R.K. Patra, J.
1. Validity of Finance Department notification dated 20.7.1999 (Annexure-9) by which the State Government has withdrawn the Sales Tax exemption granted to the petitioner in the Finance Department notification dated 25.1.1999 (Annexure-8) is the subject matter of challenge in this writ petition.
2. The petitioner's case is that it is a public limited company incorporated under the Indian Companies Act, 1956. It has an authorised capital of Rs. 10 crores out of which the paid up capital is Rs. 8.50 crores. The Industrial Promotion and Investment Corporation of Orissa Limited (IPICOL) has an equity participation of Rs. 50 lakhs in the Company. Many investors have also invested money to the tune of Rs. 225 lakhs in the Company by purchasing shares. It is engaged in manufacture of Vanaspati which has a good market in the State of Orissa as well as outside the State. It is a foot selling consumer item but the competition being tough, the petitioner is not in a position to raise the price of its product above that of the competitors as price like would virtually affect its existence. In the initial stage, the margin of profit was very low because the petitioner had to pay huge interest on the loans which it had availed from various financial institutions. Therefore, Sales Tax exemption is necessary for its very existence and if such concession by way of Sales Tax exemption is not granted, the petitioner's unit would not be viable. The Industrial Policy of the State Government taken from time to time extends various concessions including the exemption of Sales Tax,
On 6.7.1997 the petitioner's unit went into commercial production. The Industrial Finance Corporation of India Limited on 3.11.1997 recommended to the State Government for Sales Tax exemption on the ground that if no such concession was made available, the viability of the project would be jeopardised and would affect its over all operation. The State Government did not take any decision on the recommendation and kept the matter hanging. The petitioner had to make reported representations and ultimately by the Finance Department Notification dated 25.1.1999 (Annexure-8) the petitioner was exempted from payment of Sales Tax. After getting the Sales Tax exemption, the petitioner invested about Rs. 3 crores for purchase of raw materials and also invested huge amount in developing the market and went into production in full speed. It also paid Rs. 60 lakhs in advance to the raw material suppliers for blocking of rawmaterials so that production would not be affected. Finished products worth Rs. 70 lakhs was ready for sale. While the matter stood thus, the State Government in Finance Department Notification dated 30.7.1999 (Annexure-9) arbitrarily has withdrawn the concession granted to the petitioner in its previous notification dated 25.1.1999 (Annexure-8).
3. The State Government in the Finance Department, which is opposite party No. 1, has filed counter affidavit and additional counter affidavit justifying the withdrawal. Briefly stated its case is that the Sales Tax concession was made available to the petitioner under Section 6 of the Orissa Sales Tax Act, 1947 (hereinafter referred to as 'the Act') and in exercise of that power the State Government can withdraw the concession. The State Government had been considering ways and means for reviewing the Sales Tax incentives with a view to improve mobilisation of resources and accelerating economic development because of the fiscal situation of the State which is in dire straits and there is huge financial overburden. The State is passing through a phase of grave fiscal imbalance because of mounting revenue and fiscal deficits. In the last few years, revenue expenditure has for exceeded the revenue receipts. To over-come the revenue deficit, a number of measures were taken in the past and some further new measures are being taken. Keeping the aforesaid factors in view, the Government decided that Sales Tax incentives granted should be withdrawn in public interest and accordingly the impugned notification dated 30.7.1999 has been issued. It has also been further pleaded in the counter affidavit that the petitioner's unit was neither availing Sales Tax exemption under the Industrial Policy Resolution, 1992 northe Industrial Policy Resolution, 1996. Hence, it cannot claim for continuance of the benefit which was enjoyed earlier,
4. Shri Kanungo, learned counsel for the petitioner, contended that the impugned notification is arbitrary and unreasonable and is bit by the principle of promissory estoppel. After hearing was concluded and the matter was reserved for judgment, he has filed, a written note of submission on 21.12.2001, We have duly considered the same. Shri Ray, learned Advocate General on the other hand submitted that there can be no estoppel against a statute and the exemption granted to the petitioner in exercise of powers under Section 6 of the Act can be withdrawn which is permissible under the very provision. We justified the withdrawal of exemption in public interest.
5. It is the admitted case of both parties that the Sales Tax exemption granted to the petitioner was not as per the Industrial Policy Resolution of 1992 or of any other year. There is no disputethat the Sales Tax exemption allowed to the petitioner was in exercise of power conferred by Section 6 of the Act. It is, therefore, necessary to extract the notifications extending the Sales Tax exemption and the impugned notification withdrawing the same which are respectively, at Annexures-8 and 9.
