LexM/S. K.B. TEA PRODUCT PVT. LTD. & ANR. versus COMMERCIAL TAX OFFICER, SILIGURI & ORS.
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A B C D E F G H 828 SUPREME COURT REPORTS [2023] 8 S.C.R. M/S. K.B. TEA PRODUCT PVT. LTD. & ANR. v. COMMERCIAL TAX OFFICER, SILIGURI & ORS. (Civil Appeal No. 2297 of 2011) MAY 12, 2023 [M. R. SHAH AND KRISHNA MURARI, JJ.] Doctrines/Principles – Doctrine of legitimate expectation – West Bengal Sales Tax Act, 1994 – ss.2(17), 17(3)(a)(xi), 39 – West Bengal Finance Act, 2001 – West Bengal Sales Tax Rules, 1995 – r.52 – Bengal Finance (Sales Tax) Act, 1941 – s.2(dd) – Whether despite s.2(17) of the 1994 Act which was amended w.e.f. 01.08.2001, omitting “tea blending” from the definition of “manufacture”, the appellants shall still be entitled to the exemption from payment of sales tax – Held: Per M.R. Shah, J. Nobody can claim the exemption as a matter of right – To grant/continue/ withdraw the exemption is a policy decision – Unless withdrawal is found to be so arbitrary, the Court would be reluctant to interfere – Prior to 2001, as per s.2(17), 1994 Act, the activity of “tea blending” was included in the definition of “manufacture” – Therefore, being in the activity of “tea blending”, the appellants were entitled to the exemption from payment of sales tax as manufacturers – However, consequent to the amendment, when the activity of “tea blending” was excluded from the definition of “manufacture”, the appellants ceased to be the manufacturers and thus, on and from 01.08.2001, they were not entitled to the exemption – There cannot be any promissory estoppel against the statute – This is not a case of “vested right” but of “existing right”, which can be varied or modified and/ or withdrawn – View taken by the Tribunal and the High Court agreed with – Per Krishna Murari, J. [Dissenting (on the applicability of the doctrine of legitimate expectation)] The tax holiday granted by way of an amendment to small scale industries involved in the manufacture and blending of tea, created a legitimate expectation in favour of the appellants – This legitimate expectation was broken when a subsequent amendment was brought removing “blending of tea” from the definition of “manufacture” – To justify such a shift in policy, and snatch away the legitimate expectation created in favour of the appellants, the public authority must [2023] 8 S.C.R. 828 828 A B C D E F G H 829 demonstrate the reasons for such a shift – However, no such appropriate justification was provided – A mere claim of change of policy not sufficient to discharge the burden of proof vested in the government – Respondents to extend the benefits of the original amendment to the appellants, till the expiry of such benefit as per the original amendment – In view of divergence of opinion, matter to be placed before the Hon’ble the Chief Justice of India for appropriate orders – State Scheme of Incentives for Cottage and Small-Scale Industries, 1993 – West Bengal Incentive Scheme, 1999. Manuelsons Hotels Private Limited v. State of Kerala & Ors. (2016) 6 SCC 766 : [2016] 3 SCR 718; MRF Ltd., Kottayam v. Assistant Commissioner (Assessment) Sales Tax & Ors. (2006) 8 SCC 702 : [2006] 6 Suppl. SCR 417; Motilal Padampat Sugar Mills Co. Ltd. v. State of Uttar Pradesh & Ors. (1979) 2 SCC 409 : [1979] 2 SCR 641; State of Jharkhand & Ors. v. Brahmputra Metallics Ltd. Ranchi & Anr. Civil Appeal Nos. 3860- 3862 of 2020; Dai-ichi Karkaria Ltd. v. Union of India & Ors. (2000) 4 SCC 57 : [2000] 2 SCR 1254 – held not applicable. Directorate of Film Festivals & Ors. v. Gaurav Ashwin Jain & Ors. (2007) 4 SCC 737 : [2007] 5 SCR 7 – referred to. Sub-Committee on Judicial Accountability v. Union of India and Ors. (1991) 4 SCC 699 : [1991] 2 Suppl. SCR 1 – followed. State Of Kerala & Ors. v. K.G. Madhavan Pillai & Ors. (1988) 4 SCC 669 : [1988] 3 Suppl. SCR 94; Navjyoti Coop. Group Housing Society & Ors. v. Union of India & Ors. (1992) 4 SCC 477 : [1992] 1 Suppl. SCR 709; Food Corporation Of India v. Kamdhenu Cattle Feed Industries (1993) 1 SCC 71 : [1992] 2 Suppl. SCR 322; M. P. Oil Extraction & Anr. v. State Of M.P. & Ors. (1997) 7 SCC 592 : [1997] 1 Suppl. SCR 671; MRF Ltd. Kottayam v. Assistant Commissioner Sales Tax & Ors. (2006) 8 SCC 702 : [2006] 6 Suppl. SCR 417; Howrah Municipal Corporation & Ors. v. Ganges Rope M/S. K.B. TEA PRODUCT PVT. LTD. v. COMMERCIAL TAX OFFICER, SILIGURI A B C D E F G H 830 SUPREME COURT REPORTS [2023] 8 S.C.R. Company Ltd. & Ors. (2004) 1 SCC 663 : [2003] 6 Suppl. SCR 1212; Madras City Wine Merchants Association & Anr. v. State Of Tamil Nadu & Anr. (1994) 5 SCC
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