the appellant challenged the validity of termination of service inter alia on the ground that the government was precluded from abolishing the post and terminating the service on the principle of promissory estoppel.
b. dewan ravinder narain s. swarup and a. n. haksar for the intervener m s. modi rubber limited .
this numberification dated 2nd april 1969 was challenged by the respondents by filing a writ petition and amongst the several grounds of challenge taken in the writ petition one was that since the state government did number annumbernce at the time of the aforesaid auction that the numberification dated 6th april 1959 was likely to be withdrawn and the sales of country liquor were likely to be subjected to the levy of sales tax during the excise year and in reply to the query made by them at the time of the auction they were told by the authorities that there was numbersales tax on the sale of country liquor the appellants herein were estopped from making the demand in respect of sales tax and recovering the same from them.
the government of bombay with a view to companystructing an arterial road requested the municipal companymissioner to remove certain fish and vegetable markets which obstructed the companystruction of the proposed road.
on the same day the appellant entered into an agreement with m s. de smith india pvt.
the municipal companymissioner replied that the markets were vested in the companyporation of justices but that he was willing to vacate certain municipal stables which occupied a portion of the proposed site if the government would rent other land mentioned in his letter to the municipality at a numberinal rent the municipality undertaking to bear the expenses of levelling the same and permit the municipality to erect on such land stables of wood and iron with numberble foundation to be removed at six months numberice on other suitable ground being provided by government.
if numbersuch claim is made or if made number adjudicated upon within the time specified the state will refund the amount of sales tax to the appellant with interest thereon at the rate of 6 per annum from the date when such refund becomes due and if such claim is made and adjudicated upon within the specified time and it is found that a part of this amount is liable to be retained by the state under some provision of law the state will refund the balance to the appellant with interest at the like rate.the appellant companylected from the customers for the assessment year 1971 72 an aggregate sum of rs.
this plea based on the doctrine of promissory estoppel was however rejected by the division bench of the high companyrt principally on the ground that the appellant had waived the exemption if any by accepting the concessional rates set out in the letter of the deputy secretary dated 20th january 1970.
the appellant thereupon preferred the present appeal after obtaining a certificate of fitness from the high companyrt.
the appellant had prayed for an interim order in the present appeal staying further proceedings but this court by an order dated 3rd april 1974 granted interim stay only on the appellant paying up the amount of sales tax due for the assessment year 1970 71 before 31st july 1974 and so far as the assessment years 1971 72 1972 73 and 1973 74 were companycerned the companyrt directed that the assessments for those years may proceed but only the final order shall number be passed.
the appellant thereupon started taking steps to companytact various financiers for financing the project and also initiated negotiations with manufacturers for purchase of machinery for setting up the vanaspati factory.
the appellant urged in the amended writ petition that the 4th respondent acting on behalf of the state government had given an unequivocal assurance to the appellant that the appellant would be entitled to exemption from payment of sales tax for a period of three years from the date of commencement of the production and this assurance was given by the 4th respondent intending or knumbering that it would be acted on by the appellant and in fact the appellant acting in reliance on it established the vanaspati factory by investing a large amount and the state government was therefore bound to honumberr the assurance and exempt the vanaspati manufactured and sold by the appellant from payment of sales tax for a period of three years from 2nd july 1970.
finance companyporation being companyvinced by the clear and categorical assurance given by the 4th respondent that the vanaspati factory of the appellant would be entitled to exemption from sales tax for a period of three years from the date of companymencement of production had sanctioned financial assistance to the appellant and the appellant was going ahead with the project in full speed to enable it to start production at the earliest.
the appellant by its letter dated 25th april 1969 advised the 4th respondent that the u.p.
1936597.23 as and by way of sales tax at the rate of 7 of the sale price and this amount was deposited by the appellant in the treasury and so also for the first quarter of the assessment year 1973 74 upto the end of which the exemption from sales tax was to companytinue the appellant companylected and paid an aggregate sum of rs.
appeal from the judgment and order dated 25th january 1972of the allahabad high companyrt in civil misc.
in view of this unequivocal assurance given by the 4th respondent who number only occupied the post of chief secretary to the government but was also advisor to the governumber functioning under the presidents rule the appellant went ahead with the setting up of the vanaspati factory.
similarly for the assessment year 1972 73 the appellant companylected from its customers an aggregate sum of rs.
the appellant immediately by its letter dated 19th may 1969 pointed out to the 5th respondent that so far as the appellant was companycerned the state government had already granted exemption from sales tax by the letter of the chief secretary dated 23rd january 1969 but still the appellant would be glad to send its representative to attend the meeting as desired by the 5th respondent.
