Judgment:
Jagannadha Rao, J.
1. All these three writ petitions deal with the right of the three petitioner-companies for obtaining from the Government of Andhra Pradesh the amount payable towards 'Interest-free sales tax' (hereinafter called 'the IFST'). The first of the writ petitions, viz., W.P. No. 1861 of 1982 was filed by Sree Rayalaseema Paper Mills Ltd., Kurnool, in 1982 and during the pendency of this writ petition a large number of events took place, the most important of which is the passing of the Andhra Pradesh Interest-free Sales Tax Loans for Industries (Imposition of Ceiling) Ordinance, 1987 (Ordinance 1 of 1987) which was replaced by the Andhra Pradesh Interest-free Sales Tax Loans for Industries (Imposition of Ceiling) Act, 1987 (Act 20 of 1987) which was given retrospective effect from January 1, 1976. We shall first take up W.P. No. 1861 of 1982 and deal with the facts of that case and the subsequent events which are relevant to that writ petition and then decide the points arising in that case. Thereafter we shall refer to the two later writ petitions which are of recent origin and deal with them separately.
2. W.P. No. 1861 of 1982 :
The petitioner in this writ petition is Sree Rayalaseema Paper Mills Limited, Kurnool. The writ petition was filed on March 15, 1982, seeking for the issue of a writ of mandamus directing the respondents to disburse 'Interest-free sales tax loans' (IFST) of an amount of Rs. 297.47 lakhs.
3. The Government of Andhra Pradesh issued G.O. Ms. No. 224, Industries and Commerce, on March 9, 1976, proposing to revise the scheme of incentives for new industries to be set up in Andhra Pradesh. This Government Order makes reference to G.O. Ms. No. 1225, Industries and Commerce dated December 31, 1968 and also to G.O. Ms. No. 455, Industries and Commerce, dated May 3, 1971, and proceeds to state that in the light of the subsequent developments and situation obtaining in 1976, the Government proposed to revise these incentives so as to more effectively serve the purpose of bringing about repaid industrial growth in the State and also serve the purpose of bringing about such growth in all parts of the State, with particular attention to the backward talukas and blocks and to stimulate new entrepreneurial development. The principles of selectiveness and gradation were also to be introduced. On that basis, the State incentive scheme appended to that G.O. was issued to have effect from January 1, 1976, for a period of five years up to December 31, 1980. Apart from new industries, existing industries which go in for substantial expansion, i.e., additional fixed capital cost of a value not less than 25 per cent of the undepreciated value of the existing units' capital cost, are also eligible for those incentives. The scheme consists of three main parts : (A) Investment subsidy; (B) Interest subsidy for schemes of the educated self-employed and the technocrat, and (C) Interest-free sales tax loan. In these batch of writ petitions we are concerned with the last of these items. In the abovesaid G.O. Ms. No. 224 it is stated in respect of the IFST that the State Government will give an interest-free sales tax loan to all new industrial units and/or to those going in for substantial expansion in all the areas (excepting the Municipal Limits of Hyderabad, Secunderabad, Vijayawada and Visakhapatnam).
4. The petitioner strongly relies upon a letter dated February 28, 1977, from the Government addressed to the General Manager, Industrial Development Bank of India (IDBI), Bombay, agreeing to grant IFST loan to the petitioner-company in a sum of Rs. 100 lakhs. The abovesaid letter was written in reply to a letter from the IDBI to the Government on September 6, 1976, that the matter of bridging the gap of Rs. 200 lakhs in the project cost of the paper project of the petitioner-company was considered at the Inter-institutional Group meeting on August 2, 1976 and that the financing institutions had agreed to provide a terms loan for an amount of Rs. 100 lakhs. An earlier letter of the Ministry of Industries, Government of Andhra Pradesh, was also referred to in which the said Minister had indicated, at a meeting in July, 1976, the State Government's willingness to provide an amount of Rs. 100 lakhs to the project as advance IFST loan. The IDBI had requested the petitioner-company to confirm the financing arrangements for the project in terms of the said communication of the IDBI. In this letter dated February 28, 1977, the Government, therefore, confirmed that in terms of the incentive scheme, the paper project of the petitioner-company will be entitled to interest-free sales tax loan. The material portion of the abovesaid letter dated February 28, 1977 reads as follows :
'In terms of the incentive scheme, the paper project of M/s. Sree Rayalaseema Paper Mills Limited will be entitled to interest-free sales tax loan on sales tax paid on construction materials, raw materials, finished goods, etc. It is understood that the sales tax so payable will be of the order of Rs. 400 lakhs in the next 2 - 3 years by the company. In view of this, the State Government hereby confirm, that subject to formalities and verification, a amount of Rs. 100 lakhs will be made available to the company as interest-free sales tax loan.
I am to request that the term loan may be released to the company expeditiously on the basis of this letter of confirmation.'
5. Copies of the abovesaid letter of the State Government were also marked to the Andhra Pradesh Industrial Development Corporation as well as petitioner-company. It is on the basis of this letter that the petitioner has been claiming that the State Government was bound to give an IFST loan to the petitioner-company in a sum of Rs. 100 lakhs. The petitioner-company went into production on July 1, 1979 and had invested Rs. 4,381.68 lakhs towards fixed capital, the company is said to have paid up to December, 1981 Rs. 279.47 lakhs towards sales tax both under the A.P. General Sales Tax Act, 1957 and the Central Sales Tax Act, 1956, as stated in annexure A to the writ petition. The value of the fixed assets of the company is set out in annexure B as amounting to Rs. 4,381.68 lakhs. The company, therefore, contends that it is eligible for Rs. 279.47 lakhs as IFST loan inasmuch as this amount it less than 10 per cent of the total fixed capital cost. The petitioner stated that it had made representations to the Government and that by the letter dated February 28, 1977, the State Government had agreed to grant an advance of Rs. 100 lakhs as IFST loan but that it failed to give this advance to the petitioner-company in spite of several representations. The petitioner alleged that IFST loan had, however, been granted to certain other companies such as the Nagarjuna Steels, the Andhra Scooters and the Andhra Steels but not to the petitioner and that this was discriminatory. The petitioner also contended that principles of promissory estoppel apply to the facts of the case in view of the assurances given in G.O. Ms. No. 224 dated March 9, 1976. The petitioner also states that if the respondents are not in a position immediately to disburse the abovesaid amount, they should be restrained from collecting sales tax from the petitioner on finished goods which comes to Rs. 12 lakhs per month. On these allegations, the petitioner filed the present writ petition as long back as on March 15, 1982, for the issue of a writ of mandamus directing the respondents to disburse interest-free sales tax loans of Rs. 297.47 lakhs and for restraining the respondents from collecting sales tax (both under the Andhra Pradesh General Sales Tax Act and the Central Sales Tax Act) to the extent of the abovesaid sum.
