POURNAMI OIL MILLS, ETC. versus STATE OF KERALA & ANR.

Citation: [1987] 1 S.C.R. 654 · Decided: 19-12-1986 · Supreme Court of India · Bench: P.N. BHAGWATI · Disposal: Appeal(s) allowed

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

Judgment (excerpt)

A 
POURNAMI OIL MILLS, ETC. 
v. 
STATE OF KERALA & ANR. 
DECEMBER 19, 1986 
B 
[P.N. BHAGWATI CJ AND RANGANATH MISRA,J.] 
c 
Kera/a General Sales Tax Act, 1963: s.10-Power of Government 
to grant exemption and reduction of Tax-Small Scale Industries-
Purchase Tax and Sales Tax Concession-Whether could be 
withdrawn. 
Promissory estoppel-Applicability of. 
Section 10 of the Kerala General Sales Tax Act, 1963 emJMlwers 
the Government in public loterest to make an exemption or reduction in 
rates either prospectively or retrospectively in respect of any tax pay-
D able under the Act. 
The State Government with a view to boost industrialisation, by 
an order dated ! Ith April, 1979 offered incentive to Small Scale in-
dustries, to be set up thereafter, in the fonr of exemption from sales tax 
and purchase tax for a period of five years from the date of commence-
E ment of production. By a second order dated 29th September, 1980, 
published in the Gazette on 21st October, 1980 purJM1rted to be made 
under s.10 of the Act, the Government withdrew the exemption relating 
to purchase tax and confined the exemption from sales tax to the limit 
specified. 
· 
F 
The appellants who set up their industries after April 11, 1979, 
' ..... 
. ,.-. 
including those who did it after 21st October, 1980, claimed benefit of 
exemption from purchase tax and sales tax in terms of the first order. 
Tbey pleaded the rule of estoppel against the State Government in 
),. 
making the second order. The High Court in dismissing their Writ 
Petitions proceeded on the footing that the first order was not made in 
G 
exercise of statutory JMIWer while the second order was issued under 
s.lOoftheAct. 
Allowing the appeals by Special Leave, the Court, 
HELD: I. Where the authority making an order has JMIWer con-
H ferred upon it by statute to that effect, soch an order if made without 
654 
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POURNAMI OIL MILLS v. STATE OF KERALA [MISRA, J.] 
655 
indicating the section under which it is made, it would be deemed to 
have been ·made under the enabling provislon. In the instant case, 
A 
therefore, both the orders are covered by s.10, though in the earlier 
order there was no reference to the statutory provision. [658G·Hl 
2. The appellants who in response to the first order dated April 
11, 1979 set up their industries prior to 21st October, 1980 would be B 
entitled to exemption extended and/or promised under that order. Such-
. exemption would continue for the full period of five years from the date 
they started production. New industries set up after 21st October, 1980 
would not be entitled to that benefit as they had noticed of the curtail· 
ment in the exemption before they came to set up their industries. They 
would be entitled to exemption from-sales la)< only to the limit specified c 
in the second order. [659G·600A] 
' 
3. If in. response to an order made by the Government and in consi· 
deration of the concession made available therein the promoters of any 
small scale concern set up their industries within the State, they would 
D 
certainly be entitled to plead the rule of estoppel· in their favour when 
the State purports to act differently. In the facts of the present case, · 
however, the plea of estoppel is unanswerable. [6598.F] 
Motilal Padampat Sugar Mills Co. Ltd. v. State of V.P. [1979] 2 
SCC 409, Baku/ Cashew Co. v. Sales Tax Officer, Qui/on, [1986] 
2 sec 365, referred to. 
E 
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 626 
of 1986 etc. 
From the Judgment and Order dated the 7th June, 1984 of the 
Kerala High Court in 0.P. No. 6642 of 1982 
F 
Soli J. Sorabji, G.V. Iyer, A.S. Nambiar; S. Kumar, E.M.S. 
Anam and R.N. Keswani for the Appellants. 
T.S.K. Iyer, V.J. FrancisandN.M. PoplifortheRespondents. 
G 
The Judgment of the Court was delivered by 
RANGANATH MISRA, J. All these appeals are by special leave 
and are directed against judgments rendered-by the Kerala High Court 
in Writ Petitions filed before it. The High Court in each case refused to 
grant relief. 
H 
656 
SUPREME COURT REPORTS 
[1987] 1 S.C.R. 
A 
Two Notifications/Orders issued by the State Government are 
relevant. The first one is dated 11.4. 1979 and the second is dated 
29.9.1980 which was published in the State Gazette on 21.10.1980. For 
convenience, the texts of the two Notifications/Orders are extracted 
below: 
B 
"Order dated 11.4.1979: 
The incentives now given to the industries in the State a;·e 
too meag

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