1999 INSC 0360
                                                  State of Rajasthan

                                                           Vs

                                              Mahaveer Oil Industries

                                          Civil Appeal No. 669 of 1997

                             (Sujata V. Manohar, D.P. Mohapatra, R.C. Lahoti JJ)

                                                      22.04.1999

                                                     JUDGMENT

Mrs. Sujata V. Manohar, J.

1. At all material times the respondent was an industry engaged in the business of oil extraction and
manufacture in the State of Rajasthan.

2. By a notification dated 23rd of May, 1987 issued in the exercise of its powers under Section 4(2)
of the Rajasthan Sales Tax Act, 1954, the appellant - State of Rajasthan notified a Sales Tax
Incentive Scheme for Industries, 1987 (hereinafter referred to as the "Incentive Scheme") under
which it exempted (inter alia) new industries, 1987 (hereinafter referred to as the "Incentive
Scheme") under which it exempted (inter alia) new industrial units from payment of tax on the sale
of goods manufactured by them for sale within the State of Rajasthan in the manner and to the
extent and for the period as specified in that notification. The operative period of scheme under that
notification was from 5th of March, 1987 to 31st of March, 1992. It was subsequently extended to
31st March, 1997. The incentive scheme was applicable, inter alia, to new industrial units set up in
areas mentioned in Annexure-A to the notification. Annexure-B sets out a list of industries which
not eligible for the benefit of the said notification. Oil extraction or manufacture was not listed in
appendix-B. Hence this industry was eligible for benefits under the scheme of 23rd of May, 1987.

3. By another notification dated 23rd of May, 1987 issued under Section 8(5) of the Central Sales
Tax Act the State Government notified another sales tax incentive scheme for industries exempting
(inter alia) new industrial units from payments of central sales tax on the inter-state sale of goods
manufactured by them within the State of Rajasthan. Under this notification also it was provided
that industries listed in appendix-B would not be eligible for the benefit of the scheme. Oil
extraction or manufacture was not listed in appendix-B to this notification. Hence oil extraction
units were eligible for exemption from central sales tax in respect of inter-state sale of their goods.

4. By a notification dated 6th of July, 1989 issued under Section 4(2) of the Rajasthan Sales Tax
Act, 1954 the appellants notified Sales Tax New Incentive Scheme for Industries, 1989, to exempt
industrial units from payment of tax on sale of goods manufactured by them within the State of
Rajasthan in the manner and to the extent and for the period covered by that notification. The new
Incentive Scheme of 1989 was deemed to have come into operation with effect from 5th of March,
1987 and was to remain in force upto 31st of March, 1992. A similar notification of the same date
was issued in respect of the central sales tax exemption for the said units under Section 8(5) of the
Central Sales Tax Act. Under this notification also appendix-B contained a lit of industries not
eligible for benefits under the said notification. Once again oil extraction or manufacture was not
listed in appendix-B in either of the two notifications.

5. By two notifications dated 7th of May, 1990 - once issued under the Rajasthan Sales Tax Act,
1954 and the other issued under the Central Sales Tax Act, the notifications of 23rd of May, 1987
were amended. As a result, by amendment of Annexure-B, oil extracting or manufacturing industry
was added as an entry, thus withdrawing the benefits of the incentive scheme from oil extracting and
manufacturing industries both in respect of Rajasthan Sales Tax as also Central Sales Tax.
Thereafter by further notifications dated 10.9.1990 issued under the Rajasthan Sales Tax Act, 1954
and the Central Sales Tax Act, it was further notified, inter alia, that whenever an industry is
included on any date during the period of operation of the scheme in Annexure-B, the units of such
industry which have started commercial production and whose applications for benefit under the
scheme are pending on the said date before the appropriate screening committee will be entitled to
claim full benefit of the scheme.

6. Thus by reason of the notifications issued on 7.5.1990 the benefit of the incentive scheme was
withdrawn from oil extracting and manufacturing industries. Thereafter the position was reviewed
by the Finance Department and the Industry Department of the State of Rajasthan. Ultimately by a
notification dated 26.7.1991 the benefit of exemption from Central Sales Tax was restored to oil
extracting and manufacturing industry to the extent of 75% in the cases of new industries and to the
extent of 60% in the case of industries going for expansion or diversification. Thus new industrial
units established after 7.5.1990 and before 26.7.1991 alone were not entitled to the benefit of the
Incentive Scheme under the Central Sales Tax Act in respect of inter-state sales of their goods.

7. The respondents commenced commercial production on 17th of February, 1991. Prior thereto, on
2.4.1991 they applied for an eligibility certificate. The appellants sent a reply dated 29.4.1991
pointing out that they were not eligible for the benefit of the incentive schemes since the benefit of
the said schemes had been withdraw with effect from 7.5.1990 in respect of their industry. The
application of the respondents was finally rejected on 30.11.1991. The respondents thereupon filed
writ petition NO. 2529 of 1992 before the High Court challenging the two notifications of 7.5.1990
issued under the Rajasthan Sales Tax Act, 1954 and the Central Sales Tax Act. Several such
petitions were filed between the years 1990 and 1992 by various oil industries challenging the two
notifications of 7.5.1990. When the writ petition of the respondents came up for hearing before a
learned Single Judge, one such petition in the case of Govardhan Oil Mills had already been decided
by the same High Court by a Single Judge quashing the notifications of 7.5.1990. Relying on the
said judgment the Single Judge granted relief to the respondents setting aside the notifications of
7.5.1990 and directing the appellants to issue an eligibility certificate to the respondents within six
weeks. An appeal filed by the appellant before the Division Bench of the High Court has been
dismissed by the impugned judgment dated 14.8.1995.

8. During the pendency of the appeal before the Division Bench in the present case, six other writ
petitions filed by various oil industries including Gopal Oil Mills were heard by a Division Bench of
the same High Court and decided on 12.1.1993. By the said judgment the High Court held that the
notifications of 7.5.1990 cannot be given effect to where all necessary acts for setting up the new
industry had been done prior to 7.5.1990 and production had also started. The High Court invoked
the doctrine of promissory estoppel and gave relief to the six industries before it, as also new
industries set up before 31.3.1992.

9. The appellants in those cases filed a special leave petition before this Court in which this Court
on 4.4.1994 granted an interim stay of the judgment of the High Court dated 12.1.1993. Thereafter
the appeals of Gopal Oil Mills and other appeals were decided by this Court on 213.2.1995. Before
this Court, the respondents in those appeals only pressed their claim for exemption from Central
Sales Tax for the period 7.5.1990 to 26.7.1991. This Court came to the conclusion that there was no
public interest in withholding the benefit in respect of