BAKUL OIL INDUSTRIES & ANR. versus STATE OF GUJARAT & ANR.

Citation: [1987] 1 S.C.R. 185 · Decided: 11-11-1986 · Supreme Court of India · Bench: M.P. THAKKAR · Disposal: Dismissed

Cited by 2 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

BAKUL OIL INDUSTRIES & ANR. 
v. 
STATE OF GUJARAT & ANR. 
NOVEMBER l l, 1986 
[M.P. THAKKAR AND S. NATARAJAN, JJ.) 
Gujarat Sales Tax Act, 1969: ss. 15 & 49(2)-Tax exemption for a 
period of five years from commissioning of industry- Withdrawal of-
Effect and validity of Government notification. 
8 
~ ,-
Promissory estop~e/-Doctrine of-Grant of exemption from 
1 sales ta~ to new industry-W ith~rawal of-Whether permissible. 
C 
By a notification dated April 29~.J 970 issued under s. 49(2) of the 
Gujarat Sales Tax Act, 1969 the State Government exempted wholly or 
partly from payment of sales ,tax or purchase tax certain specified clas; 
ses of sales and purchases·described in entries I to 52 in the Schedule. 
This notification was subsequently amended by another dated D 
No-vember 11, 1970 by adding a new entry No. 53 in the Schedule· 
exempting a manufacturer, who established a new industry, from the 
whole of (a) purchase tax under s. IS of the.Act, (b) sales tax leviable 
under. the Act, for a period of five years from the date or commissioning 
the industry. By another notification issued on July 17, 1971 the 
Government amended the explanation cootained in the second notifica- E 
tion therebj taking out certain industries, including oil mills, out of the 
purview of the Act. 
The appellants' oil mill set up in a conforming area, was commis-
sioned oo May 14, 1970. Their application for eligibility certificate for 
claiming exemption from payment of sales tax as per the second notifi- F 
cation having been rejected by the Industries Commissioner, they filed 
~ 
special civil application under Art. 226 of the Coostitution for an 
urder directing the Industries Commissioner to grant them eligibility 
~ertificate. It was contended for them that the notification dated July 
J 7, I 97 I would have no effect on the eligibility already acquired by 
them io.tenns oftbe second notification. 
G 
The High Court took the view that the notification dated July 17, 
1971 was oDly prospective in operation and not retrospecti~e, that it did 
oot affect the exemption enjoyed by thi petitioners under the s«ood 
notification in respect or the purchases and sales effected prior· to July 
r 7 1971 and that the second notification created only exiSting rights 
··and not vested rights and such existing rigbtS could be taken away by H 
185 
186 
SUPREME ·COURT REPORTS 
l 
[1987) I 'S.C.R~ 
A the subsequent notification. It, therefore, held that the appellants were 
entitled tc) exemption from payment of tax only for the period anterior 
to July 17, 197 l, and for the period thereafter they had no rights to 
claim exemption. 
In this appeal by certificate under Art. 133(l)(c) of the Constitu-
B tion it was contended for the appellants that by virtue of the first and 
the second notifications they had acquired a vested right to a tax ho9iday 
for a period of five years and the Government acting in exercise of the 
delegated powers did not have competence to nullify the exemption by 
giving retrospective effect to its notification dated July 17, 1971, and\ 
that in any event they were entitled to the benefit of tax exemption for a · 
C , period of five years on the ground of promissory estoppel and the 
Government was obligated to give tax exemption for the full period of 
the claim. 
Dismissing the appeal, the Coort, 
D 
HELD: l. The appellants are entitled to the benefit of tax exemp-
tion only for the limited period during which the concession was offered 
by the Government. [l94F] 
2. Since the first notification dated April 29, 1970 did not stipu-
late as to how long the exemption from sales tax would remain in opera-
E tion the concession granted thereunder was to have operative force only 
till such time that it was allowed to remain in force before being with-
drawn by the subsequent notification. The second notification dated 
November I I, 1970 which set out that the exemption granted would be 
operative for a period of five years from the date or commissioning or 
the industry at any time during the period from April I, I970 to March _j 
F 31, 1975, was prospective in operation. It woold, therefore, apply on~ 
to those new industries which were commissioned subsequent to 
issuance thereof. As the appellants' unit was commissioned several 
~ 
months before the second notification the same cannot be invoked by 
them for claiming benefit of tax exemption for a period or five years 
from the date of commissioning of their mill. [l9IE

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