Authored By : B.P. Singh, N.K. Sinha

B.P. Singh, J.

1. These three writ petitions involve common questions and have, therefore, been heard together and are being disposed of by this common judgment. Counsel for the parties are agreed that issues involved are identical and in all the three writ petitions the same question arises for consideration by this Court, namely whether the petitioners are entitled to the benefit envisaged under paragraph 10.4(i)(b) of the Industrial Incentive Policy, 1993, announced by the Government of Bihar and published in the official gazette on 16.7.1993. In other words, the sole question which arises for consideration is whether the petitioner-units, which were established before 1st April, 1993, with investments on plant and machinery not exceeding Rupees 15.00 Crores, and had also come into production before that date, are entitled to the benefit of sales tax exemption on the purchase of raw material for a period of seven years from 1.4.1993. The case of the petitioners is that under paragraph 10.4(i)(b) the old industrial units referred to are those which answer the description in that sub-paragraph, but regardless of the date on which they went into production. The industrial policy does not lay down any other condition regarding their having taken benefit of any earlier scheme.

On the other hand, the learned Advocate General appearing for the State submits that on a proper appreciation of the said policy it would be apparent that no benefit whatsoever was sought to be extended to such units which had gone into production before 1st April, 1993, and had taken advantage of the earlier industrial policy. It was for this reason that Notification No. S.O. 95 dated 4.4.1994 and published in the official gazette on the same date was issued by the Commercial Taxes Department laying down a condition that the exemption from payment of tax on purchase of raw materials shall be granted only to those units which had not availed of any benefit earlier under any industrial policy.

Counsel for the petitioners submits that the Notification dated 4.4.1994 takes away a small benefit extended to the petitioner-units, which could not be done unless there was a change in Government policy. The language of paragraph 10.4(i)(b) is clear and categoric and, therefore, the Notification issued on 4.4.1994, to the extent it imposes such a condition must be quashed, as unwarranted and illegal, being contrary to the policy itself.

2. Counsel for the parties have made their submissions by reference to the facts stated in C.W.J.C. No. 7063 of 1994, and I shall, therefore, take representative facts from that petition.

3. The petitioner claims that it owns an industrial unit and is included in Annexure-V under item No. 46 of the Industrial Incentive Policy, 1993, it being an industry dealing with iron and steel, as defined in Section 14 of the Central Sales Tax Act, 1956. It is a medium scale industry manufacturing steel tubes. Its total investment on plant and machinery is less than Rs. 15 crores. It had started production prior to 1st April, 1993. The State of Bihar with a view to accelerate the growth of industries in the State issued notifications from time to time from the year 1960 extending various benefits by way of incentives to the industries, with the twin objective of development of the State as well as providing employment to the people of the State of Bihar. The earlier policy announced by the Government granted total exemption from payment of tax both on purchase of raw materials as well as of finished products. However, in its subsequent policy the Government decided to grant exemption from purchase of raw materials so far as sales tax was concerned, and to give interest-free sales tax loan in lieu of sales tax deposited by the industries. Such provision was made in the Industrial Policy dated 1st September, 1986 providing both the incentive, namely, exemption from payment of tax on purchase of raw materials as well as interest-free sales tax loan on the sale of finished products enumerated in clause 9 of the said policy. Since the Government was not satisfied with the pace of progress and development achieved under the old policy, it decided to grant further incentives to accelerate industrial growth. It was in this background that the State Government announced its Industrial Incentive Policy in 1993 for the rapid growth of industry in the State of Bihar. The Resolution incorporating the policy mentions in the opening paragraph that with the objective of accelerating industrial progress in the State the Industrial Incentive Policy was announced by the State Government on 1st September, 1986, the period of which was extended upto 31.3.1993 under different Resolutions issued from time to time. It had been experienced that desired industrial progress 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 Centre, and with the withdrawal of Freight Equalisation Policy, these industrial incentives require new dimensions to achieve balanced industrial growth in a planned manner so that the natural and human resources of the State were fully utilised and developed and the opportunities for employment were progressively increased. In the very second paragraph of the Resolution under subparagraph (a) it is provided that this industrial policy shall be applicable to those industrial units which would come into production from 1.4.1993 to 31.3.1998. Sub-paragraph (b) provides that units coming into production before 1.4.1993 shall be entitled to the benefits for the period as announced by the previous incentive policy. The entrepreneurs, who have invested capital for the establishment of industry on the basis of previously announced incentive benefits before 1.4.1993 will have to give in writing to the Director of Industries within 30 days from the date of issue of the Resolution whether they want to avail of the benefits as announced by the previous incentive policy or the benefits of the new industrial policy, which has come into effect from 1.4.1993. These entrepreneurs shall be entitled either for the complete package of the benefits announced by the previous incentive policy or for the package of benefits announced by the new industrial policy which came into effect from 1.4.1993. But they will not be entitled to the partial benefits both from the previous incentive policy and from the new incentive which came into effect from 1.4.1993.