6. Initially, a counter was filed by the respondents in April, 1982, by Sri J. K. Rao, Assistant Secretary to the Government, Industries Department, After setting out the terms of the G.O. and the contents of the letter dated February 28, 1977, addressed by the State Government to the IDBI and stating that the petitioner's application for grant of advance was belated, it was, however, submitted that the question of the grant of IFST loan was placed before the State Level Committee at its meeting held on November 8, 1980 and December 30, 1981, for consideration and that the matter was deferred. It was pointed out that during 1979-80, 124 industrial units in the State were granted IFST loan in a total sum of Rs. 55 lakhs while for the year 1980-81, 154 units were granted Rs. 100 lakhs and likewise in 1981-82, 85 units were given such loan totaling Rs. 75 lakhs. It was stated that no industrial unit in the State was paid more than Rs. 10 lakhs of IFST loan and that having regard to 'the meagre budget allocation for IFST loan and the increased number of industrial units in the State claiming eligibility for such loan, 'it was not possible for the Government to disburse the loan amount to the petitioner'. It was admitted that IFST loan was advanced to the Nagarjuna Steels and the Andhra Scooters Limited but only at the rate of Rs. 10 lakhs each. No amount was allotted to the petitioner inasmuch as the petitioner's claim was for a huge amount of loan. There was, therefore, no discrimination. Coming to the question of promissory estoppel, it was contended that the sanction of the loan depends upon various factors such as availability of the funds, the number of units applying for the loan and the amount for which the loan is sought. With limited budget provision made in the plan outlay approved by the Planning Commission, disbursement of IFST loan had to be made to hundreds of small, medium and large industrial units and taking all these matters into account the case relating to the petitioner was still under consideration and that Government 'did not make any promise' to the petitioner as to the sanction of Rs. 100 lakhs as IFST loan. No question of promissory estoppel, therefore, arises.
7. During the pendency of this writ petition from March, 1982 onwards, nothing further happened except that the terms of G.O. Ms. No. 224 dated March 9, 1976 were periodically extended up to August 29, 1983. During this period, as already stated the State Level Committee had recommended to the Government that the IFST loan under G.O. Ms. No. 224 dated March 9, 1976, should not exceed Rs. 10 lakhs in respect of each industrial unit. Be that as it may, the Government issued two G.Os. on September 9, 1986, in favour of two companies agreeing for IFST loan to the tune of Rs. 100 lakhs.
8. In G.O. Ms. No. 482, Industries and Commerce, dated September 9, 1986, the Government issued certain concessions to M/s. Bhadrachalam Paper Boards Limited. It was stated therein that the total IFST loan eligible under G.O. Ms. No. 224, Industries and Commerce, dated March 9, 1976 would be limited to a sum of Rs. 2 crores out of which an amount of Rs. 25 lakhs would be disbursed by way of cash disbursement as IFST loan and that the balance of Rs. 1.75 crores on IFST would be by way of deferment of sales tax payable by M/s. Bhadrachalam Paper Boards Limited over a period of two years, with a ceiling of Rs. 87. 5 lakhs during the financial year ending March 31, 1987 and that the balance amount of Rs. 87.5 lakhs would be during the financial year ending March 31, 1988. In the event of the amount actually retained during the financial year ending March 31, 1987, falling actually retained during the financial year ending March 31, 1987, falling short of Rs. 87.5 lakhs, the amount of such short-fall will be permitted to be set off by the company during the financial year ending March 31, 1988 in addition to the abovementioned amount of Rs. 87.5 lakhs permitted to be retained during the financial year ending March 31, 1988. Each year's loan is repayable in full at the end of the tenth year from the date of drawing the loan. It was stated that inasmuch as the said company had agreed to withdraw the court cases the comprehensive settlement on the lines mentioned in the G.O. was accepted by the Government. Appropriate instructions are to be issued to the Industries and Commerce Department and the Forest and animal Husbandry Department as well as the Revenue Department.
9. Similarly G.O. Ms. No. 483, Industries and Commerce, was issued on September 9, 1986, in respect of IFST loan and other concessions granted in favour of M/s. A. P. Rayons Limited, Hyderabad. It is stated therein that the total quantum of IFST loan eligible under G.O. Ms. No. 224 dated March 9, 1976, would be limited to a figure of Rs. 100 lakhs and this amount would be allowed to be retained by the Company in a period of two years, by retaining the sales tax payable by them, subject to the condition that the amount retained towards IFST loan does not exceed Rs. 50 lakhs in each year. Each year loan is repayable in full at the end of the 10th year from the date of drawing the loan. It is further stated that in the light of the declaration made by the company that they have not filed any court cases, the comprehensive settlement on the lines mentioned in the G.O. was accepted by the Government.
10. It will thus be seen that even thought the State Level Committee had earlier recommended that the amount of IFST loan should not exceed Rs. 10 lakhs in respect of each unit, the Government had issued these two G.O., viz., Ms. No. 482 and 483 on September 9, 1986, in favour of M/s. Bhadrachalam Paper Boards Limited and M/s. A.P. Rayons Limited agreeing to grant IFST loan in amounts up to Rs. 200 lakhs and Rs. 100 lakhs, respectively.
11. At that stage, W.P. No. 12008 of 1985, filed by Sri Ambuja Petrochemicals Limited for grant of IFST loan in a sum of Rs. 1,15,55,275 on the basis of G.O. Ms. No. 224 dated March 9, 1976, came up for hearing before a learned single Judge of this Court. The learned Judge after noting the recommendations of the State Level Committee that the IFST loan should not exceed Rs. 10 lakhs, came to the conclusion that in view of G.O. Ms. No. 224 and the other G.Os. extending its life, the State Level Committee could not come in the way of the petitioner in that writ petition and as long as G.O. Ms. No. 224 and the G.Os. extending the life of the said G.O. were not cancelled or modified, the petitioner in that writ petition viz., Sri Ambuja Petro-chemicals Limited could not be denied the grant of IFST loan as prayed for. The G.Os. passed by the Government were binding on it and have to be enforced. A group of subordinate officers constituting the State Level Committee could not go against the G.O. On that basis the said writ petition was allowed.