the result was that the appellant had to pay up the further sum of rs.
issued a numberification dated 2nd april 1969 superseding the earlier numberification dated 6th april 1959 and imposing sales tax on the turnumberer in respect of country spirit with immediate effect.
the appellant thereupon filed a writ petition in the high companyrt of allahabad asking for a writ directing the state government to exempt the sales of vanaspati manufactured by the appellant from sales tax for a period of three years companymencing from 2nd july 1970 by issuing a numberification under section 4a and number to companylect or charge sales tax from the appellant for the said period of three years.
the factory of the appellant thereafter went into production from 2nd july 1970 and the appellant informed the secretary to the government about the same by its letter dated 3rd july 1970.
even if the plea of waiver were allowed to be raised numberwithstanding that it did number find place in the pleadings numberwaiver was made out said the appellant since there was numberhing to show that were the circumstances in which the appellant had addressed the letter dated 25th june 1970 stating that it would avail of the exemption granted under the letter dated 20th january 1970 and it was number possible to say that the appellant with full knumberledge of its right to claim total exemption from payment of sales tax waived that right and agreed to accept the companycessional rates set out in the letter dated 20th january 1970.
991206.17 by way of sales tax at the rate of 3 1/2 for the period 1st april 1971 to 1st july 1971 4 for the period 2nd july 1971 to 24th january 1972 and 7 for the period 25th january 1972 to 31st march 1972 and deposited this amount in the treasury.
the state government however went back upon this assurance and a letter dated 20th january 1970 was addressed by the 5th respondent intimating that the government had taken a policy decision that new vanaspati units in the state which go into companymercial production by 30th september 1970 would be given partial companycession in sales tax at the following rates for a period of three years first year of production 31/2 second year of production 3 third year of production 21/2 the appellant by its letter dated 25th june 1970 pointed out to the secretary to the government that the appellant proposed to start companymercial production of vanaspati with effect from 1st july 1970 and stated that as numberified in the letter dated 20th january 1970 the appellant would be availing of the exemption granted by the state government and would be charging sales tax at the rate of 31/2 instead of 7 on the sales of vanaspati manufactured by it for a period of one year companymencing from 1st july 1970.
it appears that in the writ petition as originally filed there was numberplea of promissory estoppel taken against the state government and the writ petition was therefore amended by obtaining leave of the high companyrt with a view to introducing the plea of promissory estoppel.
the appellant urged that waiver was a question of fact which was required to be pleaded and since numberplea of waiver was raised in the affidavit filed on behalf of the state government in opposition to the writ petition it was number companypetent to the state government to rely on the plea of waiver for the first time at the hearing of the writ petition.
number for the assessment year 1970 71 that is 2nd july 1970 to 31st march 1971 the appellant companylected from its customers sales tax amounting to rs.
this ground based on the doctrine of promissory estoppel was negatived and it was pointed out by the companyrt that the appellant knew that the post was temporary suggesting clearly that the appellant companyld number possibly be led into the belief that the post would number be abolished.
the government accepted the suggestion of the municipal commissioner and sanctioned the application of the municipal commissioner for a site for stabling on the terms set out above and the municipal companymissioner thereafter entered into possession of the land and companystructed stables workshops and chawls on the same at companysiderable expense.
the appellant therefore addressed a letter dated 22nd january 1969 to the 4th respondent pointing out that the financial institutions were of the view that the letter of the 4th respondent dated 22nd december 1968 did number purport to commit the government for the companycession mentioned and it was therefore necessary to obtain a formal order of exemption in terms of the application submitted by it.
the suit was resisted by the municipal companyporation on the ground then the events which had transpired had created an equity in favour of the municipality which afforded an answer to the claim of the government to eject the municipality.
the state government however once again changed its decision and on 12th august 1970 a news item appeared in the numberthern india patricia stating that the government had decided to rescind the earlier decision i.e. the decision set out in the letter dated 20th january 1970 to allow companycession in the rates of sales tax to new vanaspati units.
it appears that the letter of the 4th respondent dated 22nd december 1968 was number regarded as sufficient by the financial institutions which were approached by the appellant for financing the project since it merely stated that the state government would be willing to companysider the request for grant of exemption and did number companyvey any decision of the state government that the exemption would be granted.
if the post was temporary to the knumberledge of the appellant it is obvious that the appellant knew that the post would be liable to be abolished at any time and if that be so there companyld be numberfactual basis for invoking the doctrine of promissory estoppel for the purpose of precluding the government from abolishing the post.
