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NON-REPORTABLE

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO. 2806 of 2009

M/s Dugar Tea Industries Pvt. Ltd ...Appellant                                  Versus

State of Assam & Ors.            ...Respondents

WITH CIVIL APPEAL NO.3246 OF 2009

CIVIL APPEAL NOS.3247-3253 OF 2009 CIVIL APPEAL NOS.3254-3262 OF 2009 CIVIL APPEAL NOS.3264-3266 OF 2009

    J U D G M E N T

ANIL R. DAVE, J.

    1.  Being  aggrieved  by  the  common  judgment

delivered  by  the  Gauhati  High  Court  on  14th

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November,  2006,  the  appellants  have  approached

this Court by way of these appeals.   

2. The  facts  giving  rise  to  the  present

litigation, in a nutshell, are as under:

As the legal issues involved in all of the

aforesaid appeals are same, for the purpose of

convenience,  we  have  taken  facts  from  Civil

Appeal No.2806 of 2009.   

3. The appellant is a private limited company

engaged in the business of blending and packing

of tea.  After some modernisation, it commenced

its production in April, 1988.  The case of the

appellant-Company  was  with  regard  to  availing

sales  tax  concession  declared  by  the

respondent-State.  Before  going  through  the

relevant provisions, we may record the fact that

the respondent-State had notified its Industrial

Policy in 1982, which had thereafter been revised

in 1986.  The said Policy had been framed so as

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to increase economic and industrial growth in the

State.

4. In pursuance of the aforestated Policy, the

respondent-State enacted Assam Industries (Sales

Tax Concession) Act, 1987 (hereinafter referred

to as “the Act”).  By virtue of the provisions of

the  Act,  certain  new  industries,  subject  to

certain conditions, were to be given exemption

from payment of sales tax but the exemption was

not  to  be  given  in  respect  of  certain

commodities.  

5. The case of the appellant-Company was that

the  Company  was  made  eligible  for  certain

concessions in pursuance of the Industrial Policy

framed by the government, which had been declared

in  1982,  but  ultimately  the  benefits  had  been

denied to the company under the Act.  

6. The reason for not giving the benefits under

the  Act,  as  stated  by  the  respondent-

Authorities, was that ‘tea’ was a raw material,

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in respect of which no exemption was to be given

and the appellant-Company was merely blending and

packing tea and was not having any manufacturing

activity.

7. As the sales tax exemption had been denied to

the  appellant-Company,  the  appellant-Company

filed petitions before the High Court challenging

denial of the tax exemption but the petitions had

been  rejected  by  a  common  Judgment  dated  9th

September,  2003  and  being  aggrieved  by  the

rejection of the petitions, the appellant-Company

had  also  filed  writ  appeals,  which  have  been

dismissed  by  a  common  Judgment  dated  14th

November, 2006, and the said judgment has been

challenged in these appeals.

8. The  learned  counsel  appearing  for  the

appellant-Company  mainly  submitted  that  the

appellant-Company had been given an eligibility

certificate dated 7th July, 1988 under the 1982

Incentive  Scheme  of  Government  of  Assam  as

amended  in  1986.  By  virtue  of  the  said

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certificate  dated  7th July,  1988,  exemption  in

respect of payment of sales tax had been granted

to the appellant-Company w.e.f. 14th April, 1988

to 13th April, 1993, as the appellant- Company was

eligible  to  get  the  exemption  from  payment  of

sales  tax  under  the  1986  Incentive  Scheme  of

Government of Assam.

9. The learned counsel further submitted that as

per the exemption granted under the eligibility

certificate, the respondent-State and the Sales

Tax  Authorities  of  the  respondent-State  were

bound to give exemption from payment of sales tax

to  the  appellant,  but  the  appellant  had  been

denied the exemption, which was neither fair nor

legal.   He  further  submitted  that  as  per  the

conditions  incorporated  in  the  scheme,  the

appellant-Company  had  already  made  investments

and  had  already  employed  local  persons  of  the

State of Assam in service.  Having complied with

all the conditions, the eligibility certificate

had  been  issued  to  the  appellant-Company  and

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therefore,  the  respondent-Authorities  are

estopped from denying the benefit which had been

assured to it under the eligibility certificate

dated 7th July, 1988.  The learned counsel cited

several judgments to substantiate his case that

once  an  assurance  was  given  to  the  appellant

under  the  eligibility  certificate  that  the

appellant-Company  would  be  enjoying  exemption

under the 1986 Incentive Scheme of Government of

Assam,  the  exemption  could  not  have  been

withdrawn by the respondent-Authorities.  

10. On  the  other  hand,  the  learned  counsel

appearing for the State Authorities supported the

judgments delivered by the learned Single Judge

as well as by the Division Bench of the High

Court.  

11. The  learned  counsel  submitted  that  there

cannot be any estoppel against legal provisions.

He further submitted that as per Rule 2(f) of

Assam  Industries  (Sales  Tax  Concession)  Rules,

1988, ‘tea’ is not the raw material in respect of

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which exemption from payment of sales tax is to

be granted.  In view of the aforestated statutory

provision and in view of the fact that tea was

the ‘raw material’ which was being used by the

appellant-Company for the purpose of blending and

packing, the appellant was not entitled to any

exemption.   

12. Moreover,  he  submitted  that  the  appellant-

Company  was  not  involved  in  any  manufacturing

activity. It was merely blending and packing tea

and blending as well as packing of tea was not a

manufacturing  activity  and  therefore,  also  the

appellant was not entitled to the benefit claimed

by it.  

