I. Mahanty, J.
1. In these writ applications the petitioner, M/s. Lingaraj Pipes Private Limited has sought to challenge various orders of assessment and consequential demands, inter alia, on the ground that the assessing officer has failed to consider the exemption that the petitioner is entitled to under the I.P.R., 1996. According to the petitioner it had set up its unit acting upon the Industrial Policy Resolution, 1996 (hereinafter referred to as 'IPR, 1996') having fulfilled the terms and conditions regarding investments in capital within the stipulated period and commenced its commercial production with effect from January 8, 2000. The petitioner-company further submits that it has been duly certified by the Director of Industries on March 29, 2001 to be a 'priority industry' within the meaning of paragraph 2.7 of the IPR 1996 and the Director of Industries has issued necessary certificate in form E(96) declaring the petitioner-company to be eligible for all the sales tax incentives available under the IPR 1996 under the category of 'priority industry'. The learned Counsel for the petitioner-company further contends that while the said certificate holds good and has not been withdrawn, the sales tax authorities of Orissa have not accepted the certificate granted by the Director of Industries and consequently raised tax demand against the petitioner-company. The petitioner-company further submits that raising of such demand is illegal and therefore the following orders of assessment under the Central Sales Tax Act, 1956 and Orissa Sales Tax Act, 1947, being in gross violation of the certificate of eligibility to sales tax exemption granted by the Director of Industries, should be quashed/set aside.
1. CST assessment for the year 1999-2000 WP(C) No. 8952 of 2003
2. do. 2000-2001 WP(C) No. 1919 of 2004
3. do. 2001-2002 WP(C) No. 8604 of 2005
4. OST assessment for the year 2000-2001 WP(C) No. 1920 of 2004
5. do. 2001-2002 WP(C) No. 8600 of 2005
2. Although notices were served on all opposite parties, i.e., Sales Tax Officer, Bhubaneswar II Circle (O.P. 1), General Manager, District Industries Centre, Bhubaneswar (O.P. 2), Director of Industries, Orissa, Buxibazar, Cuttack (O.P. 3) and the State of Orissa, represented by Secretary, Industries Department, Government of Orissa (O. P. 4), the only counter-affidavit in these cases has been filed on behalf of opposite parties 2, 3 and 4. Mr. Ashok Mohanty, learned Senior Standing Counsel, has appeared for all the opposite parties and submitted that the counter-affidavit filed in W.P. (C) No. 8600 of 2005 may be accepted as a common counter-affidavit in all the connected cases referred to above. The opposite party No. 1-Sales Tax Officer has not filed any counter-affidavit in this case.
3. On the issue of the eligibility certificate to the petitioner in form E(96) by the Director of Industries, one Sri Biranchi Narayan Das, Under Secretary to Government of Orissa, Industries Department, has filed the counter-affidavit on behalf of the opposite parties 2, 3 and 4 and stated in paragraph 13 as follows:
That, it is humbly submitted that the letter of February 23, 2004 addressed to the Director of Industries, Orissa and the letter dated May 20, 2004 addressed to the Commissioner of Commercial Taxes, Orissa were issued on a mistaken notion that the manufacturing of P.V.C. pipes from P.V.C. resins is a petrochemical industry. On subsequent scrutiny and analysis of the letter No. 450132/24/2000-PV/IV-dated February 16, 2000, it was found that the Government of India has defined such industry only as a downstream process of petrochemical industry and not as a petrochemical industry and as such the petitioner industry does not fall under 'petrochemical industry' and as such cannot be termed as a 'priority industry'.
4. Sri A.K. Ganguly, learned Senior Advocate appearing on behalf of the petitioner, presented his arguments by relying upon the IPR, 1996 and while placing reliance on Clause 2.1 being its objectives, Clause 5 and Clause 5.4, which are the thrust areas and the incentives available to new industries in order to fulfil its objectives (vide Part II, page 19), claimed that the petitioner-company duly fulfilled all the objectives and therefore, it was issued with a certificate of eligibility both in form E(96) (annexure 3) as well as certificate of eligibility on sales tax concession on purchase of raw materials, machinery, spare parts, packing materials and finished products under IPR, 1996 (new units) in form II (annexure 4) issued by the Director of Industries, Orissa, Cuttack.
