LLOYD ELECTRIC AND ENGINEERING LIMITED versus STATE OF HIMACHAL PRADESH AND OTHERS
[2015] 10 S.C.R. 362, Supreme Court of India, 2015
Outcome: Appeal(s) allowed (Granted)
Segment: Issues
[2015] 10 S.C.R. 362 
A 
LLOYD ELECTRIC AND ENGINEERING LIMITED 
B 
v . 
. STATE OF HIMACHAL PRADESH AND OTHERS 
(CivilAppeal No.6838 of2015) 
SEPTEMBER 3, 2015 
[ANIL R. DAVE, KURIAN JO~EPH AND 
· ADARSH KUMAR GOEL, JJ.) 
Taxation - Central Sales Tax - On inter-State sales -At 
C concessional rate of 1% - Permissibility -
The assessee 
enjoying the concessional rate upto 31.3.2009 - Policy 
decision taken by Council of Ministers to extend the period 
of concession upto 31.3.2013 or till the CST is phasedout-
D Statutory Notification to that effect issued by the Excise and 
Taxation Department on 18. 06. 2009 - Revenue denying tax 
concession to the assessee from 1.4.2009 to 18.6.2009 
holding that assessee was entitled to the concession only 
from the date of issuance of the Notification i.e. 18. 6. 2009 -
E Held: Once the Council of Ministers takes a policy decision, 
the implementing Department cannot issue a notification 
contrary to that policy decision - It was not an introduction of 
a new policy under the notification, but was an extension of 
the benefits under the extended policy -
The State 
F Government is bound by the policy decision - The assessee 
is entitled to concessional rate of tax@ 1% w.e.f. 1.4.2009 till 
31.3.2013-CentralSales TaxAct, 1956-s. 8(5)(b). 
G 
H 
Allowing the appeal, the Court 
HELD: 1. Once the Cabinet takes a policy decision 
to extend its 2004 Industrial Policy in the matter of Central 
Sales Tax (CST) concession to the eligible units
beyond 
31.03.2009, upto 31.03.2013, merely because the Excise 
362
LLOYD ELECTRIC AND ENGINEERING LIMITED v. STATE 363 
OF HIMACHAL PRADESH 
and Taxation Department took some time to issue the A 
notification, it cannot be held that the eligible units are 
not entitled to the concession, till the Department issued 
the notification i.e.18.06.2009. [Para 10] [369-G; 370-C] 
2. No doubt, the statutory notification issued by the B 
Excise and Taxation Department u/s. 8(5)(b) of the Central 
Sales Tax Act on 18.06.2009, has stated that the eligible 
units will be entitled to the concession with immediate 
effect. Merely because such an expression has been 
used, it cannot be held that the State Government can C 
levy the tax against its own policy. The State Government 
is bound by the policy decision taken by the Council of 
Ministers and duly notified by the Department concerned. 
[Para 1 O] (370-D-E] 
D 
3. The High Court has gone wrong in not 
appreciating the background of the case and the 
decision of the Council of Ministers to extend its own 
Industrial Policy announced in 2004 and the tax 
concession beyond 31.03.2009. Once the Council of E 
Ministers takes a policy decision, the implementing 
Department cannot issue a notification contrary to the 
policy decision taken by the Government. The High Court 
also erred. in analyzing and understanding the 
Notification dated 18.06.2009 as if it introduced the CST F 
concession @ 1 per cent with effect from the date of 
issuance of notification. It is not the introduction of a new 
policy
but an extension of the. benefits under the 
extended policy. The appellant shall be entitled to the 
concessional rate of CST @ 1 per cent with effect from G 
01.04.2009 till 31.03.2013 until it is duly varied by the State 
Government. [Paras 13 and 14] [371-E-G; 372-B] 
State of Bihar and others v. Suprabhat Steel 
Limited and Ors. (1999) 1 SCC 31: 1998 (2) 
H
364 
SUPREME COURT REPORTS 
[2015) 10 S.C.R. 
A 
Suppl. SCR 699; State of Jharkhand and Ors. v. 
B 
Tata Communications Limited and Anr. (2006) 4 
sec 57: 2006 (3) SCR 443 - relied on. 
Case Law Reference 
1998 (2) Suppl. SCR 699 
2006 (3) SCR 443 
relied on. 
Para 9 
relied on. 
Para 13 
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 
C 6838 of 2015 
D 
E 
From the Judgment and Order dated 24.05.2013 of the 
High Court of Himachal Pradesh, Shimla in CWP No. 8170/ 
2012-G. 
