ARVIND INDUSTRIES AND ORS. versus THE STATE OF GUJARAT AND ORS.

Citation: [1995] SUPP. 3 S.C.R. 16 · Decided: 23-08-1995 · Supreme Court of India · Bench: A.M. AHMADI · Disposal: Dismissed

Judgment (excerpt)

A 
B 
c 
ARVIND INDUSTRIES AND ORS. 
v. 
THE STATE OF GUJARAT AND ORS. 
AUGUST 23, 1995 
f A.M. AHMADI, CJ, SUHAS C. SEN AND 
K. S. PARIPOORNAN, JJ.] 
Gujarat Sales Tax Act, 1969: Sections 49(2) and 86. 
Gujarat Sales Tax Rules, 1970: Rule 42-A. 
Sale Tax-Exemption to new i11dust1ies-Notification regarding-Claim 
of benefit by assessee-new i11dust0>-Held not available on facts-Held 
govemment is entitled to grant e.xemption--But can withdraw or modify fiscal 
D benefits from time to time-Held case of promiss01y estoppel was not made 
out by assessee. 
E 
The appellant established a solvant extraction plant at Junagadh 
and claims benefit of exemption from sales tax provided under a Notifica-
tion dated 11th November, 1970 issued by the respondent- State. Under 
this Notification a new industry which was commissioned at any time 
between 1st April, 1970 to 31st March, 1975 was entitled to the benefit of 
sales tax exemption for a period of five years from the date of commission-
ing of the industry. The assessee was also to obtain an eligibility certificate 
from the commissioner of Industries to the effect that the industry has 
F 
been commissioned in the area beyond prescribed municipal limits. The 
appellant states that by establishing the plant it had changed its position 
to its detriment by relying not only on the said notification but also on the 
strength of assurance held out by the Government in a press statement 
and the speeches made by the Chief Minister and the Finance Minister on 
G the floor by the house. Therefore it was entitled to the benefit of exemption 
and the Government was estopped from withdrawing the benefit as has 
been done by a subsequent .notification dated 17th July, 1971. In the 
connected appeal also, which involves similar facts, the contention of 
promissory estoppel was raised. 
H 
Dismissing the appeals, this Court 
16 
( 
1 
ARVIND INDS. v. STATE 
17 
• 
HELD : 1. The Government is entitled to grant exemption to in-
A 
dustries having regard to the industrial policy of the Government. It is 
equally free to modify its industrial policy and grant, withdraw or modify 
fiscal benefits from time to time. There is nothing in the notification dated 
11.11.1970 by which any assurance was held out to any industry. This° was 
an usual Government notification relating to purchase and sales tax, 
granting reliefs to certain industries on fulfilment of the conditions laid 
down in the notification. [20-F-G] 
2. The appellant has not been able to show that some definite 
promise was made by or on behalf of the Government and the appellant 
B 
had acted upon that promise to its detriment and thereafter the changes C 
effected by the Notification date 17th July, 1971 have caused great 
prejudice to the appellant. Therefore, it is not necessary to go into the 
question of applicability of the doctrine of promissory estoppel in the field 
of fiscal legislation. [21-F -G] 
3. The date of commencement of appellant's industry, according to D 
., 
the eligibility certificate obtained by the appellant from the Commissioner 
of Industries, is 3rd December, 1970. It is difficult to believe that the 
appellant, after the exemption Notification dated 11th November, 1970 was 
issued and on the basis of it, set up an oil extraction plant which com-
. menced production with in three weeks' time on 3rd December 1970. No E 
particulars have been given as to when the land was purchased, or when 
the plant and machinery for the industry were procured. [20-D-E] 
4. In the connected appeal the appellant had stated that on 31st 
August, 1970, it had set up the factory premises. This was long before the 
' 
exemption Notification dated 11th November, 1970. However, no dates F 
have been given for the purchase of machinery and spare-parts. But it has 
been stated that the production in the factory started from 31st December, 
1970. Thus having regard to the facts of the case and also nature of the 
two Notifications issued by the Government dated 11th November, 1970 
and 17th July, 1971, the factual basis for a case of promissory estoppel has G 
not been made out by the appellant. [22-B-D] 
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 951 of 
1976. 
From the Judgment and Order dated 24/25.6.76 of the Gujarat High H 
18 
SUPREME COURT REPORTS [1995] SUPP. 3 S.C.R. 
A 
Court in S.C.A. No. 468 of 1973. 
AND 
Civil Appeal No. 1011 of 1977. 
B 
From the Judgment and Order dated 9.7.76 of the Gujarat High 
c 
Court in 

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