JUDGMENT
L.N. RAY, Chairman
1. These six applications under Section 8 of the West Bengal Taxation Tribunal Act, 1987 are in the nature of writ applications under Article 226 of the Constitution of India. The cases were heard analogously, because the question involved in all the cases is identical. The question is whether amendment of the Explanation I in Rule 98 of the West Bengal Sales Tax Rules, 1995 (in short, “1995 Rules”) by insertion of a new clause, i.e., Clause (v) with effect from September 1, 1999 will be enforceable in respect of newly set up small-scale industrial units who started enjoying the tax holiday under Section 39 of the West Bengal Sales Tax Act, 1994 (in short, “1994 Act”) prior to September 1, 1999. The new Clause (v) of Explanation I in Rule 98 lays down that the tax holiday will be available to an industrial unit “which does not use on franchise or otherwise the trade mark or brand name or logo of any product of an industrial unit situated within or outside West Bengal and where such product is sold in West Bengal.”
2. The cases of the applicants are similar. The case of Pacific Health Care Pvt. Ltd. in RN-375 of 1999 is that it manufactures ayurvedic medicines. Himani Ltd., now known as Emami Ltd., agreed to buy the entire production of the said company on principal to principal basis after getting its brand names/trade marks affixed by the applicant-company on the goods. Neither in Section 39 of 1994 Act, nor in Rules 98 to 101 of 1995 Rules there was any restriction on use of trade mark/brand name of other established manufacturers. Accordingly, the applicant-company decided to set up its factory in the State of West Bengal for availing of the tax holiday under Section 39 in respect of its manufactured goods in the newly set up industrial unit for a period of five years. The company has narrated what steps it had to take and what investments it had to make for commencing production. The applicant-company duly applied on July 28, 1998 under Section 39 of 1994 Act for issuance of eligibility certificate for availing of the tax holiday. On January 6, 1999 the respondent No. 4, namely, the Assistant Commissioner of Commercial Taxes, Special Cell, issued the eligibility certificate (EC) to the applicant-company after being fully satisfied. The said EC was made valid from May 30, 1998 to May 29, 2003 (five years). Therefore, the applicant-company is entitled to tax holiday during the said period of five years. But on August 12, 1999 the respondent No. 1 issued Notification No. 2425-FT adding Clause (v) to the Explanation I to Rule 98 and it was to come into force on September 1, 1999. The respondent No. 2, Commissioner of Commercial Taxes, issued a public notice/circular, calling it urgent notice in the Statesman, a daily newspaper dated August 31, 1999, stating that according to the said amendment in Rule 98 any small-scale industrial unit which uses on franchise or otherwise, the trade mark or brand name or logo of any product of an industrial unit situated within or outside West Bengal and sells such product in West Bengal, will not be entitled to get the benefit of exemption on and from the 1st day of September, 1999. Thus, allegedly the respondents took the view that the newly set up SSI units in West Bengal which were already enjoying the tax holiday under Section 39, would not be entitled to the tax holiday on and from September 1, 1999, if they use the trade marks, brand names or logo of any product of any industrial unit situated within or outside West Bengal and sells such products in West Bengal. The said notice of respondent No. 2 dated August 31, 1999 is challenged as illegal, invalid and without jurisdiction. According to the applicant-company, the amendment of Rule 98 does not and cannot apply to it. If the amendment is sought to be applied to it, the amendment would be illegal, invalid and without jurisdiction. It is contended that the respondents are prevented from applying the amendment to the applicant-company by the doctrine of promissory estoppel (paragraph 30 of the application). It is also contended that the right to get the exemption on fulfilling the conditions laid down on the date of issuance of EC is a vested right to the applicant-company, and it cannot be curtailed or nullified by a subsequent amendment (paragraph 31). If that is done, it is stated that the notification by which the amendment was promulgated, would be wholly arbitrary and violative of articles 14, 19(1)(g) and 300A of the Constitution of India (paragraph 31). In paragraph 32 it is contended that the goods manufactured by the applicant-company are sold on principal to principal basis to Himani Ltd., which is the owner of the brand names/trade marks and it is the said buyer which uses the said brand names/trade marks while selling the goods in the market. In paragraph 33 the case made out by the applicant-company is that the amendment in question and the public notice dated August 31, 1999, issued by respondent No. 2 seek to make an arbitrary and hostile discrimination between persons similarly situated, and the distinction sought to be made between SSI units using the brand names/trade marks of other industrial units and such units not using them, and such distinction has got no rational nexus with the objects sought to be achieved by Section 39. The company prays for a declaration that the amendment effected by the notification dated August 12, 1999 and the public notice dated August 31, 1999 issued by respondent No. 2 are ultra vires articles 14, 19, 265 and 300A of the Constitution of India and ultra vires Section 39 of 1994 Act, and illegal and void.