4. The policy also states that the Industrial Units coming into production between 1.4.93 and 31.3.98 shall be entitled to the following benefits:

(i) Subsidy, (ii) Financial Assistance & (iii) Exemption in Sales Tax/Deferment Facility. In the instant case, we are not concerned with the Subsidy and Financial Assistance extended to the new industries which have come into production after 1.4.1993. The dispute is only with regard the limited benefit with regard to sales tax exemption on the purchase of raw material only. Paragraph 10 of the Policy provides that the scheme is applicable to new industrial units coming into production between 1.4.93 and 31.3.98. Besides, the scheme is applicable to those units which are defined in Annexure-1 for expansion and diversification for the period 1.4.93 to 31.3.98. Under paragraph 10.1 provision is made for facility of sales tax deferment on finished goods. This benefit is not claimed by the petitioners. Paragraph 10.2 of the Policy provides for facility of sales tax exemption/deferment on finished products, and provides that the facility of exemption from payment of sales tax on finished products in lieu of deferment shall be admissible only to the industrial units mentioned in Annexure-VI of the Policy. Certain conditions have been laid down which must be fulfilled before the benefit can be claimed. Paragraph 10.3 provides for the manner in which the amount involved in sales tax deferment will be repayable.

5. Then comes paragraph 10.4, which is the crucial paragraph so far as the dispute in these writ petitions is concerned. For the sake of convenience the same is reproduced below:

10.4. Sales Tax exemption on the purchase of Raw Material.--(i) This facility will be admissible to the industrial units mentioned in Annexure-V in the following manner:

(a) Industrial Units coming into production between 1.4.93 to 31.3.98 whose investment on plant & machinery does not exceed Rs. 15.00 Crores shall be entitled to this facility for a period of seven years from the date of production.

(b) Such old industrial units whose investment on plant & machinery do not exceed Rs. 15.00 Crores on 1.4.93 shall be entitled to this facility for a period of seven years from 1.4.93.

(ii) All other industrial units shall continue to enjoy the existing facility of purchase of raw material on concessional rate of tax as announced and made applicable by the Sales Tax Department as before.

6. Paragraph 10.5 provides as follows:

10.5. A separate order/notification for sales tax exemption will be issued by the Commercial Tax Department and the condition mentioned in that order/notification shall be binding in final terms.

