LexASSISTANT COMMISSIONER OF COMMERCIAL TAXES (ASST.) DHARWAR versus DHARNENDRA TRADING COMPANY, ETC. ETC.
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ASSIStANT COMMISSIONER OF COMMERCIAL TAXES
(ASST.) DHARWAR
v.
DHARNENDRA TRADING COMPANY, ETC. ETC.
MAY 5, 1988
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[R.S. PATHAK, CJ'AND M.H. KANIA, J.]
Karnataka Sales Tax Act, 1957-Whether Government has power
to notify exemptions and reductions in levy of tax on sale or purchase of
goods under section BA of-Whether Government can withdraw con-
c cessions in sales tax granted by its earlier order on ground of alleged
misuse of concessions without proof thereof-Against the Doctrine of
Promissory Estoppel.
The Government of Karnataka issued an order dated the 30th
June, 1969, sanctioning in-centives and concessions in the matter of
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sales tax to the entrepreneurs for starting new industries in the Mysore
State. On the 12th January, 1977, the Government issued another
order, presecribing ceiling limits on the quantum of the sales tax or
concession to be granted. Thereupon several persons filed writ petitions
before the High Court, claiming that they had started new Industries In
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the State because of the concessions granted to them under the order
E .dated the 30th June, 1969 and they could not be deprived of the conces-
sions given to them by the former order as the said grant of concessions
constituted a promissory estoppel against the Government and the Gov-
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ernment was not entitled to go back on the promise. The High Court
upheld the contention of the petitioners and allowed the writ petitions.
Against the decision of the High Court, these appenls were filed in this v
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Court by the Assistant Commissioner of Commercial Taxes and others.
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Dismissing the appeals, the Court,
HELD: The contention of the appellants that the doctrine of
Promissory Estoppel was not applicable in this case because the conces-
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sions granted under the order dated 30th June, 1969 were being mis-
used, could not be accepted. There was nothing to show that any misuse }
was made of the concessions. A recital in the order dated 12th January,
1977, regarding misuse of the concessions, could not by itself establish
that the concessions were misused. I 949F-G I
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There was no substance in the appellants' contention that the
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ASSTI. COMMR. OF COMMERCIAL TAXES v. D.T. CO. [KANIA,J.I 947
concessions granted by the order dated 30th June, 1969, were of no
legal effect of the contention that the said order was ultra vires and bad
in law, as there was no provision in the Kranataka Sales Tax Act ("the
said Act") under which any refund could be granted, and the State
Government bad no authority to provide for refunds. Though the be·
nefit regarding sales tax granted to the new industries was by way of
refunds of sales tax paid to the extent protided in the order, in effect,
the benefit granted was in the nature of an exemption from the payment
of the sales tax or reduction in the sales tax liability to the extent stated
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in the Order. The mere fact that the order of 30th June, 1969 did not
specify the power under which it was issued would make no difference
because such a power was there in Section SA of the said Act. Where the
source of power under which an order is issued is not stated in the order
but can be found on the examination of the relevant Act, the exercise of C
the power must be · attributed to that source. The appeals were
. dismissed. [95!C-E]
Union of India v. Mis Indo Afghan Agencies Limited, [1968] 2
S.C.R. 366; Century Spinning and Manufacturing Company Limited &
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Anr. v. The Ulhasnagar Municipal Council and Anr., [.1970) 3 S.C.R.
854; Ms Motilal l'adampat Sugar Mills Company Pvt. Ltd. v. State of
Uttar Pradesh and Ors., A.1.R. 1979 S.C.621 and State of Bihar and
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Anr. v. Usha Martin Industries Ltd., [1987) 65 STC 430, referred to.
CIVIL APPELLATE JURISDICTION: Civil A peal Nos. 2204·
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47of1980.
From the Judgment and Order dated 15.10.1979 of the High
Court of Karnataka in W.A. No. 1101to1144 of 1979.
P.R. Ramasesh for the Appellants.
T.S. Krishnamurthy, Vineet Kumar and H. Raghavendra Rao
for the Respondents.
The Judgment of the Court was delivered by.
KANIA, J. These appeals arise from the decision of a Division
Bench of the High Court of Karnatflka in Writ Appeals Nos. 1101 'to
1144 of 19791 It appears that the Government of Karnatflka decided to
adopt a policy to encourage rapid industria1isation. An Order No. CI
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58 FMI 69 dated 30th June, 1969 was issued which recited that the
Government, namely, the Government of Karnatflka wExcerpt shown. Read the full judgment & AI analysis in Lexace.