By Finance Department notification dated 25.1.1999 published in the Orissa Gazette dated 27.1.1999, Sales Tax exemption was granted to the petitioner which reads as follows :
FINANCE DEPARTMENT
NOTIFICATION
The 25th January, 1999.
S.R.O. No. 59/99 -- In exercise of powers conferred by Section 6 of the Orissa Sales Tax Act, 1947 (Orissa Act 14 of 1947), the State Government do hereby make the following amendment further to amend the notification of the Government of Orissa in the Finance Department No. 20206-CTA-14/76-F. dated the 23rd April, 1976, namely :
AMENDMENT
In the Schedule to the said notification, after serial No. 35-i, the following new serial and entries against it shall be inserted under the appropriate columns, namely :
Sl. No.Description of goodsConditions and exceptions subject to which exemption has been allowed
(1)(2)(3)
35-J(a)Purchase of raw-materialsthat is to say, goods which directly go into the composition of finishedproducts by M/s. Shivanl Vanaspati Ltd.,Cuttack and by other similarly placedmanufacturing units located in Orissa;
(1)Theexemption of Sales Tax on purchase of raw materials and on sale of finishedproducts shall be allowed for aperiod of flve years from thedate of commercial production to be certified by the Director of industries, Orissa;
(b)Sale of finished products of M/s.ShivaniVanaspati Ltd., Cuitack and similarly placed manufacturing units located InOrissa,
(2)Such exemption of sales tax on purchasa of raw materialsand on sale of finished products taken together shallbe limited to a celling of 75%of the fixed Capital Investment.
(No.3230-CTA-84/98/F)
By order of the Governor
P.K.Sahoo
Under Secretary to Government
By the Finance Department notification dated 30.7.1999 which was published in the Orissa Gazette dated 31.7.1999, the aforesaid concession has been withdrawn, which reads as under:
FINANCE DEPARTMENT
NOTIFICATION
The 30th July, 1999.
S.R.O. No. 622/99-- Whereas, the State Government has been passing through a phase of grave fiscal imbalances characterised by mounting revenue and fiscal deficits.
And whereas, it is considered necessary to take immediate measures to improve the revenue receipts as well as sales tax revenue;
And whereas, it is considered necessary to take immediate measures to improve the revenue receipts as well as sales tax revenue;
And whereas, keeping in view the loss of revenue on account of sales tax incentives and concessions granted under various Industrial Policies, it is considered necessary to withdraw some of these incentives;
Now, therefore, in exercise of the powers conferred by Section 6 of the Orissa Sales Tax Act, 1947 (Orissa Act 14 of 1947), the State Government having been satisfied that it is necessary so to do in the public interest, do hereby make the following amendments to the notification of the Government of Orissa in the Finance Department No. 20206-CTA-14/76-F, dated the 23rd April, 1976, as amended from time to time, and direct that the said amendments shall come into force on the 1st day of August, 1999, namely :
AMENDMENTS
In the Schedule to the said notification :
(i) Serial number 26, 26-A, 26-D, 26-F, 26-FF, 30-FF, 30-FFF, 30-FFFF, 30-FFFFF, 30-FFFFFF, 36-I and 36-J along with the entries appearing against themshall be omitted.
(ii) *** ** (No. 33558-CTA-71/99-F)
By order of the Governor
S. K. Mishra
Deputy Secretary to Government
6. On careful reading of the notification dated 25.1.1999, it may be seen that SI. No. 35-J came to be inserted to the list of Goods exempted from Orissa Sales Tax by virtue of which Sales Tax exemption was granted to the petitioner and by the impugned notification, the aforesaid SI. No. 35-J of the list stands omitted.
7. May it be noticed that Sales Tax exemption vide sl. No. 35-J was allowed by the State Government in exercise of its power conferred by Section 6 of the Act which lays down that the State Government may by notification, subject to such condition and exception, if any, exempt from tax the sale (or purchase) or any goods or class of goods and likewise withdraw any such exemption.
8. Power to grant exemption from payment of Sales Tax under the Act flows from the provision of Section 6. The power to exempt includes the power to modify or withdraw the same. Under Section 22 of the Orissa General Clauses Act, 1937 (corresponding provision of the Central Act is Section 21), an authority which has the power to issue a notification, has also the power to rescind or modify the notification in a like manner. From the very nature of power of exemption granted to the State Government under Section 6 of the Act, it follows that it can withdraw the same if it is necessary to do so in the public interest. It is now well settled by series of decisions of the Supreme Court that there could be no promissory estoppel against statute (see Kasinka Trading v. Union of India, AIR 1995 SC 874, Sales Tax Officer v. Shree Durga Oil Mills, AIR 1998 SC 591 and Sharma Transport v. Government of A.P., 2001 AIR SCW 4958). A bench of this Court has also relying on the ratio of decisions of the Supreme Court, referred to above, hold that benefit of exemption granted for certain period can be withdrawn in the public interest and there can be no promissory estoppel (See Laxmi Udyog Rock Cement Pvt. Ltd. v. State of Orissa, AIR 2001 Orissa 51).
