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C.T.O., SIROHI versus M/S UNILINKS CEMENT PVT LTD.

High Court of Rajasthan

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C.T.O., SIROHI v M/S UNILINKS CEMENT PVT LTD. - CR Case No. 161 of 2005 [2007] RD-RJ 2578 (10 May 2007)

IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN AT

JODHPUR.

ORDER

(1) S.B. Civil Sales Tax Revision No.156/2005

Commercial Taxes Officer vs. M/s Unilink Cement Pvt.

Sirohi Ltd.

(2) S.B. Civil Sales Tax Revision No.161/2005

Commercial Taxes Officer vs. M/s Unilink Cement Pvt.

Sirohi Ltd.

(3) S.B. Civil Sales Tax Revision No.166/2005

Commercial Taxes Officer vs. M/s Unilink Cement Pvt.

Sirohi Ltd.

(4) S.B. Civil Sales Tax Revision No.167/2005

Commercial Taxes Officer vs. M/s Unilink Cement Pvt.

Sirohi Ltd.

(5) S.B. Civil Sales Tax Revision No.205/2005

Commercial Taxes Officer vs. M/s Unilink Cement Pvt.

Sirohi Ltd.

(6) S.B. Civil Sales Tax Revision No.222/2005

Commercial Taxes Officer vs. M/s Unilink Cement Pvt.

Sirohi Ltd. against the judgment dated 11.2.2003 passed by the learned Rajasthan Tax Board, Ajmer.

Date of Judgment: May 10th, 2007.

PRESENT

HON'BLE MR. PRAKASH TATIA,J.

Mr. Sangeet Lodha for the petitioner.

Mr. Dinesh Mehta for the respondent.

BY THE COURT:

All these six revision petitions are against the order of the

Rajasthan Tax Board dated 11.2.2003 by which the revenue's six appeals were dismissed by the Rajasthan Tax Board, Ajmer by above common judgment dated 11.2.2003.

The facts in detail may not be required because of the fact that almost identical issue was before the Rajasthan Taxation Tribunal in the appeal preferred by Bhatnagar Cement Company wherein the Rajasthan

Taxation Tribunal was of the view that where a unit is set up and was eligible to take benefit of tax exemption under the Rajasthan Sales Tax

Incentive Scheme, 1987 and the eligibility certificate is granted to the said unit, then any notification issued during period of exemption restricting scope of exemption, then by that notification, the exemption cannot be withdrawn retrospectively, unless expressly it is permissible by law. In said appeal of Bhatnagar Cement Company, the decision was given by the Rajasthan Taxation Tribunal which is delivered in the case of Bhatnagar Cement Co. v. State of Rajasthan and others ( 103 STC 146). The order of the Rajasthan Taxation Tribunal was challenged before the Hon'ble Supreme Court. The Hon'ble Supreme Court in the case of State of Rajasthan & ors. vs. Bhatnagar Cement Co.(Pvt.) Ltd.

(125 STC 290) observed as under:-

"However, for the period subsequent to February 22, 1990, the Tribunal proceeded only upon the basis of promissory estoppel. Promissory estoppel has to be pleaded and established. We find nothing in the application made by the respondent to the Tribunal which can be said to be a plea of promissory estoppel supported by the necessary factual particulars. It is only if these factual particulars are pleaded that the other side has an opportunity to answer the same. We think also that before applying the doctrine of promissory estoppel, as it did, the

Tribunal should have reached a finding as to whether or not the respondent's plant qualified as a small-scale industry or as a mini cement plant within the meaning of the amended scheme. This was the respondent's only case before it. If the particulars in this behalf were not, as it stated, before the Tribunal, the Tribunal should have called for the same or sought a finding on this aspect from the tax authorities."

(emphasis supplied)

The Hon'ble Supreme Court in view of above reason, allowed the appeal of the revenue so far as it relates to the period subsequent to

February 22, 1990 and set aside the order of the Tribunal for that period and the matter was remanded to the Rajasthan Taxation Tribunal for deciding the appeals afresh in the light of the observations of the

Hon'ble Supreme Court obviously allowed the tax authorities to call upon the assessee to furnish factual foundation for plea of promissory estoppel so that the tax authority may decide the question of applicability of doctrine of promissory estoppel.

Facts of these cases are also almost same as were in the case of

Bhagnagar Cement Company (supra). In the present controversy, it is not in dispute that the assessee in the present case, obtained the tax exemption certificate under the Scheme of 1987 on 8.7.1988 whereby it was declared that the assessee shall be entitled to tax exemption upto 100%. That was the fact situation in Bhatnagar Cement Company's case.

It is contended that at that time, the mini cement was not defined and, therefore, the State Government issued a notification on 11.1.1990 and provided that the mini cement plant shall be entitled to tax exemption upto the extent of 50% only. This notification dated 11.1.1990 was made applicable with retrospective effect from 6.8.1988. It is also not disputed that mini cement plant was defined by issuing notification dated 22.2.90 only. Since the notification dated 11.1.1990 was made applicable with retrospective effect, therefore, the revenue sought to re-assess the tax liability of the assessee for the period prior to the issuance of the notification dated 11.1.1990 as well as for the period subsequent to issuance of notification. In these six revision petitions, the relevant period is of the years 1992-93, 1993-94 and 1994-95.

Meaning thereby the notification reducing the benefit of tax exemption to the assessee is sought to to be used for levy of tax prospectively that is for the period after issuance of the notification. The Tax Board in present matters, following the decision of the Rajasthan Taxation

Tribunal delivered in the case of Bhatnagar Cement Co. vs. State of

Rajasthan (103 STC 146), upheld the decision of the Deputy

Commissioner(Appeals) dated 1.5.1998 wherein it has been held that the principle of promissory estoppel applies and the revenue cannot demand tax from the assessee's unit on the basis of amendment made after the assessee was granted tax exemption certificate upto the extent of 100% prior to the notification of 1990.

