BHARAT GENERAL & TEXTILE INDUSTRIES LTD. & ORS. versus STATE OF MAHARASHTRA & ORS.

Citation: [1988] SUPP. 3 S.C.R. 72 · Decided: 19-09-1988 · Supreme Court of India · Bench: A.P. SEN · Disposal: Dismissed

Judgment (excerpt)

A 
B 
c 
D 
E 
F 
BHARAT GENERAL & TEXTILE INDUSTRIES 
LTD. & ORS. 
v. 
STATE OF MAHARASHTRA & ORS. 
SEPTEMBER 19, 1988 
[A.P. SEN AND S. NATARAJAN, JJ.] 
Constitution of India, 1950: Articles 14. 19( 1) (g) and 300A-
Sections 41 and 41A of Bombay Sales Tax Act-Validity of-Whether 
there is conferment of arbitrary power on State Government to exempt 
units from sales tax. 
Bombay Sales Tax Act: Sections 41 and 41A and Package 
Scheme of incentfres 1979-Whether confers arbitrary power of exemp-
tion on State Go<"ernment to exempt units from payment of Purchase 
Tax, Sales Tax and Central Sales Tax. 
By virtue of the notifications issued by the Government of 
Maharashtra in exercise of its powers under section 41 of the Bombay 
Sales Tax Act, the new industries set up in backward areas for the 
production of edible as well as non-edible oils came to enjoy the benefit 
of exemption from paying purchase tax/sales tax. Subsequently, the 
Government of Maharashtra amended the Act and introduced section 
41A by virtue of which the tax exemption facility originally granted 
under the Package Scheme of Incentives, 1979 to edible oil units stood 
withdrawn earlier than stipulated in the exemption notifications. The 
withdrawal of the tax exemption however did not apply to units engaged 
in producing non-edible oils. 
The petitioner in one petition has challenged the constitutional 
validity of section 41, while the petitioners in the other two writ peti-
tions challenged the validity of section 41A. 
The petitioner in the first petition, who was engaged in the pro-
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duction of washed cottonseed oil, in an old unit, contends that (i) the 
power of exemption can be granted on any specified class of sales or 
purchases from payment of tax, and the Government was not entitled to 
grant exemption only in favour of new units set up in backward areas, 
(ii) section 41 confers arbitrary powers of exemption on the State 
Government so as to exempt new units from the payment of purchase 
H 
tax, sales tax and central sales tax, thus placing old units in a very 
72 
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BHARAT GENERAL & TEXTILE INDS. v. STATE 
73 
disadvantageons position, and (iii) washed cottonseed oil is also edible 
oil although it requires some processing for making it fit for human 
consnmption, and therefore the new washed cottonseed oil units should 
also he classified as units producing edible oils and subjected to purch-
ase tax and sales tax, 
The petitioners in the other two petitions contend that the 
Government was precluded by Promisory Estoppel from going back on 
the incentive Scheme, before the expiry of the full term of tax exemption 
benefit period. 
Dismissing the writ petitions, it was, 
HELD: (I) Section 41 has been provided in order to enable the 
State Government to grant exemption from payment of purchase tax/ 
sales tax on any specified class of sales or purchases in public interest. It 
is not as if the power has been given to the government to act in an 
arbitrary manner or for conferring largess on any section of manu-
facturers or traders. Section 41 has withstood the test of time and has 
enabled the government to promote public interest, by granting tax 
exemption benefit, whenever needed. l8IA-D] 
A 
B 
c 
D 
(2) The words "exempt any specified class of sales or purchases" 
could well be construed as applying to the grant of exemption to the 
new units because the sales and purchases effected by new entrants 
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would constitute a specified class by themselves in contra distinction 
with the class of sales and purchases effected by the older and seasoned 
units. l82C-D] 
(3) Even though edible and non-edible oils may fall nnder the 
general heading of 'oils' they undoubtedly constitute two separate 
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groups which are capable of distinct classification on intelligible 
basis. l83A-BJ 
( 4) The Package Incentives Scheme was only evolved to provide 
incentive to enterpreneurs to start new units in backward areas. It 
could never have been the intention or the object of the Government 
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that the entt!rpreneurs should unjustly enrich themselves at the cost 
of the public exchequer or to be given competing ability with the 
older units to such an extent as to virtually drive the latter out of the 
business. 
(5) Since the very foundation of the Scheme for giving tax. ff 
74 
SUPREME COURT REPORTS 
[1988] Supp. 3 S.C.R. 
A exemption benefits is public interest, the government was not only 
entitled but it was under an obligation to withdra

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