7. The case of the petitioners is that the language employed in paragraph 10.4(i)(b) being clear and unequivocal, there is no scope for any misunderstanding, since it is clear from a mere perusal of the said paragraph that it refers to old industrial units, meaning thereby industrial units which came into production before 1.4.1993. It does not provide for any date of production nor does it provide any condition as to whether the unit had or had not in the past taken the benefits under any other industrial policy. The facility given to such old industries is a limited facility confined to the sales tax exemption on the purchase of raw material. The new units, namely, those which came into production on or after 1.4.1993 are entitled to all other facilities under the Industrial Incentive Policy of 1993, such as subsidy, financial assistance, facility of sales tax deferment on finished goods and facility of sales tax exemption/deferment on finished products. Those facilities have not been extended to old industrial units, but only a limited facility is extended to such old units whose investment on plant and machinery did not exceed Rs. 15.00 crores on 1.4.93. The grievance of the petitioners is that despite the clear language employed in the industrial policy, the Commercial Taxes Department issued a Notification on 4th April, 1994, purportedly in exercise of authority under paragraph 10.5 of the policy laying down that the old industries which had made investment of less than Rs. 15.00 crores upto 1st April, 1993 shall be entitled to get exemption provided they had not got any benefit under any previous industrial incentive policy. According to the petitioners, this amounts to depriving them of the facility/benefit granted to old industrial units under the Industrial Incentive Policy of 1993. Under paragraph 10.5 of the Policy, the conditions with regard to grant of exemption could be specified by Commercial Taxes Department, and this could relate to details of the utilisation of raw materials and other things, but a condition could not be imposed, whereby the exemption could be denied to old industrial units. Under the earlier industrial incentive policy in exercise of similar power, the Department had prescribed the form for application, grant of certificates, account of raw material purchased, goods manufactured etc. with a view to ensure that the incentive was not misutilised or was not extended to undeserving units. By issuance of the notification dated 4.4.1994, the benefit itself has been withdrawn contrary to the Industrial Incentive Policy. The notification issued by the Commercial Taxes Department Is, therefore, in conflict with the Industrial Incentive Policy of 1993. The petitioners had made purchases of raw materials within the State of Bihar relying upon the representation made in the Industrial Incentive Policy.

8. A counter-affidavit has been filed on behalf of Commissioner, Commercial Taxes and Deputy Commissioner, Commercial Taxes (respondent Nos. 5 and 6) asserting that the Notification dated 4.4.1994 was issued by the Commissioner, Commercial Taxes, in exercise of power conferred under Section 7(3) of the Bihar Finance Act by which exemption from payment of tax on purchase of raw materials to the old Industries has been disallowed, if the industry had taken any benefit under another Industrial Incentive Policy. Reliance is placed upon the Preamble of the said Resolution, and it has been submitted that the Preamble makes it clear that the Industrial Policy of 1993 was applicable to only those industrial units which went into production from 1.4.1993 to 31.3.1998. The units which came into production before 1.4.1993 were entitled to the benefits for the period announced by the previous incentive policy. In the case of industries set up before 1.4.1993, but which could not start production till 31.3.1993, they were entitled at their option either to claim complete package of benefits announced by the previous incentive policy or package of benefits announced by the new industrial policy which came into effect from 1.4.1993. The benefit provided for in clause 10.4(i)(b) of the Industrial Incentive Policy, 1993, to the old units relates to such units, which have not come into production till 31.3.1993 although set up before 31.3.1993, and had not availed of any benefit under any industrial incentive policy earlier. So construed, the Notification dated 4th April, 1994 is not in conflict with the provision of the Industrial Incentive Policy of 1993. It is further asserted that the Industrial Incentive Policy of 1993 itself provided in paragraph 10.5 that the Commercial Taxes Department shall have full power to put such conditions as it may deem fit while issuing the notification to give effect to the policy. As such, the condition depriving the old industrial units from benefit of tax on purchase of raw materials cannot be termed as arbitrary, illegal or unconstitutional. It has been sought to be argued that the old units do not suffer even if such benefit is not extended to them. That in my view is beyond the scope of these writ petitions, because if the policy itself conferred that benefit, it is not for this Court to consider whether the benefit will really produce the desired result, as it is always open to the industry concerned not to avail of the benefit if the same is not beneficial. It has further been submitted that the petitioners are bound to purchase raw material to keep their industries running and, therefore, there is no question of the application of any principle of estoppel even if the petitioners had purchased the raw materials within the State of Bihar.