The learned counsel for the petitioner-revenue vehemently submitted that the decision of the Rajasthan Taxation Tribunal is not good law so far as it gave benefit to assessee on the ground of promissory estoppel without factual foundation. It is submitted that the matter is covered by the decision of the Supreme Court whereby the

Supreme Court held that plea of promissory estoppel can be entertained when there is factual foundation for that and can be invoked after giving opportunity to the other party to rebut it. According to the learned counsel for the revenue,in identical facts and circumstances, when the exemption certificate under the Scheme of 1987 was granted to the assessee, in the case of Bhatnagar Cement Company(supra) and plea of promissory estoppel was sought to be used against the revenue, then the Hon'ble Apex Court clearly held that the plea of promissory estoppel is required to be supported by necessary factual particulars and can be applied only after giving an opportunity to answer the plea to the revenue. In view of the above reasons, the orders of the Deputy

Commissioner(Appeals) dated 1.5.1988 and the order of the Rajasthan

Tax Board dated 11.2.2003 deserves to be set aside and the matters may be remanded back to the Rajasthan Tax Board for deciding the appeals afresh in the light of the decision of the Hon'ble Supreme Court delivered in the case of State of Rajasthan and ors. vs. Bhatnagar

Cement Co. (Pvt.) Ltd. (125 STC 290).

The learned counsel for the assessee-respondent submitted that apart from plea of principle of promissory estoppel the Assessing

Authority's order was illegal on other grounds also. It is submitted that it is settled law that the Commercial Tax Officer-the Assessing Authority itself has no right to ignore the certificate issued by the competent authorities under the Scheme of 1987 wherein the assessee was declared entitled to 100% tax exemption benefit. If the Assessing Authority was of the view that the tax exemption has been granted wrongly by the competent under the Scheme of 1987, then also the Assessing Authority should have moved for correction in the tax exemption certificate of the assessee but till that the tax exemption certificate is set aside or modified, the Assessing Authority is bound by the tax exemption certificate. It is also submitted that the Assessing Authority passed by impugned order on 11.1.1996 on the basis of the amendment made in the year 1991 by notification dated 11.1.1990. Before proceedings could have been initiated by the Assessing Authority in present all matters, the relevant provisions under the Scheme of 1987 itself was amended by issuing notification on 10.12.1996 whereby the reduction in the tax benefit itself was deleted. Meaning thereby the date on which the assessee availed the tax exemption to the extent of 100%, he was holding a valid tax exemption certificate and on the date when the

Assessing Authority passed the order, there was no notification reducing the tax benefit of the assessee. In view of the above reasons, the order of the Assessing Authority was wholly without jurisdiction. It is also submitted by the learned counsel for the respondent with the help of the Division Bench judgment of this Court delivered in the case of Mumal

Marbles Ltd. vs. State of Rajasthan and anr. (130 STC 160) wherein it has been held that where deletion of explanation without saving clause then re-assessment after deletion on the basis of then existing provision, cannot be made. Therefore, in the present matters also, when there is no clause saving the notification dated 11.1.1990, in the notification dated 10.12.1996, then the Assessing Authority could not have assessed the tax on the basis of notification which itself was never in existence.

The learned counsel for the assessee-respondent relied upon the judgment of the Hon'ble Supreme Court delivered in the case of

Kolhapur Canesugar Works Ltd. And anr. vs. Union of India & ors. (JT 2000(1) SC 453) in support of his contention that the deleted provision, without there being any saving clause, cannot be enforced.

I considered the submissions of the learned counsel for the parties.

In view of the fact that the issue involved in these matters has already been considered by the Hon'ble Supreme Court in the case of

State of Rajasthan and ors. vs. Bhatnagar Cement Co. (Pvt. ) Ltd. (125

STC 290), these revision petition deserves to be allowed in part so that all the issues can be decided by the tax authority first, including the plea of applicability of the principle of promissory estoppel as taken by the assessee and for which the complete factual particulars are not on record and, therefore, the revenue had no opportunity to meet with the plea of the assessee about the applicability of the doctrine of promissory estoppel in present matters. Since the assessee's plea of promissory estoppel was accepted by the Deputy Commissioner(Appeals) and the Rajasthan Tax Board, Ajmer, therefore, the petitioner's other objections were not considered and otherwise also the assessee's other objections are also legal objections depending upon facts then the assessee may now submit his other arguments before the tax authority who may decide all issues.

In view of the above reasons, all the six revision petitions are partly allowed. The order of the Rajasthan Tax Board, Ajmer dated 11.2.2003 as well as the Deputy Commissioner(Appeals) dated 1.5.1998 are set aside and the matters are remanded back to the Deputy

Commissioner(Appeals) so that the Deputy Commissioner (Appeals) may permit the assessee to plead and place on record the factual foundation for his claim of applicability of the doctrine of promissory estoppel and to allow the revenue to meet with the plea of the doctrine of promissory estoppel set up by the assessee. While doing so, the Deputy

Commissioner(Appeals) shall also allow the assessee to raise all the pleas which the assessee has raised before this Court mentioned above and in support of his entitlement of claiming 100% tax exemption in the light of the various decisions of this Court as well as of the Hon'ble Supreme

Court.

( PRAKASH TATIA ),J. mlt.


Copyright

Reproduced in accordance with s52(q) of the Copyright Act 1957 (India) from judis.nic.in, indiacode.nic.in and other Indian High Court Websites

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