vil Appeal No 2211 NT of 1988 etc
From the Judgment and Order dated 7101986 of the Madhya Pradesh High Court in MP No 1861 of 1983
594 Prithvi Raj RB Mishra Uma Nath Singh SK Gambhir Vivek Gambhir Satish K Agnihotri Ashok Singh and Mrs VD Khanna for the Appellants
Harish N Salve Ms Lira Goswami and DN Misra for the Respondent
The Judgment of the Court was delivered by RANGANATHAN J
The Civil Appeal and SLP 1205487 are by the State of Madhya Pradesh MP
The respondents in these two matters and the petitioners in the other five Special Leave Petitions are certain concerns in MP assess able to sales tax hereinafter compendiously referred to as the assesses 
All these matters can be conveniently dis posed of by a common judgment as they raise a common issue
The assesses  claim for exemption from sales tax for certain periods in question was accepted by the High Court in the case of GS Dhall  Flour Mills and following it in the case of Mohd Ismail a case where the exemption sought for was originally granted but subsequently revoked
However subsequently a Full Bench of the High Court in the case of Jagadamba Industries disapproved the view taken by the Division Bench in the GS Dhall  Flour Mills case and following the Full Bench the writ petitions filed by certain other assesses were dismissed by the High Court
The State is aggrieved by the judgment in the first two cases and the assesses by the High Court s decision in the other cases
Hence these appeals and special leave petitions
Before dealing with the appeals on merits an important circumstance needs to be referred to which is this The judgment of the Full Bench in the case of Jagadamba Indus tries was itself the subject matter of Special Leave Peti tions in this Court but those petitions SLP Nos 15688 9087 were dismissed at the stage of admission on 92
1988 with the observations We are in agreement with the views expressed by the High Court
The Special Leave Peti tions are dismissed
In view of this the State submits that CA 22 1187 should be allowed and that the assesses  SLPs should be dismissed in limine
On the other hand counsel for the assesses seek to distinguish the Jagadamba case by contending that this Court had refused leave against the Full Bench judgment on account of certain special facts which were considered sufficient to disentwine the assesses in those 595 cases from claiming the exemption
They contend that in view of this and the fact that the GS Dhall  Flour Mills case is in appeal before we may grant leave in the SLPs
and dispose of all the appeals on merits
We accept this plea and grant leave in the SLPs
condoning a delay in the filing of SLP 1205487
We shall however touch upon the above aspect of the matter in the course of our judgment
The issue raised is at first blush a simple one
section 12 of the MP Sales Tax Act hereinafter referred to as the Act  enables the State Government to grant exemption from the levy of sales tax in certain circumstances
It says 12
Saving 1 The State Government may by notification and subject to such restrictions and condi tions as may be specified therein exempt whether prospec tively or retrospectively in whole or in part i any class of dealers or any goods or class of goods from the payment of tax under this Act for such period as may be specified in the notification ii any dealer or class of dealers from any provision of the Act for such period as may be specified in the notifica tion
2 Any notification issued under this section may be re scinded before the expiry of the period for which it was to have remained in force and on such rescission such notifica tion shall cease to be in force
A notification rescinding an earlier notification shall have prospective effect
 In exercise of this power the State Government issued the following notification on 2326101981 which it is neces sary to extract in full here along with its Annexure
It reads In exercise of the powers conferred by section 12 of the Madhya Pradesh General Sales Tax Act 1958 No 2 of 1959 the State Government hereby exempts the class of dealers specified in column 1 of the Schedule below who have set up industry in any of the districts of Madhya Pradesh specified in the annexure to this notification and have commenced production after 1st April 1981 from pay ment of tax under the said Act for the period specified in column 2 subject to the restrictions and conditions specified in column 3 of the said schedule 596 Class of dealers Period Restrictions and conditions subject to which exemption has been granted 1 2 3 1
dealers who Two years The dealer specified in a hold a certifi from the column 1 shall continue cate of regis date of to furnish the pres tration under The commence cribed returns under the MP General Sales ment of MP General Sales Tax Tax Act 1958 production Act 1958 and shall pro duce before the assessing b are registered authority at the time of small scale indus his assessment a certifi trial units with cate issued by the Direc the Industries Dep tor of Industries Madhya artment of Govt
of Pradesh or any officer au MP and thorised by him for the purpose certifying that c have set up ind such dealer is eligible to ustry in any of the claim the exemption and districts specified that he has not opted for in part I of the the scheme of deferring Annexure the payment of tax under the rules framed for this purposes
Dealer who do a hold certifi a 3 years cate of registra in case of an tion under the industry loca MP General Sales ted in a district Tax Act 1958 specified in A  No2 of 1959 of part II of the Annexure
b are registered b 4 years in the as Small scale Ind case of an industry ustrial units with located in category the Industries De B  of Part II of partment of Govt
of of the Annexure MP or are regis and tered with the Di rector General of Technical Develop ment as an indus trial unit or are registered 597 as industrial units by any authority duly empowered to do so by the State Govt
or Cen tral Govt
or hold a licence under the In dustries Development  Regulation Act 1951 No65 of 1951 and c have set up indus c 5 years in do try in any of the dis the case of an tricts specified in industry located part II of the Anne in a district spe xure
cified in category C  of part II of the Annexure from the date of commen cement of production
Dealers who a hold certificate a 3 years in The dealer speci of registration under the case of an fied in column 1 the MPGeneral Sales Industry loca shall produce be Tax 1958 No2 of ted in any of fore the assessing 1959 the tehsils of authority at the a district spe time of his assess fied in part I ment a certificate of the Annexure issued by the Direc tor of Industries Madhya Pradesh or any b are registered b 5 years in officer authorised by as industrial units the case of an him for the purpose with the Director industry located of certifying that General of Technical in any of the the dealer is eligi Development or by any tehsils of a ble to claim such authority duly em a district spe exemption under the powered to do so by cified in cate scheme of the Indus State or Central gory A  of Part tries
Department Government or hold II of the Anne being a first dealer licence under the xure to have commenced Industries Develop production in the ment and Regula industry set up by him in the tehsils referred to in col umn 2 and that such dealer has not opted for the scheme of deferring the pay ment of tax under the rules framed for this purpose
598 tion Act 1951 No65 of 1951 have fixed a capital in vestment between Rs1 crore and Rs10 crores and c are the first to c 7 years in set up the industry the case of an in any tehsil of the industry loca district of Madhya ted in any of Pradesh specified in the tehsils of the Annexure
a district spe cified in cate gory B  of Part II of the Anne xure d 3 years in the case of an industry located in any of the tehsils to a district specified in category C  of Part II of the Annexure from the date of commencement of production
ANNEXURE Part I 1
Indore 2
Ujjain 3
Bhopal 4
Jabalpur 5
Gwalior 6
Durg Part II Category A  1
Bilaspur 2
Raipur 3
Dewas 4
Handsaur 5
Morena 6
Vidisha 7
Hoshangabad 8
Ratlam 9
Khandwa 10
Satna 11
Shahdol 599 Category B  1
Geoni 2
Balaghat 3
Betul 4
Raigharh 5
Guna 6
Chindwara 7
Damoh 8
Sagar 9
Narsimhpur 10
Senor 11
Rajmandgoo Category C  1
Panna 2
Sidhi 3
Rewa 4
Chhatarpur 5
Tikamgarh 6
Khargone 7
Surguja 8Mandla 9
Bhind 10
Shivpuri 11
Datia 12
Raisen 13
Shajapur 14
Dhar 15
Rajgarh 16
Jhooua 17
Bastar It is not in dispute that the assessees before us fulfil the qualifications mentioned in the notification
However when they approached the Director of Industries for the certificate of exemption envisaged under column 3 of the notification it was denied to them on the ground that the industries run by them are traditional industries which were not eligible for exemption