9. In its rejoinder the petitioner has reiterated its assertions in the writ petition. It has, however, filed a supplementary affidavit stating that in view of the Industrial Policy of 1993 the petitioner has altered its position by purchasing raw materials within the State of Bihar on the assumption that the exemption shall be made available to the petitioner on purchase of raw materials. In other neighbouring States exemption is being provided to the manufacturer of the raw materials of the petitioner's industry when the petitioner purchases raw materials in the State of Bihar it has to pay taxes twice, if this exemption is not granted, firstly to the seller of the raw material which buys goods from other States and are paying taxes there, and again taxes are being charged from the petitioner by the seller of the goods. In view of the policy decision of the State, in the hope that the benefit of exemption shall be available, the petitioner purchased more and more materials in the State of Bihar. The petitioner has also made further investments in land, building, plant and machinery after 1.4.1993 on the basis of the promise made in the industrial policy.

10. A counter-affidavit has also been filed on behalf of the State of Bihar. The stand of the State of Bihar is substantially the same as the stand of the Commissioner of Commercial Taxes.

11. I may first of all deal with the submission urged on behalf of the State that having regard to the Preamble of the policy, it must be held that whatever is contained in the policy is applicable only to industries which fulfill the other conditions and additionally came into production on or after 1st April, 1993. Relying upon paragraphs (a) & (b) of the Policy to which I have referred earlier it was submitted that in clear terms it has been provided that the Industrial Incentive Policy shall be applicable to those industrial units which would go into production from 1.4.1993 to 31.3.1998. According to the learned Advocate General, this was conclusive and permitted no argument. On the other hand, counsel for the petitioners submitted that the Preamble is not always determinative in the matter of interpretation. The language of the provision must be looked at, and if the language employed is clear and unambiguous, it must be given effect, notwithstanding the fact that there is something in the Preamble which may be inconsistent with the substantive provision in a legislation. Counsel relied upon the decisions of the Supreme Court, reported in AIR 1961 SC 954 (M/s. Burrakur Coal Co. Ltd. v. Union of India) and  AIR 1970 SC 540 (Tribhuban Parkash vs. Union of India). In my view, it is not possible to accept the rival contentions in a case of this nature where the Court is concerned with an Industrial Incentive Policy. Such policy decisions are not drafted with the same skill as is required while enacting a legislation. The precision and accuracy expected in a legislation is not expected when such policy decisions are announced by the Government, and therefore, it would not be appropriate to interpret a policy decision in the same manner as a law enacted by the legislature is interpreted, in the sense that the technical rules of interpretation may not be applied with equal rigour. The policy decision must be read as a whole. If the language employed is clear and unequivocal, it must be given meaning and effect. No doubt, in the opening paragraphs of the Policy it has been stated that the Industrial Incentive Policy shall be applicable to those industrial units, which would come into production from 1.4.1993 to 31.3.1998. This is obviously so because the main emphasis in the Policy was to provide incentives to industries which went into production or even came into existence after 1.4.1993. But, this does not mean that it was not open to the State Government to confer some small benefits on older units as well, while considering the grant of larger incentives and benefits to new units. I have, therefore, no hesitation in coming to the conclusion that the Industrial Incentive Policy of 1993 must be read as a whole with a view to understand its scope and import. If on a reading of the Policy as a whole it appears that some benefit was sought to be conferred on older units as well, such benefits cannot be denied to older units only on the ground that in the opening paragraphs of the Policy it is stated that the Policy shall be applicable to those industrial units which would come into production from 1.4.1993 to 31.3.1998.

12. Then comes the question as to whether paragraph 10.4(i)(b) extends to old industrial units the facility of sales tax exemption on the purchase of raw material. Sub-paragraph (b) must not be read in isolation. It must be understood in the light of sub-paragraph (a) and other provisions of the Policy. Sub-paragraph (a) of paragraph 10.4(i) provides that industrial units coming into production between 1.4.93 and 31.3.1998, whose investment on plant and machinery does not exceed Rs. 15.00 crores shall be entitled to the facility of sales tax exemption on the purchase of raw material for a period of seven years from the date of production. Thereafter comes sub-paragraph (b) which begins with the words "such old industrial units whose investment on plant & machinery do not exceed Rs. 15.00 Crores on 1.4.93 shall be entitled to this facility for a period of seven years from 1.4.93". Obviously, therefore, the Policy makes a distinction between new industrial units covered by sub-paragraph (a) and old industrial units covered by subparagraph (b). It cannot, therefore, be said that the old industrial units were not entitled to this facility at all. In fact, even the impugned Notification dated 4.4.1994 provides that the facility of sales tax exemption on the purchase of raw material shall be extended to such old industrial units, but lays down a condition that the facility shall be made available only if such old industrial units had not availed of incentive under any earlier Industrial Incentive Policy. It is to this condition that the petitioners object. It is their submission that the Policy does not lay down any such condition and, therefore, the said policy could not be modified by the issuance of the Notification dated 4.4.1994. The Commissioner was bound to issue a notification with a view to give effect to the policy decision of the Government, and not to deprive the old industrial units of the limited facility granted under the new scheme under the Policy of 1993.

