M/S. Pine Chemicals Ltd. & Ors Vs. The Assessing Authority & Ors [1992] INSC 10 (16 January 1992)

M/S. Pine Chemicals Ltd. & Ors Vs. The Assessing Authority & Ors [1992] INSC 10 (16 January 1992)

Ramaswami, V. (J) Ii Ramaswami, V. (J) Ii Rangnathan, S. Ojha, N.D. (J)

CITATION: 1992 SCR (1) 179 1992 SCC (2) 683 JT 1992 (1) 220 1992 SCALE (1)46

ACT:

Interpretation of Statutes-Deeming provision- Construction (Section 5, Jammu and Kashmir General Sales Tax Act, 1962).

Jammu and Kashmir General Sales Tax Act, 1962-Section 5-Granting tax exemption-Procedure-Whether Government Orders 159 and 414 deemed to be exemption notification-Tax exemption-Kinds of-Person claims exemption-Duty of.

Jammu and Kashmir General Sales Tax Act, 1962-Section 5-Tax exemption by Govt. Orders 159 and 414-"Will be granted exemption" and "will be exempted"-Meaning-Whether same.

Jammu and Kashmir General Sales Tax Act, 1962-Section 5-Government Order 159 dated 26.3.1971, whether a follow up action of Government to its notification in SRO 214 dated 3.6.1971 issued under section 23 of the Jammu and Kashmir Urban Immovable Property Tax Act, 1962.

Claim of Period of exemption for 10 years on the ground of promissory estoppel-Reference to 10 years in Finance Minister's speech and the Brochure dated 7.9.1978-Whether benefit under Govt. Orders 159 and 414 continues for 10 years.

Exemption-hether Govt. Orders 159 and 414 superseded by SRO 195 dated 31.3.1978-Taxability of Vanaspati and edible oils under notification SRO 448 dated 22.10.1982.

Section 4(1)-Scheme of-Levy of single point taxation- Tax exemption under Govt. Orders 159 and 414 whether covers entire series of sales of the goods manufactured- Applicability of notification SRO 448.

Central Sales Tax Act, 1956 :

Sections 6(1), 6(1-A), 15,8 (2-A)-Tax liability under- Inter State sale-When takes place-Imposition of tax on sale of declared goods by 180 State under State Law in inter state sale-CST if paid, to be reimbursed-Over-riding effect of section 8(2-A)-Scope of- Applicability of Section 6(1-A).

Jammu and Kashmir General Sales Tax Act, 1962 :

Section 5-Govt. Orders 159 and 414-Benefits under-Facts to be proved by dealer-Intention of.

Govt. Orders 159 and 414-Whether superseded by SRO 80/82.

Jammu and Kashmir General Sales Tax Act, 1962-Section 8B-Application of.

C.A. No. 2309/1989

HEAD NOTE:

The appellant-a public limited company-was manufacturing Rosin, Turpentine and Rosin Derivatives and was carrying on business at Bari Brahmana and Jammu Tawi.

On 20.1.1981, the Assessing Authority assessed the appellant-company under the Central Sales Tax Act, for the year ending 30.6.80.

On 22.2.1981 an assessment order under section 10 of the Act was made. A penalty order was also made.

The appellants challenged the order of the Assessing Authority before the High Court filing Writ Petition No. 87 of 1987, contending that they were exempt from payment of sales tax under the Central Sales Tax Act, 1956 and the Jammu & Kashmir General Sales Tax Act, 1962, on the finished goods produced by them for a period of five years commencing from 8th November, 1979, in terms of the Government Orders No. 159-Ind. dated 26.3.1971 as amended by Government Order No. 414-Ind. dated 25th August, 1971 read with Section 8(2A) of the Central Sales Tax Act; that the Government represented and announced a package of incentives for large and medium scale industries grant of exemption from sales tax both on the raw materials purchased by the industries and the sale of their finished products; and that the Government was estopped from charging sales tax.

The High Court dismissed the Writ Petition holding that the two Government Orders were only declarations of an intention to exempt 181 from payment of sales tax and that they were not exemption notifications under section 5 of the General Sales Tax Act and that the appellants failed to prove the factual foundation for invoking the principle of promissory estoppel.

Against the High Court's decision by special leave C.A. No. 2309 of 1989 was filed by the appellant-company.

C.A. No. 2310 of 1989 The appellant-company had filed a miscellaneous petition, after the judgement in the W.P.No. 87 of 1987 (the writ petition of the High Court against which C.A.No. 2309 of 1989 was filed) for permission to file reply affidavit on the ground of that the documents produced at the time of hearing needed explanation.

The High Court dismissed the Misc. Petition as it was belated and the judgement in the writ petition was delivered relying on the materials placed on record.

C.C.No. 3148-50 of 1989 The appellant-partnership firm was manufacturing Vanaspati Ghee. It was assessed for the period from 2.9.1981 till 30.9.1981 under the Jammu & Kashmir General Sales Tax Act.

The appellants moved the High Court in a writ petition (W.P.No. 52 of 1982) to quash the assessment order, contending that the Government order 159-Ind. dated 26.3.1971 as amended by Government Order 414-Ind. dated 25.8.1971 exempted the sales of the finished product of Vanaspati Ghee from sales tax and that the Government was estopped from collecting tax.

When the Writ Petition (W.P.No. 52 of 1982) was pending an assessment order was made on 14.11.1984 for the assessment year ending 30th September, 1982, including the period 2nd September to 30th September, 1981 (which was questioned in W.P.No. 52 of 1982). The assessment order dated 14.11.1984 was challenged by the assessees-appellants in the writ Petition No. 822 of 1984.

During the pendency of the writ petitions certain other Government Orders were passed and certain assessment orders for the subse- 182 quent periods were passed and those were questioned in the Writ Petition No. 711 of 1987.

The assessees contended that Government Order No. 159- Ind. dated 26.3.1971 and Government Order 414-Ind. dated 25.8.1971 were exemption orders referable to section 5 of the Jammu & Kashmir General Sales Tax Act.

The respondents contended that the said Government orders were not exemption orders section 5 of the General Sales Tax Act and that there was not factual foundation for the plea of promissory estoppel.

The High Court dismissed all the three writ petitions by a common order, against which Civil Appeals 3148-50 of 1989 were filed.