The assessees went to Court contending that this was totally unjustified
They said the concept of traditional industries was one unspecified in the notification
The authorities had no jurisdiction to travel outside the terms of the notification and import extraneous considerations to deny the assessees an exemption they were entitled to under the notification
It is this contention that was accepted in the GS Dhall and Flour Mills case
The State had relied on the provisions of the MP Deferment of Payment of Tax Rules 1983 notified on 1983 in particular rule 13 thereof and on certain instructions that had been issued by the Government on 1211983 pertaining to the grant of certificate of eligi bility to new industrial units claiming exemption fromdeferment of payment of sales tax
The High Court took the view that these rules and instructions had no relevance to the claim for exemption put forward under the notifica tion of 23101981 and that in any event the executive instructions could not override the provisions of the statu tory notification
This judgment was delivered on 7101986 by Sohani CJ and Faizanuddin J
The Full Bench in its judgment of 2111987 took a different view
It has in effect attached importance to the rules and instructions referred to above and relied considerably on the history of the 600 sales tax levy in the State as furnishing a proper and necessary background in which the terms of the notification of 23101981 have to be read and interpreted
This history has therefore to be set out now in order to appreciate the validity of the conclusions of the Full Bench
Before doing this it may be mentioned that the Full Bench comprised of Ojha CJ Faizanuddin J and Adhikari J
In fact the judgment was written by Faizanuddin J who has explained in detail the reasons for his change in view
It may also be mentioned as a matter of record that subsequent to the decision of the Division Bench in GS Dhall and Flour Mills the State Government appears to have issued a notifi cation on 37 1987 intended obviously to overcome the effect of the said decision
We shall refer to this later in this judgment
Now to turn to the history relied on by the Full Bench we start with a scheme for the grant of subsidyinterest free loan to new industries set up in Madhya Pradesh
The scheme was to be effective from 15969 and till the end of the Fourth Five Year Plan period 1970 or such further period as may be extended by the State Government from time to time
It would appear that the scheme was being adminis tered informally under executive instructions even beyond 1970
Though certain rules appear to have been framed for the first time on 30873 these rules it would seem were not statutory but were only in the nature of executive instructions
We shall however refer to them as rules
Rule 3 was clear as to the persons eligible to avail of it
It read Rule 3 It shall be applicable to all new industrial units except traditional industries like oil mill flour mill dall mill rice mill ginning and printing factories who set up in Madhya Pradesh provided further that such appli cants register themselves with the department after 15969 but before 31374 and in case of SSI units go into produc tion within a period of one year and in case of Large and Medium Industries go into production within 3 years of their date of registration provided further that in case of delay in going into production the period of availability of subsidy or concession will be reduced by the period of delay in going into production
This will come into force from 1474
Note Small Scale Industries who are already registered with the department need not register separately for this concession
 601 It would also appear that the districts of the State were divided into two categories advanced and backward and the latter into three categories A  B  C 
The amount and period of the subsidyloan depended upon this classification and was elaborately set out in para 8 which need not be extracted here
A note added to para 8 had this to say Note 1 Unit who is otherwise entitled to subsidy may on his request be considered for grant of interest free loan to the extent of entitlement of the subsidy
2 No unit available concession under the scheme will be allowed to change the location of the whole or any part of the industrial unit or effect any substantial part of its total fixed capital investment within a period of five year after its going in to production
3 In case the ownership of a new unit changed during the period of availability of this concession the new owner would be entitled to this concession for the balance period
4 A closed unit which is re started by an entrepre neur will not be considered to be a new unit for the purpose of this concession
 Another set of rules came into force with effect from 141977 and superseded the earlier rules
These were on more or less the same lines as the earlier ones and were to apply to new industrial units and existing industrial units as defined in rules 2a and b on fulfillment of certain terms and conditions but industries enumerated in rule 3 were specifically excluded from the purview of the definition
Rule 3 made it clear that the rules shall not be applicable to the following traditional industries
The list of such industries in addition to those mentioned in the earlier set of rules excluding roller flour mills and solvent extraction plants in oil mills took in also saw mills ice factories and such other industries as may be notified by the Government from time to time
The period and extent of the subsidy loan here again depended upon the district advanced or backward and in the latter category A  or B  or C  in which the industry was set up Rule 7 is of some relevance and may be set out 7
An industrial unit eligible for this concession will apply 602 to the Asst
Director of Industries of the district con cerned for verification of the date of going into commercial production and other particulars of new industrial unit or substantial expansion in respect of which the concession is sought
The Asst
Director of Industries will make verifica tion in accordance with rules 51 and send within 15 days of the receipt of the application his report to the sanc tioning authorities Dy
Director of Industries or Director of Industries indicating the date of going into commercial production of the unit
A copy will be furnished to the applicant
 The form of the certificate to be issued by the office of the Director of Industries read thus No Date The particulars furnished by Ms       have been checked and verified from records including those of consumption of power and raw materials and output of finished products
The date of commencement of commercial production by the industrial unit is The date from which the unit has exceeded on a sustained basis production over the licensed or installed capacity of the unit is    Asst
Director of Industries It appears that the Government had announced conces sions regarding the payment of sales tax by new industrial units including pioneer units going into production after 1 4 1981 not only under the notification dated 231081 but also under other notifications dated 1 5 82 and 29 6 82
Two of these notifications are on record before us
It is however unnecessary to extract them here
It is sufficient to set out their purport quoting from the instructions of 12 1 83 referred to a little later According to the first notification the new industrial units are exempted from the payment of sales tax
This notification covered sales tax payable by them on the products manufactured by them
It entitled them to exemption 603 from payment of purchase tax on purchase made by them from unregistered dealers
According to the second notification an industrial unit making purchases of its raw material from a registered dealer is exempted from payment of sales tax on the raw materials so purchased by him from the registered dealer
In other words registered dealers selling raw materials to a new industrial unit are not required to charge any sales tax from the new industrial unit on sales made by them to such unit
The third notification exempts the goods manufactured by the new industrial units from the levy of sales tax even when these goods are sold by the dealers who have purchased these goods from the new indus trial units
In other words by issue of this notification the goods manufactured by the new industrial units are fully exempted from the payment of sales tax right upto the stage they reach the consumer
These three notifications only deal with the grant of exemption from payment of sales tax under the MP General Sales Tax Act
that is to say from the payment of the State Sales Tax
The fourth notification exempts the new industrial units from payment of the Central Sales Tax on the sale of goods manufactured by them in the course of interstate trade or commerce
