S K Katriar, J.

1.This writ petition has been preferred with the prayer to set aside the order dated 7.3.2000 (Annexure 5), passed by the Commercial Tax Tribunal, Bihar, Patna, in Revision Case No. PT -193/99 (M/s Shakti Tubes Ltd. v. State of Bihar), whereby the order passed by the authorities under the provisions of the Bihar Finance Act (hereinafter referred to as ` the), has been upheld, and it has been held that the petitioner is not entitled to the benefit of exemption from payment of purchase tax on raw materials used for manufacture of the products to the extent of sales effected by the petitioner outside the State of Bihar by stock transfer, in terms of the Industrial Incentive Policy 1993. It relates to the assessment year 1994-95.

2. A brief statement of facts essential for the disposal of the writ petition may be indicated. The petitioner is a Private Limited Company, incorporated 2 under the provisions of the Companies Act 1956, and has set up a steel plant at Hajipur, district Vaishali. The State Government had issued its industrial policy for rapid growth of industries in the State of Bihar, whereby incentives were given to entrepreneurs to set up industrial units in the State of Bihar, vide its resolution no.13730, dated 1.9.1986, which was extended upto 1993, by various orders of the State Government. The State Government noticed that the desired industrial growth had not been achieved in all the districts of the State. It was also felt that in the context of new Industrial Policy 1991 of the Central Government, and with the withdrawal of freight equalization policy, the incentives granted by the said industrial policy of the Bihar Government required new dimensions to achieve balanced industrial growth in a planned manner so that natural and human resources of the State are fully utilised and developed and the opportunities for employment are progressively increased. With these objectives clearly stated in the preamble, the new Industrial Incentive Policy 1993 (hereinafter referred to as `the Industrial Policy; Annexure 1) came to be issued, replacing the previous industrial policy. New incentives were granted to the entrepreneurs to promote industrial growth in the State. The same was approved by the Bihar Cabinet on 10.6.1993, and was enforced with effect from 1.4.1993 (Annexure 1). It is relevant to state that the petitioner company had already commenced production before 1.4.1993, and its capital investment was less than Rs. 15 crores.

3. In view of the provisions of Section 7(3)(b) of the Act, and in purported exercise of powers under Paragraph 10.5 read with the provision of Paragraph 10.4 of the 1993 Industrial Policy, the State Government issued S.O. No.95, dated 4.4.1994 (Annexure 2), along with the forms appended thereto, purporting to impose certain restrictions on the grant of industrial incentives. We shall confine ourselves to the restrictions in so far as relevant in the present context. It is further relevant to state that the State Government in the Department of Commercial Taxes had issued certificate of exemption to the petitioner company on 29.9.1995 (Annexure 12), declaring therein that it shall be 3 exempted from levy of sales tax and purchase tax on the items mentioned in Paragraph 4 therein.

4. The petitioner submitted its returns and, inter alia, in view of clause 10.4 of the 1993 Policy, claimed the benefit of exemption from payment of purchase tax on raw materials used for manufacture of its products. The learned Assessing Officer, namely, the Deputy Commissioner of Commercial Taxes, Patna West Circle, passed the order of assessment on 15.7.1997 (Annexure 3), whereby he, inter alia, held that the petitioner is not entitled to the benefit of exemption from payment of purchase tax on the purchase of raw materials to the extent the finished products were sold outside the State of Bihar by stock transfer (vk<+r). Aggrieved by the order, the petitioner preferred revision application which was rejected by order dated 3.2.1999 (Annexure 4), passed by the learned Commissioner of Commercial Taxes in Revision Case No.CCS (S) 361 and 361A/1997-98. Aggrieved by the same, the petitioner preferred second revision application before the Tribunal which has been rejected by the impugned order. The two revisional authorities have concurrently upheld the view taken by the learned assessing authority.