12. Against the said judgment in favour of M/s. Ambuja Petro-chemicals Limited, the State preferred W.A. No. 1088 of 1986. Along with the said writ appeal, W.P. No. 4461 of 1981 filed by another company, viz., Kesoram Cement came up for hearing. It appears that before the Division Bench the writ petitioners relied not only upon G.O. Ms. No. 224 dated March 9, 1976, but also upon another G.O. Ms. No. 375 dated August 23, 1985, which was a new scheme introduced in supersession of the one contained in G.O. Ms. No. 224 dated March 9, 1976. The writ appeal and the above said writ petition were disposed of by a Division Bench of this Court on December 19, 1986, stating that the learned advocates themselves had represented that the entire subject-matter of IFST loans was under consideration by the Government and that the Government was considering action either to withdraw G.O. 224 or to take appropriate legislative measures and that, therefore, no further orders need by passed. The operative portion of the order of the Division Bench in the Writ Appeal No. 1088 of 1986 reads as follows :
'In view of the representation by the learned Advocate-General, we consider the State Government may be enabled in eight weeks from today either to pass on executive order or issue an ordinance. If none of the courses is adopted in the period prescribed, the company to submit claims indicating the amount of IFST loan under what conditions of G.O. 224 or in virtue of any other scheme. The Government is obliged after receipt of such a claim within three months to pass appropriate orders. If the schemes in G.O. 224 and G.O. 375 are abrogated or modified, the affected can choose to seek remedies provided in law.'
13. The next important event to the noted is the issued of Ordinance 1 of 1987, on February 9, 1987, called the A.P. Interest-free sales Tax Loans for Industries (Imposition of Ceiling) Ordinance, 1987 with retrospective effect from January 1, 1976. The said Ordinance was replaced by Act 20 of 1987 published on April 13, 1987 in the Gazette and it was called the A.P. Interest-free Sales Tax Loans for Industries (Imposition of Ceiling) Act, 1987. This was also given retrospective effect from January 1, 1976. Sections 2 and 3 of the said Act are important and read as follows :
'Section 2, Sanction of interest-free sales tax loan. - The State Government may fix the maximum of the interest-free sales tax loan during the period from the 1st January, 1976 to the 31st March, 1984, in respect of new industrial units which go into regular production on or after the 1st of January, 1976 and such other industrial units going in for substantial expansion, situated in all the areas of the State of Andhra Pradesh excepting in the Municipal Corporation limits of Hyderabad, Vijayawada and Visakhapatnam, notwithstanding the limits specified in G.O. Ms. No. 224, Industries and Commerce Department, dated the 9th March, 1976 and as subsequently modified from time to time.
Section 3. Ceiling on interest-free sales tax loan.- Notwithstanding anything in any judgment, decree or order of any court, Tribunal or other authority or any order to the contrary, the maximum amount of interest-free sales tax loan granted as an incentive to the new industries which have gone into regular production on or after the 1st of January, 1976 and those industries which go in for substantial expansion situated in all the areas of the State of Andhra Pradesh excepting in the Municipal Corporation limits of Hyderabad, Vijayawada and Visakhapatnam in terms of the G.O. Ms. No. 224. Industries and Commerce Department, dated the 9th March 1976, as extend from time to time till the 31st March, 1984, shall not exceed a sum of rupees ten lakhs in respect of each industry with a fixed capital cost of rupees one crore and above.'
14. It will thus be seen that in respect of IFST loans intended to be granted under G.O. Ms. No. 224 dated March 9, 1976, the Legislature passed a law with retrospective effect from January 1, 1976, limiting the loan to a sum of Rs. 10 lakhs for each unit, notwithstanding any judgment or order, etc., to the contrary.
15. The abovesaid subsequent events have led to the filing of an additional affidavit by the petitioner's company in this writ petitioner (W.P. No. 1861 of 1982) on September 7, 1987, questioning the legality of Act 20 of 1987 as contravening principles of natural justice, promissory estoppel, fair play and as being unreasonable and discriminatory and violative of articles 14 and 19(1)(g) of the Constitution. The writ petitioner also made a reference to the new scheme of State incentives made in G.O. Ms. No. 375 dated August 23, 1985, in which a maximum of Rs. 1 crore was allowed as payable towards IFST loan and contended that the plea of 'financial stringency' made by the State Government was false and baseless. It was stated that the said new scheme, IFST loan up to one crore was applicable to all new industrial units even though Act 20 of 1987 had taken away the incentives granted in G.O. Ms. No. 224 dated March 9, 1976. On this ground also, it was stated that Act 20 of 1987 was discriminatory and violative of articles 14 and 19(1)(g) of the Constitution. It was also stated that no reasons were given for-fixing the maximum limit of IFST loans to Rs. 10 lakhs in respect of industries which have gone into regular production on or after January 1, 1976, while fixing a limit of one crore under G.O. Ms. No. 375, dated August 23, 1985. Principles of promissory estoppel are again pleaded. There is also a reference to article 300 of the Constitution. Incidentally, it is mentioned that even during the currency of G.O. Ms. No. 224, dated March 9, 1976, M/s. Bhadrachalam Paper Boards Limited, M/s. A.P. Rayons Ltd. and also M/s. Volroho Limited were granted IFST loans up to Rs. 200 lakhs, Rs. 100 lakhs, and Rs. 100 lakhs, respectively, contrary to the provision of G.O. Ms. No. 224.