This notification has exempted the new units from payment of sales tax wef 1 7 82
 In view of these notifications the Government considered it necessary to issue certain instructions for the grant of certificate of eligibility to new industrial units claiming exemption fromdeferment of payment of sales tax on 12 1 1983
These instructions also proceed on the same lines as the earlier ones
Traditional industries as listed in para 5 are said to be outside the purview of the scheme
Para 5 enumerated the following as traditional industries flour mills excluding roller flour mills oil mills excluding solvent extraction plants dall mills
saw mills rice mills printing presses of all types cotton ginning and pressing factories in factories and such other indus tries as may be notified from time to time
It also stated a that industrial units undertaking expansionmodifica tion or diversification will not be eligible for these concessions b that a closed unit revived by the entrepre neur will not be considered as a new unit for the purpose of availing of these concession and c that units claiming interest free loans as an existing unit will not be eligible for these concessions
A certificate of eligibility had to be obtained in the prescribed manner 604 and this procedure was made more elaborate
District Level Committees and a State Level Committee were constituted for this purpose and they took a decision on the application of the unit read with the comments thereon by the Director of Industries though the certificate was actually issued by the Director of Industries or the General Manager of the District Industries Centre in a prescribed form
The Full Bench after considering the scheme and in structions of the Government discussed above came to the conclusion that the scope of the exemption notification of 1981 was not intended to be wider than that of the conces sions granted earlier
The 1981 notification was intended to bring about only a change in the mode of relief to the same categories of industries as were covered by the earlier schemes
The Court observed It appears that the mode of concessions granted by the aforesaid instructions involved some inconvenience to the industrial units and duplication of procedure inasmuch as the industrial unit had to first collect the sales tax and the tax so collected and paid along with the returns were later on refunded to the industrial unit in the shape of subsidy
To avoid the duplication of procedure the State Government thought it fit to altogether exempt the industri al units from payment of sales tax or defer the payment of sales tax
 The Court observed
vis a vis the various instructions referred to above 12  
These instructions also contain a complete procedure for application and grant of eligibility certifi cate by the Industries Department
Thus it is clear from these instructions that the question of grant of eligibility certificate by the Industries Department is not an empty formality but before granting the certificate the Industries Department has to see whether all the requirements as con tained in the instructions are fulfilled and complied with or not
All the Government Instructions discussed above issued from time to time right from 1973 onwards till 1983 Annex ure R I II and III clearly indicate not only the consist ent Government policy in the matter of grant of 605 Sales Tax concessions to the New Industrial Units but also the consistent practice that has been followed throughout whereby these concessions were not at any time made avail able to the Traditional Industries like Flour Mills and Dall Mills etc
Not a single instance is available to show that any of these concessions were ever made available to any Traditional Industries
It may be pointed out that all these facts and the Government policy as also all the aforesaid Government Instructions on the subject were not placed before the Division Bench which heard and decided Misc
Petition No 1861 of 1983 G section Dall Mills vs State of MP
However after the decision of MP No 186183 the State Government while issuing a Notification No 351 dated 21st October 1986 under section 12 of the Act a photostat copy of which has been filed on record of MP No 271087 See at page 94 of the paper book exempting the Industrial Units specified therein from payment of tax under section 6 and 7 AA of the Act again specifically provided in clause xiii of the said Notification that the said exemption shall not be available to the Industrial Units enumerated therein including Flour Mills and Dall Mills etc
 It was true the Court agreed that a notification has generally to be construed on its plain language
But here as pointed out earlier column 3 of the 1981 Notification Annexure B does not contain any guidelines or a procedure in the matter of grant of eligibility certificate or refusal thereof by the Industries Department and as the grant or refusal of such certificate cannot be an empty formality and therefore in order to avoid the possibility of arbi trariness and injustice to any one the State Government was justified in issuing executive instructions laying down the guidelines and procedure for the same
 The Full Bench therefore observed 16
From what has been stated and discussed above it is clear that at no point of time any concession or exemption from
payment of sales tax was ever given to the Traditional Industries and not a single example to that effect is avail able
The State Government while issuing instruction from 606 time to time have been specifically excluding the Tradition al Industries
Thus the executive authorities and the high est agency and its officers charged with the duty for the administration and enforcement of the said Notification are not only conversant with the underlying policy of the Gov ernment but they are also intimately acquainted with the economic significance of the tax in question and exemption thereof
The interpretation of the Government regarding the construction of 1981 Notification read with the instructions Annexure R I II and III excluding the Traditional Indus tries which has been consistently followed and acted upon accordingly for a period over a decade cannot be given a go by but has to be accepted
In view of the above discussion the impugned Notifica tion dated 4 7 1987 Annexure G is hardly of any conse quence
More or less it is a clarification of 1981 Notifica tion and not rescission of any grant
 The contention that instructions could not override the effect of the statutory notification was repelled by the Court on the ground that the validity and effectiveness of the instructions can be supported by reference to Article 162 of the Constitution as filling up a lack of guidelines in the notification
An argument based on the doctrine of promissory estoppel was also rejected as the petitioners were well aware of the fact that the exemption was not available to their new units and they had not established their units because of the exemption
The Court explained the position thus 20
In this behalf firstly it may be pointed out that all the petitioners had established their Industrial Units after the Government issued the executive instructions Annexure R III dated 12 1 1983 of which clause 5b specifically speaks that the concessions will not be available to Tradi tional Industries like Flour Mills and Dall Mills etc
To say that the petitioners were not aware of these executive instructions would be incorrect because clause 6 of these instructions contemplates that New Industrial Units desirous of availing the said concessions shall have to apply in Form I accompanied with a declaration in Form II appended to the said Instructions and the petitioners applied in Form I with declaration in Form II See Annexure D DI and D2 in MP No 271087
Further these 607 applications for exemption were made by the petitioners only after the order dated 7 10 1986 was passed in GS Flour Mills vs State MP No 1861 of 1983 which shows that the petitioners were aware of the fact that they were not entitled to exemption and it was only after the aforesaid decisions that they considered to apply for exemption
This fact is further fortified from the conduct of the petition ers themselves as they continued to submit returns right from 1983 onwards and continued to pay the tax as assessed against them without taking any steps to claim exemption
In this behalf paragraphs 8 and 9 of the petitions are self explanatory
Thus having regard to all these facts the
question of application of principle of promissory estoppel in the present case does not arise and the petitions deserve to be dismissed
 Sri Harish Salve appearing for the GS Dhall  Flour Mills apart from pleading that the view taken in this case is the correct one and not that enunciated by the Full Bench also raised an alternative contention on the footing that at best the notification of 1981 was ambiguous and lent itself to two plausible interpretations