5. While assailing the validity of the impugned order, learned counsel for the petitioner submitted that in view of the preamble of the Government notification bearing S.O.no.95, dated 4.4.94 (Annexure 2), the same does not create any new condition so as to deprive the petitioner of the benefits of Paragraph 10.4 of the Industrial Policy with respect to its sale of finished products outside the State of Bihar. If any such indication is to be found in the notification or the forms thereto, the same would be clearly ultra vires the scheme of things. He also submitted that S.O.No.95, dated 4.4.94, cannot act in contravention of the Industrial Policy because it has to be subservient to the same and is only meant to help achieve the goals set out in the policy. He relied on the judgment of the Supreme Court in case of State of Orissa vs. Tata Sponge Iron Ltd. [2007(8) SCC 189] (paragraph 13). He submitted in the alternative that, if any such condition is to be found in S.O.no.95, the same falls foul of Paragraph 10.4 of the Policy and has to be ignored. He relied on the 4 judgment reported in the case of M/s Suprabhat Steel Ltd. vs. State of Bihar & Others [1995 (2) PLJR 536 ], which was upheld by the Supreme Court in the case of State of Bihar vs. M/s Suprabhat Steel Ltd. and the analogous cases, reported in (1999) 1 SCC 31. He also relied on the judgment dt. 20.5.2008 of a Division Bench of this Court in CWJC No.2916 of 2000 (M/s Kalyanpur Cement vs.State of Bihar).He next submitted that, in view of the aims and objects of the Industrial Policy, Paragraph 10.4 has to be given its full play to achieve the aims and objects. He next submitted that the petitioner is also protected by the principles of estoppel. He relies on the judgment of the Supreme Court in State of Punjab vs. Nestle India Limited & Another [(2004) 6 SCC 465] (paragraphs 24 to 30, and 47). He next submitted that the authorities seemed to have overlooked the legal position that the provisions of Section 4 of theare subject to the provisions of Sections 5, 6 and 7 of the. In other words, in his submission, once there is a policy decision in terms of Section 7 of thegranting certain exemptions, the provisions of Section 4 become inoperative with respect to the persons or companies covered by the Industrial Policy. He relied on the judgment of the Supreme Court in Associated Companies vs. State of Bihar [(2004) 7 SCC 642] . He lastly submitted that S.O.no.95 was in the nature of sub-delegated legislation, and cannot be repugnant to the dominant policy.

6. Learned Additional Advocate General III submitted that the writ petition is not maintainable because the petitioner had already moved this Court earlier by preferring CWJC No.7467 of 1994 (M/s Shakti Tubes Ltd. v. State of Bihar), 1995(2) PLJR 536, where the petitioner had the opportunity to raise this issue. The writ petition is barred by the provisions of Order 2, Rule 2, CPC. He submitted in the same vein that the petitioner is, therefore, precluded from challenging the validity of S.O.No.95. He relied on the judgment of the Supreme Court in Inacio Martins vs Narayan Hari Nayak [(1993) 3 SCC 123] (para-6). He next submitted that S.O.no.95 has been framed with the object to promote industrial growth in this State for the benefit of the people of the State and enhance Government revenue. The petitioner has transferred 5 major portion of its finished products outside the State of Bihar by stock transfer as a result of which this State would be deprived of its revenues like Bihar sales tax or central sales tax. He next submitted that Paragraph 10.5 of the Industrial Policy fully authorizes the Sales Tax Department to put conditions to prevent misuse of the benefits thereunder. Section 7(3) of thecontemplates exemption with respect to sales. Transfer of stock from this State to another State is not sale. He relied on the judgment of the Supreme Court in Collector of Central Excise vs. Parle Exports (P) Ltd. [(1989) 1 SCC 345] (Para 17). He also submitted that the decision in Suprabhat Steel Ltd (supra) is inapplicable in the present case because the factual position in that case was different. That was a case of complete deprivation of the benefits which is not the situation here, and is instead a case of imposing reasonable restrictions to prevent misuse. He relied on the following reported judgments of the Supreme Court:-

He relied on the judgment of the Supreme Court in CST vs Crown Re-Roller (P) Ltd. [(2007) 3 SCC 659] (para 17).

7. We have perused the materials on record and considered the submissions of learned counsel for the parties. It is evident from a plain reading of the preamble of the Industrial Policy that the State Government had reviewed the implementation of its previous industrial policy of 1986, alongwith its subsequent amendment(s), and felt very dissatisfied with the achievements, 6 which fell far short of the aims, objects, and the expectations. The State Government, therefore, reviewed the entire situation and framed the Industrial Policy. Its preamble and the relevant provisions are reproduced hereinbelow:-

It is thus evident on a plain reading of the extracted portion that the State Government had felt dissatisfied with the results achieved as per the old policy, and also in view of the subsequent developments like enforcement of the new industrial policy of the Central Government, and withdrawal of freight equalization policy. The State Government, therefore, decided to remove the 7 constraints which had impeded the previous industrial policy so that the objects of industrialization of the State, use of its human resources, and opportunities of employment are increased. In other words, a very liberal policy was conceived and incorporated in the Industrial Policy. Obviously, therefore, a wide and expansive meaning has to be given and, in case of doubt or difficulty, the Courts would lean in favour of a liberal approach, and in favour of the entrepreneur.