16. Initially, a counter-affidavit was filed on December 3, 1987 by the Government dealing with these allegations which were based on subsequent events. While contending that Act 20 of 1987 was not illegal or discriminatory or violative of article 19(1)(g) or article 300, it was further stated that so far as G.O. Ms. No. 375 dated August 23, 1985, was concerned, it came into force from April 1, 1984 and was originally valid for three years but was extended only up to March 31, 1988. It is stated that the said G.O. did not provide for IFST loan at all but only provided for deferment of sales tax that too in three backward districts of the State which were to be designated as intensive industrial development areas. It is pointed out that these three areas are identified as (1) Srikakulam district in coastal Andhra region; (2) Adilabad in Telangana region; and (3) Anantapur in Rayalaseema region, in which industries with an investment of Rs. 10 crores and above offering employment to 250 persons or more in the abovesaid backward area were entitled for the benefit of deferment of sales tax. Under G.O. Ms. No. 375 dated August 23, 1985, sales tax payable by the industry for the first five years commencing from the date of commercial production would be allowed on deferred payment basis up to a maximum of one crore or 15 per cent of the total value of the fixed assets which is lower, subject to the condition that the amount of sales tax deferred during any particular year did not exceed Rs. 20 lakhs. This new scheme was applicable only to backward districts and therefore, there was no discrimination. It was also pointed out that the plea of 'financial stringency' was true and that was a reason for Act 20 of 1987. It is further stated, with reference to the three companies referred to in the petitioner's additional affidavit as follows :
'It is submitted that the orders issued in favour of M/s. Bhadrachalam Paper Boards Ltd., and M/s. A.P. Rayons Limited have not been implemented in view of the enactment of the Act. (vide Act 20 of 1987). In respect of M/s. Volroho, orders were issued in G.O. Ms. No. 542 dated October 16, 1986, pertaining to sales tax loan with interest and the concession does not come under the purview of the orders issued in G.O. Ms. No. 224 dated March 9, 1976. Hence no discrimination has been shown to any industry by the Government.'
17. Thereafter, the present batch of writ petitions came up for hearing before this Court on December 7, 1987. After hearing the counsel on both sides for considerable time we passed an order directing the Government to clarify the following facts : (1) In what circumstances were the said two G.Os. 482 and 483 issued; (2) Whether the aforesaid G.O. Ms. Nos. 482 and 483 dated September 9, 1986, have been rescinded, modified or revoked after they were issued; (3) Whether the said G.Os. were acted upon by the Government and whether the Government released the loans mentioned in the said G.Os.; (4) Whether the said two companies, acting upon the said G.Os., have been withholding the sales tax and, if so, to what extent each of them have withheld; (5) Whether, after the issuance of the Ordinance and the making of the aforesaid Act replacing the Ordinance, has the Government taken any steps for recovering the sales tax deferred by the said companies in excess of rupees ten lakhs.
18. On the basis of the abovesaid directions, a further counter was filed by the State Government on December 13, 1987. It was stated that so far as the Bhadrachalam Paper Boards Ltd. and M/s. A.P. Rayons Ltd. were concerned the Government had issued the two G.Os. 482 and 483 on September 9, 1986, inasmuch as Bhadrachalam Paper Boards gave consent letter to withdraw court cases and M/s. A.P. Rayons agreed not to go to court but that the petitioner, Sri Rayalaseema Paper Mills had not given any consent letter to the Government and that, therefore, no G.O. was issued in favour of the petitioner. Subsequently, Act 20 of 1987 was passed after disposal of W.A. No. 1088 of 1986. It was also accepted that the said two G.Os. 482 and 483 are not operative in view of Act 20 of 1987. It was admitted :
'That since Act 20 of 1987 came into effect from January 1, 1976 restricting IFST loan to Rs. 10 lakhs, it was considered that no separate orders either rescinding, modifying or revoking the abovesaid two G.Os. are necessary. The said two G.Os. were executive in nature whereas the legislation has overriding effect on the executive orders. Para 4(1) of G.O. Ms. No. 482 and para 2(1) of G.O. Ms. No. 483 are not operative in view of the impugned Act.'
19. It was further admitted that in view of Act 20 of 1987, the Government have 'not cleared' the implementation of the provisions of the said two G.Os. in respect of IFST loans either by payment of cash or by deferment to the two companies. It was also pointed out that the petitioner was not entitled to the benefits of G.O. 201, Social Welfare, dated December 17, 1976 which was applicable only to tribal areas (scheduled areas) nor to G.O. No. 606, Revenue, dated April 9, 1981 which was merely an extension of G.O. No. 201.
20. Thereafter, the matter came up before this Bench again on December 14, 1987. During the course of arguments the learned Advocate-General stated that there was some misunderstanding of the purport of the points mentioned in the counter dated December 13, 1987. After noting the further clarification sought for by the court, the learned Advocate-General took time to file another additional counter. We, accordingly, passed another order on December 14, 1987, stating that the court wanted information only with regard to IFST loan and not with respect to other sales tax concessions. The question was whether G.O. Ms. Nos. 482 and 483 were implemented in respect of M/s. Bhadrachalam Paper Boards Ltd. and M/s. A.P. Rayons Ltd. or not.
21. Pursuant to the further directions given on December 14, 1987, by this Court, the Government filed a further affidavit dated December 18, 1987. It was stated that so far as Bhadrachalam Paper Boards Limited was concerned, notwithstanding Act 20 of 1987 having superseded G.O. Ms. No. 482 dated September 9, 1986, the said company, viz., Bhadrachalam Paper Boards had unilaterally withheld a sum of Rs. 77,92,877 towards amounts payable under the Andhra Pradesh General Sales Tax Act and the Central Sales Tax Act for the period from April, 1987 to October, 1987. It was added in the said counter that 'action is being pursued for recovering the sales tax difference from the company in excess of Rs. 10 lakhs'. Again, in respect of M/s. A.P. Rayons it was stated in the said counter that the said company had also unilaterally withheld a sum of Rs. 53,13,099.74 for the years 1986-87, from April, 1986 to March, 1987 and for the year 1987-88 from April, 1987 to October, 1987 and that 'action is being taken for recovery of the amount withheld by the company'. From the aforesaid counter-affidavits filed by the Government on December 3, 1987, December 13, 1987 and December 18, 1987, it is now clear that so far as G.O. Ms. No. 482 dated September 9, 1986, granting IFST loan in a sum of Rs. 200 lakhs to Bhadrachalam Paper Boards is concerned, the said company was unilaterally withholding a sum of Rs. 77,92,877, even after the passing of the A.P. Act 20 of 1987 and that likewise M/s. A.P. Rayons was unilaterally withholding a sum of Rs. 53,13,099.74 payable towards Andhra Pradesh general sales tax and Central sales tax for various periods. On the basis of these counters the matter was finally heard by us.