Assuming that there was initially some ambiguity regarding the applicabil ity of the Notification of 231081 to traditional indus tries it had been dispelled by the instructions of 12 183
Once these instructions were published any assessee setting up a traditional industry took a calculated risk on the issue as to whether the Notification should be confined on proper interpretation only to non traditional industries and could not rely on the doctrine of equitable estoppel
Pointing out that the assesses in the Full Bench case were persons who had set up their industry after 12183 Sri Salve argued that the dismissal of the Special Leave Peti tion against the Full Bench judgment will not affect his case as this assessee had set up its industry admittedly before 121
The position is similar in the case of Mohan
Ismail
Learned counsel therefore submitted that even if the 1983 instructions were rightly held by the High Court to have validly supplemented the terms of the 1981 Notification they can have no application to the two earli er cases which had to be decided solely on the terms of the 1981 Notification
To answer these contentions one has to look first at the statutory instruments in this case viz section 12 of the Act and the notification thereunder
section 121i with which we are concerned lays down four requirements for the grant of exemption from the provisions of the Act 608 i that any exemption to be granted under the section has to be by a notification ii that the notification may exempt any class of dealers or any goods or class of goods from the payment of tax under the Act in whole or in part but only for a definite period to be specified in the notification iii that the exemption will be subject to such restric tions and conditions as may be specified in the notifica tion iv that such exemption could be prospective or retrospec tive
We are concerned here with the scope of the second and third requirements mentioned above
So far as the class of dealers entitled to the exemption are concerned the notifi cation spells out the following requisites i they must belong to one of the classes Of dealers speci fied in column No 1 of the schedule ii they must have set up industry in any of the districts of Madhya Pradesh specified in the annexure iii they must have commenced production after 14
The period of exemption is also specified in the notifica tion
So far as the restrictions and conditions subject to which the exemption has been granted they are as per column No 3 of the Schedule a that the dealer should continue to furnish the pre scribed returns under the Sales Tax Act and b that they should produce at the time of their assessment a certifi cate from the Director of Industries certifying that such dealer is eligible to claim exemption and has not opted for the scheme of deferring the payment of tax under the rules framed for the purpose
It is not anybody s case that the assesses before us did not fall within the class of dealers specified in column 1 or that they did not comply with a above or that they had opted for the scheme of deferment of tax
This being so the assesses claim that they are eligible for the exemption under the notification and that the Director of Industries should have granted them a certificate to this effect
It is the denial of 609 this certificate which has brought the assesses to Court
The question for consideration is whether the Director of Industries can refuse the exemption certificate on a consid eration not specified in the notification
Prima facie No All the conditions for exemption have to be
and are set out in the notification itself and all that the Director of Industries has to do is to satisfy himself that those condi tions are fulfilled he cannot travel beyond the terms of the notification
He can see whether the dealer falls under the description in column 1 whether he has set up a new industry in MP State whether he has commenced production after 141981 and whether has opted for the deferment scheme
The condition about the dealer filing returns regu larly would seem to be one under the purview of the sales Tax Officer rather than one under that of the Director of industries
If these conditions are fulfilled the exemption certificate will have to be granted
That seems the straight and simple interpretation of the notification
But it is said for the State this is not the intend ment or effect of the notification
It is said that the argument overlooks the reference in column 3 to the grant of an eligibility certificate by the Director of Industries
This is one of the important conditions for the grant of this exemption
It is pointed out in this context that there had been in force in the State for several years past a scheme of subsidyloan
That scheme was also depend ant on a certificate of the Director of Industries but that certificate could be denied to traditional industries
It is argued that since the notification does not set out the conditions on which and the procedure in accordance with which the Director of Industries is to issue the eligibility certificate that earlier scheme and procedure should be read into the notification
Sri Salve objected to this reading of the notification infer alia on the ground that the earlier scheme and the exemption now proposed are total ly different in their object and scope and that while the former scheme was intended as an incentive to any one who set up a new industry in the State so that traditional industries did not get any benefit the notification presently under consideration was issued with the object of industrialising the backward areas of the State and so it was immaterial what type of industry went in there and whether the industry proposed to be set up was a tradition al one or not
This contention does not appear to be quite correct
It has been pointed earlier that even the earlier schemes provided for graded incentives for industrialisation effective for varying periods depending upon the backward ness or otherwise of the district in which the industry was proposed to be set up
But even granting that the 1981 policy was to replace the earlier subsidyloan by an exemp tion it does not necessarily follows that the 610 units intended to be covered by the new scheme were only those that were covered by the earlier scheme and that no wider exemption was contemplated
Indeed there were four new concessions introduced in 1981 82 and there is no mate rial which would justify these being tied down to the param eters of the earlier schemes
No factual foundation has been laid to establish the hypothesis that the exemption con ferred in 1981 was to be a mere extension or substitution of the benefits conferred earlier
There are other difficulties in reading the provisions of the earlier schemes into the notification
In the first place the earlier schemes spe cifically provided that traditional industries were out side their purview
The language of the notification which is a piece of subsequent legislation is silent about this
This is itself indicative of a legislative intent to widen the scope of relief and grant exemption to traditional industries as well vide GP Singh Interpretation of Statutes 4th Edition pp 767 8
The omission to specifi cally exclude traditional industries as was done in the earlier schemes the notification gains added significance in view of section 12 which specifically requires that all condi tions and restrictions governing an exemption should be specified in the notification
Secondly the attempt of the State to read a further condition into the notification excluding traditional industries from the exemption is based on the words which require that the Director of Indus tries should grant a certificate a that the dealer is entitled to claim the exemption and b that he has not opted for the scheme of deferring the payment of tax under the rules framed for the purpose
But these words do not carry the State s case further for what the Director of Industries has to do is to certify that the applicant is entitled to the exemption on the terms and conditions set out in the notification and not on the basis of any further requirements not so set out
The notification does not authorise him to say that though the applicant fulfills the terms of the notification he will not grant the eligibility certificate because under the previously prevalent schemes he could not issue an eligibility certificate to tradition al industries
He could not grant an eligibility certifi cate under the earlier schemes because the instructions which outlined the scheme specifically excluded traditional industries