3. The case of the other applicants are identical. In RN-357 of 1999 Ronix Electronics (P) Ltd., is the applicant. In the similar manner it manufactures television sets (TV sets) under the brand name of “Oscar” in its unit. That is the brand name of Kejriwal Electronics Ltd, By a letter dated April 17, 1998 Kejriwal Electronics Ltd., allowed the applicant-company to use the said brand name in the TV sets manufactured by it. Had the applicant not got the permission to use the brand name, it would not have established the unit in the State of West Bengal. TV sets require intensive marketing support in terms of manpower and money-power resources and a big establishment. Without the brand name, it would not have been possible for the applicant-company as a SSI unit to compete with multi-national companies and well-established branded companies. The company applied for tax holiday under Section 39 of 1994 Act and Rule 98 of 1995 Rules for TV sets manufactured with the brand name “Oscar”. The respondent No. 2 made verifications, found as a fact that the applicant-company was manufacturing TV sets with the brand name “Oscar” and issued EC for the period of five years from May 21, 1998 to May 20, 2003. Accordingly, the applicant-company has been selling TV sets with that brand name to various parties in and outside West Bengal without charging any sales tax, as it was not liable to pay any sales tax under Section 39, These are the facts of this case, but the challenges are identical.
4. In RN-372 of 1999, Jesie Household Care Products Ltd., is the applicant-company. Its case is that on or about October 18, 1996 the company was incorporated for manufacturing and trading in cosmetics, household care products and insect repellent creams, etc. Relying upon the provisions of tax holiday in the 1994 Act the unit was set up by the company in West Bengal. It has been manufacturing and selling toothpaste with the brand names “Promise”, “Babool” and “Meswak” under a franchise agreement with Balsara Hygiene Products Ltd., of Bangalore. An application was made for EC under Section 39 and it was granted to the company for the period of five years from March 27, 1998 to March 26, 2003. The SSI unit was established by the applicant-company relying on the representations made through the tax holiday provisions, and without such provisions the company would have considered its other options. It altered its position on the basis of the tax holiday provisions as obtaining at the time of establishment of the unit. The challenge to the amendment in Rule 98 of 1995 Rules is identical.
5. In RN-420 of 1999, the case of Sm. Shashi Malik is that she runs a business under the trade name of Lakshmi Electronics. That is a SSI unit which started the business of re-selling TV sets in 1998. The sets were being imported into West Bengal from outside. In July, 1998 the applicant entered into an agreement with BPL Ltd., for supply of TV sets. It allowed the applicant to use its brand name in TV sets to be manufactured by the applicant. Manufacture of such TV sets was started in February, 1999. On March 8, 1999 the applicant prayed for issuance of EC under Section 39 in respect of TV sets manufactured in her unit. The respondent No. 1 made verification on the application and found as a fact that the applicant was manufacturing TV sets with the brand name “BPL”. In view of the impugned Notification No. 2425-FT dated August 12, 1999 made effective from September 1, 1999, the respondent No. 1 passed an order on September 7, 1999 and granted EC for the period from February 26, 1999 to August 31, 1999, but did not issue EC for the period after August 31, 1999 on the ground that the applicant was using the brand name “BPL”. In RN-425 of 1999, the case of Quality Home Products (P) Ltd., is that it carries on the business of manufacture of synthetic detergent powder and scouring powder with the brand names-“Mr. White”, “Limeshot”, “Chek” and “Odopic” in its newly set up SSI unit. The products are sold in and outside West Bengal. The said brand names are owned by Henkel Spic India Ltd., and Balsara Agent Products Ltd. (the last one for “Odopic”). The brand names have been used with due permission from the owners. The applicant made an application for EC under Section 39. The respondent No. 2 made the necessary verifications. The respondent No. 1 found as a fact that the applicant was manufacturing those items under those brand names. An eligibility certificate was issued to the applicant by respondent No. 2 by order dated January 18, 1999 regarding the sales of the manufactured products for the period from April 1, 1996 to February 3, 2001. On the basis of the EC the applicant has been selling the said goods without charging any sales tax, as it was not liable to pay any such tax under Section 39. In RN-338 of 1999 Universal Systems Incorporate is the applicant. Its case is that it carries on a business of manufacturing black and white TV sets with components purchased mainly from outside West Bengal and the TV sets are sold in and outside West Bengal. The applicant was eligible for tax holiday under Section 39 for its newly set up SSI unit. It applied for EC under Section 39. On December 11, 1997 respondent No. 3 issued an EC to the applicant-company for the period from October 17, 1997 to October 16, 2002. The tax holiday is being enjoyed by the applicant-company on that basis. The applicant-company uses brand names/trade marks, logo of other renowned companies for selling its products in West Bengal (paragraph 6 of the application), but without charging sales tax on account of the tax holiday under Section 39 and the EC issued to it. Except the facts of the individual applicants, there is no other difference in their challenges to the amendment of Explanation I to Rule 98 by which Clause (v) was inserted with effect from September 1, 1999.