13. In course of his submission the learned Advocate General submitted that the Notification of 4th April, 1994 amounted to a change of policy by the Government. This was objected to by the petitioners, and they challenged the State to produce material to show that the Government had consciously changed its policy by incorporating such a condition. However, ultimately the learned Advocate General did not proceed on the basis that the Government had changed its policy, and submitted that the Notification dated 4th April, 1994 was not inconsistent with the policy decision.

14. I have considerable difficulty in accepting the submission urged by the learned Advocate General that sub-paragraph (b) which refers to old industrial units must mean old industrial units which were established before 1.4.1993, but had not gone into production before that date. He, therefore, submitted that the old industrial units, to which sub-paragraph (b) refers, are such old industrial units which, though established before 1.4.93 went into production later. It is not disputed that those industries which went into production between 1.4.1993 and 31.3.1998 are entitled to all the facilities and incentives under the Policy of 1993. It is also not disputed that the industrial units which came into production before 1.4.1993 are entitled to claim all benefits under the earlier scheme. So far as the third category of industrial units is concerned, namely, industrial units which were established before 1st February 1993, and which came into production on or after 1.4.1993, the industrial policy is quite clear and such units are covered by paragraph (b) of what has been described by the learned Advocate General as "the Preamble". It has been clearly laid down that such units may either claim the benefits announced by the previous incentive policy or may claim benefits announced by the Industrial Incentive Policy of 1993. They have to opt between the complete package of the benefits announced by the previous incentive policy or the package of benefits announced by the Policy of 1993. They could not be allowed to pick and choose. Such being the position, it would be difficult to contend that paragraph 10.4(i)(b) when it refers "such old industrial units", refers to units which came into production after 1.4.1993 though established before that date. Such units could opt for benefits under the old policy or under the new policy package for package, and could not select a few benefits here and a few benefits there.

15. Reading the Industrial Incentive Policy, 1993 as a whole, it appears to me that the industrial policy formulated by the Government was essentially meant for the industrial units going into production between the period 1.4.1993 and 31.3.1998. With regard to industrial units which had come into production before 1.4.1993, their entitlement to incentive under the earlier policy was protected. With regard to industrial units which were established before 1.4.1993, but came into production in or after 1.4.1993, option was given to them to elect to be governed by the old policy or the new policy package for package. Under the Policy of 1993 the industrial units coming into production between 1.4.1993 and 31.3.1998 were entitled to several benefits, such as subsidy of different types, financial assistance in many matters as also facility of sales tax exemption and deferment on finished products. These facilities/benefits were not extended to other units. However, in paragraph 10.4 where the policy dealt with the grant of sales tax exemption on the purchase of raw material, this facility was extended to the industrial units coming into production between 1.4.1993 and 31.3.1998, and also such old industrial units whose investment on plant and machinery did not exceed Rs. 15 crores on 1.4.1993. To the extent of this facility alone a facility was sought to be conferred even on old industrial units. So far as the policy goes, there is no other condition attached to the grant of this facility except that the investment on plant and machinery as on 1.4.1993 must not exceed Rs. 15 crores. The clear and unequivocal words employed in the said paragraph of the policy decision permit no other meaning being given to the policy.

