AUGUSTAN TEXTILE COLOURS LIMITED (NOW AUGUSTAN TEXTILE COLOURS PVT LIMITED) versus DIRECTOR OF INDUSTRIES & ANR

Citation: [2022] 15 S.C.R. 104 · Decided: 08-04-2022 · Supreme Court of India · Bench: K.M. JOSEPH · Disposal: Dismissed

cites 4 · see the full citation network in Lexace

Judgment (excerpt)

A
B
C
D
E
F
G
H
104
SUPREME COURT REPORTS
[2022] 15 S.C.R.
AUGUSTAN TEXTILE COLOURS LIMITED (NOW AUGUSTAN
TEXTILE COLOURS PVT LIMITED)
v.
DIRECTOR OF INDUSTRIES & ANR.
(Civil Appeal No. 2830 of 2022)
APRIL 08, 2022
[K. M. JOSEPH AND HRISHIKESH ROY, JJ.]
Kerala General Sales Tax Act,1963 – s.10 – Sick Industrial
Companies (Special Provisions) Act, 1985 – ss.17,18, 19 and 20 –
Tax exemption – The case involves the withdrawal of tax exemption
benefits granted to the appellant, who had revived a sick industrial
unit under the Sick Industrial Companies Act – Government by
exercising its power under Section 10(3) of the KGST Act, 1963 by
an order of 2006 withdrew the exemption granted earlier – This
prompted the appellant to file a petition in the High Court
challenging the 2006 order – The High Court doubted whether the
exemption could have been extended to the appellant alone instead
of a class of industries and upheld the order of Government – The
appellant approached the Supreme Court – Held: (Per Hrishikesh
Roy, J.) : The power to grant exemption u/s 10(1) is in respect of a
class of persons and was never intended for an individual industrial
unit like appellant – When this aberration was noticed and it was
seen that amongst similarly engaged units in the same business, the
appellant was the only one enjoying the benefit of exemption, the
2006 government order was issued withdrawing the exemption
granted – Even though appellant was granted benefit of tax
exemptions, it cannot be continued for further assessment years, as
that would amount to perpetuating and condoning a wrong, which
is opposed to public policy – Benefit of equitable doctrine of
estoppel cannot be extended to the appellant as in that case the
State Authority would be obligated to act in a manner which is
contrary to legislative mandate – Judgment of High Court was upheld
– (Per K.M Joseph, J.) (concurring): Appellant cannot pitch its case
higher than at the limit under Order dated 25.11.1994 – Exemption
of sales tax is contemplated for a period of two years – Maximum
period in any case is 5 years – In the case of the appellant, the
appellant enjoyed the benefit of the exemption till it was withdrawn
   [2022] 15 S.C.R. 104
104
A
B
C
D
E
F
G
H
105
on 21.11 2006 – Appellant enjoyed the benefit of exemption for
nearly 4 years – Appellant is a company which is making profits –
Appeal must fail.
Dismissing the appeal, the Court
HELD:
Per Hrishikesh Roy, J.:
1.The gap between the 2004 Government Order and the
Government Order dated 21.11.2006 shows that the appellant
was enjoying the benefit for a fair duration. Significantly, the power
to grant such tax benefit is not seen in any other State Legislation
but only in Section 10(1) of the Kerala General Sales Tax Act,
1963. The power to grant exemption under Section 10(1) is
however in respect of a class of persons and was never intended
for an individual industrial unit like the appellant. When this
aberration was noticed and it was seen that amongst similarly
engaged units in the same business, the appellant was the only
one enjoying the benefit of exemption, the 2006 government
order was issued withdrawing the exemption granted on
20.3.2004. [Para 20][115-G-H; 116-A-B]
2. Undoubtedly, the government was empowered under
Section 10(3) to withdraw the exemption at any time and therefore,
it cannot be said that the principle of promissory estoppel by
itself, will facilitate the appellant to challenge the 2006
Government Order. It must be pointed out that a number of
concessions were offered to the appellant under the 2004
Government order and it is discernible that payments under
several heads were not set apart for the appellant, notwithstanding
their role in revival of the sick unit. [Para 21][116-B-C]
3. The present dispute pertinently is only with regard to
the exemption relatable to sales tax/works contract tax and it is
nobody’s case that past arrears of sales tax/works contract tax
payable by the sick units, were completely waived. Factoring this,
the writ court as well as the Division Bench opined that sub-
clause (1)(b) of 2004 Government Order relating to waiver of tax
in the State is of such wide amplitude that the same must be seen
as uncertain and vague. Also importantly, such exemption cannot
continue indefinitely and particularly not beyond the point at which
the revival of the sick unit is seen. [Para 22][116-D-E]
AUGUSTAN TEXTILE COLOURS LTD. (NOW AUGUSTAN TEXTILE
COLOURS PVT LTD.) v. DIRECTOR 

Excerpt shown. Read the full judgment & AI analysis in Lexace.