments was  that (see  p.159)  the  result  of  the  1985 amendment to  Sec. 41-4  was that  while the old unit had to pay Purchase-tax, Sales-tax, turnover tax etc. totalling Rs. 1650/- per  metric ton,  the new  units producing  the  same washed cotton-seed oil got away scot-free without paying any tax and these stood placed in a very advantageous position.      It was  held that  in  that  case  that  the  exemption granted in  favour of the new units has a sound economic and policy underlying it". After referring to what was stated by the Government in the Counter, this Court observed :      "It cannot, therefore, be contended      that the old units should also have      been granted  the same  benefits as      new units  since both the units and      engaged in  the manufacture  of the      same type  of  products.  In  fact,      such a  policy, if  followed by the      Government, would  not only fail to      provide  incentive   to   the   new      industries put  wold also place the      new   units    at   a   comparative

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 9 of 10  

    disadvantage in  being made to face      stiff competition  with older units      which  have   been  established  at      lesser   cost    and   which   have      stapilised  themselves in the field      by successfully  running the  units      number of years’.      Again in  Mohd. Jappan  Malik Lasjan  vs. State of J.K. 1994 Suppl.  (3) SCC 24 (to which one of us. S.C.Sen, I. was a party)  It was  held that  though initially exemption from Sales-tax was  granted for  a specified  period  to  certain industries  by  placing  them  under  a  common  heading,  a subsequent denial of extension of the exemption to some only of such  industries was  not an arbitrary exercise of power, more so  when the  industry granted  further exemption was a comparatively new one. This Court observed:      "The Government, in exercise of its      power given  by Section  5  of  the      Act, can  decide the  exemption  of      any gods  from taxation.  The power      may be  exercised having  regard to      social, economic administrative and      fiscal conservations."      Therefore, it  was for  the  policy-maker  to  consider whether he  should not allow the older units to get benefits of sales-tax  which they  were producing  to  give  the  new units.  If   they  felt   that  units   which  were  already established at  lesser cost  and which  got well stabilised, should not  be allowed  to  have  any  advantages  over  new industries, then  such a  classification would  be perfectly which.      Nor can  arguments that  units of  the second and third type under the 1980 policy did not go into production before 1.4.1986 only on account of pad planning or inefficiency, be accepted. There  could  be  a  variety  of  factors  like  - increase in cost of construction, machinery, the comparative backwardness of  the area,  administrative delays  or labour problems - as to why some units could not go into production before 1.4.1986.      It is  again well  settled that  the State  has greater latitude in taxation matters and in particular, in the grant of sales tax exemptions Verma J (as he then was) observed in Kerala Hotel and Restaurant Associations vs. State of Kerala [1990 (2) SCC 502] as follows:      "The   scode   for   classification      permitted in  taxation  is  greater      and unless  the classification made      can  be   termed  to   be  palpably      arbitrary. It  must be  left to the      legislative wisdom  to  choose  the      yardstick  for  classification,  in      the background of the fiscal riding      of the State......." (p. 512)      Venketachaliah  J.     (as   he  then  was)  stated  in P.M.Ashwathanaravana Setty  vs.  State  of  Karnataka  [1929 Suppl. (1) SCC 696] as follows:      ".....the State  enjoys the  widest      lastitude   where    measures    of      economic regulations are concerned.      These  measures   for  fiscal   and      economic  regulation   involve  and      evaluation  of  diverse  and  quite      often conflicting economic criteria      and  adjustment  and  balancing  of      various  conflicting   social   and

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 10 of 10  

    economic values  and interests.  It      is for  the State  to  decide  what      economic  and   social  policy   it      should     pursue      and     what      discriminations    advance    those      social and economic policies."      We, therefore,  hold that  para 2.18 of the 1989 policy and the  corresponding provisions  of the  notification  SRO 790/90 (Finance)  dated 16.8.1990,  insofar as they extended the benefit  of the 1989 policy only to the continuing units of  1980   policy  with   had  gone  into  production  after 1.4.19986, the  said classification is valid and was not hid by Art.14 of the Constitution of India. Article 142 :      The last  arguments of Shri Shanti Bhushan was that the appellant was  the only  industry which  made come upto this Court seeking  benefit of  1989 policy  and therefore in the interests of  justice, this  court  should  exercise  powers under Art.142  of the  Constitution of  India. We are of the view  that   appellant  has  no  case  on  merits  and  even otherwise, this  is not  a fit  case for grant of any relief under Article 142.      For all the above reasons, the appeal is dismissed.