C.A. No. 3151 of 1989 :

The appellant-assessee filed a writ petition praying to quash certain notices issued under section 14 of the Central Sales Tax Act and for a declaration that the Vanaspati Ghee manufactured by them was exempt from payment of tax upto January, 1992, i.e., for a period of 10 years from the date from which they started their commercial production as per the Government Order 159-Ind. dated 26.3.1971 and Government Order No. 414-Ind. dated 25th August 1971 as orders exempting their goods from sales tax under Section 5 of the Jammu & Kashmir General Sales Tax Act.

The Writ Petition was also dismissed against which C.A.No. 3151 of 1989 was filed by special leave.

The assessee contended that the exemption from payment of tax was extended from 5 years to 10 years and the Government was bound to give the exemption for 10 years on the ground of promissory estoppel; that SRO 448 which superseded the exemption granted under the Govt. Orders was ultra vires and that the SRO 448 had no effect of superseding exemption granted under the G.O. 159 and 414; and that the exemption for 5 years granted under the Government Orders could not be withdrawn on the ground that SRO 80/82 was prospective in operation and also on the ground of promissory estoppel.

The State contended that even if the sale of a particular commod- 183 ity was exempted from payment of tax under the local Act, the dealer selling the same in inter-state trade or commerce would be liable to pay Central Sales Tax under the provisions of Section 6(1A) of the Central Sales Tax Act;

that if Section 6(1A) of the Central Sales Tax Act was applicable to a particular transaction of sale, Section 8(2- A) of the General Sales Tax Act would not be applicable to that transaction; that the conditions that the industry should have been set up and commissioned subsequent to the Government Orders 159 and 414 and the commodity sold in order to claim the exemption under the Government Orders, should be those manufactured by that industry were the conditions or specified circumstances within the meaning of the Explanation and, therefore, the appellants in C.A. Nos. 2309, 2310/89 were not entitled to any exemption under Section 8(2-A) of the Central Sales Tax Act; that the Government Orders were superseded by SRO 80/82 and Vanaspati Ghee was made liable to tax at the rate of 8 per cent; that the goods manufactured by the appellants in C.A.Nos. 2309, 2310/89 were also made taxable as falling under the residuary item at the rate of 8 per cent; that in the assessment order relating to Assessment Year 1981-82 for the period from 1.9.1981 to 30.8.1982 in the case of appellants in C.A. Nos. 3148-3150 of 1989 there was a finding that the assesses collected sales tax in respect of their sales turnover for which the exemption was now claimed and that under Section 8-B of the J&K General Sales Tax Act the said amount was refundable to the Government.

As the questions, arose in these appeals were common, appeals were heard together and allowing the appeals of the assessees by a common judgment, this court,

HELD :

1. If power to do an act or act or pass an order can be traced to an enabling statutory provision, then often if that provisions is not specifically referred to, the act or order shall be deemed to have been done or made under the enabling provision. [194D]

2.1 Normally in the case of grant of tax exemption as an incentive to industry the exemption orders have generally taken the form of Government Order rather than a notification. But in the case of other exemptions though they are also under section 5 of the local Act (J&K General Sales Tax Act, 1962) they have taken the form of notification. [194G-H]

2.2 The pattern followed in Jammu & Kashmir is that in respect 184 of exemptions from payment of taxes following Cabinet decision on Policy matters and incentive they have taken the form of a Government order. [194H-195A]

2.3 The Jammu & Kashmir General Sales Tax Act, 1962 itself makes a distinction requiring a notification to be made for certain purposes and the making of a Government order in respect of certain other purposes. Since there is no form prescribed in this behalf, if the particular order in effect is an exemption order, whether it takes the form of an order or notification makes no difference. [194F-G]

2.4 From the publicity given to the Government Orders 159 and 414 by the Government, while inviting entrepreneurs to establish industries in Jammu & Kashmir and certain other communications to the parties, it is be understood that the Government orders 159 and 414 were treated as exemption orders satisfy all the requirements of the provisions of section 5 of the local Act. [195B-C, 194E]

2.5 Even as an order of exemption the appellant will have to show that he had set up the industry in conformity with the intent of 1971 order and entitled in terms thereof to the exemption in respect of the goods manufactured by him. But that is not to say that after he establishes those facts the Government will have to make a separate order of exemption in relation to him. [201C-D]

2.6 There is no prescribed form for granting exemption under section 5 of the Jammu & Kashmir General Sales Tax Act. There is also no prohibition against reference to any other matter or matters in exemption orders under section 5 of the General Sales Tax Act. If the incentives related also to other benefits or rights merely because they are included in the same Government Order does not make it any the less an exemption order so far as the exemption related to payment of sales tax. [202C-D]

2.7 The High Court was in error in thinking that the exemption order should be specific in favour of the appellant. The exemption as can be seen from the provisions of section 5 of the Jammu & Kashmir General Sales Tax Act could be in respect of any class of dealers or any goods or class or description of goods. There could be an exemption to an individual also but the power of exemption is not restricted to such cases alone. It may refer to transactions of sale of a particular type of goods or class or description of goods or in respect of any class of 185 dealers or a combination of both. [201B]

3.1 `Will be granted exemption' has the same meaning as `will be exempted' and does not in any way show that it requires a further follow up action. [201G-H]

3.2 The exemption is with reference to an industry which is to be established subsequent to the Government order. Therefore in that sense both expressions mean the same. [202A]

4. The notification issued on the 3rd of June 1971 in SRO 214 under section 23 of the Jammu & Kashmir Urban Immovable Property Tax Act, 1962, amending the Immovable Property Tax Rules, 1962 by inserting Rules 20-A was subsequent to GO 159 Ind. dated 26.3.1971. It was published on 25.3.1971 in the Government Gazette under section 23(1) for information of all persons likely to be affected thereby and any objection or suggestion which may be received in the Finance Department from any person with respect to the said draft before the said date will be considered by the Government. It is by reason of the fact that this draft rule has been published calling for objection the GO 159 Ind. itself stated that the grant of immovable property tax exemption would be available "as admissible under the Urban Immovable Property Taxation Rules". Thus on the day when the Government Order was made there was already the draft amendment rules, and, therefore, it could not be stated that the amendment was a follow up action in pursuance of the Government order. The Government order refers to the draft and says as per the amendment they will be entitled to the exemption. [202E-203B]

5.1 The only reference to 10 years was in the Finance Minister's speech and in the Brochure dated September 1978.

The Brochure only lists the concession and incentives available generally. It does not refer to any Government decision or Cabinet decision or any order of the Government.

