Case: Gitesh Pipes Private Limited &amp; Another Vs. The State of Maharashtra &amp; Others

3. Petitioner no. 1 is a Company duly incorporated under the provisions of the Companies Act, 1956 as a Private Limited Company. Petitioner no. 2 is its Director having authority to sign and act on its behalf. It is case of the petitioners that in order to achieve dispersal of industries out of Mumbai,Thane, Pune belt and to attract them in theunderdeveloped and developing areas of theState, respondent no. 1 offered packages of incentives to new units and for expansion of existing units in the specified region of the State.The original package of 1964 came to be amended from time to time and ultimately in the year 1993 a new package of incentives scheme was introduced by respondent no. 1. Under the said scheme, various regions were identified for grant of various types of incentives. Jalgaon city and district has also been included in it.Petitioner no.1 is aindustry engaged in manufacture of PVC pipes and fittings situated at M.I.D.C. area Jalgaon. The above said package scheme was implemented in Jalgaon district through respondent no.3. Besides other benefits under the scheme, sales tax exemption and other benefits including special capital incentives are conferred upon the specified industries in which the petitioner Company is included. The term S.C.I. benefits or incentives mean special capital incentives including exemption and refund of octroi, etc. The term S.T.I. incentives means exemption from sales tax, etc. upto 120 per cent of fixed investment of the unit. In this case, there is no dispute regarding eligibility of the petitioner for S.C.I. benefits or incentives. The dispute is only in respect of S.T.I. incentives and eligibility of the petitioner Company for them.5. It is case of the petitioners that earlier the petitioner Company was styled as, "M/s Shri Pulp and Paper" and had obtained Plot No.from the M.I.D.C., Jalgaon. At that time, petitioner Company was not registered. The matter was being processed. The petitioners desired to have the benefit of the scheme. On 28.3.2000, an application for letter of intent for eligibility for incentives was forwarded to respondent no. 3. After processing the same, a letter of intent is issued by respondent no. 3District Industries Centre. The date by which the particular unit has to start functioning and actual production is also fixed by respondent no. 3 in advance. The unit is expected to take effective steps by such date to get benefits of package scheme. After testing the eligibility of the petitioner on 30.12.2000 respondent no. 3 issued the letter of intent directing that if effective steps are not taken by 31.3.2002 to install and start production, the benefit of package scheme of 1993 shall not be given to the petitioners and the letter of intent shall be rendered invalid. Petitioner no. 1Private Limited Company was registered by present name on 8.2.2002 and due permission of respondent no. 1 was obtained regarding the same. Thereafter the petitioners took various steps for acquisition, installation of machinery, and creating other infrastructure for starting production. In due course it obtained permission from the Electrical Inspector to install 140 KV Generator. By 28.3.2002, the petitioners obtained necessary consent from the Maharashtra Pollution Control Board. By 26.2.2002 the petitioners started purchasing raw material. It had obtained loan from Jalgaon Janata Bank. The production was started successfully on 20.3.2002. By 21.3.2002 it had invested about Rs. 96 lac on the project. This was all done to complete necessary steps before cut off date given in the letter of intent which was 31.3.2002.Under the circumstances, the petitioners were under legitimate expectation of getting benefit of the package scheme on both counts including exemption in sales tax and cash incentives popularly known as subsidy. Thereafter the petitioners approached respondent no. 2 by representation dated 5.6.2002 and pursued the matter. The respondents thereafter informed that under the Government Circular dated 23.3.2000 the cut off date was 31.12.2001 and the petitioners ought to have started production by that date, but this was contrary to the cut off date i.e. 31.12.2001 mentioned in the letter of intent. The petitioners did not bring to the notice of the respondents that the cut off date was 31.12.2001 prior to its starting production. Under the circumstances, the petitioners have to meet tough competition with other PVC pipe units. It is also stated that the action of the respondents is illegal and arbitrary. There is no rational basis for denying the benefits of the package scheme and in the circumstances the petitioners have approached this Court with various reliefs as stated above.7. Respondent nos. 2 and 3 have filed their affidavit in reply stating in paras 8 and 9 that the petitioner unit has made application for benefits of incentives on 28.3.2000 and, therefore, the case comes under the said pipe line case. Pursuant to this, the petitioner was issued the letter of intent on 30.12.2000 which is annexed at "A", pages 13 to 17, with the petition. However, in the letter of intent in clause 5 date for completing final effective steps occurred as 31.3.2002 instead of 31.12.2001 by mistake/computer error. However, as per the instructions issued by the Director of Industries and the notification dated 23.3.2000, the cut off date of letter of intent of pipe line case is 31.12.2001. In other words, the Government wants to resist the petition on the ground that it was mere error in mentioning the date in the letter of intent.8. It is further stated in the affidavit in reply that the Government Resolution dated 12.5.2000 intimating that limit for the said package scheme of incentives of 1993 which earlier was extended upto 31.12.1999 was further extended and last date for submitting applications for classification by the unit in pipe line case would be 31.3.2000. Thus earlier cut off date for eligibility of the benefits was substituted as 31.3.2000 as provided in clause 3(ii). In the said Government Resolution in the preamble it has been provided that the concerned units were eligible for the benefits other than the sale tax. The same provision is incorporated in clause 3(iv) of the said Government Resolution. It is also stated that these Government guidelines were published in daily "Loksatta" dated 14.3.2000 and also through letter dated 22.3.2000 sent to the district Information Officer, Jalgaon for publication, copy of which is produced at Exh.with the affidavit in reply.

