R. Jayasimha Babu, J.

Petitioner is an assessee under the Tamil Nadu General Sales Tax Act. The petitioner availed the benefit of waiver of Sales-tax on the newsprint, printing and writing papers made by it from its new Mill, which it established as part of the expansion programme at a cost of Rs.427.21 crores. The production in that mill commenced on 01.01.1996. The waiver was for a period of seven years from the date of commencement of production. Petitioner obtained such waiver under the scheme of waiver/deferral for mega projects under G.O. Ms. No.323 dated 18.07.1991 read with G.O. Ms.No.43 dated 13.12.1992.

2. G.O.Ms.No.43 in paragraph 2(d) provided that, "Industry set up anywhere in Tamil Nadu having an investment of Rs.300.00 crores and above will be eligible for a subsidy of Rs.1.00 crore and a sales tax waiver upto seven years or deferral for 14 years upto full value of investment". That G.O. as also G.O.Ms.No.323 set out that "existing norms and guidelines for sanction of subsidy and sales tax waiver/deferral will be applicable in full" to those schemes. Neither of these two Government Orders in terms refer to the earlier Government Order which had been issued on 14.05.1990 in G.O.Ms. No.500 which dealt with further liberalisation of incentive scheme for industries located in the most backward taluks. G.O.Ms.No.500 requires the production of any eligibility certificate from the State Industries Promotion Corporation of Tamilnadu (SIPCOT) by medium scale and major industries as a pre-condition for obtaining the benefit of waiver/deferral.

3. Petitioner applied to SIPCOT on 08.09.1995 for the eligibility certificate, and obtained the same on 16.02.1996. That certificate sets out that the petitioner for its unit located in Punjai Pugalur village, Karur Taluk, Trichy District for the manufacture of newsprint, printing and writing papers, would be eligible to avail the sales tax waiver scheme of the Tamil Nadu and specified the limit upto which such waiver could be availed, viz., Rs.427.21, crores, for a period of seven years from 01.01.1996 when commercial production in the new mill was commenced. The certificate sets out that it is subject to the Government Orders No.43 dated 13.12.1992, No.500 dated 14.05.1990 and No.119 dated 13.04.1994.

4. Sub paragraph (iii) of Paragraph 4 of the eligibility certificate which has been challenged by the petitioner as being illegal and ultra vires the Government Orders referred to above, reads thus:

"4. iii. Sales tax waiver benefit is subject to the sales tax payable on products manufactured by the capacity created by Expansion scheme at Punjai Pugalur Village, Karur Taluk, Trichy District only. The company is eligible for waiver of sales tax only on the increased volume of production/sale. For the purpose of determining the increased volume of production, the base figure would be the highest of the volume of production/sale in the company in anyone of the year during the last three years. Till reaching the volume of production/sale specified earlier the company would continue to pay tax and liability in excess of the production/sale specified above alone will be eligible for waiver. The highest production/sales achieved by the company prior to the proposed expansion in the last three years is Newsprint = 40476 T for the year 1992-93 and printing and writing paper of 64401 T for the year 1994-95/ sales turnover of Rs.21,011.20 lakhs for the year 1994-95 (Rupees twenty one thousand and eleven lakhs and twenty thousand only) for the year 1994-95."

In accordance with this clause petitioner would be eligible for waiver only for the quantities produced in excess of the specified figure of base production and only after it had attained the base sales volume. Those figures specified in that certificate were subsequently revised downward by the SIPCOT by its letters of 16.03.1996 and 20.07.1998.

5. It is now necessary to refer to the G.O.Ms.No.119 dated 13.04.1994 which Government Order authorises the inclusion of base production volume and base sales turnover in the eligibility certificate, as, it is the contention of the petitioner that that Government Order is applicable only to cases of deferral and is wholly inapplicable to the case of the petitioner.