22. It is contended by the learned counsel for the petitioner, Sri K. Srinivasamurthy, that the provisions of Act 20 of 1987 are violative of articles 14 and 19(1)(g) and are liable to be struck down. It was further contended that principles of promissory estoppel still apply and the Government is bound to apply G.O. No. 224 dated March 9, 1976 as extended from time to time in the case of the petitioner and grant IFST loan. It was further contended that in any event the Government acted arbitrarily in allowing Bhadrachalam, Paper Boards Limited and A.P. Rayons Ltd. to withhold large sums of sales tax amounts even subsequent to the commencement of A.P. Act 20 of 1987 instead of recovering the sums granted as IFST loans to those companies in G.O. Ms. Nos. 482 and 483, respectively. Reliance is also placed on G.O. Ms. No. 375, dated August 23, 1985 and it is contended that the said G.O. was also liable to be struck down inasmuch as the same is contrary to article 14 inasmuch as the basic theme of Act 20 of 1987 that there is financial stringency in the State.
23. On the other hand, it is contended by the learned Advocate-General that the Act is valid, that there is no question of promissory estoppel and that the Government did not choose to treat Bhadrachalam Paper Boards Limited and A.P. Rayons Limited differently but that those companies unilaterally withheld amounts payable towards sales tax and that the Government has now initiated proceedings for recovery of the sums due. The learned Advocate-General filed a large number of documents containing about 50 pages of material to show that notices have already been issued by the concerned Commercial Tax Officers for recovering the arrears of sales tax due from Bhadrachalam Paper Boards Limited and A.P. Rayons Limited, during February, 1988. He also contended that so far as G.O. Ms. No. 375 dated August 23, 1985 was concerned it was applicable only to the three backward districts of the State and that it was open to the State Government to make special provision for development of industries in backward areas and that the petitioners cannot challenge that such treatment to backward areas was illegal.
24. We shall deal with the first and fourth contentions relating to the validity of the provisions of sections 2 and 3 of the A.P. Interest-free Sales Tax Loans for Industries (Imposition of Ceiling) Act, 1987, and the attack on G.O. Ms. No. 375, dated August 23, 1985. In the Statement of Objects and Reasons of the Act, it is stated that the Act is intended to fix the maximum amount of interest-free sales tax loan to certain industries in the State of Andhra Pradesh. After referring to G.O. Ms. No. 224 dated March 9, 1976, under which the State incentive scheme was brought into force initially for a period of five years from January 1, 1976, for setting up new industries, and to the terms and conditions thereof already set out by us earlier, it is stated that a committee was constituted by the Government under the said G.O. for scrutinising and sanctioning all the claims for subsidy or loan and to review the implementation of the Scheme and suggest changes or modifications as may be necessary from time to time for approval of Government and that the said committee, at its meeting held on December 5, 1978 recommended a ceiling limit of Rs. 10 lakhs for the grant of IFST loan for any industry. It is also mentioned that the scheme introduced in G.O. Ms. No. 224 dated March 9, 1976 was extended up to March 31, 1984. Reference is then made to the fact that certain industries filed writ petitions in the High Court, that W.P. No. 12008 of 1985 (filed by Sri Ambuja Petrochemicals) was allowed on the ground that 'there was no amendment' to G.O. Ms. No. 224 dated March 9, 1976, that when W.A. No. 1088 of 1986 was filed by the Government and was heard along with W.P. No. 4461 of 1981 (filed by Kesoram Industries), the High Court 'directed the State Government' to take appropriate remedial measures in pursuance of the recommendations of the Committee within a period of eight weeks by amending G.O. Ms. No. 224 dated March 9, 1976, either by way of any executive order or by undertaking legislation. It is then stated that if the claims for loans are limited to 10 per cent of the fixed capital cost as per the G.O. Ms. No. 224, the financial commitment would go up to Rs. 46 crores and that 'due to financial constraints', the State is not in a position to meet such huge commitment and that it is, therefore, decided to limit the benefits of IFST loan under G.O. Ms. No. 224, dated March 9, 1976 to a maximum of Rs. 10 lakhs per industry. As already stated, the limit of Rs. 10 lakhs has been introduced with retrospective effect from January 1, 1976, the date from which G.O. Ms. No. 224 dated March 9, 1976, was effective. We shall now refer to the provisions of the Act.
25. Under section 1(2), the Act is given retrospective effect from January 1, 1976. Under section 2 of the Act, the State Government is permitted to fix the maximum of the IFST loan for the period from January 1, 1976 to March 31, 1984, in respect of new industrial units which go into regular production on or after January 1, 1976 and also in respect of other industrial units going in for substantial expansion, situated, in 'all the areas' of the State of Andhra Pradesh (except in the Municipal Corporation limits of Hyderabad, Vijayawada and Vishakapatnam) notwithstanding the limits specified in G.O. Ms. No. 224 dated March 9, 1976 as subsequently modified from time to time. Under section 3, it is stated that the maximum amount of IFST loan 'granted' as per G.O. Ms. No. 224 dated March 9, 1976 (As extended from time to time up to March 31, 1984) shall not exceed a maximum sum of Rs. 10 lakhs in respect of each industry with a fixed capital cost of Rs. 1 crore or above. This is notwithstanding anything in any judgment, decree or order of any court, tribunal or other authority or any order to the contrary.
26. From the aforesaid provisions, it is clear that the Act purports to limit, with retrospective effect from January 1, 1976, the IFST loan mentioned in G.O. Ms. No. 224, dated March 9, 1976, to a maximum amount of Rs. 10 lakhs in respect of the industries mentioned in the said G.O., with a fixed capital cost of Rs. 1 crore or above, notwithstanding the provisions of G.O. Ms. No. 224, dated March 9, 1976 and notwithstanding any judgment of any court or any order to the contrary. In other words, the benefit of IFST loan is retrospectively limited to Rs. 10 lakhs by legislative fiat in respect of such industries covered by G.O. Ms. No. 224, dated March 9, 1976.
27. The power of the Legislature to pass a law with retrospective effect is undoubted and cannot be normally questioned as violative of the provisions of article 14 or 19(1)(g) of the Constitution. The Legislature, while acting within the scope of the entries in List II can pass a law which has not only prospective effect but also retrospective effect. It is true that normally rights, if any, vested by virtue of any orders of the Government are deemed not affected by any subsequent law passed in relation to the subject but the Legislature can pass a law affecting vested rights, expressly or by necessary implication. In the present case, the law is passed with express retrospectivity.