13. The learned counsel thereafter submitted that

according to the provisions of Section 4 of the

Act,  Certificate  of  Authorisation  should  have

been procured by the appellant for availing the

benefit under the Act.  Such a Certificate of

Authorisation  had  never  been  issued  to  the

appellant-Company  and  therefore,  the  appellant

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was not entitled to the exemption in respect of

payment of sales tax claimed by it.

14. For  the  aforestated  reasons,  the  learned

counsel submitted that the appeals deserved to be

dismissed.

15. We have heard the learned counsel at length

and have considered the relevant legal provisions

and  the  judgments  referred  to  by  the  learned

counsel.   

16. Upon perusal of the record and the law laid

down by this Court in the light of the facts of

the case, we are of the opinion that the view

expressed by the Courts below cannot be said to

be incorrect.

17. Rule 2(f) of the Assam Industries (Sales Tax

Concession) Rules, 1986 reads as under:-

“2(f) ‘Raw material’ means any material or commodity  capable  of  being  used  for manufacture of any other product specified in any authorisation certificate as intended by the holder for use by him as raw material in the manufacture of goods in the State for

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sale  by  him  but  shall  not  include  the following commodities namely : (a) tea, (b) coal, (c) liquefied petroleum gas, (d) plywood, (e) petrol, diesel oil and lubricants.”

   In  view  of  the  aforestated  Rule,  it  is

crystal clear that tea is not to be included in

“raw material” and therefore, no exemption could

have  been  claimed  by  the  Appellant  Company  in

respect of ‘tea’ as a raw material for purchase

as well as sale of tea.  It is also pertinent to note  that  the  appellant  had  earlier  preferred

Civil Rule No.4162 of 1991 before the High Court

challenging  validity  of  the  aforestated  Rule.

The  learned  Single  Judge,  while  rejecting  the

petition, vide order dated 17th August, 1988 held

that Rule 2(f) of the 1988 Rules was legal and

valid and the plea of promissory estoppel raised

by the appellant was also not accepted.  Against

the said judgment, no appeal was filed by the

appellant  and  therefore,  the  said  issue  had

attained finality.   

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18. Another  important  thing  is  with  regard  to

certificate of authorisation.

19. It is an admitted fact that so as to avail

the  benefit  as  per  Section  4  of  the  Act,

certificate of authorisation is a must.  The said

Section reads as under:

“4. Certificate of authorisation –  (1) A person undertaking to manufacture in the State such goods, as may be prescribed, may make an application in the prescribed form to the prescribed authority and within the  prescribed  time  for  a  certificate  of authorisation  for  the  purposes  of sub-section (1) of section 3. (2) If the authority to whom an application is made under sub-section (1) is satisfied that the application is in conformity with the provisions of the Act and the rules made there under it shall grant to the applicant a certificate  of  authorisation  in  the prescribed form which shall specify the class or  classes  of  goods  for  purposes  of sub-section (1) of section 3 and the period for which it shall remain valid. (3) A  certificate  of  authorisation  granted under this section shall remain valid for a period  of  five  years  from  the  date  of completion of effective steps for setting up the industrial unit in respect of which the certificate is granted. (4) No certificate of authorisation shall be granted  under  sub-section  (2)  except  in

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respect  of  such  raw  materials  as  may  be prescribed. (5) A  certificate  of  authorisation  granted under this section may:- (a) be amended by the authority granting it

if  he  is  satisfied  either  on  the application of the holder or, where no such  application  has  been  made,  after due notice to the holder, that by reason of the holder having changed the name, place or nature of his business or the class or classes of goods bought, sold or manufactured by him or for any other reason the certificate of authorisation granted to him required to be amended; or  

(b) be cancelled by the authority granting it,  where  he  is  satisfied  after  due notice to the holder that the holder has ceased to carry on business or for any other sufficient reason.”

20. As stated hereinabove, it is an admitted fact

that no certificate of authorisation, as provided

under  the  Act,  had  ever  been  granted  to  the

appellant-Company and therefore, in our opinion,

the  courts  below  were  absolutely  right  to  the

effect that the appellant was not entitled to any

sales tax exemption.

21. So  far  as  the  averments  with  regard  to

estoppel  are  concerned,  it  is  a  settled  legal

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position  that  there  cannot  be  any  estoppel

against law.  When there is a legal provision to

the effect that when tea is used as raw material,

no  tax  exemption  would  be  available  under  the

provisions  of  the  Act,  none  can  claim  tax

exemption  in  respect  of  sales  tax  payable  on

purchase or sale of tea.  It is true that an

eligibility certificate had been issued to the

appellant-Company  in  pursuance  of  the  1986

Incentive Scheme of Government of Assam but when

the said Scheme was given a statutory form under

the  Act,  ‘tea’  had  been  excluded  from  the

definition of raw material and therefore, on the

basis of the eligibility certificate issued under

the 1986 Incentive Scheme of Government of Assam,

the appellant cannot claim any benefit.

22. It  is  also  pertinent  to  note  that  the

respondent-Authorities have rightly held that the

appellant  was  not  in  the  business  of

‘manufacturing’ tea but was merely blending and

packing  tea,  which  does  not  amount  to

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‘manufacturing’ of tea.  We find substance in the

said stand taken by the respondent-Authorities as

the said view has been fortified by a decision of

this Court in Commissioner of Income Tax, Kerala v. Tara Agencies 2007 (6) SCC 429.  

23. For the aforestated reasons assigned by the

State in the impugned order passed as well as in

the  judgments  delivered  by  the  High  Court,  we

cannot find fault with the impugned judgment and

therefore, these appeals deserve dismissal.

24. The  appeals  are  accordingly  dismissed.

However, there shall be no order as to costs.

 ................................J.

  (ANIL R. DAVE)     

                         ................................J.    (SHIVA KIRTI SINGH)

     NEW DELHI; OCTOBER 06, 2016.