Court's reasoning:
16. By letter dated 20.3.2002 which is produced as Annexure E to the petition, respondent no. 3 has informed that as per Government Resolution dated 23.3.2000 the last date for completing all stages was 31.12.2001 and, therefore, within 15 days from the date of the letter they should produce all necessary documents so that they will be entitled for all benefits except sales tax. It is this letter which is challenged. According to the petitioners, this was the first communication in which it is said that the petitioners would not be entitled to benefit of sales tax but only to the subsidy and again it is said that they have to complete the steps before 31.3.2002. So this letter in one sentence stated that the last date for completion as per the Government Resolution was 31.12.2001, but then it is said that the petitioners would be entitled to the benefits other than sales tax if they complete all stages before 31.3.2002.17. Along with the affidavit in reply, the respondents have produced the original package scheme of incentives 1993 as Annexureand its preamble discloses that package scheme of incentives which is a scheme introduced in order to achieve dispersal of industries outside thebelt and to attract them to theunderdeveloped and developing areas of theState. Para 2 shows that the implementing agency was the District Industries Centre which is respondent no. 3 in this case. Para 3.3 shows what are the effective steps which are to be taken for getting benefits. Para 5 deals with incentives and para 5.1 deals with sales tax incentives which include sales tax incentives by way of exemption, sales tax incentives by way of deferal, and sales tax incentives by way interest free unsecured loan, etc. 18. In the case of Hitech ElectrothermicsHydropower Ltd. vs. State of Kerala and others (2003) 3 SCC 716, the Kerala Government in its industrial policy offered concessional tariff rate for a five year period to new industries from the date they commenced such production between 1.1.1992 and 31.12.1996. The Electricity Board adopted that policy. The appellant industry was granted registration certificate by District Industries Centre in 1993 and the Board accorded sanction for power to it in 1995. However, the Board, despite repeated requests, provided power connection only in 1998 and such an inaction on the part of the Board prevented appellant from starting production within the prescribed time limit i.e. 31.12.1996. It was held that, under the circumstances, concessional rate cannot be denied to the appellant on literal interpretation of the Governments policy as adopted by the Board. The Supreme Court directed concessional rate to be granted to the appellant which commenced production, though not by 31.12.1996, but for a period of 3 years. 19. The doctrine of promissory estoppel was considered by the Supreme Court recently in the case of Southern Petrochemical Industries Co. Ltd. vs Electricity Inspector and E.T.I.O.Ors. [2007 AIR SCW 3752]. The case related to tax on electricity consumed. In para 135 it is observed that the doctrine of promissory estoppel would undoubtedly be applicable where an entrepreneur alters his position pursuant to or in furtherance of the promise made by a State to grant inter alia exemption from payment of taxes or charges on the basis of the current tariff. Such a policy decision on the part of the State shall not only be expressed by reason of notifications expressed under the statutory provisions, but also under the executive instructions. 20. In this case the respondents have stated that publication was given regarding notification dated 12.5.2000 in daily "Loksatta" dated 14.3.2000. Its copy is not produced. It is not known whether it has wide circulation in Jalgaon district. Secondly it is also stated that the District Information Officer, Jalgaon was informed by letter dated 22.3.2000 regarding giving publicity. There is nothing to show whether he acted on the letter and how he had given publicity. So the respondents have not brought on record evidence to show that the petitioners knew or there is reason to believe that they knew the facts and there was no question of they being misled by the representation. 21. It is not the case of the respondents that the doctrine of promissory estoppel cannot be invoked by the petitioners because the Government has been acting in discharge of its duty in law or that acting in pursuance of the representation made in the letter of intent would be against any statute. It also does not appear that the doctrine is invoked against the legislative power of the State nor it is said that special considerations necessitated the respondents not to comply with the representation in the letter of intent in the public interest. So, the respondents have not brought their case under any of the exceptions to the doctrine of promissory estoppel.22. So, considering the facts and circumstances, it is abundantly clear that the petitioners were represented by the respondents by letter of intent Exh. A that the effective steps had to be completed by 31.3.2002. On the said representation the petitioners have acted upon. They purchased land to set up factory after obtaining loan from the Bank. They have also obtained loan of Rs. 1.90 crores, power supply and the no objection certificate from the Maharashtra Pollution Control Board. Respondent no.3 is admittedly agency of respondent nos.1 and 2 and respondent nos.1 and 2 cannot deny the representation/act made/committed by their representative/agent i.e. respondent no.3. In the circumstances, therefore, in our considered opinion, the petitioners are entitled to the benefit of the concessions which were promised by the letter of intent. In the facts and circumstances of the case, we hold that the Government Circular dated 23.3.2000 which provides 31.12.2001 as cut off date will not be applicable to the petitioners in view of the letter of intent in which 31.3.2002 is mentioned as the cut off date. Therefore, the petitioners are entitled to grant of S.T.I. incentives under the package scheme of 1993.