9. On a re-reading of the notification at Annexure-6 it would appear that concession was granted by inserting SI. No. 35-J to the 'List of Goods exempted from payment of Sales Tax' and it was so done in exercise of its power conferred under Section 6 of the Act. Since the very provision authorises the State Government to withdraw any such exemption, the petitioner cannot resist it by advancing the theory of promissory estoppel in as much as there can be no promissory estoppel against the statute.
10. Exemption was granted to the petitioner as per the notification at Annexure-8 in public interest and the same has been withdrawn in public interest which is evident from the impugned notification at Annexure-9. It is, therefore, necessary to examine what superveningpublic interest compelled the State Government to issue the impugned notification. In this regard, the averments made in the affidavit dated 19.11.2001 which has been affirmed by the Deputy Secretary of the Finance Department are relevant for our purpose. It has been stated therein that the State Government has been running under acute fiscal pressure for last few years. While the revenue expenditure of the State Government has been rising at a fast rate, the growth of revenue receipts has not been commensurated. As a result, the gap between the revenue receipts and revenue expenditure has increased to alarming proportions. The revenue deficits of the State has been rising over time and reached an alarming level of Rs. 2,265 crores during the year 1998-99 which is at 16.30% of the State's Gross Domestic Products was clearly unsustainable. The persistent revenue deficit has compelled the Government to divert the borrowed fund meant for developmental work for meeting revenue expenditure liabilities. This resulted in the borrowing rising steeply in recent years increasing the debt servicing liabilities. The burden of payment of interest and repayment of borrowed capital, led to further increase in non-plan revenue expenditure. The fiscal position of the State was becoming increasingly vulnerable and immediate steps were needed to arrest the trend. Due to persistent fiscal deficit very often the State Government's Account was overdrawn and the State Government had to approach Government of India to bail It out from the over-draft situation, In April, 1999 the Government of India pointed out that the ways and means difficulties faced by the State Government were the out-come of continue neglect of fiscal prudence and accordingly the Government of India specifically wanted that the State Government sign a Memorandum of Understanding (M.C.U.) for implementing specific fiscal reform measures aimed at strengthening the financial situation of the State so that such difficulties do not become a recurring feature. It was agreed between the representative of Ministry of Finance, Government of India and Government of Orissa that Central Government would assist the State Government in times of need to got out of over drafts on the condition that the Government of Orissa agrees to implement a set of specific time bound reforms measures. One of the important time bound reform measures Included in the M.C.U. was that the State Government issued orders doing away with the tax deferrals to industries and for reducing tax concessions by end of May, 1999. This was in recognition of the fact that Sales Tax deferrals and concessions granted to industries substantially eroded the base of the sales tax which is the single largest source of State's own revenues.
It has been further stated in the said affidavit that State can only offer sales tax exemption as it can afford and the State's capacityto bear the financial burden of the tax related incentives was becoming increasingly limited. It was, therefore, felt necessary to protest at the first instance sales tax revenue from loss through the open ended concessions under the Industrial Policy Resolutions and other sales tax occupation granted to Cement and Vanaspati units including the Petitioner which was reckoned at more than Rs. 70 crores per annum. The State Government has been passing through a phase of grave fiscal imbalance accompanied by mounting revenue deficit and unless timely steps are taken to correct the same, the imbalance will deteriorate to further leading eventually to a situation when the State will not be in a position to implement any development and welfare programmes. In consideration of the imperative need for additional revenue generation for fiscal stabilisation, withdrawal of sales tax incentives in exercise of power conferred by Section 6 of the set was felt essential in the supervening public interest. In the new and demanding situation, the State Government had to change its earlier policy in the greater public interest with the sole aim of improving the fiscal situation.
11. On careful consideration of the facts mentioned above, we have no hesitation to hold that the State Government is fully justified in withdrawing the concession in public interest. After all public interest must override the consideration of private loss or gain.
From what has been stated above, we also do not find any valid reason for the petitioner to contend that the impugned notification suffers from the vice or arbitrariness or discrimination.
In the result, the writ petition merits dismissal. We order Accordingly.
12. Writ petition dismissed.