8. The admitted position in the present case is that the petitioner company qualified for the incentives under clause (b) set out hereinabove. In other words, the petitioner company had commenced production before 1.4.1993, and its investment was less than 15 crores. It is nobodys case that the petitioner had already availed of the incentives under 1986 Policy. We, therefore, proceed to examine whether or not the petitioner is entitled to the incentives under the Industrial Policy. The petitioner claims exemption from levy of purchase tax as contemplated by Paragraph 10.4 of the policy. Paragraph 10.4 and Paragraph 10.5 of the Industrial Policy are reproduced hereinbelow.

9. The admitted position is that the petitioner is covered by clause (b). The petitioner company has used the raw materials for manufacture of steel and iron products. Equally admitted position is that a substantial portion of its end products were transferred to other State(s) by stock transfer, and a comparatively small portion was sold in the State of Bihar. The statutory authorities under the granted exemption from payment of purchase tax on 8 purchase of its raw materials to the extent the end products were sold in Bihar. But the benefit of exemption has been declined on the raw materials used to the extent the manufactured products were sent outside the State of Bihar by stock transfer, and is the subject matter of adjudication before us. This issue arises in view of notification no.95, dated 4.4.94 (Annexure 2), issued by the Sales Tax Department in terms of Paragraph 10.5 of the Industrial Policy set out hereinabove, and is reproduced hereinbelow:-

10. Learned counsel for the petitioner has submitted that there is no additional eligibility condition indicated in the notification of 4.4.94 (Annexure

2). It is thus evident that interpretation of the relevant portion of the notification is the determining factor. It appears to us from the relevant portion of the same set out hereinabove that, in order to qualify for the exemption, the entrepreneur must have manufactured the finished products in Bihar and may have been sold within the State or outside the State. In other words, the primary emphasis is on manufacture within the State, and then on its sale in Bihar or outside. It is not in doubt that the petitioners unit is situate in Bihar and the entire raw materials on which it seeks exemption from payment of purchase tax during the period in question was used for manufacture of finished products. We are of the view that the condition sought to be imposed by the respondents that, in order to qualify for exemption, the finished products must necessarily be sold within the State of 9 Bihar, or during the course of inter-State sale, is not discernible from the preamble, the aims and objects, the other provisions of the Industrial Policy, and the. We see no such restriction in the notification dated 4.4.94.

11. We must also notice the relevant provisions of the. Section 4 is headed `Levy of purchase tax, and is reproduced hereinbelow:

It opens with the non-obstante clause and states that the provisions of Section 4 are subject to Sections 5, 6 and 7. Section 7 is particularly relevant and is reproduced hereinbelow:-

It is evident that once the State Government issues a notification of exemption in terms of Section 7, no tax under the shall be payable on sales or purchase of goods which have, inter alia, taken place outside the State. Once a notification under Section 7 is issued, Section 4 of theceases to operate 10 with respect to a dealer engaged in the manufacture or sale of the products. We are mindful of the provisions of sub-section (3) of Section 7 which is to the effect that it is open to the government to impose such conditions or restrictions as it may decide. A few conditions have been imposed by the said notification dated 4.4.94 (Annexure 2), namely, the unit must have commenced production between 1.4.1993 to 31.3.1998, or even older units, but in both cases its investment must not exceed Rs.15 crores as on 1.4.1993, and manufacture of its products must have taken place in the State, for the purpose of sale. We see no such restrictions in the said notification of 4.4.1994, as is sought to be canvassed on behalf of the respondents. Neither do we see any such condition in the preamble of the notification dated 4.4.94, issued in terms of Section 7(3)(b) of the Act, nor in Paragraph 10.4 of the Policy. In that view of the matter, the terms of Section 7(1)(b) of the Act, i.e. sales outside the State, must be allowed to have its full play, and the benefit of exemption shall be available to the entrepreneur even if the sale of goods takes place outside the State of Bihar, may be after stock transfer or vk<+r.