6. The applications have been resisted by the respondents. The case of the respondents is basically the same in all these cases. Now we are summarising the case of the respondents in the affidavit-in-opposition in RN-375 of 1999 (Pacific Health Care Pvt. Ltd.). According to respondents, the EC was granted under Section 39 to the applicant for tax holiday in respect of its turnover of sales of hair oil and ante septic cream manufactured in their newly set up SSI unit. If the applicant used the brand name, trade mark or logo of Himani Ltd., for their products, it was purely a private arrangement between them, and none of the respondents is in any way responsible for or bound by such private arrangement. The applicant is eligible for the tax holiday, provided it manufactures hair oil and anteseptic cream in the SSI unit during the specified period. There is allegedly nothing on record that the applicant ever used any such brand name, etc. The EC granted to it did not expressly or impliedly confer any authority to use any such brand name of any other company. It is contended that there was an implicit condition that brand name, trade mark or logo of any other industrial unit cannot be used, if the tax holiday is availed of. By insertion of Clause (v) in the Explanation I to Rule 98 the condition which was implicit was made explicit with effect from September 1, 1999 “and not from any anterior dates”–(paragraph 12 of the affidavit-in-opposition). The object of the amended explanation was not to cancel or revoke the EC already granted, but to lay down that newly set up SSI units already enjoying or intending to enjoy tax holiday cannot use with effect from September 1, 1999 any trade mark, brand name or logo of any product of any other industrial unit on franchise or otherwise. Use of any such thing would disentitle them to enjoy the benefit of tax holiday. The power to impose restrictions and conditions for granting tax holiday is a matter of “economic wisdom and policy” falling exclusively within the province of the State Legislature (paragraph 12). Acquisition of a vested right to get the tax holiday for five years by means of the EC already granted is denied. By using brand name, trade mark or logo of industrial units which are not entitled to tax holiday, what is being done is that those industrial units are deriving benefit of tax holiday indirectly. The trade circular of the Commissioner of Commercial Taxes is claimed to be consistent with the amended Rule 98 with effect from September 1, 1999. No promise or assurance was given by the respondents to the applicant that they would be allowed to use brand name, etc., of similar products of any other industrial unit. It is said to be a well-established trade practice (paragraph 16 of the opposition) that unless a person discloses that brand name, trade mark or logo of any industrial unit is used by it on franchise or otherwise, the presumption would be that the unit was selling its manufactured products under its own brand name, trade mark or logo. The applicant-company having used the brand name, etc., of Himani Limited became ineligible for tax holiday with effect from September 1, 1999. This was done in order that the legislative policy and the object of tax holiday were not frustrated, because the legislative intention was to encourage setting up of new industrial units in the State for manufacture of goods, generating employment, income, production of goods, and services in the State. The amending notification is stated to be clarificatory. The amendment of Rule 98 is said to be not violative of articles 14, 19, 263 and 300A. Himani Ltd., is not a SSI unit and is not entitled to tax holiday, and it cannot derive a benefit indirectly. Similar affidavit-in-opposition was filed by respondents in RN-338 of 1999 (Universal Systems Incorporate), RN-372 of 1999 (Jesie Household Care Products Pvt. Ltd.) and RN-357 of 1999 (Ronix Electronics Pvt. Ltd.). No affidavit-in-opposition was filed by respondents in RN-420 of 1999 (Sm. Shashi Malik) and RN-425 of 1999 (Quality Home Products Pvt. Ltd.), because the question involved is a question of law and because of the analogous hearing.