[203G-H]

5.2 The Finance Minister's statement made in March 1978 only refers to a proposal to continue the grant of exemption from payment of sales tax for a period of 10 years. This statement also is not unambiguous. It may mean that the benefits under the Government Orders 159 and 414 may be continued for another 10 years without withdrawing the same.

This is merely a budget proposal which could 186 give rise to no right to the appellants. As no decision order or notifications is produced extending the period of exemption in relation to sales tax it is not possible to consider the claim of the appellants for exemption for 10 years on the ground of promissory estoppel. [204 B-C]

6.1 The SRO No. 195 dated 31.3.1978 did not and could not supersede the exemption granted under the Government orders 159, 414. [205D]

6.2 When it stated in the amending notification SRO 448 dated 22nd October, 1982 that vanaspati and edible oils are taxable at the point specified therein it only means that those vanaspati and edible oils which are not exempted are taxable at the points specified in the Schedule. The Government order gave exemption only for five years from the date of commencement of the industry and those industries who had been manufacturing for more than that period and also those industries who were not entitled to the benefit of the said Government order would be liable to pay sales tax on the vanaspati manufactured by them and the said goods were liable to tax at the point specified in the Schedule.

[205F-G]

7.1 In the scheme of levy of single point taxation, the Government could fix any point in the series of sales for the Government have fixed the sale by the dealer, that if the second sale, as the taxable point no exception can be taken. In that sense no question of vires on the ground of lack of power would arise. [205H-206A]

7.2 Under section 4(1) of Jammu & Kashmir General Sales Tax Act the goods are taxable only once, that is it could be taxed only at one point of sale. The government orders 159 and 414 are exemption orders and exempt the sale by appellants of their manufactured products. The exemption would not arise unless the goods are taxable at the point of their sale. Thus the effect of exempting their sale is that the said goods manufactured by them could not be taxed at the second or subsequent sales also as that would offend section 4(1) which provides for single point levy. In cases where there are no exemption orders and the State fixed the second or subsequnt sale as point of taxation the first or prior or subsequent sales are not exempted sales but are not taxable sales. Therefore SRO 448 fixing he sale of vanaspati ghee by a dealer would not be applicable to vanaspati ghee manufactured by the appellants which are exempt under the Government orders. [206B-D] 187

7.3 The goods manufactured by the Appellants are exempt under Government Orders 159 and 414 and that exemption covers entire series of sales of that very goods. [206D]

8.1 Under section 6(1) of the Central Sales Tax Act, 1956 every dealer who sells goods in the course or inter- state trade or commerce shall be liable to pay tax under that Act. A sale of goods shall be deemed to take place in the course of inter-state trade or commerce if the sale occasions the movement of goods from one state to another or if effected by a transfer of documents of title to the goods during their movement from one State to another. [207D-E]

8.2 In view of the provisions of Section 15 the State Law can impose tax on sale of declared goods only at a rate not exceeding four per cent of the sale price and such tax also shall not be levied at more than one stage. If the tax has been levied under the State Law on declared goods and such goods are sold in the course of inter-state trade and tax has been paid under the Central Sales Tax the Law levied under the State law shall be reimbursed to the person making such sale in the course of inter-state trade. [208C-E]

8.3 Section 8(2-A) of the Central Sales Tax Act does not have any over-riding effect on the scheme of taxation relating to inter-State sale of declared goods. There is also scope for the applicability of section 6(1-A) of the Central Sales Tax Act when the inter-state sale takes place when the goods are in transit and is effected by transfer of documents of title to the goods during their movement from one State to another. [209B-C]

8.4 Only certain cases which would have been covered by section 6(1-A) of the Central Sales Tax Act have been carved out for the purpose of exemption subject to the applicability of section 8(2-A) of the Central Sales Tax Act. Section 6(1-A) of the Central Sales Tax Act has not become otiose by reason of inclusion of that section in the non-obstante clause in section 8(2-A). Both provisions, therefore, operate and they should not be read so as to nullify the effect of one another. [209C-E]

9. The facts which the dealer had to prove to get the benefit of the Government orders are intended only to identify the dealer and the goods in respect of which the exemption is sought and they are not conditions or specifications of circumstances relating to the turnover sought 188 to be exempted from payment of tax within the meaning of those provisions. The specified circumstances and the specified conditions referred to in the explanation should relate to the transaction of sale of the commodity and not identification of the dealer or the commodity in respect of which the exemption is claimed. The conditions relating to identity of the goods and the dealer are always there in every exemption and that cannot be put as a condition of sale. [210D-F]

10.1. SRO 80/82 was prospective in operation. The Government seems to have been following as a pattern that is in the case of incentives to industries the exemption orders had taken the form of a Government order. Government orders 159 and 414 were also in pursuance of a Cabinet decision.

SRO 80/82 though a Government notification under the Business Rules it is issued by the Ministry concerned. In the circumstances there is also a serious doubt whether the said incentives could have been superseded by the SRO 80/82. [213H-214B]

10.2. In the case of a grant of exemption without specifying any period for which the exemption is available the Government could withdraw the same at any time. The appellants acting on the representations of the Government had set up their industries. Therefore they are entitled to claim the benefit of the exemption for the entire period of five years calculated as per the terms of the Government orders, even if it were to be held that SRO 80/82 superseded the earlier exemption orders. [216D-E, 216G-217A]

11. Since the assessment orders were regular assessment orders on the ground that their sales are taxable sales the question of applicability of Section 8B of the local Act does not arise. That question arises in view of the finding that their sales turnover are exempt but still under section 8B of the Local Act, they are liable to refund any money collected "by way of tax". [217G-H]

Pournami Oil Mills & Ors. v. State of Kerala & Anr., [1986] Supp. SCC 728; Bakul Oil Industries & Anr. v. State of Gujrat & Anr., [1987] 1 SCR 185; Assistant Commissioner of Commercial Taxes (Asstt), Dharwar & Ors. v. Dharmendra Trading Company and Ors., [1988] 3 SCC 570; Indian Aluminium Cables Ltd. & Anr. v. State of Haryana, 38 STC 108; Industrial Cables India Ltd. v. Assessing Authority, [1986] Supp. SCC 695; International Cotton Corporation (P) Ltd. v. Commercial Tax Officer & Ors., 35 STC 1; referred to.