Actually even under the earlier schemes nei ther the application form nor the form of certificate which have been extracted earlier make any reference to the assessee concerned not being a traditional industry 
Be that as it may for granting a certificate that the appli cant is eligible for exemption under the notification the director has to look to the conditions set out in the noti fication and nowhere else
To say that when the notifica tion requires an eligibility certificate from the Director it means a certificate on the terms prescribed under the earlier scheme is to read into 611 the notification something which is not there
Thirdly the interpretation advocate by the State really narrows down the class of dealers entitled to the exemption as set down in column 1 of the notification
It amounts to substituting for the word dealers in column 1 of the notification the words dealers other than those carrying on traditional industries
Such an interpretation also virtually amounts to allowing certain executive instructions issued in a different context to cut down the scope of a statutory notification
This cannot clearly be done
Lastly a perusal of the earlier schemes would show that the concept of traditional industries is a vague one
The nomenclature of these industries has varied from time to time
The note in the 1977 and the definition in the 1983 instructions show the eligibility under the earlier schemes was denied not only to traditional industries but also certain other industries such as revived or reconstructed industries
We may also mention in this context a notification of 21101986 referred to by the High Court outlining exemp tions under Ss 6 and 7AA
It excludes from exemption in addition to saw mills flour mills etc
which the State calls traditional industries various other industries total numbering 26 specified in cl
xiii thereof
This changing definition of eligibility for exemption also shows that there was no common or identical group of beneficiaries intended under the various instructions or notifications and that each set of instructions or notification issued from time to time defined only the categories exempted from its purview and nothing else
The exemption list under one was not meant to be carried over into another
We are there fore of opinion that it is not permissible to restrict the scope of the notification in the manner suggested
We may point out that in construing the notification thus we are only giving effect to a well settled rule that may be illustrated by a reference to the decision in Hansraj Gordhandas vs HH Dave In that case notifications had been issued under section 8 of the granting exemption to a cotton fabrics produced by any cooperative society formed of owners of cotton powerlooms   and b cotton fabrics pro duced on powerlooms owned by any cooperative society or owned by or allotted to the members of the society   
The appellant had sought exemption from excise duty under these notifications in respect of cotton fabrics which had been got manufactured by him on the powerlooms belonging to a cooperative society in pursuance of an agreement entered into with it
The excise authorities rejected the claim on the ground that the exemption under the notifications could be claimed only when the cotton fabrics were manufactured by a cooperative so 612 ciety for itself
Upholding the assessee s claim this Court observed It was contended on behalf of the respondent that the object of granting exemption was to encourage the forma tion of co operative societies which not only produced cotton fabrics but which also consisted of members
not only owning but having actually operated not more than four power looms during the three years immediately preceding their having joined the society
The policy was that instead of each such member operating his looms on his own
he should combine with others by forming a society which
through the cooperative effort should produce cloth
The intention was that the goods produced for which exemption could be claimed must be goods produced on its own behalf by the society
We are unable to accept the contention put forward on behalf of the respondents as correct
On a true construction of the language of the notifications
dated July 31 1959 and April 30
1960 it is clear that all that is required for claiming exemption is that the cotton fab rics must be produced on power looms owned by the coopera tive society
There is no further requirement under the two notifications that the cotton fabrics must be produced by the Cooperative Society on the power looms for itself
It is well established that in a taxing statute there is no room for any intendment but regard must be had to the clear meaning of the words
The entire matter is governed wholly by the language of the notification
If the tax payer is within the plain terms of the exemption it cannot be denied its benefit by calling in aid any supposed intention of the exempting authority
If such intention can be gathered from the construction of the words of the notification or by necessary implication therefrom
the matter is different but that is not the case here
In this connection we may refer to the observations of Lord Watson in Salomon vs Salomon  Co   38 Intention of the legislature is a common but very slippery phrase which popularly understood may signi fy anything from intention embodied in positive enactment to speculative opinion as to what the legislature probably would have meant although there has been an omission to enact it
In a Court of Law or Equity what the Legislature intended to be 613 done or not to be done can only be legitimately ascertained from that which it has chosen to enact either in express words or by reasonable and necessary implication
 It is an application of this principle that a statutory notification may not be extended so as to meet a casus omissus
As appears in the judgment of the Privy Council in Crawford vs Spooner  
We cannot aid the legislature s defective phrasing of the Act we cannot add and mend and by construction make up deficiencies which are left there
 Learned Counsel for the respondents is possibly right in his submission that the object behind the two notifications is to encourage the actual manufacturers of handloom cloth to switch over to power looms by constituting themselves into Cooperative Societies
But the operation of the notifica tions has to be judged not by the object which the rulemak ing authority had in mind but by the words which it has employed to effectuate the legislative intent
 In our view this principle applies here squarely
Indeed even granting that the notification may be inter preted having regard to the past history and the possible intention of the Government while issuing the notification the position of the assesses here is much stronger for while in the reported case the State was trying only to effectuate the clear object of the notification here it is not at all clear for the reasons discussed above that the State intended the exemption to be confined only to the cases covered by the subsidyloan schemes prevalent earlier
The 1981 notification does not expressly or for the rea sons discussed above even by necessary implication exclude traditional industries from its scope
Sri Salve contends that even if a lenient view is taken and a more liberal construction is sought to be placed on the notification the best that could be said for the State would be that the notification was ambiguous
One could either say that the previous procedure and requirements prevalent for obtaining an exemption certificate were in tended to be incorporated by the words requiring such a certificate as suggested for the appellant or one could say with equal plausibi 614 lity that the exemption certificate is to be based only on the conditions and requirements mentioned in the notifica tion as contended for by the assesses
In such a state of law he contends one can have regard to the conduct of the parties and how they understood the notification
His argu ment is that the State by its conduct had held out to the assessee that it would also be eligible for the exemption
In this context he drew our attention to the following circumstance 1 The MP Audhyogik Vikas Nigam a State instrumen tality which was administering the notification issued in November 1981 a pamphlet setting out the various incentives the State was offering for new industries proposed to be set up in the State
As to exemption from sales tax the pamphlet stated that new industrial units coming into production after 1481 will be entitled to an exemption for a period depending upon the district where it is set up or could alternatively exercise an option to defer payment of sales tax by a period of 10 years
It did not mention anywhere that the industry should not be a traditional industry
2 The Nigam allotted a plot of land of the extent of 1 acre to enable the assessee to establish its unit in the Industrial Area