12. Learned counsel for the petitioner has rightly relied on the judgment of a Division Bench of this Court in M/s Suprabhat Steel Ltd. v State of Bihar (supra), wherein the Division Bench interpreted the Industrial Policy. The following observations are particularly relevant in the present context and indeed support the petitioners case:

13. The aforesaid judgment was upheld by the Supreme Court in State of Bihar vs. Suprabhat Steel Limited [(1999) 1 SCC 31] . The following portion of the judgment is relevant:-

14. Learned counsel for the petitioner has also rightly relied on the unreported judgment dated 20.5.2008, passed by a Division Bench of this Court in CWJC No.2916 of 2006 (M/s Kalyanpur Cement Ltd. vs. State of Bihar & Ors.). That was a case where the Court was called upon to declare the Explanatory Note appended to Rule 3 of the Bihar Sales Tax Supplementary (Deferment of Tax) Rules 1990, as ultra vires and inconsistent with the provisions of the Bihar Finance Act 1981, and the Industrial Policy Resolution 1989. The petitioner therein had made the further prayer to quash the order of the State Level Committee, whereby it had held that the petitioner shall be entitled for the incentive of deferment, not on the additional production, but on the incremental production above the installed capacity. The following portion of the judgment is relevant and reproduced hereinbelow:-

15. Learned counsel for the petitioner is right in his submission that a narrow interpretation of the Policy and the notification will defeat the aims and objects of the Policy. As noticed hereinabove, the preamble of the Policy noted the near-failure situation produced by the 1986 Policy, and the State Government on a thoughtful review of the matter, intended to liberalize the incentives under the Industrial Policy. The policy seeks to achieve balanced industrial growth in a planned manner so that human and natural resources are fully utilized and developed, and the opportunities for employment are progressively increased. It is evident that the main emphasis is on use of the raw materials for production of finished products in the State of Bihar, which will industrialize the State, and will generate employment opportunities. While formulating the Policy, the State Government was mindful of the position that these industrial units are centres of production which will generate wealth, increase employment directly, and also indirectly, for example, a large number of ancillary units owned and managed by others come up to support the main industry. The transport sector and diverse other commercial activities get a fillip, lot of money gets into circulation in the local market which enhances the buying capacity of the local populace etc.

16. Learned counsel for the petitioner is further right in his submission that the principle of estoppel comes to the aid of the petitioner. In view of the liberal policy, the petitioner purchased more and more of raw materials, and ventured to produce more and more products for sale. If the petitioner were not certain of getting the benefit of exemption, it may not have purchased raw materials in enormous quantities. It must have accordingly organized the manufacturing process and streamlined the marketing and other commercial activities. The judgment of the Supreme Court in State of Punjab vs. Nestle India (supra) is relevant in the present context, particularly Paragraphs 30 to 47, and supports the petitioners case.

17) Paragraph 1514 at page 1017 of Hallsbusrys Law of England, 4th Edition, Vol.16, is headed "Promissory estoppel", is relevant and reproduced hereinbelow:-

The principle so clearly and authoritatively enunciated fully supports the petitioners case. The notification of Sales Tax Department cannot act in contravention of the Industrial Policy. Once the policy defines the purpose, aims, objects, and the sweep, the notification of the Sales Tax Department must in a subservient manner ensure effective implementation of the policy. We are in no doubt that in case of any apparent or real conflict between the dominant policy decision and the notification of the Sales Tax Department, the latter shall yield to the former, and will have to be read down in case of doubt or difficulty. The latter can be read only in the manner it advances the aims and objects of the Industrial Policy, and any attempt to reduce its efficacy has to be discouraged, and, if necessary, shall be declared to be repugnant to the Policy.

18. The judgment of the Supreme Court in the State of Orissa v. Tata Sponge Iron (Paragraph 13) (supra), is relevant in the present context and supports the aforesaid proposition. The judgment of the Supreme Court in Associated Cement Companies Ltd. vs State of Bihar [(2004) 7 SCC 642] (supra), is also relevant to the present issue.

19. We must now consider the contentions advanced on behalf of the State of Bihar. Learned Government Counsel has submitted that the writ petition is 15 not maintainable and is hit by the bar engrafted in Order 2, Rule 3, CPC, for the reason that the petitioner had preferred the previous writ petition bearing CWJC No.7467 of 1994, which was disposed of by a Division Bench of this Court in M/s Suprabhat Steel Ltd. vs. State of Bihar (supra), wherein the petitioner company had the opportunity to raise the issues canvassed before us. He relied on the judgment of the Supreme Court in Inacio Martins v. Narayan Hari Naik [(1993) 3 SCC 123) (paragraph 6). That was a case where 1993 Policy was as a whole reviewed and the relevant observations having strong bearing in the present context have been set out hereinabove which fully support the petitioners case. The provisions of Order 2, Rule 3, CPC, are not at all attracted in the present case because the issue raised herein have surfaced by reason of the assessment proceedings giving rise to the present writ petition and was not the subject matter of the previous writ petition. The contention is rejected.