16. If I am right in coming to the conclusion that the facility of sales tax exemption on the purchase of raw material was extended to old industrial units also fulfilling the condition laid down in the policy, the Notification of 4th April, 1994 imposing the condition that such old industrial units must not have taken advantage or benefit under any other industrial policy, appears to deprive the old industrial units of the benefits under the Industrial Incentive Policy of 1993. As has been urged on behalf of the petitioners, industrial units which had come into production earlier did take advantage of the benefits and facilities extended under the earlier policy of the Government. The Government was also aware of this fact and yet provided a limited facility by way of incentive to such old units also. It is not as if the Government was not competent to extend this limited facility to older industrial units, and if it was competent to do so, it has done so in clear words without imposing any condition. The petitioners are, therefore, right in contending that the notification of 4th April, 1994 in so far as it imposes a condition that the old industrial units should not have taken benefit under any earlier industrial incentive policy of the Government is inconsistent with the policy decision. In exercise of authority vested in the Commercial Taxes Department under paragraph 10.5 of the Industrial Incentive Policy, 1993, the Commercial Taxes Department could not add or subtract to the incentive/benefits granted under the policy decision, but could only issue a separate order/notification for sales tax exemption with a view to give effect to the policy decision. The conditions which it could lay down by issuing such order or notification could be conditions which were essentially to be imposed with a view to keep a check on the persons availing of the benefits and to ensure that the facility was not being misused. They could require the industrial units to furnish such particulars about their purchases and production as was considered necessary, and for that purpose could have prescribed forms and declarations as was considered necessary with a view to give effect to the policy decision and to avoid misuse of facilities/benefits conferred thereby. Such conditions could not be imposed which in effect amended the policy decision itself by depriving industrial units of the benefits/facilities granted by the policy decision. The petitioners on the basis of the Industrial Incentive Policy of 1993 have made purchases of raw materials in the State of Bihar with a view to avail of such facility. Counsel for the petitioners explained that otherwise it could have been beneficial for such industrial units to make purchases outside the State of Bihar so as to avoid the incidence of local taxes. The petitioners have also asserted, which is not denied by the State, that they have purchased more raw materials with a view to increase their production and take advantage of the incentives announced by the Government. They have also made heavy investment on the basis of the promise held in the Industrial Incentive Policy, 1993, that they shall be given the facility of sales tax exemption on the purchase of raw material. Having done all these, they cannot be deprived of the facility which they were promised under the Industrial Incentive Policy, 1993 and that too by the issuance of notification which is inconsistent with the policy decision, and seeks to modify the same without authority of law. In exercise of his power under the Bihar Finance Act, the Commissioner should have issued appropriate notification granting exemption in the matter of payment of sales tax consistent with the Industrial Incentive Policy decision of 1993, which bound the State.

17. The learned Advocate General did not urge that the principle of estoppel does not apply in the instant case, and in my view, rightly. The impugned notification has been issued with a view to give effect to the policy announced. It does not proceed on the basis that old industrial units which came into production before 1.4.1993 are not entitled to any benefit under the scheme. On the contrary, it concedes that such old industrial units are entitled to the facility of exemption of sales tax on purchase of raw material, provided they have not taken benefit under any earlier incentive policy. The challenge is on the ground that if the notification is intended to give effect to the policy decision announced by the State, it is not permissible to the Commissioner of Sales Tax to make a further classification by imposing a condition not warranted by the policy. If the policy intended to give a benefit or facility, to a class of industries, he could not impose a further condition so as to create another class of industries out of the industries to whom the benefit or facility was intended, as that would be arbitrary and unreasonable. In these circumstances, these writ petitions are allowed. The Notification bearing S.O. No. 95 dated 4.4.94 (Annexure-3) is quashed to the extent that it imposes a condition that the facility of sales tax exemption on purchase of raw material will be available only to old industrial units whose investment on plant and machinery did not exceed Rs. 15.00 crores on 1.4.1993, and who had not availed of any facility/benefit under the earlier incentive policy. It is further declared that the petitioners are entitled to the facility of sales tax exemption on the purchase of raw material under paragraph 10.4(i)(b) of the Industrial Incentive Policy, 1993.

N.K. Sinha, J.

I agree.