Mandideep Dt
Raisen
3 Other incentives as to power interest and capital subsidy were extended to the assessee
Thus says counsel the State lured the assessee to set up a unit in the record time of ten months and with a substantial capital outlay of over Rs 10 lakhs in a backward area
These incen tives were meant to be coextensive with the concession regarding sales tax
He contends that these representations and acts are sufficient to found a claim of equitable estoppe against the State
We are unable to accept this argument
The respondents have stated in their counter affidavit that the Nigam had acted in error and misconstrued the notification and was not acting under the authority of the Government in issuing the pamphlet
The other conces sions extended to the assessee pertained to the setting up of a small scale industry in the State and were unrelated to the exemption from sales tax
In our opinion there is force in these submissions
The circumstances and material relied on by the assessee do not spell out any clear promise of exemption from sales tax even for traditional industries
The notifications or guidelines under which the other facil ities were granted have not been 615 placed before us and no material is available on record to correlate them to the sales tax exemption or to show that all these were inextricably connected so as to form part of a single relief packet
We therefore reject this conten tion of Sri Salve
However on the interpretation of the notification
we accept the contention of the assesses that the notification does not warrant denial of exemption solely on the ground that the applicant is having a traditional industry
We have indicated earlier that the assesses whose writ petitions were disposed of by the Full Bench had set up their industries after 121
1983 by which time elaborate instructions had been issued to explain the State s point of view The question is whether this makes a difference
We think not
Even the 1983 document is not a statutory instru ment neither a notification nor a rule framed under the statute
The Full Bench has considered those instructions to be conclusive on two grounds on the doctrine of contempora nea exposition and on the principle that executive instruc tions can always be issued to supplement statutory instru ments so as to fill up areas on which the latter are silent
In our opinion neither of these grounds is tenable
It is true that the principle of contemporanea exposition is in voked where a statute is ambiguous but is shown to have been clearly and consistently understood and explained by the administrators of the law in a particular manner
This doctrine has been explained and applied in a numbers of cases of this Court eg See Varghese vs LTO   in addition to the cases referred to by the Full Bench
As pointed out by Sri Salve its applicability in the construction of recent statutes
and that too in the first few years of their enforcement has been doubted
vide Doypack Systems P Ltd vs Union of India
  para 61
But this apart the principle will not be applicable here for two reasons
In the first place the instructions of 1983 do not anywhere expound the terms of the notification
They do not give any indication that the state had applied its mind to the precise terms of the notification or their interpretation
They do not explain or clarify that though the notification is silent it has been intended that the limitations of the previous schemes should be read into it
Secondly the cases referred to will show that the doctrine applies in cases where the plea is that though the language of the statute may appear to be wide enough to seem applicable against the subject in particular situations the State itself which was the progenitor of the statute had not understood it in that way
But to apply the doctrine to widen the are bit of the statutory language would however virtually mean that the State can determine the interpretation of a statute by its 616 ipsi dixit
That certainly is not and cannot be the scope of the doctrine
The doctrine can be applied to limit the State to its own narrower interpretation in favour of the subject but not to claim its interpretation in its own favour as conclusive
The second ground on which the Full Bench has sought to invoke the instructions is also not correct
Executive instructions can supplement a statute or cover areas to which the statute does not extend
But they cannot run contrary to statutory provisions or whittle down their effect
The Full Bench seems to think that unless the instructions are brought in the notifications would have been in danger of abuse for want of proper guidelines as to the grant of exemption certificates
It is suggested that the notification contemplates rules to be issued for the purpose and that since no rules had been issued Directors of Industries were left with no parameters for the issue of exemption certificates and might act capriciously or arbi trarily in granting or refusing certificates
The instruc tions it is said have been issued to fill in this lacuna and are hence valid
There are two misconceptions in this line of reasoning
The first is that
though the last few words in column 3 of the notification are capable of a wider meaning it would appear that these words govern only the immediately preceding words rules envisaged are not in relation to the grant of exemption certificates and condi tions therefore but in respect of the circumstances in which the assesses can exercise the option between exemption and deferment of sales tax
This view derives support from the instructions of 1983
As pointed out earlier the instruc tions first set out the scope of the various notifications as granting exemption from sales tax the instructions thereafter proceed to say The grant of exemption from the payment of sales tax is contingent upon the issue of a certificate of eligi bility to the new industrial units
This certificate of eligibility is required to be issued by the Director of Industries or an officer authorised by him for this purpose
In so Jar as the grant of concessions relating to the exemption from payment of sales tax is concerned no further notifications are required to be issued
For ena bling the new industrial units to avail of the second con cession viz that of deferment of payment of sales tax a scheme is being issued separately
For availing of the benefit of the deferment of concession too a certificate of eligibility is required to be obtained by the industrial unit
However
617 pending the issue of the scheme the grant of certificate of eligibility should not be held up underlining ours Incidentally we may point out the first part of the para does not clarify that the eligibility certificate is not to be granted to traditional industries
But so far as the present point is concerned it is categorically stated that no further notifications are required to be issued and that they are needed only to define the scheme for deferment of tax
Indeed rules were framed in order to implement the deferment scheme which came into force with effect from 1 4 1983
We shall refer a little later to these rules
Secondly there is no warrant for assuming that the notifi cation envisages conditions for the issue of the eligibility certificate other than those specified by itself
There is nothing in the language of the notification to suggest that anything further is needed to enable the Director of Indus tries to grant the exemption
Without the guidelines the requirement for an exemption certificate would not become an empty formality as suggested by the Full Bench
The Direc tor of Industries has to issue the same after satisfying himself that the applicant industry falls within the terms of the notification in the following respects a that the assessee is one of the class of dealers set out in column  1 b that he has set up an industry in the State c that it has been set up in one of the districts set out in the annexure and the category to which it belongs d that the industry has commenced production after 1 4 81 e that the assessee has not opted for the deferment scheme
These conditions are many and detailed and do not leave anything to the discretion of the Director of Industries
We fail to understand what need there was to lay down any elaborate procedure therefore
Even if there was and the earlier procedure by way of application form declaration form and form of certificate were to be adapted that proce dure by itself did not as pointed out earlier contain any reference to the assessee being a traditional industry or otherwise