5. Sri Ganguly further submitted that the certificates contemplated under the IPR, 1996 were in fact, issued to the petitioner-company under annexures 3 and 4 and remained valid as on date and the same have not been withdrawn. He further submitted that for the first time, the opposite parties have taken different stand in the counter-affidavit filed before this court on April 18, 2006 and in paragraph 13 thereof, claimed that the certificates had been issued to the petitioner on a 'mistaken notion', that the manufacturing of P.V.C. pipes from P.V.C. resins is a petrochemical industry. In this respect, Sri Ganguly, submitted that such stand of the opposite parties in the counter-affidavit is impermissible in law and cannot be sustained since the plea now raised in the counter-affidavit is vague and clearly unsustainable with regard to legitimate rights of the petitioner-company. In this respect, Sri Ganguly has relied upon the judgment of the honourable Supreme Court in case of State of Assam v. Raghava Rajgolpalchari [1972] SLR 44, wherein the Supreme Court held that 'the respondent to the writ petition cannot be allowed to attack its own order as a respondent'. He further relied upon the judgment of the honourable Supreme Court in case of Anil Kumar Chowdhury v. State of Assam : [1975]3SCR878 , wherein the Supreme Court held that 'the Governments speak and act formally and in solemn writing and not informally'. He submitted that the honourable Supreme Court has specifically rejected the contentions of the State Government that the affidavit may be treated as a formal declaration, as required under the statute.
6. Sri Ganguly further contended that from a reading of paragraph 13 of the counter-affidavit of the State, it would be clear that the deponent of the said affidavit was himself not clear as to when the alleged 'mistaken notion' came to the notice of the authorities concerned and further the deponent is unclear as to the manner in which the authorities acted on meaning of such 'mistaken notion'. Sri Ganguly further contended that the certificate granted in favour of his client has not been withdrawn and remains valid. A mere declaration in the counter-affidavit of the State to the effect, i.e., 'mistaken notion' is of no legal consequence, especially since the counter-affidavit was filed on April 18, 2006 whereas the period of sales tax exemption is from January 8, 2000 to January 7, 2005 and is already over.
7. The learned Counsel for the petitioner-company further contended that the Director of Industries prior to issue of eligibility certificate to the petitioner-company had consulted the Ministry of Chemical and Fertilisers in the Government of India (Central Institute of Plastics, Engineering and Technology) and the said institute duly certified that 'the manufacturers of PVC pipes from PVC resins is downstream process of petrochemical industry and hence the same can be defined as petrochemical processing industry', vide letters dated February 16, 2000 and October 18, 2000. After receipt of such letters, the Department of Industries, Government of Orissa, after due examination of the scope of IPR 1996 and nature of the petitioner's industry had taken a decision that the petitioner's unit was a 'priority industry' in terms of the IPR. In this respect Sri Ganguly submitted that the Industries Department, Government of Orissa had addressed a letter to the Commissioner of Commercial Taxes on May 20, 2004 regarding entitlement of the petitioner to the benefit of the exemption as a 'priority industry'. In the said letter it was asserted that:
the differential frame of reference of 'petro-chemicals' has further been examined at this end and therefore does not require further clarification in view of the clarification contained in this department letter No. 3380 dated March 23, 2004. Government in Industries Department have already accepted such industries as priority sector industries. M/s. Lingaraj Pipes Pvt. Ltd., Patia engaged in manufacture of PVC pipes comes within this category.
8. Mr. Ganguly relying upon Clause 24.2 of IPR, 1996 submitted that it was declared that the 'industries department shall be the nodal agency' for its implementation and its interpretation of the IPR is 'final and binding' on all concerned. Relying on the aforesaid provisions of the IPR and the certificate as well as clarification issued by the Industries Department, Sri Ganguly contended that the authorities of the Sales Tax Department of the State have acted grossly in excess of their authority by denying the petitioner-company the benefits available under IPR, 1996 and therefore, consequently, the petitioner has sought for quashing the said assessment orders.
9. Shri Ashok Mohanty, learned Senior Counsel appearing for the opposite parties, contended that the petitioner-company is not a 'petrochemical industry' since the petitioner itself claims that it is a 'downstream petrochemical processing industry'. He further submitted that the petitioner-company was registered as a small-scale industry and was, therefore, not entitled to avail exemption under entry No. 43-A as the said entry contemplates exemption only to the industrial units which are basically new, medium and large scale sectors.
10. The further submission of the opposite parties was that the petitioner is not a petro-chemical industry in terms of the definition of 'priority industry' as contemplated in 1996 IPR and further contended that it was never the intention of the State to grant incentive to 'downstream petrochemical industries'. In the category of 'petrochemical industry', 'downstream industry' has not been specifically included, and hence it ought to be held to have been specifically excluded. It is further submitted that the petitioner-company manufactures PVC pipes and such pipes though are made out of PVC which is a petrochemical by-product, manufacture of pipes from PVC resins cannot by itself be termed as 'petrochemical industry'.