28. It is, however, argued for the petitioner by Sri K. Srinivasa Murthy that the State having promised to act in a particular manner in future as per G.O. Ms. No. 224, dated March 9, 1976, it cannot withdraw the said promise unilaterally and that on this ground the Act is arbitrary and illegal as it is against equity and principles of natural justice. We are unable to agree. The law does not contemplate any prior notice or opportunity before a Legislature decides to pass legislation. No principles of estoppel, much less promissory estoppel, can be enforced if they are contrary to a statute and, therefore, the law cannot be termed arbitrary or unreasonable. Equity does not override the statute. The argument of the learned counsel is bereft of any legal precedent. It is then contended that 'financial stringency' is not a valid reason to pass legislation restricting or reducing incentives already granted to any particular figure. We are unable to see how 'financial stringency' cannot be treated as a reasonable ground for limiting the IFST loan. The State thought initially that it will be able to give the incentive of IFST loan to all new industrial units and expanding units up to a limit of 10 per cent of the fixed capital cost so that each year's loan will be repayable in full at the end of the tenth year from the date of drawing the loan. But as stated in the Statement of Objects and Reasons, it was realised subsequently, that the financial commitment would go up to Rs. 46 crores if the 10 per cent principle is applied. It has been stated by the learned Advocate-General that the budget allocation in this behalf is only six crores. In the earliest counter of April, 1982 itself, the Government stated that during 1979-80, 124 industrial units in the State were granted a sum of Rs. 55 lakhs, that in 1980-81, a sum of Rs. 100 lakhs for 154 units was granted and that in 1981-82, a sum of Rs. 75 lakhs was granted for 85 units. It was stated that 'having regard to meagre budget provision' made in the plan outlay approved by the Planning Commission for disbursement of IFST loan, the State had to limit the grant of IFST loan to Rs. 10 lakhs per unit. We may also state that it is not as if, the decision was taken without consideration of all the aspects of the matter. The expert committee, namely, the State Level Committee, which was constituted under G.O. Ms. No. 224, dated March 9, 1976 itself, had recommended on December 5, 1978 that the limitation of Rs. 10 lakhs per unit should be imposed. It is, therefore, not possible to characterise the limitation of Rs. 10 lakhs as being arbitrary or unreasonable. After all, public interest, also requires that steps shall be taken for easing the 'financial stringency'. We are, therefore, unable to strike down the provision of the Act either under article 14 or article 19(1)(g) of the Constitution.
29. It is then argued that the plea of 'financial stringency' is false because, in spite of the recommendations of the State Level Committee as long back as on December 5, 1978, two companies covered by G.O. Ms. Nos. 482 and 483 were granted IFST loans up to Rs. 200 lakhs and Rs. 100 lakhs, respectively, as late as on September 9, 1986 while the petitioner's case for grant of IFST loan was rejected on the ground that it had not given any letter consenting to withdraw court cases. It is also argued that again, as late as August 23, 1985, the Government had introduced a new incentive scheme in G.O. Ms. 375 permitting sales tax to be paid on a deferment basis up to a maximum of Rs. 100 lakhs or 15 per cent of the total value of fixed assets in respect of the industries covered by G.O. Ms. No. 375 and with permission to pay the same without interest from the sixth year from date of production in five equal instalments.
30. In our opinion, this submission cannot be accepted. It is true that in G.O. Ms. Nos. 482 and 483, dated September 9, 1986 two companies were granted IFST loans certain concessions described as interest-free sales tax loan even subsequent to the recommendation of the State Level Committee dated December 5, 1978. The said two companies are not parties in any of the cases before us and it is not desirable for us to express any opinion on this matter but it is sufficient to set out the stand taken by the Government in its counters dated December 3, 1987, December 13, 1987, and December 18, 1987, in this behalf and refer to the documents filed before us relating to events up to February, 1988 in respect of those two companies. In the counter filed on December 3, 1987, it was stated (in para 16) that the
'orders issued in favour of M/s. Bhadrachalam Paper Boards Ltd. and M/s. A.P. Rayons Ltd. have not been implemented in view of the enactment of the Act (vide Act 20 of 1987).'
31. Again, in the further counter filed on December 13, 1987, it is stated by the Government that
'in view of the Act 20 of 1987, which came into force from January 1, 1976, the Government have not cleared the implementation of the provisions in the said two G.Os. in respect of IFST loan either by payment of cash or by deferment to the two companies.'
32. In the last counter dated December 18, 1987, it is again stated by the Government that Bhadrachalam Paper Boards Ltd. had unilaterally withheld Rs. 77,92,877 of IFST loan and that
'action is being pursued for recovering the sales tax difference from the company in excess of Rs. 10,00,000.'
33. In this context, we may also refer to G.O. Rt. No. 390 (Rev)(S) Dept. dated March 24, 1987 which reads as follows :
'Government have examined the matter in detail. Recently an Ordinance (Andhra Pradesh Ordinance No. 1 of 1987) was promulgated on February 9, 1987, fixing a limit under interest-free sales tax loan up to Rs. 10 lakhs only with retrospective effect. Government, therefore, direct that the orders in G.O. Ms. No. 482, Industries and Commerce, dated September 9, 1986, in respect of sales tax concession to M/s. Bhadrachalam Paper Boards Limited be implemented subject to the limit of Rs. 10 lakhs prescribed in Andhra Pradesh Interest-free Sales Tax Loan for Industries (Imposition of Ceiling) Ordinance, 1987 (A.P. Ordinance No. 1 of 1987).'
34. So far as A.P. Rayons is concerned, in the last counter dated December 18, 1987, it is again stated that the company had unilaterally withheld a sum of Rs. 55,13,099.74 and that
'action is being taken for the recovery of the amounts withheld by the company.'
35. While, we are conscious of the fact that the aforesaid two companies are not before us and we should not be understood as having expressed any opinion as to the validity of the grant of IFST loan or sales tax concession in G.O. Ms. Nos. 482 and 483, dated September 9, 1986, we are setting out the stand taken by the Government in the various counters, to the effect that the provisions of the Act 20 of 1987 are being implemented in respect of those two companies also. We are, therefore, unable to say that there is any illegal discrimination against the petitioner falling under article 14 or that the petitioner's rights under article 19(1)(g) are affected. We are also satisfied that if the said companies unilaterally withheld the amounts of sales tax up to a tune of Rs. 77.92 lakhs and Rs. 55.13 lakhs, respectively, that does not militate against the statement of the Government regarding 'financial stringency' of the Government.