20. Learned Government Counsel has next contended that 1993 Policy read with the notification of 4.4.1994 (Annexure 2), is intended to benefit the people of this State. If the exemption is granted with respect to the end products transferred to different State by stock transfer, this State is deprived of the sales tax. In view of the foregoing discussion, it is evident that the framers of the Industrial Policy as well as the notification issued in terms of Section 7(3) of the Act, never intended to restrict the exemption to sales within the State of Bihar or in the course of the inter-State trade. Such a restriction were possible if the Industrial Policy itself so stipulated, which is wholly absent therein, and is equally absent in the notification. The only possible requirement is that the goods so manufactured within the State of Bihar, should be for the purpose of sale. In such a situation, the provisions of Section 7(1)(b) are attracted in the present case, and comes to the aid of the petitioner. The contention is rejected.

21. Learned Government Counsel next contended that Paragraph 10.5 of 1993 Policy fully authorized the Sales Tax Department to introduce conditions to prevent misuse of the Policy. We have held hereinabove that no such condition is to be found in the Policy, or the notification. The respondents are trying to read into the same conditions of the nature not intended to be added by 16 the sales tax department. No such condition can be permitted which will produce the effect of diluting the Industrial Policy. Furthermore, the respondents have not even prima facie shown any situation of misuse attributable to the petitioner, not even a hypothetical situation. We would be aghast to be told that sales outside the State of Bihar by transfer of stocks, in a situation where the petitioner satisfies all the prescribed conditions which qualify him for exemption, and his industry has given a fillip to the intended prosperity and also giving spurt to ancillary units, has run counter to the objects of the Industrial Policy and is a misuse of the same. Can the subservient instrument be permitted to be construed to mean that the alleged loss of sales tax to the State of Bihar must outweigh the perceptible growth in industry and the intended concomitant benefits. The answer is in the negative. And if the State Government really intends to deprive the petitioner of the benefit as has been canvassed, then we shall be constrained to declare the notification of the Sales Tax Department to be repugnant to the Industrial Policy. The contention is rejected.

22. Learned Govt. Counsel has further contended that the issue in M/s Suprabhat Steel Limited (supra) was quite different. In his submission, that was a case of complete deprivation of benefits which was disapproved of by the Court, whereas the issue in the present case is one of the reasonable restrictions to prevent misuse. The contention amounts to a complete misreading of the judgment. In order to do complete justice to the parties, this Court had examined the entire scheme of the and spelt out the meaning and content of the same. The judgment has been upheld by the Supreme Court. In that view of the matter, the proposition of law sought to be invoked by the respondents that a decision should be taken to be an authority for what it actually decides, and not what logically follows, is wholly inapplicable to the present case because the Division Bench in order to dispose of the issues arising there, had to examine the scheme of the Industrial Policy and the notification. Neither the petitioner nor this Court has relied on the judgment in M/s Suprabhat Steel Ltd. in a manner which discloses an intention to take what logically seems to follow. On 17 the contrary, the observations of the Division Bench relevant in the present context have been reproduced hereinabove, and we have taken therefrom only what has actually been decided. The contention is rejected.

23. Learned Govt. Counsel has also submitted that once it is held that the restriction is within the meaning of Section 7(3) of the Act, then the rigors of Section 4 are applicable. The contention is rejected, inter alia, for the reason that we have held hereinabove that S.O.no. 95 does not spell out any restrictions as has been canvassed by the respondents.

24. Learned Govt. Counsel has also relied on the judgment of the Supreme Court reported in (2007)3 SCC 659 (CST vs Crown Re-Roller (P)Ltd.) (Para

17), in an effort to highlight the purpose of exemption. The purpose of exemption has been discussed hereinabove. The contention runs counter to the very aims and objects which the Industrial Incentive Policy 1993, which it intends to achieve. The contention is rejected.

25. In the result, the writ petition is allowed. The impugned order dated 7.3.2000 (Annexure 5), passed by the learned Commercial Tax Tribunal, is set aside. It is held that the petitioner is entitled to the benefit of exemption from payment of purchase tax on purchase of raw materials for manufacture of its products in Bihar, and sold in Bihar or outside Bihar. The petitioner shall be entitled to refund of the amount, if any, deposited by it along with interest @ 15% from the date of deposit(s) till the date of payment. There shall, however, be no order as to costs.

( S K Katriar ) I agree.

Jyoti Saran, J.

( Jyoti Saran ) Patna High Court, Patna The 9th of September, 2009 AFR/ mrl