7. In RN-375 of 1999 an affidavit-in-reply was used by the applicant-company. It was stated therein (paragraph 4) that the fact that the company was using the brand name of Himani Ltd., for its products was duly disclosed and was made known to the respondents. In this connection annexure “A”, an agreement, has been referred to. It is an agreement between the applicant-company and Himani Ltd., for use of brand name, trade mark, etc. It is asserted by the applicant-company that the said agreement was duly produced before respondent No. 4 (Assistant Commissioner, Commercial Taxes, Special Cell, Behala Circle). He duly considered the same before grant of EC and registration certificate. Even in the provisional certificate issued by the respondents the goods manufactured by the applicant-company was specified with reference to the trade marks–Boro Plus and Nav Ratan. The applicant-company has reiterated that the amendment of Rule 98 by addition of Clause (v) in Explanation I is not applicable to the applicant-company, because EC had been granted to it for five years before that amendment. It has been denied that there was any implicit condition in the EC or that the amendment was clarificatory for making an implicit condition explicit. No new condition like this can be imposed on the applicant-company after it established its unit on the basis of the provisions then existing. In RN-372 of 1999 a reply was used by the applicant-company. Similarly, in RN-338 of 1999 the applicant-company used a reply. It was stated therein, inter alia, that neither the EC nor the relevant rules as existing at that time laid down any restriction or reservation with regard to use of brand name or logo of other companies. Hence, the only reasonable conclusion was that the authorities allowed the exemption from tax after due consideration of all facts. Although the contract to sell goods using brand name or logo of another company is a bipartite agreement, it was undertaken by the applicant-company on the basis of representations made by the respondents. It has been denied that an agreement for using brand name of another company was required to be recorded specifically in the EC. As soon as EC was granted regarding sales of products, it was implied therein that in the manner the sales were being made, it would enjoy the tax holiday. At the time of granting EC, use or non-use of brand name or logo of any other company was not at all a relevant consideration. Since there was no such reservation, the applicant-company entered into agreement with other company for using the latter’s brand name or logo, It has been admitted by the respondents in the affidavit-in-opposition that the amendment of Rule 98 by insertion of Clause (v) in Explanation I was prospective, and not retrospective. That being the position, the contention of the applicant-company is that such a prospective amendment cannot apply to the applicant-company.
8. All the cases before us are governed by 1994 Act and 1995 Rules. Section 39 of the Act lays down that, “subject to such conditions and restrictions as may be prescribed, no tax shall be payable by a dealer for such period as may be prescribed in respect of his sales of goods manufactured by him in his newly set up small-scale industrial unit……………………….”. The heading of Section 39 is : “Tax holiday for new small-scale industrial units”. The conditions and restrictions and the period of tax holiday are prescribed in Rules 98 to 101. Rule 55 is also to an extent relevant and Rule 98 together lay down that in order to avail of the tax holiday the dealer must obtain an EC and shall claim deduction from his gross turnover. In order to fully appreciate the scheme of tax holiday, Rules 98 to 101 are to be closely analysed. The Explanation I below Rule 98(3) is very important. It is the definition of “newly set up small-scale industrial unit”. Unless the dealer is such a unit, it is not eligible for enjoying the tax holiday. A dealer who is not such a unit, is to be shut out at the threshold. The conditions and restrictions prescribed in Explanation I are naturally to be more strictly observed than the other conditions and restrictions prescribed in Rules 98(2) and 98(3). Here there is no dispute that all the requirements were complied with by the applicants on the respective dates of first sale, and also on the dates of applications for the ECs. What we want to say is that the rules and Section 39 do not lay down that any additional condition or restriction may have to be complied with on any future date. In this connection Rule 101 is significant. It has the heading : “Cessation of validity of certificate of eligibility”. It runs like this : “Where the Deputy Commissioner or the Assistant Commissioner is satisfied that the dealer has contravened any of the provisions referred to in Sub-rule (2) and Sub-rule (3) of Rule 98, he shall, after giving such dealer a reasonable opportunity of being heard, by an order in writing, declare such certificate invalid from such date as he may specify in the order”, Therefore, what has been clearly intended is that throughout the length of the period of tax holiday the dealer must observe and fulfil the requirements of Rule 98(2) and Rule 98(3), but not the requirements of Explanation I. And, to refresh our memory, we may repeat that the impugned Clause (v) regarding use of brand name, trade mark and logo, effective from September 1, 