189

CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 2309 & 2310 of 1989 etc etc.

From the Judgment and Order dated 23.9.1988 of the Jammu & Kashmir High Court in Writ Petition No. 87/81 and C.M.P. No. 2519 of 1988.

K. Parasaran, D.D. Thakur, M.H. Beg, Raja Ram Agrawal, M.L. Verma, Prashant K. Goswami, Anil B. Divan, Pramod Kohli, P.H. Parekh, Hari Khanna, J.P.Pathak, Sandeep Thakral, S.M.Thakral, B.V. Desai, Ms. Vinita Ghorpade, E.C. Aggarwala, N.N. Bhatt, Dhiraj Singh and Ashok Mathur for the appearing parties.

The Judgment of the Court was delivered by V. RAMASWAMI, J. Civil Appeal No. 2309 of 1989 arises out of an order made by the High Court of Jammu & kashmir in Writ Petition No.87 of 1981 dismissing the Writ Petition filed by M/s. Pine Chemicals Ltd., which is a public limited company manufacturing Rosin, Turpentine and Rosin Derivatives and carrying on business at Bari Brahmana, Jammu Tawi. The appellants had prayed in the writ petition for quashing the order of assessment dated 20th January, 1981 made by the Assessing Authority, Incharge Sales Tax Circle, Jammu under the Central Sales Tax Act, 1956 for the year ending 30.6.1980 and the penalty order made on February 2, 1981 under Section 10 of the Central Sales Tax Act in respect of the same period. They had also prayed for a declaration that they are entitled to exemption from payment of tax under the Central Sales Tax Act and the Jammu & Kashmir General Sales Tax Act, 1962, on the finished goods produced by them for a period of five years commencing from 8th November, 1979, when the Company went into commercial production. This main relief had been prayed for on the grounds that the appellant were exempt from payment of sales tax in terms of the Government Orders No. 159 - Ind. dated 25.3.1971 as amended by Government Order No. 414-Ind. dated 25th August, 1971 read with section 8(2A) of the Central Sales Tax Act. Their further case was that the Government represented and announced a package of incentive for large and medium scale industries including grant of exemption from sales tax both on the raw materials purchased by the industries and the scale of their finished products, that acting upon such representation and assurances, appellants set up their factory at Bari Brahmana on the land allotted by the State Industrial Development Corporation and that therefore the Government is estopped from charging sales tax on the doctrine of promissory estoppel. The High Court was of the view that 190 the two Government orders referred to above were only declarations of an intention to exempt from payment of sales tax and that they are not exemption notifications under sections 5 of the General Sales Tax Act. The High Court was also of the view that the appellant have failed to prove the necessary factual foundation for invoking the principle of promissory estoppel and that, therefore, they are not entitled to any relief under that doctrine. In that view the writ Petition was dismissed.

It may be mentioned that Civil Appeal No. 2310 of 1985 is against an order made in a Civil Misc. Petition No. 2519 of 1988 which was also dismissed on 23.9.1988 along with the writ petition. This miscellaneous petition was filed after the judgment in the writ petition was reserved for permission to file reply affidavit on the ground that the assessment files produced at the time of hearing contained certain documents needing certain explanation by the appellants. Both on the ground that it was belated and on the ground that the judgment in the writ petition was delivered only relying on the material placed on record and therefore there was no need for giving an opportunity to the writ petitioners to file a reply statement, the learned judgment dismissed this miscellaneous petition also.

Civil appeals 3140-50 of 1989 have been filed by M/s. K.C. Vanaspati, a firm of partnership manufacturing Vanaspati Ghee at Bari Brahmana, Jammu Tawi. They filed writ petition 52 of 1982 praying to quash a sales tax assessment order dated 16.1.1982 assessing them to sales tax for the period from 2nd September, 1981 till the end of the month under the Jammu & Kashmir General Sales Tax Act. They also prayed for a mandamus directing the Government and the Assessing officer not to assess them to sales tax or recover any amount on account of sales tax from them for a period of five years from 2nd September, 1981 when their industry started commercial production. This relief was prayed again on the ground that Government Order 159-Ind. dated 26.3.1971 as amended by Government Order 414-Ind. dated 25.8.1971 exempted the sales of their finished product of Vanaspati Ghee from sales tax and also on the ground that in any case the Government is estopped from collecting tax on the principle of promissory estoppel. When this writ petition was pending as assessment order was made on 14.11.1984 for the assessment year ending 30th September 1982 including the period 2nd September to 30th September, 1981 which was the subject matter of the earlier assessment order and which was questioned in writ petition No. 52 of 1982. The validity of this assessment order was the subject matter of writ petition No. 822 of 1984 filed by the appellants. The relief prayed for and the grounds on which the relief prayed for were almost identical as that in writ petition No. 52 of 1982 except that 191 on the question of promissory estoppel, more detailed facts were mentioned in this writ petition. The respondents filed their counter affidavits contending that the said Government orders were not exemption orders under Section 5 of the General Sales Tax Act and that there is no factual foundation for the plea of promissory estoppel. Since we will be dealing with contentions in detail at the appropriate place we are not setting out contentions of the petitioners and the replies of the Government in the writ petitions in details. During the pendency of the writ petitions certain other Government orders came to be passed and certain assessment orders for the subsequent periods were also sought to be made and questioning these actions M/s. K.C. Vanaspati filed Writ petition No. 711 of 1987 for a writ of prohibition restraining the Assessment Officer and Government from recovering any sales tax at any point of sale in the series of sales in respect of Vanaspati Ghee manufactured by them for a period of 10 years from 2nd September, 1981 when their factory went into commercial production and also for a declaration that SRO 448 dated 22nd October, 1982 issued by the Government of Jammu & Kashmir (which will be referred to later) was illegal and unconstitutional. They had also prayed for a mandamus directing the respondents to refund the sales tax already recovered from them with interest and damages. In this writ petition also they contended that Government Order No. 159- Ind. dated 26.3.1971 and Government Order 414-Ind. dated 25.8.1971 were exemption orders referable to section 5 of the General Sales Tax Act. They have also referred elaborately to the representations, declarations and promises of the Government in support of the plea of promissory estoppel. The respondents had filed a counter affidavit refuting these contentions of the appellants. The High Court dismissed all these three writ petitions by a common order dated 22nd February, 1989. Civil Appeals 3148- 50 of 1989 have been filed against this common order.