To assume first that the conditions specified in the notification are not exhaustive or suffi 618 cient and may lead to abuse of power by executive authori ties unless canalised by procedural guidelines and then to say that such a conclusion is borne out by the mere refer ence to a certificate being granted by the Director of Industries because under some earlier schemes such certif icate was being granted on a restricted basis does not appear to be sound logic
We are therefore of opinion that the notification is quite clear and leaves no area of vacuum which needs to be supplemented by guidelines
Thirdly if we read the last part of the entry in column 3 of the notifi cation as envisaging rules to be framed for the grant of the eligibility certificate no such rules were flamed
Only instructions were issued
These instructions say that even an assessee who fulfills all the requirements of the noti fication will not be eligible for exemption unless he fulfills one more condition outside the notification
They travel beyond and counter to the notification
They restrict the scope of exemption under the notification
They deny exemption to a person who qualifies for it under the statu tory notification
Indeed there is force in the contention that if the statutory notification is construed as permit ting the State by rules or executive instructions to pre scribe other conditions for exemption whether new or based on past practice it is liable to be struck down on the ground of impermissible delegation of legislative power to the executive
This certainly they cannot do
A further development which has been relied on by the State but does not really seem to help its case may now be referred to
State Act 25 of 1982 inserted section 22 D in the Act in the following terms 22 D Special provisions relating to deferred payment of tax by Industrial Units Notwithstanding anything contained in any other provisions of this Act a registered dealer who is a registered as a small scale industrial unit with Indus trial Department of the Government of Madhya Pradeshor b registered with the Director General of Technical Devel opment as an industrial unit or c registered as an industrial unit by any authority duly empowered to do so by the Government of Madhya Pradesh or the Central Government or d holding a licence under the Industries Development and Regulation Act 1951 No 65 of 1951
619 and who in each case has or may set up a new industrial unit in any district of Madhya PradeSh if eligible for grant of the facility of deferred payment of tax under the scheme providing for grant of incentive to enterpreneurs for set ting up new industrial units in the state as the State Government may make in this behalf may make deferred payment subject to such restrictions and conditions as may be speci fied in such scheme
 Thereafter the State Government framed the MP Deferment of Payment of Tax Rules 1983 which were gazetted of 1983 but with retrospective effect from 14 1981 that is even anterior to the date of the notification
Rules 3 4 and 14 are relevant and may be set out here
3 Eligibility for grant of Facility of Deferred payment of tax 1 A new industrial unit other than a unit specified in rule 14 which is covered by any of the categories speci fied in section 22D and of the Act and which is engaged in the manufacture and sale of any goods shall qualify for deferred payment of the tax payable by it provided it is eligible for grant of the concession of exemption from payment of tax in terms of notification No A 3 41 81 35 ST V dated the 23rd October 1981 and No A 3 41 8131 ST V dated the 29th June 1982 as amended from time to time subject to the provisions of the act
The period pertaining to which the tax which the new industrial unit can defer will be the same for which it could have obtained the con cession of the exemption from payment of tax ie the period pertaining to which the tax can be deferred will be the period shown in column 2 of the said notification
2 The new industrial unit shall be eligible to defer only the payment of tax which is due from it under the Act
Application for Scheme of deferred payment and grant of certificate of eligibility 1 A new industrial unit opting for the scheme of deferred payment of tax shall apply for and obtain a certificate of eligibility in accordance with the instructions issued by State Government in the Commerce and Industries Department for the said purpose
An applica tion in writing shall be submitted within forty five days of the publication of these rules or of commencement of the production whichever is later
In the application form the 620 new industrial unit shall indicate that it has opted for scheme of deferred payment of tax
The option once exercised shall be irrevocable
The form of the application as well as the certificate of eligibility shall be as specified in the said instructions
The application shall be made to the General Manager District Industries Centre of the district where the new industrial unit is or is proposed to be locat ed and shall be processed further in accordance with the said instructions
The certificate of eligibility in respect of large and medium scale units shall issued by the Director of Industries Government of Madhya Pradesh and in respect of small scale units by the said General Manager and shall carry a specific and district number given by the said officer
2 A copy of the certificate of eligibility shall be for warded by the officer issuing the certificate to the appro priate Sales Tax Officer ie the Sales Tax Officer in whose circle the industrial unit is registered as a dealer
The Sales Tax Officer receiving the copy of the certificate of eligibility shall maintain a record of the same in such form as may be directed by the Commissioner and shall not enforce recovery of the tax payment whereof has been shown to have been deferred in the certificate of eligibility
3 The new industrial unit shall be entitled to defer the payment of the tax for a period of ten years
This entitle ment shall be available only on receipt of the certificate of eligibility to it under sub rule 1
The certificate of eligibility shall show the duration for which the payment of the tax has been deferred
The year in which the tax per taining to any accounting year of the industrial unit is required to be paid consequent upon deferment of tax shall also be shown in the certificate of eligibility
The entire tax assessed pertaining to any accounting year shall be payable by the industrial unit in lump sum on the expiration of duration of deferment and payment of such tax shall be made within thirty days of the date on which the period of ten years from the end of the relevant accounting year expires
Non availability of facility of deferred payments The result of the scheme of deferred payment of tax shall not be available to the following new industrial units namely 621 A 1 flour mills Excluding Roller Flour Mills 2 Oil mills excluding Solvent Extraction Plants 3 dall mills 4 saw mills rice mills 6 printing presses of all types 7 cotton ginning and pressing factories 8 ice factories 9 such other industries as may be notified by Government from time to time
B industrial units undertaking expansion modernisation or diversification C a closed unit revived by an entrepreneur D units claiming interest free loans as an existing unit establishing a new unit E an industrial unit set up by transferring or shifting or dismenting an existing industry
A note was also published in the Gazette explaining the background of the rules
It reads thus NOTE EXPLAINING THE BACKGROUND OF THE SCHEME OF DEFERRED PAYMENTS TAX The Government of Madhya Pradesh with a view to accelerat ing the pace of industrialisation have announced concessions regarding the payment of tax under the Madhya Pradesh Gener al Sales Tax Act 1958 and the by new industrial units going into production after 1st April 1981 which contemplate a total exemption from payment of tax whether State or Central by new industrial units going into production after 1st April 1981 for varying periods depending upon the district in which the new industrial unit is set up 622 b deferment of the payment of tax in lieu of the above said exemption for a period of ten years
To give effect to the concession of exemption from payment of tax the Government in the Separate Revenue Department have already issued the following notifications i F No A3 41 8135 ST V dated 23rd October 1981
iiF No A3 41 81 25 ST V dated 1st May 1982
iii F No A3 41 8124 ST
V 1st May 1982
iv F No A3 41 81 31 ST V dated 29th June 1982
With a view to enabling those new industrial units who opt for the alternative concession of deferment of payment of tax a special provision in the shape of section 22 D has been inserted in the Madhya Pradesh General Sales Tax Act 1958 with effect from 1st April 1981 according to which the facility of deferring the payment of tax which become available subject to the provisions of the scheme providing for the grant of incentives for setting up the new industri al Units The aforesaid rules have therefore been framed to formulate the scheme of deferred payment of tax