M.P. Devanath, Vivek Sharma,Ambarish Pandey for the 
Appellant. 
Suryanarayana Singh, AAG, Varinder Kumar Sharma for 
the Respondents. 
The Judgment of the Court was delivered by 
KURIAN, J. 1. Leave granted. 
F 
2. Whether the appellant is liable to pay Central Sales Tax 
(hereinafter referred to as "CST")@ 2 per cent on the inter-
state sales for the period 01.04.2009 to 17.06.2009 or@ 1 
per cent in view of the Industrial Policy of the state, is the dispute 
arising for consideration in this case. It is not in dispute that as 
G per the Industrial Policy of the State of Himachal Pradesh, the 
appellant had been enjoying the concessional rate in CST@ 
1 per cent upto 31.03.2009. It is also not in dispute that the 
Cabinet had taken a policy decision to extend the period of 
concession upto 31.03.2013 or till the CST is phased out. Still 
H further, it is not in dispute that the Department of Industries
LLOYD ELECTRIC AND ENGINEERING LIMITED v. STATE 365 
OF HIMACHAL PRADESH [KURIAN, J.] 
had, accordingly, issued a notification extending the A 
concessions from 01.04.2009 to 31.03.2013 or till the time 
the CST is phased out. The dispute arose on account of the 
Notification dated 18.06.2009 issued by the Excise and 
Taxation Department granting the concessional rate of the CST 
@ 1 per cent wherein the expression " ... with immediate effect B 
for the period ending 31.03.2013" was used. 
3. The High Court, as per the impugned judgment, took 
the view that the expression " ... with immediate effect" has to 
be given a plain meaning, and therefore, the appellant is not C 
entitled to the concession which it had been enjoying upto 
31.03.2009 till the Notification dated 18.06.2009 is issued by 
the Excise and Taxation Department. 
4. Heard Shri M.P. Devanath, learned Counsel appearing D 
for the appellan~ and Shri Suryanarayana Singh, learned 
Additional Advocate General appearing for the respondent-
State. 
5. In order to appreciate the contentions advanced by the E 
p·arties, it is necessary for us to refer to the background of the 
dispute. Industrial Policy-2004 was notified by the State of 
Himachal Pradesh, providing for, inter a/ia, at Clause 10.3 
concessional rate in Central Sales Tax: 
"10.3 
Central Sales Tax at a concessional rate of 1 % F 
shall be leviable on the goods manufactured by new and 
existing industrial units (as defined under these Rules) 
unless
provided otherwise elsewhere under these Rules, 
upto 31-03-2009. This incentive will not be provided to G 
industrial unit engaged in the production of breweries, 
distilleries, non-fruit based wineries and bottling plants 
(both for country liquor and Indian made foreign Liquor)." 
6. It is not in dispute that the appellant was found eligible H
• 
366 
SUPREME COURT REPORTS 
[2015) 10 S.C.R. 
A for the said concession since it satisfied the parameters 
prescribed in the notification till 31.03.2009. It is seen from 
the Cabinet Note on extension of the incentive of concessional 
rate of CST@ 1 per cent beyond 31.03.2009 to industrial 
enterprises of the State of Himachal Pradesh prepared on 
B 
19.05.2009, the issue whether the concession should be 
extended beyond 31.03.2009 for some more time, was 
specifically addressed. To quote the relevant discussion: 
c 
D 
E 
F 
"3 .... The State Government has been vigorously pursuing 
at various levels with Government of India the case for 
the extension of the Special Package for our State 
announced in January 2013 till at least March 2013 as it 
expires in March 2010. In the absence of any decision 
or any positive indications so far, it is imperative that the 
State Government also at its own level considers taking 
such initiatives by way of which Industrial Enterprises 
being set up in our State could be provided some basic 
attraction in the form of tax incentives and a facilitating 
environment. Availability of such incentives in the 
neighbouring State such as Uttarakhand where the 
incentive of1 % CST is available to the industrial units till 
March, 2014 renders our State uncompetitive and 
Unattractive to industrial investors. During the year 2007-
08 the Industrial Enterprises of the Ste had contributed a 
sum of Rs.113.4 7 Crores to State exchequer through 1
% 
CST. In case the incentive of 1 % CST is not restored till 
the time the CST is phased out by Central Government it 
will affect the viability of units adversely and majority of 
G 
big Enterprises may resort to branch transfer/ 
consignment sales outside the State to avoid 2% CST 
to maintain their competitiveness. It is therefore 
proposed that the incentive of concessional rate of 
Central Sales Tax @ 1 % be allowed to be continued 
H 
beyond 31st March, 2009 till March 2013 or till the time
LLOYD ELECTRIC AND t:.NGINEERING LIMITED v. STATE 367 
OF HIMACHAL PRADESH [KURIAN, J.] 