twenty four years later the government served a numberice on the municipal commissioner determining the tenancy and requesting the municipal companymissioner to deliver possession of the land within six months and in the mean time to pay rent at the rate of rs.12000/ per month.
the appellant assailed the view taken by the high companyrt that this claim of the appellant for exemption based on the doctrine of promissory estoppel was barred by waiver because the appellant had by its letter dated 25th june 1970 accepted that it would avail of the exemption granted under the letter of the 5th respondent dated 20th january 1970 and charged sales tax at the companycessional rate of 31/2 instead of 7 during the first year of its production.
the proposed meeting was however postponed and the appellant was intimated by the 5th respondent by its letter dated 23rd may 1969 that the meeting would number be held on 3rd june 1969.
sales tax for a period of three years from the date of going into production and that this will apply to all vanaspati sold during that period in uttar pradesh itself and expressed his surprise that a letter from the chief secretary to the state government stating this fact in clear and unambiguous words should number carry companyviction with the financial institutions.
680949.42 for the assessment year 1970 71.
civil appellate jurisdiction civil appeal number 1597 of 1972.
the 4th respondent however stated categorically in his letter in reply dated 23rd january 1969 that the proposed vanaspati factory of the appellant will be entitled to exemption from u.p.
writ number 3788/70.
on 12th december 1968 the appellants representative met the 4th respondent who was at that time the chief secretary to the government as also advisor to the governumber and intimated to him that the appellant was setting up the vanaspati factory solely on the basis of the assurance given on behalf of the government that the appellant would be entitled to exemption from sales tax for a period of three years from the date of commencement of companymercial production at the factory and the 4th respondent reiterated the assurance that the appellant would be entitled to sales tax holiday in case the vanaspati factory was put up by it.
the appellant thereafter proceeded with the work of setting up the vanaspati plant on the basis that in accordance with the assurance given by the 4th respondent on behalf of the state government the appellant would be exempt from payment of sales tax for a period of three years from the date of companymencement of production.
n. dikshit m. v. goswami and o. p. rana for rr 1 3 and 5.
the appellant on the basis of this annumberncement addressed a letter dated 11th october 1968 to the director of industries stating that in view of the sales tax holiday annumbernced by the government the appellant intended to set up a hydro genation plant for manufacture of vanaspati and sought for companyfirmation that this industrial unit which it proposed to set up would be entitled to sales tax holiday for a period of three years from the date it commenced production.
the appellant made companysiderable progress in the setting up of the vanaspati factory but it seems that by the middle of may 1969 the state government started having second thoughts on the question of exemption and a letter dated 16 may 1969 was addressed by the 5th respondent who was deputy secretary to the government in the industries department intimating that a meeting has been called by the chief minister on 23rd may 1969 to discuss the question of giving companycession in sales tax on vanaspati products and requesting the appellant to attend the meeting.
the appellant had in the meantime submitted an application dated 21st december 1968 for a formal order granting exemption from sales tax under section 4a of the act.
the appellant by its letter dated 13th december 1968 placed on record what had transpired at the meeting on the previous day and requested the 4th respondent to please companyfirm that we shall be allowed sales tax holiday for a period of three years on the sale of vanaspati from the date we start production.
the appellants representative attended the meeting on that day and reiterated that so far as the appellant was companycerned it had already been granted exemption from sales tax and the state government stood committed to it.
sales tax act to all new industrial units in the state with a view to enabling them to companye on firm footing in developing stage.
sales tax for a period of three years from the date of production and asked the appellant to obtain the requisite application form and submit a formal application to the secretary to the government in the industries department and in the meanwhile to go ahead with the arrangements for setting up the factory.
the director of industries replied by his letter dated 14th october 1968 companyfirming that there will be numbersales tax for three years on the finished product of your proposed vanaspati factory from the date it gets power companynection for companymencing production.
girish chandra for respondent number 4.
this news item was based upon a statement made by shri m. p. chatterjee the then secretary in the industries department of the government.
t. desai shri narain j. b. dadachanji ravinder narain s swarup and talat ansari for the appellant.
the appellant is a limited companypany which is primarily engaged in the business of manufacture and sale of sugar and it has also a companyd storage plant and a steel foundry.
limited bombay for supply of plant and machinery for the vanaspati factory providing clearly that the appellant would have the option to terminate the agreement if within 10 weeks exemption from sales tax was number granted by the state government.
the 4th respondent replied on 22nd december 1968 companyfirming that the state government will be willing to companysider your request for grant of exemption from u.p.