 It might appear at first sight that since the relief by way of deferment of tax is only in the nature of an alterna tive to the provision for exemption and the former is not available to traditional industries because of rule 14 above the same should be the position in regard to the exemption provision also
There are however several diffi culties in accepting this suggestion
In the first place the rules relate to tax deferment and not tax exemption
It is open to the State Government particularly in view of section 22D to frame such scheme for the purpose as it may deem fit
The provision for exemption however needs to be spelt out under section 12 in a statutory notification
Secondly if as is being urged on behalf of the State it is explicit even on the terms of the notification that traditional industries are excluded it is not necessary for the rules of deferment to specifically provide that they will not be available to the industries listed in rule 14 particularly when rule 4 has incorporated the requirement of an eligibil ity certificate in accordance with 623 the previous instructions for the said purpose
Thirdly rule 14 excludes from the scheme not merely traditional indus tries covered by para A but also industrial units which may not be traditional industries  falling under paras B to E
Fourthly the rules are not inconsistent with the interpretation that while all industries fulfilling the terms of the notification can claim exemption under it only some of those units which do not fall under rule 14 can opt for the alternative of determent
We are therefore of opinion that even the retrospective promulgation of these rules provide no assistance in the interpretation of the notification
A reference has now to be made to the notification of 3787 amending the 1981 notification with retrospective effect so as to exclude what may be described in brief as traditional industries  though like rule 14 of the defer ment rules the exclusion extends even to certain other non traditional units operating in certain situations
Though this notification purports to be retrospective it cannot be given such effect for a simple reason
We have held that the 1981 notification clearly envisages no exclu sion of any industry which fulfills the terms of the notifi cation from availing of the exemption granted under it
In view of this interpretation the 1987 amendment has the effect of rescinding the exemption granted by the 1981 notification in respect of the industries mentioned by it
section 12 is clear that while a notification under it can be prospective or retrospective only prospective operation can be given to a notification rescinding an exemption granted earlier
In the interpretation we have placed on the notifi cation the 3787 notification cannot be treated as one merely clarifying an ambiguity in the earlier one and hence capable of being retrospective it enacts the rescission of the earlier exemption and hence can operate only prospec tively
It cannot take away the exemption conferred by the earlier notification
We would like to add that we agree with the view of the Full Bench that if the notification is interpreted as done by it or even hold it to be ambiguous there is no scope for the assessee to invoke the doctrine of promissory estoppel
We have already dealt with this aspect in regard to the cases in which the State has appealed
In the other cases covered by the Full Bench decision the mere fact that an exemption was initially granted and then revoked would be insufficient to found the claim of estoppel particularly when it has been found that the assesses started production after 121
1983 and claimed exemption very much later
But since in our view the terms of the notification are clear and envisage no denial of exemption to traditional indus tries this question does not survive
624 Before we conclude we have to refer to one aspect which we have touched upon at the very beginning of the judgment and that is the dismissal in limine of the Special Leave Petition filed in this Court by the petitioners before the Full Bench
It has been pointed out that the above petition was dismissed notwithstanding that the Special Leave Peti tion in the case of GS Dhall  Flour Mills was also then pending for admission
It would perhaps have been better if both the SLPs had been taken up and dealt with together
However the SLP against the Full Bench was dismissed and two of us having been members of the Bench that dis missed it we may observe that Sri Salve is perhaps right in saying that it was the content of paras 20 and 21 of the Full Bench judgment that persuaded this Court to dismiss the SLP there against
The Full Bench has there pointed out that even if it could be said that two interpretations of the notification were equally plausible
the assesses in those cases had set up the industries after the explicit instructions of 121
1983 were made public and thus took a deliberate risk and had only themselves to thank
Neverthe less the fact is that the view taken by us on the scope of the notification runs counter to the Full Bench decision which must be treated as overruled
For the above reasons we have come to the conclusion that the GS Dhall and Flour Mills case laid down the correct law and not the Full Bench
We would like to add that we are not quite happy to arrive at this decision
It does seem likely that the State Government had not intended the exemption to be availed of by certain categories of industries
But it has failed to achieve this purpose on account of the wide language in which it couched the exemp tion notification
We find ourselves unable for the reasons discussed above to discover any valid legal basis on which the exemption clearly granted can be withheld from the assesses here
We therefore dismiss the appeals of the State and allow the appeals preferred by the assesses and hold them entitled to the exemption under the 1981 notifica tion
We however make no order regarding costs
RSS Appeals filed by State dismissed and other appeals allowed


Summary:
The Appellant s father purchased the house of respondent Nos 1 and 2 with condition of repurchase by the sellers after five years
He permitted the respondents to remain in possession but got a rent note executed by Respondent No3 the first cousin of Respondent No1
After the expiry of 5 years when the house was not repurchased by the respondents the appellant s father plaintiff instituted a suit for arrears of rent and ejectment against Respondent Nos 1 2 and 3 Defendant Nos 2 3 and 1 claiming that defendant No 1 was in arrears of rent and defendant Nos 2 and 3 were his sub tenants
The Trial Court decreed the suit for ar rears of rent against defendant No 1 but dismissed the suit for ejectment against defendant Nos 2 and 3 holding that they were not sub tenants
Defendant No 1 filed an appeal against the decree for arrears of rent
The Appellate Court dismissed the appeal with an observation that though the rent note was executed by Defendant No 1 the possession of Defendant Nos 2 and 3 was on behalf of Defendant No 1 since they were closely related
Relying on these observa tions the plaintiff filed a second suit against the defend ants with a change that defendant Nos 2 and 3 were licen sees of defendant No1
The Trial Court decreed the suit for arrears of rent against defendant No 1 and for ejectment against defendant Nos 2 and 3
Both defendant No 1 sepa rately and defendant Nos 2 and 3 jointly filed two appeals which were dismissed
Separate appeals were filed in the High Court which dismissed the appeal of defendant No 1 and allowed the appeal of defendant Nos 2 and 3 holding that the findings recorded in appeal arising out of earlier suit that they were licensees did not operate as res judicata
Accordingly the High Court dismissed the suit for ejectment against defendant Nos 2 and 3
Hence this appeal
Dismissing the appeal this Court 98 HELD One of the tests to ascertain if a finding oper ates as res judicata is if the party aggrieved could chal lenge it
Since the dismissal of appeal or the appellate decree was not against defendants Nos 2 and 3 they could not challenge it by way of appeal
Even assuming that de fendant No 1 could challenge the finding that liability of rent was of defendant Nos 2 and 3 as they were in posses sion he did not file any written statement in the Trial Court raising any dispute between him self and defendants Nos 2 and 3
There was thus no occasion for the appellate court to make the observation when there was neither plead ing nor evidence
Therefore from either point of view the finding could not operate against defendants Nos 2 and 3 as res judicata
100E G Keshardeo Chamria vs Radha Kissen Chamria 1953 SCR 154 held in applicable