Civil Appeal No. 3151 of 1989 has been filed by M/s. Kashmir Vanaspati Ltd. against the judgement of the High Court in Writ Petition No.5 of 1989 in which they had prayed for the writ of certiorari to quash certain notices issued to the appellants, their selling agents and the owner of the premises where they have their sale depots, issued under section 17 of the General Sales Tax Act and for a declaration that the Vanaspati Ghee manufactured by the appellants is exempt from payment of tax at all stages upto January, 1992 i.e. for a period of 10 years from the date from which they have started their commercial production.

In this writ petition also the appellants had relied on Government Order 159-Ind. dated 26.3.1971 and Government Order No. 414-Ind. dated 25th August, 1971 as orders exempting their goods from sales tax under Section 5 of the General Sales Tax Act. They have also relied on certain statement of Government as commitments 192 to continue the incentives and exemptions from sales tax for a period of 10 years on the principle of promissory estoppel. The respondents had filed their counter affidavit. This writ petition was also dismissed on 17th March, 1989 almost on the same grounds as in earlier two cases.

The first common question that arises for consideration in all these appeals therefore is whether Government Order No. 159-Ind. dated 26.3.1971 and the amending Government Order No. 414-Ind. dated 25.8.1971 are orders of exemption referable to section 5 of the General Sales Tax Act, 1962.

The said Government Orders are extracted below :

GOVERNMENT OF JAMMU AND KASHMIR INDUSTRIES AND COMMERCE DEPARTMENT Sub: Grant of incentives to large and Medium Scale industries in the Jammu & Kashmir State Ref: Cabinet Decision No. 101 dated 26.3.1971 Government Order no. 149-Ind. of 1971 dated 26.3.1971 Sanction is accorded to the grant of the following incentives and facilities to Large and Medium Scale Industries in the State of Jammu & Kashmir :

1. Land: As provided in Government Order No. 206- Ind. of 1968 dated 5.7.1968. However, such land......include a reasonable amount of land for the establishment of residential colonies required to house the workers of Large and medium scale Industries and would be granted on the terms and conditions defined in the Government Order No. 206-Ind. of 1968 dated 5.7.1968.

2. Grant of exemption from the State Sales Tax both on raw materials and finished products for the period of five years from the date the unit goes into production.

3. Grant of exemption from levy of additional surcharge on Toll Tax for an initial period of five years from the date the unit goes into commercial production with respect to raw materials and finished goods. The question of grant of exemption from this levy for further periods would be reviewed thereafter in every 193 individual case and further grant of this concession would only be considered in deserving individual cases.

4. Grant of exemption from the levy of Urban Immovable Property Tax on the lands and buildings belonging to such industries would be available as admissible under the Urban Immovable Property Taxation Rules.

By order of the Government of Jammu and Kashmir.

Sd/-G.R.Renzu, Secretary to Government" This order was partially modified in G.O. 414 Ind.

dated 25.8.1971 which read as follows:

" GOVERNMENT OF JAMMU AND KASHMIR INDUSTRIES AND COMMERCE DEPARTMENT Sub: Grant of incentives to the Large and Medium Scale Industries in the Jammu & Kashmir State Ref: Director Industries and Commerce's letter No.

SSI-J/455/2251-52 dated 22-7-1971 Government Order No. 414-Ind. of 1971 dated 25.8.1971 In partial modification of Government Order No.

159-Ind. of 1971 dated 26.3.1971, item 2 may be read as under:

2. Grant of exemption from the sales tax both on raw materials and finished products.

The State Sale Tax paid by Large and Medium Scale Industries on the raw materials procured by them for the initial 5 years of the production would be refunded to such industries.

Similarly such industries will be granted exemption from the payment of any state sales tax on their finished products for a period of five years from the date the unit goes into production.

194 By order of the Government of Jammu and Kashmir.

Sd/- Secretary to Government".

It may be noted at this stage itself that the amending Order G.O. 414-Ind. dated 25th August, 1971 was also published in the Government Gazette.

Section 5 of the General Sales Tax Act, 1962 empowers the State Government to grant exemption from taxation and that section reads as follows:

"Exemption from taxation: The Government may subject to such restrictions and conditions as may be prescribed, including conditions as to licence and licence fees, by order exempt in whole or in part from payment of tax any class of dealers or any goods or class or description of goods." The Government orders were made implementing the Cabinet decision No. 101 of the same date. There is no ambiguity about the class of persons or dealers to whom the Government orders apply, no ambiguity about the class or description of goods and the transactions of sale which are exempt from tax. It has been duly authenticated in terms of Section 45 of the Constitution of Jammu and Kashmir. It is well settled that if power to do an act or pass an order can be traced to an enabling statutory provision, then even if that provision is not specifically referred to, the act or order shall be deemed to have been done or made under the enabling provision. Thus the Government orders satisfy all the requirements of the provisions of Section 5 of local Act. The section also does not talk of any notification: it only talks of a Government order exempting in whole or in part from payment of tax. This is very insignificant, if contrasted with Section 4(1) and 4(5) of the local Act relating to the fixation of the taxable point refers to a notification by the Government. The Act itself thus makes a distinction requiring a notification to be made for certain purposes and the making of a Government order in respect of certain other purposes. Moreover, since there is no form prescribed in this behalf if the particular order in effect is an exemption order, whether it takes the form of an order or notification makes no difference. But we may note from the various orders produced before us that normally in the case of grant of tax exemptions as an incentive to industry the exemption orders have generally taken the form of Government order rather than a notification. But in the 195 case of other exemptions though they are also under section 5 of the local Act they have taken the form of notification.

