SALES TAX OFFICER AND ANR. versus M/S SHREE DURGA OIL MILLS AND ANR.

Citation: [1997] SUPP. 6 S.C.R. 488 · Decided: 15-12-1997 · Supreme Court of India · Bench: S.C. SEN · Disposal: Appeal(s) allowed

Judgment (excerpt)

A 
SALES TAX OFFICER AND ANR. 
v. 
MIS SHREE DURGA OIL MILLS AND ANR. · 
DECEMBER 15, 1997 
B 
(SUHAS C. SEN AND SUJATA V. MANOHAR, JJ.) 
Administrative Law : 
Promissory estoppel-Applicability o_rWhen. not applicabl~State 
C Govemment under its lndusflial Policy Resolution (IPR) granted exemption 
for five years from payment of sales tax/purchase tax ta ce1tain industries on 
vmious iteins-Mode of exemption to be issued separately by the depmtment 
concemed and not under the IPR - Sales tax exemption granted to new 
indust1ies under Section 6 of the Orissa Sales Tax Act-Exemption sub-
sequently withdrawn by the State in public interest, by the exercise of same 
D power under Section 6 of the Act-lndusfly alleged to be set up after the 
introduction of IPR, claimed exemption from payment of sales tax on the 
doct1ine of promisso1y estoppel--No mate1ial to show that the industly was 
set up 011 the basis of IPR-Held, principles of promisso1y estoppel not 
applicabl~Withdrawal of notification under Section 6 of the Act done in 
E public interest on the basis of resources cnmch--Hence the Cowt will not 
inte1fere with any such actio11 taken by the Stat~Fwther held, the indust1y 
affected by the State action must be deemed to know that notificatio11 was 
liable to be amended or resci11ded at a11y time under Sectio11 6 of the 
Act-Sales Tax-Orissa Sales Tax Act, 1947, Section 6. 
F 
Public interest-May ovenide consideration of p1ivate loss or gai11. 
The industry department of the State Government issued an In-
dustrial Policy Resolution (IPR) on 18.7.1979. Clause (8) of the IPR 
provided specific industries certified as such by the Government and small 
G scale industries to be exempt from purchases/sales tax for five years on 
construction material, raw material, machinery and packaging materials. 
The IPR further provided that Government orders would be issued laying 
down the mode of administering the concessions and incentives by the 
department concerned. The IPR was effective for the period 1979- 83. Sec-
tion 6 of the Orissa Sales 'fax Act provides that the State may, by notilica· 
H tion, exempt from tax the sale or purchase of any goods or class of goods 
488 
SALES TAX OFFICER v. DURGA OIL MILLS 
489 
and likewise withdraw any such exemption. State Governm.ent had issued 
a notification under Section 6 of the Act on 11.11.1969, by which raw 
materials which went into manufacture of the finished goods were exempt 
from payment of sales/purchase tax when such goods were sold to 
registered dealer who was a manufacturer inside the State and who had 
started production after 1.4.1969. A similar notification dated 23.4.1976 was 
issued, granting exemption to raw materials purchased by a manufacturer 
for a further period of five years from the date on which the production had 
commenced. The exemption notifications were withdrawn by a notification 
dated 20.5. 1977 but were again restored by another notification dated 
9.9.1977 but in that notification the exemption was limited only to the 
industries which had started prnduction prior to 1.4.1977. 
The respondent claimed to have set up its industry pursuant to the 
IPR by obtaining huge loans from Bank, and commenced its production on 
19.3.1980 and hence it was not eligible for the exemption under notification 
dated 9.9.1977. The respondent was assessed to tax for the subsequent 
assessment years, which was challenged by the respoudent before the _High 
Court by filing a writ peti~on invoking the doctrine of promissory estoppel, 
claiming that the respondent was entitled to tax exemption on purchase of 
raw materials as promised by the Government under the IPR, which was 
allowed by the High Court. Hence this appeal by the Revenue. 
Allowing the appeal, the Court 
HELD· : 1.1. The IPR on which reliance has been placed by the 
respondent was issued on 18.7.1979. A provisional registration certificate 
in respect of the respondent's industry was issued on 28.11.1979. The 
respondent has not given factual details of how in the short span of about 
four months, it set up its industry on the basis of the IPR. [ 495-D] 
1.2. Any IPR can be changed if there is an overriding public interest 
involved. In the instant case, it has been stated on behalf of the State that 
various notifications granting sales tax exemptions to the dealers resulted 
in severe resource crunch. On reconsideration of the financial position, it 
was decided to limit the scope of the earlier exemp

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