36. Nor can the argument based on G.O. No. 375, dated August 23, 1985 be accepted as going against the plea of 'financial stringency' of the Government. It may be noted that the new incentive scheme stipulated in G.O. 375, dated August 23, 1985, is applicable only to specified backward areas in the State and is not applicable to the entire State. The G.O. specifically refers to incentives to industries in the three backward areas : (1) Srikakulam district in Andhra area, (2) Adilabad district in Telangana and (3) Anantapur district in Rayalaseema area. It is not contended before us that these three areas are not backward areas. The argument, however, was that the G.O. 375, dated August 23, 1985, was applicable to the entire State but this appears to be factually incorrect. The G.O. is applicable only in three backward districts. The fact that certain incentives are provided for permitting sales tax to be paid on a deferred basis up to a maximum of Rs. 1 crore (or 15 per cent of the total value of the fixed assets of the unit) if it is located in any of the three backward areas does not, in our opinion, run contrary to the contention based on 'financial stringency'. The State has its own priorities for specified backward areas and if it fells that, in the interests of development of specified backward areas, in the State, such concessions are a necessity even in times of 'financial stringency', the said policy of the State cannot be characterised as unreasonable or unrealistic. We, therefore, reject this contention also. In the result, we hold that the provisions of the Act in sections 2,3 and in section 1(2) are reasonable and valid and are based on objective criteria and are not liable to be struck down either under article 14 or article 19(1)(g) of the Constitution of India.
37. The second plea of the petitioner in the additional affidavit is that in view of the principles of promissory estoppel laid down by the Supreme Court, the State must be directed to discharge its obligations arising out of the said promise. This contention cannot be accepted. It is now well-settled by several decisions of the Supreme Court that the principles of promissory estoppel laid down in Century Spinning & . v. Ulhasnagar Municipality Council : [1970]3SCR854 , Motilal Padampat Sugar Mills v. State of Uttar Pradesh : [1979]118ITR326(SC) , Jit Ram Shiv Kumar v. State of Haryana : [1980]3SCR689 have no application if the Legislature makes a law withholding the obligations so incurred. Apart from the observations in the above cases dealing with the overriding effect of such statute, the respondent has further relied upon the observations of the Supreme Court in State of Kerala v. Gwalior Rayon Silk Mfg. (Wvg.) Co. : [1974]1SCR671 to the effect that there can be no surrender of legislative powers to be used for public good so as to prevail over any obligations arising out of principles of equitable estoppel. In the same decision it is again clearly stated that 'promissory estoppel' cannot be invoked to compel the Government or even on private party to do an act prohibited by law. There can be no promissory estoppel against the exercise of legislative power. The Legislature can never be precluded from exercising its legislative function by resort to the doctrine of promissory estoppel. The same principle has again been reiterated by the Supreme Court in Union of India v. Godfrey Philips India Ltd. : [1986]158ITR574(SC) . It has been stated there that 'there can be no promissory estoppel against the Legislature in the exercise of its legislative functions nor can the Government or public authority be debarred by promissory estoppel from enforcing a statutory prohibition'.
38. Reference was made to Pournami Oil Mills v. State of Kerala : [1987]165ITR57(SC) by the petitioner's counsel. But, in that case, the sales tax concession which was withdrawn by a notification was construed by the Supreme Court as being prospective. That was not a case where the Legislature concerned made a law with retrospective effect. Likewise, the decision in Surya Narain Yadav v. Bihar Electricity Board [1985] 68 FJR 53 (SC) cannot help the petitioner inasmuch as that was also not a case where a law made by the Legislature ran counter to the obligations created by principles of promissory estoppel.
39. For all the aforesaid reasons, the second contention based on promissory estoppel is rejected.
40. The third contention is that contrary to the terms of the Act 20 of 1987, two companies, namely, Bhadrachalam Paper Boards Ltd. and A.P. Rayons Ltd. were allowed to withhold large sums of sales tax under G.O. Ms. Nos. 482 and 483, dated September 9, 1986.
41. We have already dealt with this aspect in considerable detail while dealing with the first contention based on article 14 and article 19(1)(g) of the Constitution. We would, however, like to say again that it is not proper for us to express any opinion in regard to the inaction on the part of the State to recover the arrears of sales tax from these two companies inasmuch as these two companies are not parties to these writ petitions. We should not be understood as considering the right of these companies to withhold these sums of sales tax. But we are only referring to the factual aspects of the matter as reflected in the counter-affidavits filed by the State on December 3, 1987, December 13, 1987 and December 18, 1987. Those counter-affidavits make it clear that after the Act 20 of 1987 came into force, the said companies are not entitled to the IFST loan or concessional sales tax envisaged in G.O. Ms. Nos. 482 and 483, dated September 9, 1986 and that steps are being taken to recover the arrears which were unilaterally withheld by those companies. In fact, at the last date of hearing, the State has filed fifty pages of documents disclosing the steps taken by the concerned Commercial Tax Officers recently in February, 1988, to recover the arrears of sales tax withheld by these two companies. While we do not propose to say anything in this judgment which could be considered as an expression of opinion of the legality or otherwise of these recoveries, we are taking note of the factual position as on today, namely, that the State is no longer allowing these two companies to retain the arrears of sales tax referable to G.O. Ms. Nos. 482 and 483, dated September 9, 1986 and is taking steps for recovering the excess amount withheld by them. The petitioner cannot now have any grievance as against these companies or the State in this behalf. The third contention is, therefore, rejected.
42. For all the aforesaid reasons, this writ petition No. 1861 of 1982 filed by Sree Rayalaseema Paper Mills Ltd. is dismissed but in the circumstances without costs.
43. W.P. No. 13447 of 1987 :
This writ petition is filed by M/s. Kesoram Cement for the issue of a writ of mandamus declaring the A.P. Act 20 of 1987 to be unconstitutional, ultra vires and void and to direct the respondents to implement G.O. Ms. No. 224, dated March 9, 1976, by granting all incentives declared therein.