Thus the pattern followed in Jammu & Kashmir seems to be that in respect of exemptions from payment of taxes following Cabinet decision on policy matters and incentive they have taken the form of Government order. It is necessary to refer this aspect because in later modifications while superseding the earlier order or notifications, the Government have followed the specific pattern and have used the word `orders' in cases of grant of incentive and the word `notifications' in the other cases.

It may also be pointed out that the Government orders 159 and 414 were also understood and treated as such exemption orders as seen from the publicity given them by the Government while inviting entrepreneurs to establish industries in Jammu & Kashmir and certain other communications to the parties. The booklet published by the Government in December, 1975 under the heading "Incentives to Development of Industries in Jammu & Kashmir" contained incentives available for small scale industries as also large and medium scale industries. The above said two Government Orders were reproduced in this booklet as the orders relating to incentives available to large and medium scale industries. Another brochure issued in March, 1978 under the heading `The State Marches Towards Industrial Development' after noting the efforts made by the Government to invite industrial enterprises from outside the State to locate the industries in Jammu & Kashmir and the response by the industrialist, listed the package of incentives under the heading `Incentives Available to help you establish your beautiful industrial ventures in the J & K State'. Item 5 of this list related to `exemption from certain taxes'. This was followed by the Finance Minister's Budget Speech for the year 1978-79 in which the Finance Minister stated:

"We have to continue a consistent policy of support and protection to industry and attract as many new units as we can, both in order to increase the employment opportunity and to achieve better economic growth. It is as such proposed to continue the grant of exemption from payment of sales tax on the goods manufactured by new units for a period of ten years from the date the unit goes into production." Subsequent to this speech of the Finance Minister another Brochure was published by the Government on the 7th September, 1978 which referred to the sustained efforts made by the Government to involve successful and experienced entrepreneurs from all over the country in 196 setting up the industries in J & K and incentives available to the industries. In page 14 of this Brochure "Exemption from Sales Tax and toll tax for 10 years and exemption from CST" is listed as one of the incentives available in the State. Obviously these announcements, references and statements relating to exemption from sales tax refer to G.O. 159-Ind. dated 26.3.1971 and G.O. 414-Ind. dated 25.8.1971. No other Government order of notification relating to exemption from payment of sales tax by large and medium industries were bought to our notice as relating to these references in the Brochures and speeches.

Thus on a plain reading there could be no doubt that the two Government orders are referable to the power of the Government under Section 5 of the General Sales Tax Act and are exemption orders falling within the scope of that provision.

In this connection, we may also refer to three decisions of this Court cited at the Bar wherein similar orders of Government without specifying the source of power under which they were made and also not in the form of a notification, were considered to be orders granting exemption.

In Pournami Oil Mills & Ors. v. State of Kerala & Anr., [1986], Supp. SCC 728, this Court had occasion to consider almost identical Government orders as those we are concerned with in these appeals. The first was a Government Order dated 11th April, 1979 and the relevant portion of the same reads as follows:

"The Government has considered the recommendations and suggestions 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 April, 1979, will be exempted from the payment of sales tax for a period of five years from the date of production...

The second was a notification dated 21st October, 1980 made under Section 10 of the Kerala General Sales Tax Act which read as follows:

"In exercise of the power conferred by Section 10 of the Kerala 197 General Sales Tax (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 industries for a period of five years from the date of commencement of sale of such goods 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 produce proceedings of the General Manager, District Industries Centre, declaring the eligibility of the units for claiming exemption 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 notification new industrial unit under the Small scale Industries shall mean undertakings set up on or after April 1, 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 April 1, 1979." Section 10 of the Kerala General Sales Tax Act empowered the Government if they consider it necessary in the public interest, by notification in the Gazette, to make an exemption or reduction in rate either prospectively or retrospectively in respect of any tax payable under the Act.

It may be seen that the first Government Order dated 11th April, 1979 did not refer to any statutory power under which that order was made and it was generally in the nature of an order approving package of measures and incentives for promoting industrial development in Kerala and not in the form of a notification, while the second notification was made specifically in exercise of the statutory powers under section 10 of the Kerala Act. It may also be seen that the first Government Order gave more tax exemption while the second notification did not give any exemption relating to purchase tax and also confined the exemption from sales tax to the limits specified in the proviso to the notification.

Two main questions were 198 considered by this Court. The first was whether the first Government Order dated 11th April, 1979 was an exemption order referable to the powers of the Government under section 10 of the Kerala Act. On this issue this Court held that it was an exemption order and that since there was an enabling provision in the statute empowering the Government to give exemption, though the Government Order did not refer to the statutory provision conferring such powers the order should be deemed to have been made under the said enabling provision and that therefore both the orders were made in exercise of the powers under section 10 of the Kerala Act.

The second important point that was decided was that the second notification was prospective in operation and that industries set up on or after Ist April, 1979 and before the 21st October, 1980 would be entitled to the benefit of the whole exemption under the first Government order for the full period of five years from the date they started production and that right could not have been curtailed by the second notification dated 21st October, 1980. As the Govt. was bound by the rule of estoppel from taking away the right which had accrued to them under the first Government order. Only new industries set up after the 21st October, 1980 would have the restricted benefit as provided in the second notification.