CST is phased out. 
A 
4. With this proposal there would be no adverse financial 
implication and State will continue to earn the same 
rate of revenue through CST sale as Industrial 
Enterprises will prefer to pay 1 % CST instead of 
B 
resorting to branch transfer of goods. 
5. The Department of Excise & Taxation and Finance 
Department have concurred with proposal. 
6. Permission of the Hon'ble Chief Minister has been 
c 
obtained through the Chief Secretary to place the 
matter before the Council of Ministers. 
POINTS FOR CONSIDERATION 
D 
Whether to extend the incentive of concessional rate of 
CST@ 1% for all the Industrial Enterprises beyond 31"1 
March 2009 till 31 91 March 2013 or till the time the CST 
is phased out by the Central Government?" 
E 
7. The Council of Ministers, in the Meeting held on 
20.05.2009, approved the above proposal and, accordingly, 
the State Government through Principal Secretary (Industries) 
issued the following Notification on 29.05.2009: 
"Government of Himachal Pradesh, 
F 
Department of Industries (A) 
No. lnd.A(F) 6-3/2008 Dated Shimla - 02,291h May, 
2009. 
G 
NOTIFICATION 
In partial modification of this department notification No. 
lnd.A(F)6-7/2004 dated 301h December, 2004 notifying 
Industry Policy 2004 regarding grant of Incentives, H
368 
SUPREME COURT REPORTS 
[20.15) 10 S.C.R. 
A 
Concessions and Facilities to Industrial Units Himachal 
Pradesh - 2004, the Governor. Himachal Pradesh i_s 
pleased to extend the incentive of validitv of concessional 
rate of CST@ 1% upto 31.03.2013 in Rules 10.3 of 
Industry Policy, 2004 or till the time CST is phased out. 
B 
whichever is earlier. 
c 
By Order 
Sd/-
Pr. Secretary (Inds.) to the 
Govt. of Himachal Pradesh." 
(Empyhasis supplied) 
8. Thereafter, the Excise and Taxation Department of the 
D State Government issued statutory Notification under Section 
8(5)(b) of the Central Sales TaxAct, 1956 (hereinafter referred 
to as "the Act"). The relevant portion of the Notification reads 
as follows: 
E 
F 
G 
H 
"2. Now, therefore, in exercise of the powers conferred 
. by clause (b) of sub-section (5) of section 8 of the Central 
Sales Tax Act, 1956 (Central Act No. 74 of 1956), the 
Governor of Himachal Pradesh is pleased to direct that 
in respect of the sale in the courses of inter-State trade 
or commerce of the goods (other than those 
manufactured by the breweries, distilleries, nonfruit/ 
vegetable based wineries and bottling plants (both of 
country liquor and Indian made foreign liquor) 
manufactured by the dealers running any existing 
industrial unit or new industrial unit (other than those new 
industrial units which are located in the tax free industrial 
zone) in the State of Himachal Pradesh, and are 
registered as dealer with Excise and Taxation
Department, Himachal Pradesh, the tax levied under' sub-
LLOYD ELECTRIC AND ENGINEERING LIMITED v. STATE 369 
OF HIMACHAL PRADESH [KURIAN, J.] 
section (1) of section 8 of the said Act shall be calculated A 
and payable at the rate of 1 % of the taxable turnover of 
such goods with immediate effect for the period ending · 
31.03.2013." 
(Emphasis supplied) B 
9. The whole thrust of th.e contention advanced by the State 
is that since the notification under the Act providing for tax 
concession was issued only on 18.06.2009 wherein it was 
specifically mentioned that the notification would have C 
immediate effect and would operate for the period ending on 
31.03.2013, the appellant is not entitled to the CST concession 
@ ·1% for the intervening period between 01.04.2009 to 
18.06.2009. The appellant, however, submits that in view of 
the policy decision taken by the State Government extending D 
the tax concession beyond 31.03.2009 to 31.03.2013, the 
Excise and Taxation Department of the State Government 
cannot take a different view and deny the tax concession for 
the period between 01.04.2009 to 18.06.2009-the date of the 
notification issued under Section 8(5)(b) of the Act. Heavy E 
reliance is also placed on the decision of this Court in State 
of Bihar and others v. Suprabhat Steel Limited and 
Others1• 
10. We do not think it necessary to go into the various F 
contentions raised by the parties in view of the undisputed 
factual position we have referred to above. The State 
Government cannot speak in two voice. Once the
Cabinet 
takes a policy decision to extend its 2004 Industrial Policy in 
the matter of CST conc~ssion to the eligible units beyond G 
31.03.2009, upto 31.03.2013, and the Notification dated 
29.05.2009, accordingly, having been issued by the 
Department concerned, viz., Department of Industries, 
, (1999) 1 sec 31 
H
370 
SUPREME COURT REPORTS 
[2015) 1 O S.C.R. 