6. That G.O. after referring to an order dated 14.09.1992 which granted a sales-tax deferral benefit to another industry Ashok Leyland Limited, to a letter addressed to that company by the Government on 15.03.1993 as also the letter dated 22.07.1993 received by the Government from the Special Commissioner and Commissioner of Commercial Taxes sets out, inter alia that, "The Special Commissioner and Commissioner of Commercial Taxes, Madras has now reported that while issuing eligibility certificates for expansion cases, SIPCOT alone adds a clause that past revenue before the expansion should be protected as other organisations, particularly District Industries Centre do not seem to be aware of this system and issue very open ended eligibility certificates, which often causes problems to the Commercial Taxes Department, especially when some industries tend to take on more and more of the manufacture and sales in the expanded units and decrease it in the old units. Accordingly the Commissioner of Commercial Taxes for the reason stated above, has recommended that the principles laid down for the Ashok Leyland Limited referred to in the Government letter Ms. No.113, Industries, dated 15.03.1993 may be adopted as a general principle for all expansion cases and therefore he has suggested certain conditions."

7. Paragraph 3 of that Government Order then sets out the decision of the Government. It records that the Government had "decided to accept the suggestion of the Special Commissioner and Commissioner of Commercial Taxes as they protect the revenue and also help to increase the production level of the industries availing concession." Sub paragraph (v) of paragraph 3 reads thus:

"Base production volume and base sales volume will have to be worked out and incorporated in the eligibility certificate at the time of issue by SIPCOT and District Industries Centres."

8. Learned Senior Counsel for the petitioner Mr.Natarajan contends that this G.O.No.119 is applicable only to cases where option has been exercised for deferring the sales-tax and not in cases where waiver had been sought and had been granted. Reliance is placed upon the fact that this circular came to be issued in the back ground of action which had been taken in relation to another industry which had sought deferral and the fact that the first three sub paragraphs of paragraph 3 relate to deferral.

9. The further argument advanced for the petitioner is that, as G.O.Ms.No.500 dated 14.05.1990 in paragraph 9 refers to the SIPCOT as the competent authority to issue eligibility certificate for major and medium industries, the eligibility certificates issued by SIPCOT must be regarded as one which is issued under that provision and the role played by SIPCOT should be regarded as being merely administrative or clerical in nature in certifying the eligibility of the applicant in terms of the criteria laid down in the G.O.Ms.No.500. Any condition incorporated in the eligibility certificate which is not specified in the G.O.Ms No.500, according to counsel, is wholly impermissible and would not be unenforceable.

10. Counsel relied upon the decision of the apex Court in the case of State of Madhya Pradesh vs. G.S.Dall and Flour Mills, (1991) 80 STC 138 [LQ/SC/1990/570] , in which it was held that an executive order which has the effect of modifying or adding to the conditions specified in a statutory notification is not lawful. Reliance was also placed on the decision of the apex Court in the case of Assistant Commissioner of Commercial Taxes vs. Dharmendar Trading Co., (1988) 70 STC 59 [LQ/SC/1988/287] , wherein the Court held that the waiver granted by the executive order could be traced to the statutory power to grant waiver and exemption, and that the waiver granted would result in promissory estoppel. Reliance was also placed on the case of P.P.P. Industries vs. Commissioner of Industries, (1994) 92 STC 110 [LQ/TelHC/1993/336] , which decision also rested on the ground of promissory estoppel. Counsel also relied on an unreported judgment of this Court in the case of Thiagarajar Mills Ltd. vs. Assessment Circle (CT), Coimbatore, Writ Petition No.16952 of 1994 decided on 22.02.1995, wherein it was held that a certificate issued by the competent authority specified in the G.O.Ms. No.500 which incorporated a condition which was not set out in that G.O. was required to be quashed.

11. The learned Advocate General appearing for the State submitted that the petitioner is estopped from raising the contentions now raised. He submitted that the petitioner had executed an agreement dated 19.03.1996, which agreement the petitioner had executed after obtaining the eligibility certificate on 16.02.1996 as amended on 16.03.1996. That agreement had been cancelled by the Government on 26.12.1997 for breach of the terms of agreement, and it was at the request of the assessee, eligibility certificate was amended reducing the base production volume and base sales volume and the agreement restored. He submitted that the Government having changed its position by restoring the agreement on the request made by the petitioner, the doctrine of estoppel operates against the petitioner.

12. The further submission for the State was that the Government Order No.119 dated 13.04.1994 is clearly applicable not only to cases of deferral, but to the cases of waiver as well. Reliance was placed on the recitals and that part of the Government Order which has already been set out.