In Bakul Oil Industries & Anr. v. State of Gujarat & Anr., [1987] 1 SCR, 185, the effect of two exemption notifications made in exercise of the Government's power under section 49(2) of the Gujarat Sales Tax Act, 1960 was considered. Under the first notification dated 29.4.1970 certain exemption from payment of sales tax or purchase tax was given in respect of certain specified classes of sales and purchases described in the Schedule to that notification without any specification of period. The second notification dated 11.11.1970 amended the first notification by adding a new entry in the Schedule exempting a manufacturer who established a new industry from the whole of purchase tax and sale tax for a period of five years from the date of commissioning of the industry . This second notification stated that for the benefit of claiming the exemption the industry shall have been commissioned at any time during the period from Ist April, 1970 to 31st March, 1975. The assessee in that case had commissioned his plant on the 17th May, 1970 and when the Industries Commissioners refused to give him the eligibility certificate for claiming exemption he filed a writ petition under Article 226 before the Gujarat High Court. During the pendency of the writ petition the State Government issued another notification dated 17th July, 1971 amending the definition of `new industry' and excluding among others decorticating, expelling, crushing, roasting, parching, frying of oil, seeds and colouring, decolouring and scenting of oil, from the purview of the exemption notification. This Court 199 held that under the first notification dated 9.4.1990 the exemption granted was general and did not stipulate as to how long the exemption would remain in operation and that would mean that the exemption granted under the notification was to have operative force till such time that exemption was allowed to remain before being withdrawn by a subsequent notification. Though the second notification dated 11.11.1970 gave exemption for a period of five years from the date of commissioning of the industry this Court was of the view that, that exemption cannot be invoked by the assessee in that case for claiming the benefit of tax exemption for five years because the second notification was prospective in operation and would apply only to those new industries which were commissioned subsequent to the issue of that notification and since the assessee in that case commissioned the Mill on 17.5.1970 before the second notification he was not eligible for the benefit of second notification. However, the learned counsel for the respondents relied on the observation in the first paragraph at page 192 of the Bakul Oil Industries case (supra) wherein the learned Judges have held that the State Government was under no obligation in any manner known to law to grant exemption and that it was fully within its powers to revoke the exemption by means of a subsequent notification. These observations will have to be understood in the light of the earlier statement that the second notification dated 11.11.1970 was prospective; that is to say if the industry had been commissioned subsequent to 11.11.1970 the assessee would have been entitled to the exemption for the full period of five years. These observations are apposite only to the notification dated 9.4.1970 which was the one which the assessee was entitled to. In correctly understanding the ratio of this judgment we have to keep in mind that the date of commissioning of the industry was the relevant factor to the entitlement of the relief. Therefore this is an authority only for the proposition that if the exemption notification did not stipulate as to how long the exemption would remain in operation it would be open to the Government to withdraw the same at any time by a subsequent notification. But the learned Judges did not stop with that but make a further observation that if the exemption notification gave exemption from payment of tax for a particular period and an industry was commissioned after the date of the exemption order but before the exemption was withdrawn, the said industry would be entitled to the benefit of exemption for the period specified in the exemption order though the exemption was withdrawn before the expiry of that period if the industry could rely on any estoppel. This is also clear as the learned Judges themselves have observed that the industry commissioned subsequent to the notification could also plead estoppel and observed:

"We must, however, observe that the power of revocation or 200 withdrawal would be subject to one limitation viz.

the power cannot be exercised in violation of the rule of Promissory Estoppel. In other words, the Government can withdraw an exemption granted by it earlier if such withdrawal could be done without offending the rule of Primissory Estoppel and depriving an industry entitled to claim exemption from payment of tax under the said rule. If the Government grants exemption to a new industry and if on the basis of the representation made by the Government an industry is established in order to avail the benefit of exemption, it may then follow that the new industry can legitimately raise a grievance that the exemption could not be withdrawn except by means of legislation having regard to the fact that Primissory Estoppel cannot be claimed against a statute." The Government Order which was considered by this Court in Assistant Commissioner of Commercial Taxes (Asstt.). Dharwar & Ors. v. Dharmendra Trading Company and Ors., [1988] 3 SCC 570 read as follows:

"Consequently, the Governor of Mysore is pleased to sanction the following incentives and concessions to the entrepreneurs for starting new industries in Mysore State:

(1) Sales Tax-A cash refund will be allowed on all sales tax paid by a new industry on raw material purchased by it for the first (five) years from the date the industry goes into production, eligibility to the concessions being determined on the basis of a certificate to be issued by the Department of Industries and Commerce...." Though this again was in the form of a Government order giving incentives and concessions, this Court held that since there is a power to grant an exemption or concessions under the Statue the mere fact that it did not specify the power under which it was issued will make no difference and that the assessee would be entitled to the benefit of this order.

The High Court was of the view that the Government orders are, as such, not exemption orders but only a policy decision. The learned Judges observed that Section 5 of the General Sales Tax Act "does not speak of general order of exemption as the power to grant exemption is related to 201 a class of dealers or goods and that too subject to restrictions and conditions as may be prescribed. So there could no general order of exemption and hence the need for specific order in favour of the petitioner is quite obvious." On this interpretation the High Court held that the appellant has to first establish that he had set up an industry in the State which conforms to the intent of 1971 order and thereafter ask for an exemption and that on being satisfied the Government will have to make an order of exemption under section 5 of the General Sales Tax Act. We are unable to agree with this reasoning of the learned Judges on the interpretation of section 5 of the General Sales Tax Act. We are of the view that the High Court was in error in thinking that the exemption order should be specific in favour of the appellant. The exemption as can be seen from the provisions of section 5 of the General Sales Tax Act could be in respect of any class of dealers of any goods or class or description of goods. There could be an exemption in an individual also but the power of exemption is not restricted to such cases alone. It may refer to transactions of sale of a particular type of goods or class or description of goods or in respect of any class of dealers or a combination of both. Of course even as an order of exemption the appellant will have to show that he had set up the industry in conformity with the intent of 1971 order and entitled in terms thereof to the exemption in respect of the goods manufactured by him. But that is not to say that after he establishes those facts the Government will have to make a separate order of exemption in relation to him.

When the appellants sought to rely on the decision of this Court in Pournami Oil Mills case (supra) the learned Judges of the High Court sought to distinguish the same on the ground that the Government order in Pournami Oil Mills case (supra) used the words `will be exempted' whereas in the Government orders now under consideration the words used are `will be granted exemption.' According to the learned Judges there is a vast difference between the two expressions. Whereas the expression `will be exempted' is in the nature of an order the expression `will be granted exemption' clearly implies a declaration of intention which could result in an order of exemption being issued by taking further follow up action. We have carefully considered this reasoning of the learned Judges. The Government orders follow an earlier Cabinet decision to give incentives to large medium scale industries. The intention was clear that they wanted to attract entrepreneurs from all over the country to come and establish industries in the State of Jammu and Kashmir. It is not with reference to any particular industrialist or industry that the order was intended to be operative. The subject in both the Government orders show that it is grant of incentives. In the light of the context in which expressions came to be used we are 202 of the view that `will be granted exemption' has the same meaning as `will be exempted' and does not in any way show that it requires a further follow up action. Even in Pournami Oils Mills case (supra) under the Government order dated 11th April, 1979 the industries which are to be benefited are those which are to be set up on or after 1st of April, 1979. The exemption is thus with are to be set up on or after 1st of April, 1979. The exemption is thus with reference to an industry which is to be established subsequent to the Government order. Therefore in that sense both expression mean the same.