A 
thereafter, the Excise and Taxation Department cannot take a 
different stand. What is given by the right hand cannot be taken 
by the left hand. The Government shall speak only in one voice. 
It has only one policy. The departments are to implement the 
Government policy and not their own policy. Once the Council 
B of Ministers has taken a decision to extend the 2004 Industrial 
Policy and extend tax concession beyond 31.03.2009, merely 
because the Excise and Taxation Department took some time 
to issue the notification, it cannot be held that the eligible units 
are not emtitled to the concession till the Department issued 
C the notification. It has to be noted that the Finance Department 
of the State Government had concurred with the proposal of 
the Department of Industries to extend the tax concession 
beyond 31.03.2009 till 31.03.2013 and the Council of Ministers 
D had accordingly taken a decision also. No doubt, the statutory 
notification issued by the Excise and Taxation Department 
under Section 8(5)(b) of the Act on 18.06.2009 has stated that 
the eligible units will be entitled to the concession with 
immediate effect. Merely because such an expression has 
E been used, it cannot be held that the State Government can 
levy the tax against its own policy. The State Government is 
bound by the policy decision taken by the Council of Ministers 
and duly notified by the Department concerned, viz., 
Department of
Industries. 
F 
11. That apart, it appears, the Excise and Taxation 
Department itself has not actually intended the notification to 
take effect from 18.06.2009. The definition given to the new 
and the existing industrial units in the Notification dated 
G 18.06.2009 would indicate so. To quote: 
"Explanation 1:- For the purposes of this notification,-
(i) 'new industrial unit' means an industrial unit located 
in Himachal Pradesh which commenced/ 
H 
commences production on or after 31.012.2004, but
LLOYD ELECTRIC AND ENGINEERING LIMITED v. STATE 371 
OF HIMACHAL PRADESH [KURIAN, J.] 
will not include any industrial unit which is formed as 
A 
a result of reestablishment, mere change of 
ownership, change in the constitution, re-structuring 
or revival of an existing industrial unit; 
(ii) 'existing industrial unit' means an industrial unit which 
B 
commenced production before 31.12.2004;" 
12. Even otherwise, it is not altogether a new concession 
that has been notified by the Excise and Taxation Department 
in the impugned Notification dated 18.06.2009. As we have c 
noted above, it is an extension of the 2004 Industrial Policy 
and the resultant tax concession to the eligible units which was 
available upto 31.03.2009. Therefore, for all purposes, what 
is notified by the Excise and Taxation Department on 
18.06.2009 is an extension of the said concession beyond D 
31.03.2009 and that is why the notification has used the 
expression " ... for the period ending 31.03.2013" without 
otherwise indicating the concession already being enjoyed by 
the eligible units till 31.03.2009. 
13. The High Court, with great respect, has gone wrong in 
not appreciating the background of the case and the decision 
E 
of the Council of Ministers to extend its own Industrial Policy 
announced in 2004 and the tax concession beyond 
31.03.2009 .. Once the Council of Ministers takes a policy F 
decision, the implementing Department cannot issue a 
notification contrary to the policy
decision taken by the 
Government. The High Court also erred in analyzing and 
understanding the Notification dated 18.06.2009 as if it 
introduced the CST concession@ 1 per cent with effect from G 
the date of issuance of notification. As we have already clarified, 
it is not the introduction of a new policy but an extension of the 
benefits under the extended policy. It is in this context, the 
decision of this Court in Suprabhat Steel Limited (supra) 
and State of Jharkhand and others v. Tata H

372 
SUPREME COURT REPORTS 
[2015] 105.C.R. 
A Communications Limited and another2 become relevant. 
14. Accordingly, the appeal is allowed, the impugned 
judgment is set aside. It is declared that the appellant shall be 
entitled to the concessional rate of CST @ 1 per cent with 
B effect from 01.04.2009 till 31.03:2013 until it is duly varied by 
the State Government. 
15. There shall be no order as to costs. 
Kalpana K. Tripathy 
Appeal allowed. 
2 (20oa) 4 sec 57