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PETITIONER: POURNAMI OIL MILLS, ETC.

       Vs.

RESPONDENT: STATE OF KERALA & ANR.

DATE OF JUDGMENT19/12/1986

BENCH: MISRA RANGNATH BENCH: MISRA RANGNATH BHAGWATI, P.N. (CJ)

CITATION:  1987 AIR  590            1987 SCR  (1) 654  1986 SCC  Supl.  728     JT 1986  1112  1986 SCALE  (2)1225  CITATOR INFO :  RF         1992 SC1075  (8)

ACT:     Kerala  General  Sales Tax Act, 1963:  s.  10--Power  of Government  to grant exemption and reduction  of  Tax--Small Scale  Industries--Purchase  Tax  and  Sales   Tax   Conces- sion--Whether  could  be withdrawn. Promissory estoppel--Applicability of.

HEADNOTE:     Section  10  of the Kerala General Sales Tax  Act,  1963 empowers the Government in public interest to make an exemp- tion  or reduction in rates either prospectively  or  retro- spectively in respect of any tax payable under the Act.     The State Government with a view to boost industrialisa- tion,  by an order dated 11th April, 1979 offered  incentive to Small Scale industries, to be set up thereafter, in  form of exemption from sales tax and purchase tax for a period of five years from the date of commencement of production. By a second  order dated 29th September, 1980, published  in  the Gazette on 21st October, 1980 purported to be made under  s. 10 of the Act, the Government withdrew the exemption  relat- ing  to purchase tax and confined the exemption  from  sales tax to the limit specified.     The  appellants who set up their industries after  April 11,  1979,  including those who did it after  21st  October, 1980,  claimed  benefit of exemption from purchase  tax  and sales tax in terms of the first order. They pleaded the rule of  estoppel  against  the State Government  in  making  the second order. The High Court in dismissing their Writ  Peti- tions proceeded on the footing that the first order was  not made  in exercise of statutory power while the second  order was issued under I0 of the Act. Allowing the appeals by Special Leave, the Court,     HELD:  I. Where the authority making an order has  power conferred  upon it by statute to that effect, such an  order if made without 655 indicating  the section under which it is made, it would  be deemed  to have been made under the enabling  provision.  In the instant case, therefore, both the orders are covered  by

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s. 10, though in the earlier order there was no reference to the statutory provision. [658G-H]     2.  The  appellants who in response to the  first  order dated  April 11, 1979 set up their industries prior to  21st October, 1980 would be entitled to exemption extended and/or promised under that order. Such exemption would continue for the  full  period of five years from the date  they  started production.  New industries set up after 21st October,  1980 would not be entitled to that benefit as they had noticed of the curtailment in the exemption before they came to set  up their  industries. They would be entitled to exemption  from sales  tax only to the limit specified in the second  order. [659G-600A]     3. If in response to an order made by the Government and in  consideration of the concession made  available  therein the promoters of any small scale concern set up their indus- tries within the State, they would certainly be entitled  to plead  the rule of estoppel in their favour when  the  State purports  to  act differently. In the facts of  the  present case, however, the plea of estoppel is unanswerable.  [659B. F]     Motilal  Padampat Sugar Mills Co. Ltd. v. State of  U.P. [1979]  2  SCC 409, Bakul Cashew Co. v. Sales  Tax  Officer, Quilon, [1986] 2 SCC 365, referred to.

JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil Appeal No. 626 of 1986 etc.     From the Judgment and Order dated the 7th June, 1984  of the Kerala High Court in O.P. No. 6642 of 1982     Soli  J.  Sorabji, G.V. lyer, A.S.  Nambiar,  S.  Kumar, E.M.S. Anam and R.N. Keswani for the Appellants. T.S.K.  Iyer, V.J. Francis and N.M. PopIi for  the  Respond- ents. The Judgment of the Court was delivered by     RANGANATH  MISRA,  J. All these appeals are  by  special leave  and  are directed against judgments rendered  by  the Kerala  High  Court in Writ Petitions filed before  it.  The High Court in each case refused to grant relief. 656     Two Notifications/Orders issued by the State  Government are  relevant.  The first one is dated 11.4.  1979  and  the second is. dated 29.9.1980 which was published in the  State Gazette on 21.10.1980. For convenience, the texts of the two Notifications/Orders are extracted below:               "Order dated 11.4.1979:               The incentives now given to the industries  in               the  State  are too meagre and  inadequate  to               attract industries to this State when compared               to the incentives available for the industries               in  many other States. Further there are  cer-               tain inherent disincentives. also peculiar  to               this  State such as high wage  rates,  minimum               wages for certain sections, lack of availabil-               ity  of  raw materials, etc. The  question  of               offering  some  incentives  by  the  State  to               attract new industries has been under  consid-               eration of the Government.                         The question whether any  additional               incentive  can  be  given  to  the  industrial               concern the State plans to consider in  detail               and it was felt that the question of strength-               ening  the  traditional industries  which  are

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             labour-intensive, rehabilitation of sick units               and the promotional activities for the  growth               of new industries should be examined in  depth               for indentifying the problems and adoption  of               various  measures necessary to promote  indus-               trial  growth in the State. A  Committee  con-               sisting  of the following officers was  there-               fore set up to study the various problems  and               submit               report  ....................................." The Committee finalised its report on 20th March, 1979.  The Government  has considered the recommendations  and  sugges- tions  of  the Committee in detail and they are  pleased  to approve  the  following package of  measures  for  promoting industrial development in Kerala: SMALL SCALE INDUSTRIES: Sales-Tax Concessions:      New  industrial Units under small-scale industries  set up  after  1.4.1979  will be exempted from  the  payment  of sales-tax  for a period of five years from the date of  pro- duction  ........................... 657 The relevant portion of the second notification reads thus:               "In exercise of the power conferred by section               10 of the Kerala General Sales Tax Act ( 15 of               1963) the Government of Kerala have considered               it necessary in the public interest so to  do,               hereby make an exemption in respect of the tax               payable under the said Act on the turnover  of               the sale of goods produced and sold by the new               industrial units under the small-scale  indus-               tries for a period of five years from the date               of  commencement of sale of such goods by  the               said  units subject to the conditions that  if               the tax collected by any such units by way  of               tax  on  their  sales shall be  paid  over  to               Government  and  that the sales tax,  if  any,               already paid by such units to Government shall               not be refunded.                        Provided  that such units shall  pro-               duce  proceedings  of  the  General   Manager,               District  Industries  Centre,  declaring   the               eligibility  of the units for claiming  exemp-               tion from sales-tax.                        Provided further that the  cumulative               sales tax concessions granted to a unit at any               point  of  time within this period  shall  not               exceed  90  per cent of the  cumulative  gross               fixed capital investment of the unit.               EXPLANATION:- For the purpose of this  notifi-               cation  new industrial unit under  the  Small-               Scale  Industries shall mean undertakings  set               up  on or after1st April, 1979 and  registered               with   the   Department   of  Industries   and               Commerce as a small-scale industrial unit.                        This notification shall be deemed  to               have  come  into force with  effect  from  1st               April, 1979".     Section  10 of the Kerala General Sales Tax Act  at  the time the two orders were made ran thus:               "Power  of Government to grant  exemption  and               reduction in rate of tax:-                    (1) The Government may, if they  consider               it necessary in the public interest, by  noti-               fication in the Gazette, make an exemption