11. Apart from the aforesaid contention, Shri Mohanty submitted that the Notification dated July 26, 1996 'I.P.R., 1996' is a delegated legislation and is statutory and, therefore, is 'law'. Issue of notification of 1996 IPR is in exercise of legislative power. He relied upon various decisions in support of the principles of law that in the matter of taxing provision, the language of the provision is to be strictly construed and vehemently contended that the claim of the present petitioner to the entitlement of sales tax exemption under the I.P.R., 1996 is beyond the scope of law.
12. In so far as legitimate expectation and promissory estoppel is concerned, learned Counsel for the opposite parties submitted that in order to invoke such principle, a person must act on such provision and alter his position. He contended that the petitioner has never pleaded nor established that he has been induced by the promise and altered his position. He further submitted that admittedly the petitioner commenced fixed capital investment since the year 1999 at a time when the notification dated July 26, 1996 was in force and it was the law as was existing in 1999. He, therefore, submitted that the petitioner having made a fixed capital investment with his eyes wide open and knowing fully the provision of law, therefore, ought not to be permitted to invoke the principle of promissory estoppel or legitimate expectation in the present case.
13. In so far as issue of eligibility certificate in form E(96) is concerned, learned Counsel for the opposite parties submitted that the said form is prescribed form for medium/large scale unit and the provision of the I.P.R. being crystal clear, the Director of Industries is not competent to issue the eligibility certificate contrary to the I.P.R., and the law. He submitted that the mistaken act or the mistaken interpretation of the Director of Industries cannot operate against law and bind the Government. In this respect, learned Counsel for the opposite parties has placed reliance upon the case of Netrananda v. Commissioner of Sales Tax [1961] 12 STC 169 (Orissa) wherein this court concluded that the opinion given by the officials of the Government cannot obviously bind the Government even though the party may have himself been led by such opinion. Shri Mohanty further relied upon another judgment of the honourable Supreme Court in the case of Mathra Prasad and Sons v. State of Punjab [1962] 13 STC 180 wherein the apex court held that there can be no estoppel against a statute. If the law requires that a certain tax is to be collected, it cannot be given up or any assurance made that it will not be collected and would not deter the State Government whenever it chooses to collect it. Learned Counsel has referred to a press note given by the State Government in August, 1954 assuring that the tax will not be collected. Shri Mohanty further raised another plea on the principle of 'no waiver liability'. In this respect, learned Counsel for the opposite parties placed reliance upon a case of State of Rajasthan v. J.K. Udaipur Udyog [2004] 137 STC 438 (SC) wherein their Lordships of the apex court held that even if the dealer has not collected the sales tax from their customers, the same is of no consequence and the dealer is liable to pay the sales tax demanded.
14. In the light of the aforesaid rival contentions of the parties, the following facts emanate from the pleadings:
(A) The peculiar situation that arises in this case is that the petitioner-company commenced its production with effect from January 8, 2000 to January 7, 2005. The General Manager, District Industries Center, Bhubaneswar issued form II to the petitioner-company vide annexure 2 declaring therein that the petitioner is eligible for exemption of sales tax on machinery, spare parts, raw materials, packing materials and finished products for a period of five years with effect from January 8, 2000 to January 7, 2005 under IPR 1996 for a period of five years and the maximum ceiling limit of exemption is 100 per cent of fixed capital investment of Rs. 2,80,85,442 under annexure 2.
(B) The Director of Industries, Orissa, Cuttack issued certificate in form E(96) on March 29, 2001 declaring the petitioner-company as a priority industry under annexure 3 and in form No. II issued certificate of eligibility for sales tax concession on machinery, spare parts, raw materials, packing materials and finished products under IPR 1996 under annexure 4 dated March 29, 2001 declaring the petitioner-company eligible for exemption of sales tax for a period of seven years from the date of commercial production which is valid with effect from January 8, 2000 to January 7, 2007 for a maximum fixed capital investment determined at Rs. 2,69,97,437.
(C) The Industries Department, Government of Orissa, issued clarification to the Commissioner, Commercial Taxes vide letter No. 3380 dated March 23, 2004 and reiterated the same vide its letter dated May 20, 2004 to the Commissioner, Commercial Taxes, clarifying that the status of the petitioner-company as priority industry has been accepted by the Industry Department and the petitioner-company is entitled to the exemption of sales tax under IPR 1996.