It was then pointed out by the learned Judges of the High Court that this Government Order No. 159 dated 26.3.1971 dealt with to grant four different types of facilities and incentives and three out of them are covered by different legislative enactments and, therefore, it was futile to contend that without any follow up action the said order can be treated as notification of exemption under the different statutes. We are unable to agree with this reasoning of the learned Judges also. As we have already pointed out there is no prescribed form for granting exemption under section 5 of the General Sales Tax Act.

There is also no prohibition against reference to any other matter or matter in exemption orders under section 5 of the General Sales Tax Act. If the incentives related also to other benefits or rights merely because they are included in the same Government Order does not make it any the less an exemption order so far as the exemption related to payment of Sales Tax. In fact it appears to be that factually the submission of the learned counsel for the State that follow up action was taken in pursuance of the Government order in respect of exemption from the levy of Urban immovable property tax and the exemption from levy of an additional surcharge on toll tax is not correct. Mr. Verma, learned senior counsel appearing for the State of Jammu & Kashmir in two of the appeals referred to what he called as a follow up action in relation to the exemption from payment of tax under the Urban Immovable Property Act, a notification issued on the 3rd of June 1971 in SRO 214 of that date, in exercise of the powers conferred by section 23 of the Jammu and Kashmir Urban Immovable Property Tax Act, 1962 amending the Immovable Property Tax Rules, 1962 by inserting Rule 20A. The relevant portion of this Rule 20A stated that under the provisions of clause (f) of sub section (1) of section 4 of the Act "all buildings and lands owned by proprietors of a factory and used by him for the purposes thereof shall be exempted from the levy of tax etc..". It is true that this notification was subsequent to GO 159-Ind. dated 26.3.1971. But it is seen from the notification itself that the same was previously published on 25.3.1971 in the Government Gazette under section 23(1) for information of all persons likely to be affected thereby informing that notice is given thereby that it 203 will be taken up for consideration on 7.4.1971 and any objection or suggestion which may be received in the Finance Department from any person with respect to the said draft before the said date will be considered by the Government.

It is by reason of the fact that this draft rule has been published calling for objection the GO 159 Ind. itself stated that the grant of immovable property tax exemption would be available "as admissible under the Urban Immovable Property Taxation Rules." Thus on the day when the Government order was made there was already the draft amendment rules, and therefore, it could not be stated that the amendment was a follow up action in pursuance of the Government order. Rather the Government order refers to the draft and says as per the amendment they will be entitled to the exemption. So far as the toll tax is concerned the notification dated 18.7.1977 relied on by the learned counsel for the respondents only extended the benefit of exemption to large and medium scale industries in respect of additional toll leviable `till the construction phase is completed' that is in respect of tax on construction materials and it did not relate to the grant of exemption of additional surcharge on toll tax. But it is significant to note that this notification itself stated that `the raw materials brought into the stage for the purpose of manufacturing and finished products marketed outside the State by the said industries shall remain exempt from payment of additional toll for a period of ten years in respect of all the units from the date of commencement of production by them." (emphasis supplied). This definitely shows that there is already an exemption from payment of additional toll in respect of raw materials brought and finished product marketed and the Government order related only to an extension of exemption benefit in respect of the construction phase as well. These notifications under the Immovable Property Tax Act and Toll tax act rather reinforce thus contention of the learned counsel for the appellant that the Government orders themselves are exemption orders under section 5 of the General Sales Tax Act and no follow up action was intended under those orders and the said orders operate as exemption orders. Thus there could be no doubt the Government Order 159-Ind. dated 26.3.1971 and the amending Government Order 414 dated 25.8.1971 are orders of exemption from payment of sales tax issued under section 5 of the General Sales Tax Act.

Though the learned counsel for M/s Kashmir Vanaspati Limited and the learned counsel appearing tr M/s K.C. Vanaspati strenuously argued that the exemption from payment of tax was extended from 5 years to 10 years and the Government was bound to give the exemption for 10 years on the ground of promissory estoppel. We think there is absolutely no factual foundation for such a plea. The only reference to 10 years was in 204 the Finance Minister's speech and in the Brochure dated September, 1978. The Brochure only lists the concessions and incentives available generally. It does not refer to any Government decision or Cabinet decision or any order of the Government. No decision of the Government, let alone a Cabinet decision, or any Government order extending the period of exemption was produced before us. It is not clear on what basis the Brochure mentioned 10 years. Further the reference in the Brochure is not for sales tax alone, but also refers to toll tax and central sales tax. It is noticed that so far as toll tax is concerned there are Government orders exempting the industries covered by the notifications for a period of 10 years. The Finance Minister's statement made in March, 1978 only refers to a proposal to continue the grant of exemption from payment of sales tax for a period of 10 years. This statement also is not unambiguous. It may mean that the benefits under the Government Orders 159 and 414 may be continued for another 10 years without withdrawing the same. This is merely a budget proposal which could give rise to no right to the appellants. As no decision order or notification is produced extending the period of exemption in relation to sales tax it is not possible to consider the claim of the appellants for exemption for 10 years on the ground of promissory estoppel.

In exercise of the powers under section 4(7) of the General Sales Tax Act the Government notified that "In supersession of all the previous notifications on the subject, the Government hereby specify, in column 3 of the Schedule appended thereto, the point of tax on the turnover in the series of sales of goods specified in column 2 of the said schedule. "This was notified and published as SRO 195 dated 31.3.1978. The schedule in column 2 gave the description of the goods and the column 3 point of tax.

This schedule was amended by SRO 448 dated 22nd October, 1982 the relevant portion of which read as follows:

"SRO 448-. In exercise of the powers conferred by sub-section (7) of section 4 of the Jammu & Kashmir General Sales Tax Act, 1962 (XX of 1962), the Government hereby direct that in notification SRO 195 dated 31.3.1978, the following amendments shall be made namely :- (1) Sub-item (C) in column 2 under the heading "Goods manufactured in the State" appearing against serial No. 2 shall be numbered as sub-item (d) and before sub-item (d) as so numbered the following shall be inserted as sub-item (c) (c) Vanaspati and edible Oils.

205 (i) When sale is made