44. The petitioner after referring to the provisions of G.O. Ms. No. 224, dated March 9, 1976, already referred to, pointed out that the quantum of incentive towards IFST loan as mentioned in the above G.O. was reduced by the letter of the Government dated March 11, 1981 to Rs. 10 lakhs. It is stated that the petitioner challenged the contents of the said letter by filing W.P. No. 4461 of 1981 on the grounds of promissory estoppel. It is stated that the petitioner informed the State Government about the establishment of a third unit on the basis of the assurance contained in G.O. No. 224, dated March 9, 1976, and they had in fact entered into an agreement with AVB Limited for supply of plant and machinery. The petitioner approached other financial institutions on the basis that the petitioner would get the sales tax benefit specified in G.O. No. 224. The petitioner states that it applied for IFST loan of Rs. 125 lakhs, that the General Manager of the District Industries Centre, Karimnagar recommended the petitioner's application on December 1, 1980, but that the petitioner received the letter dated March 11, 1981, from the Director of Industries restricting the claim for IFST loan to Rs. 10 lakhs. It is also pointed out that while the incentive covered by G.O. Ms. No. 224 was reduced to Rs. 10 lakhs, so far as IFST loan is concerned the sales tax incentive granted in G.O. Ms. No. 375, dated August 23, 1985, was not reduced. It is contended that Act 20 of 1987 offends the provisions of article 14 and article 19(1)(g) of the Constitution.
45. We do not think that the petitioner has raised any new points which are not covered by W.P. No. 1861 of 1982. We may also add that the learned counsel for the petitioner did not address any separate arguments in this writ petition.
46. For the reasons given while dealing with W.P. No. 1861 of 1982 this writ petition is dismissed, but in the circumstances, without costs.
47. W.P. No. 17406 of 1987 :
This writ petition is preferred by Sri Ambuja Petro-chemicals Limited for the issue of a writ of mandamus declaring sections 2 and 3 of Act 20 of 1987 as ultra vires of the Constitution and for directing the respondents to consider the claim of the petitioner for grant of IFST loan or deferment in payment of sales tax as per G.O. Ms. No. 224, dated March 9, 1976.
48. In the writ petition after referring to the provisions of G.O. Ms. No. 224, dated March 9, 1976, it is stated that the petitioner submitted an application on January 27, 1982, along with a certificate that the fixed assets of the company were to the tune of Rs. 11,63,58,313 and that on that basis the petitioner was entitled to an IFST loan of Rs. 1,16,35,831. It is stated that the petitioner received a letter dated November 24, 1982, from the 2nd respondent informing that their case was decided at the meeting of the State Level Committee held on November 11, 1982 and that the said Committee decided to limit the claim for IFST loan to Rs. 10 lakhs. The petitioner referred to the filing of an earlier writ petition, W.P. No. 12008 of 1985, and as to how it was allowed by a learned single Judge on June 25, 1986 in favour of the petitioner and as to the result of the further appeal W.A. No. 1088 of 1986 on December 19, 1986 - facts to which we have already referred while dealing with W.P. No. 1861 of 1982. The petitioner also makes a reference to G.O. Ms. Nos. 482 and 483 dated September 9, 1986 under which the Government granted IFST loan in favour of Bhadrachalam Paper Boards Ltd. and A.P. Rayons Ltd. in sums of Rs. 2 crores and Rs. 1 crore, respectively. The petitioner also refers to the IFST loan of Rs. 1 crore to Volroho in G.O. Ms. No. 542, dated October 16, 1986. The petitioner then refers to the passing of A.P. Act 20 of 1987 and has questioned its validity. It is argued that G.O. Ms. No. 224, dated March 9, 1976, was superseded by G.O. Ms. No. 375, dated August 23, 1985 and that by the time Act 20 of 1987 was passed there is no G.O. No. 224 in force and that no legislation could amend a non-existent G. O. It is pointed out that the legislation had the effect of causing damage to the interests of only three companies who approached the court, viz., Sree Rayalaseema Paper Mills Ltd., Sri Kesoram Cements and Sri Ambuja Petro-chemicals Ltd. Reference is also made to G.O. Ms. No. 375, dated August 23, 1985 wherein IFST loans up to Rs. 1 crore was permissible and it is stated that the passing of the said G.O. was proof of the fact that the Government was not in financial difficulties. On this basis, it was submitted that article 14 and article 19(1)(g) of the Constitution are attracted to the facts of the case.
49. In our opinion, the contention that G.O. Ms. No. 224 dated March 9, 1976, stood superseded by G.O. Ms. No. 375, dated August 23, 1985, by the time Act 20 of 1987 was passed is based on a misconception as to the actual facts. Though in the later G.O. it was stated that the earlier G.O. was superseded, inasmuch as the later G.O. was referable to backward areas covered by G.O. Ms. No. 224, it must be treated that G.O. 224 was primarily superseded so far as the backward areas covered by G.O. Ms. No. 375 were concerned. Alternatively, it has to be noted that though the G.O. No. 224 might have been superseded, by August 29, 1983, rights flowing from prior applications for IFST loans could be considered beyond August 29, 1983, provided they were relatable to the period January 1, 1976 to August 29, 1983 covered by the said G.O. It cannot, therefore, be taken for granted that once G.O. Ms. No. 375, dated August 23, 1985 was passed, the benefits granted in G.O. Ms. No. 224, dated March 9, 1976, stood superseded. In fact, if the said argument is to be accepted the petitioner cannot claim any benefits under G.O. Ms. No. 224. The earlier writ petition No. 12008 of 1985 filed by the petitioner in 1985 was for grant of benefits of this very G.O. and the petitioner succeeded in that writ petition on June 25, 1986. Even in the present writ petition, the petitioner is seeking the benefits of G.O. Ms. No. 224 only. If this contention that G.O. Ms. No. 224 ceased to be in force by G.O. 375 dated August 23, 1985 is to be accepted the petitioner cannot get the relief claimed in the present writ petition. It is, therefore, futile to the petitioner to contend that the benefits covered by G.O. Ms. No. 224 were not available by the time Act 20 of 1987 was passed.
50. So far as the other contentions relating to promissory estoppel, the validity of Act 20 of 1987 and the alleged discrimination on account of grant of benefits to other companies or to backward areas under G.O. Ms. No. 375 dated August 23, 1985, are concerned we have already dealt with them elaborately in W.P. No. 1861 of 1982. The reasons given in that writ petition will equally apply to this writ petition also.
51. For the aforesaid reasons, this writ petition is dismissed but in the circumstances without costs.
52. For the aforesaid reasons all the three writ petitions are liable to be dismissed. This will not, however, preclude the petitioners' claims to IFST loan up to extent of Rs. 10 lakhs as mentioned in Act 20 of 1987.
53. The three writ petitions are accordingly dismissed but in the circumstances without costs. Advocate's fee Rs. 200 in each.
54. Writ petitions dismissed.