(D) In view of the aforesaid facts and while the said certificate was issued in form No. E(96) in April 2006 counter-affidavit was filed on behalf of opposite party Nos. 2, 3 and 4 contending the following facts:That, it is humbly submitted that the letter of February 23, 2004 addressed to the Director of Industries, Orissa and the letter dated May 20, 2004 addressed to the Commissioner of Commercial Taxes, Orissa were issued on a mistaken notion that the manufacturing of P.V.C. pipes from P.V.C. resins is a petrochemical industry. On subsequent scrutiny and analysis of the letter No. 450132/24/2000-PV/IV dated February 16, 2000, it was found that the Government of India has defined such industry only as a down stream process of petrochemical industry and not as a petrochemical industry and as such the petitioner-industry does not fall under 'petrochemical industry' and as such cannot be termed as priority industry.
15. The situation that arises from the facts stated hereinabove, at least on April 18, 2006, i.e., date of filing counter-affidavit of the industries department, has raised a doubt about the eligibility of the petitioner-company to the benefit of IPR, 1996 as 'priority industry'. Therefore, at least for the period from the date of commencement of production, i.e., January 8, 2000 till January 7, 2005, the certificate remained in force and there cannot be retrospective withdrawal of such benefit of the IPR. Since we are dealing with the periods of 1999 to 2000, 2000 to 2001 and 2001 to 2002 during which the petitioner-company carried out its transaction, the certificate of eligibility granted by the Industries Department remained valid. This court is to give a finding whether the doubts cast upon the certificate of eligibility of assessment, in April 2006, i.e., on the date of filing of counter-affidavit, an order of assessment passed prior thereto raising the demand can in law be sustained
16. Before we proceed any further, on consideration of the rival contentions of the parties, it is imperative to take note of the recent judgment rendered by the honourable Supreme Court on September 21, 2006 in the case of MRF Ltd. Kottayam v. Assistant Commissioner (Assessment), Sales Tax : 2008[12]S.T.R.206 . It is now well-settled by the judgment of the apex court in the case of MRF Ltd. : 2008[12]S.T.R.206 that the said company made a huge investment in the State of Kerala under a promise held to it that it would be granted exemption from payment of sales tax for a period of seven years. It was granted the eligibility certificate. The exemption order had also been passed. It is not open to or permissible for the State Government to seek to deprive MRF of the benefit of tax exemption in respect of its substantial investment in expansion in respect of compound rubber when the State Government had enjoyed the benefit from the investment made by the MRF in the form of industrial development in the State, contribution to labour and employment and also a huge benefit to the State exchequer in the form of the State's share, i.e., 40 per cent of the Central excise duty paid in excess of the capital investment within the State of Kerala. The impugned action on the part of the State Government was found by the court to be highly unfair, unreasonable, and arbitrary and therefore the same was held violative of Article 14 of the Constitution of India.
17. The facts of the present case are similar to the facts of the case dealt with by the honourable apex court in MRF Ltd. [2006] 148 STC 225 : [2006] 12 JT SC 244. In this case the petitioner-company has made substantial investment and the State Government has also enjoyed the benefit from the investment made by the petitioner-company in the form of industrial development in the State, contribution to labour and employment and also a huge benefit to the State exchequer within the State of Orissa and therefore the impugned action on the part of the State Government is held to be highly unfair, unreasonable, arbitrary and therefore the same is violative of Article 14 of the Constitution.
18. The so-called 'mistaken notion' of the industries department has resulted in the petitioner transacting its business from the date of commencement of production, i.e., January 8, 2000 till January 7, 2005 on the premise that it was entitled to such benefit on the basis of the certificate granted to it. Necessarily the grant of said certificate is for benefit of the petitioner in respect of sales tax during the said period. If the said 'mistaken notion' is given retrospective operation it would result in total injustice and would amount to arbitrary action and be violative of Article 14 of the Constitution. At the best, such mistaken notion can be corrected only in a prospective manner and therefore for the period in question, i.e., assessment years 1999-2000 to 2000-2001 in the present writ application, the 'mistaken notion' has no relevance and legal consequence.
19. Since this court follows the recent judgment of the apex court in the case MRF Ltd. Kottayam [2006] 148 STC 225 : [2006] 12 JT SC 244, this court refrains from answering the other issues raised in course of the arguments because this court is of the view that the same would be redundant in view of the latest judgment of the apex court.
20. In view of the findings pointed out hereinabove, the writ application is allowed. The impugned assessment orders and the consequential demands are quashed and the Sales Tax Officer concerned is directed to complete the assessment afresh granting the benefit of exemption to the petitioner-company in terms of the eligibility certificate granted in form E(96) by the Director of Industries. There shall be no order as to costs.
A.K. Ganguly, J.
21. I agree.