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             or reduction in rate (either pros-               658               pectively  or retrospectively) in  respect  of               any tax payable under this Act;               (i) on the sale or purchase of, any  specified               goods or class of goods, at all points or at a               specified  point  or points in the  series  of               sales or purchases by successive dealers. or               (ii)  by  any specified class  of  persons  in               regard  to  the  whole or any  part  of  their               turnover.                     (2) Any exemption from tax, or reduction               in the rate of tax, notified under sub-section               (1):               (a)  may extend to the whole State or  to  any               specified area or areas therein;               (b)  may be subject to such  restrictions  and               conditions as may be specified in the  notifi-               cation;                     (3) The Government may, by  notification               in  the Gazette, cancel or vary any  notifica-               tion issued under sub-section (1)."     It may be possible to contend with plausibility that  in the  absence  of an enabling provision in  the  statute  the State Government would not have the power to give up a  part of  the  tax due to the State and there can be  no  estoppel against  statute.  But  that question does  not  arise  here because  we have Section 10 empowering the State  Government to grant exemption from tax.     During the heating of the appeals it has been  contended that  the notifications in question were not in exercise  of the  powers under section 10 of the Act. The High Court  has proceeded’  on the footing that the first order dated  11.4. 1979 was not made in exercise of statutory powers while  the second order was issued in exercise of powers under  section 10.  Having read the two orders and the contents, we are  of the view that both the orders are covered by the  provisions of  section 10 of the Act though in the earlier order  there is no reference to section 10. It is a well-settled  princi- ple  of  law that where the authority making  an  order  has power conferred upon it by statute to make an order made  by it  and  an order is made without indicating  the  provision under  which it is made, the order would be deemed  to  have been made under the provision enabling the making of it,  We accordingly  hold that both the orders are under section  10 of the Act. 659     Under  the order dated 11.4.1979, new small-scale  units were  invited  to set up their industries in  the  State  of Kerala  and  with a view to boosting  of  industrialisation, exemption  from sales tax and purchase tax for a  period  of five  years was extended as a concession and  the  five-year period  was to run from the date of commencement of  produc- tion.  If in response to such an order and in  consideration of  the concession made available, promoters of  any  small- scale concern have set up their industries within the  State of  Kerala,  they would certainly be entitled to  plead  the rule  of estoppel in their favour when the State  of  Kerala purports to act differently. Several decisions of this Court were cited in support of the stand of the appellants that in similar  circumstances the plea of estoppel can be  and  has been applied and the leading authority on this point in  the case of M.P. Sugar Mills v. State of U.P., [1979] 2 SCC 409. On the other hand, reliance has been placed on behalf of the State  on  a judgment of this Court in Bakul Cashew  Co.  v.

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Sales Tax Officer, Quilon, [1986] 2 SCC 365. In Bakul Compa- ny’s (supra) case this Court found:               "That there was no clear material to show  any               definite  or certain promise had been made  by               the  Minister  to the  concerned  persons  and               there was no clear material also in support of               the  stand that the parties had altered  their               position  by acting upon  the  representations               and  suffered any prejudice. On facts,  there-               fore, no case for raising the plea of estoppel               has been made out." This  Court proceeded on the footing that  the  notification granting  exemption  retrospectively was not  in  accordance with section 10 of the State Sales Tax Act as it then stood, as there was no power to grant exemption retrospectively. By an amendment that power has been subsequently conferred.  In these  appeals there is no question of retrospective  exemp- tion.  We also find that no reference was made by  the  High Court to the decision in M.P. Sugar Mills’ case (Supra).  In our  view,  to the facts of the present case, the  ratio  of M.P.  Sugar  Mills’ case directly applies and  the  plea  of estoppel is unanswerable.     It is not disputed that the first Order namely, the  one dated 11.4. 1979 gave more of tax exemption than the  second one. The second notification withdrew the exemption relating to purchase tax and confined the exemption from sales tax to the limit specified in the proviso of the Notification.  All parties before us who in response to the Order of April  11, 1979 set up their industries prior to 21.10.1980 within  the State of Kerala would thus-be entitled to the exemption 660 extended  and/or promised under that Order.  Such  exemption would  continue for the full period of five years  from  the date  they started production. New industries set  up  after 21.10. 1980 obviously would not be ,entitled to that benefit as  they  had noticed of the curtailment  in  the  exemption before they came to set up their industries.     In the course of hearing and in the written  submissions furnished  on behalf of the State it was contended that  the question  as to which of the appellants are entitled to  the benefit  should  be  left to the Sales  Tax  Authorities  to decide.  We  are of the view that once the law  is  settled, that  part of the decision may be left to  the  Departmental authorities  and they may decide the question on  merits  in appropriate proceeding in accordance with the law laid  down in this judgment.     Each of the appeals is allowed. Parties are directed  to bear their own costs throughout. P.S.S.                                                Appeal allowed. 661