13. The last submission for the State was that even de hors G.O. Ms.No.119, the condition imposed relating to base production volume and base sales volume being inherently reasonable and that specification having been made in a scheme which granted the concession which otherwise would not have been available to the petitioner, that condition is required to be regarded as one which was permissible under the scheme of waiver granted to the petitioner. He also submitted that G.O. 500 does not, in terms, apply to the scheme of waiver granted to the petitioner, as that Government Order is not referred to in the Government Orders of the years 1991 and 1992 (G.O.Ms.No.323 and 43) which only set out that existing norms and guidelines for sanctioning of the subsidy and sales tax waiver/deferral will be applicable in full.

14. The case of the petitioner rests on the alleged inapplicability of G.O.119 to cases of waiver. The substance of that G.O. as also the relevant portions which have been extracted above leave no room for any doubt that what was sought to be done by the Government by that order was to require the SIPCOT and District Industries Centre to incorporate in the eligibility certificate to be issued by them, the base production volume and base sale volume in all cases. The decision of the Government recorded in paragraph 3 (v) of that order does not limit it to only cases of deferral. Though the Government Order begins by referring to what had been done by the Government in relation to another industry which had obtained deferral, it proceeds thereafter to refer to protection offered to the past revenue by the incorporation of the base production volume and base sales volume figures in the eligibility certificates and the need to discontinue the issue of "very open ended eligibility certificates". It also refers to the recommendation made by the Commissioner that "the principles laid down for Ashok Leyland Limited......... may be adopted as a general principle for all expansion cases..........."

15. The policy decision taken by the Government was to be applied for all expansion cases and what was dealt with in that Government Order was a general principle, and not merely an additional requirement limited in its application only to cases of deferral. The language used in sub paragraph (v) of paragraph 3 advisedly omits any reference either to waiver or deferral as, what is stated therein is meant to apply to cases of waiver as also to cases of deferral and was meant to protect the revenue in all expansion cases.

16. The entire case put-forth for the petitioner rests on the faulty premise that this G.O.Ms.No.119 is inapplicable in cases to waiver.

17. The benefit given to the industries by way of sales-tax concessions was meant to promote the establishments of new capacity which would, in course of time, result in a larger revenue to the State by way of realisation of sales-tax besides bringing other benefits by way of economic development and additional employment opportunities to the people of the State. The concession given to mega products was by way of deferral of the liability of payment of sales-tax for as long as a period as fourteen years and in the alternative waiver of sales-tax for a period of seven years. In cases where option of deferral is exercised the industry would have the benefit of retaining to itself monies collected from its customers as sales tax for a period of 14 years, and thereafter returning the money without any interest to the Government. During the period the money remains with the industry, it adds to the cash flow; is available for use as working capital or for purchase of capital equipment or for any other purpose at the discretion of those controlling that industry.

18. In case waiver is opted for, it enables the unit to price its product at a level which would be close to, but lower than the amount of the price plus sales-tax of a similar product made by other competing units which have to pass on the burden of sales-tax to their buyers. That would result in higher realisation which would be retained by the industry for its own benefit without any liability to pay any part thereof to the State at any point of time. Deferral as also waiver results in additional funds being put into the coffers of the industry.

19. Expansion implies the creation of additional capacity without destroying, discontinuing or diverting existing production capacity. To ensure that the sales-tax concession is utilised only for the expanded capacity would require the prevention of diversion of the concession to pre-existing capacity intentionally or otherwise. Steps taken to prevent such diversion would be applicable to cases of deferral as also waiver.

20. In principle, therefore, there is no warrant at all for not requiring the base production volume and base sales volume to be specified in the eligibility certificate in cases where waiver had been sought. The State would suffer loss of revenue in the absence of such specification in cases of deferral as also in cases of waiver. That is the reason why the recommendation made to the Government by its Commissioner was to adopt what had been done in the case of Ashok Leyland "as a general principle for all expansion cases". Paragraph 3(v) of G.O. Ms. No.119 was meant to and does apply to all expansion cases, whether the concession availed is by way of deferral or by way of waiver.

21. Though we also find considerable force in the other submissions made on behalf of the State, having regard to our finding regarding the scope and applicability of G.O. Ms.No.119 it is now not necessary to consider those other submissions. The writ petitions fail and are dismissed.