1999, was inserted in the Explanation I. Logically, the rule-making authority could not do otherwise, because the Explanation I is the definition of newly set up SSI unit. That definition must be conformed to by the applying dealer on the first date of sale and on the date of application. Once he satisfies the EC granting authority about that position, he is eligible to apply and show that he has fulfilled the requirements of Rules 98(2) and 98(3). He cannot be expected to conform to the definition in the Explanation I throughout the length of the period of validity of the EC. In this connection the applicants rightly relied on the case of Commissioner of Sales Tax v. Industrial Coal Enterprises, reported in [1999] 114 STC 365 (SC) ; (1999) 2 JT 6 (SC). That was a case under a pari materia legislation, namely, the U.P. Sales Tax Act, 1948. The principle laid down is applicable here. In that case, the respondent had fulfilled the relevant conditions, being requirements of the definition of a new unit, at the time when it applied for exemption, as its capital investment did not exceed Rs. 3 lakhs. The unit was closed from July 23, 1986 to July 31, 1986, and production at new place started on August 1, 1986 with capital investment exceeding Rs. 3 lakhs. There was no condition that exemption, once granted, would cease to operate on capital investment being in excess of Rs. 3 lakhs. It was held that subsequent excess in capital investment could not be the ground for denying the exemption. It is interesting to note that in the West Bengal Rules also the limit of capital investment is Clause (i) in the Explanation I to Rule 98. That means, it is a requirement of the definition. So, when the requirements of the definition are fulfilled on the date of application and the date of first sale, and when the EC is granted for a specified period (as in the cases before us) the EC cannot be invalidated and the tax holiday cannot be denied on the ground that the dealer has subsequently failed to comply with the requirements of the definition in the Explanation I. That being the position, how can a new requirement like the Clause (v) regarding brand name, trade mark, logo, adversely affect such a dealer ? How can such a dealer be asked to comply with the new requirement after grant of EC, i.e., tax holiday ? It is not legally possible. There is nothing in Rules 98 to 101 to the effect that such a dealer shall have to comply with a new requirement. Moreover, look at Rule 101. It mandates that the dealer shall have to comply with the requirements of Rules 98(2) and 98(3) even subsequent to the grant of EC and grant of tax holiday, but it significantly leaves out the requirements of the Explanation I. On this reasoning alone the applications should succeed. But we are discussing the other contentions as well.
9. Mr. R.N. Bajoria, counsel for one of the applicants argued, and his argument was adopted by the learned advocates for the other applicants, that when the EC was issued and the tax holiday was granted on the basis of fulfilment of requirements of the Explanation I as it stood on the dates of applications and the dates of first sales, the dealers acquired a right to get the tax holiday. Such a “vested right” could not be taken away by introducing a new requirement which did not exist on those relevant dates. Mr. D. Gangopadhyay and Mr. J.K. Goswami, State Representatives, argued on behalf of respondents. They contended that (i) the dealers had no vested right, (ii) insertion of Clause (v) in the Explanation I was clarificatory, (iii) the State had the right to impose a new condition at any stage, and (iv) no permission was given in the EC to use brand name, trade mark or logo or any other industrial unit.
10. Mr. Bajoria, Mr. M.L. Bhattacharyya and Mr. S.K. Chakraborty, appearing for the applicants, opposed all these contentions. It is true that while granting the tax holiday, no express permission was granted to use others’ brand name, trade mark or logo. But it is not the case of respondents that when tax holiday was granted to the applicants, it was one of the conditions and restrictions that the applicants could not sell their manufactured products with the brand name, etc., of any other company. In fact, the respondents have allowed the tax holiday to them till September 1, 1999 even though they sold their products using brand name, etc., of other industrial units. Respondents have not pleaded that such tax holiday was erroneously enjoyed till September 1, 1999, Moreover, the history of legislation shows that in the similar provisions under the Bengal Finance (Sales Tax) Act, 1941 and the West Bengal Sales Tax Act, 1954, the ban on use of brand name, etc., of other industrial unit was one of the conditions and restrictions. The Act of 1941 and the Act of 1954 were expressly repealed by 1994 Act under Section 106(1). The ban on use of other’s brand name, etc., was omitted in the provisions of the new Act. This indicates that the ban was consciously withdrawn. When all these are considered together, the only reasonable interpretation is that there is an implied consent or permission to the effect that the dealers could enjoy tax holiday even by using the brand name, trade mark, or logo of any other industry. In our view, absence of the ban is sufficient indication that use of other’s brand name, etc., would be no ground for denying the tax holiday.
11. Regarding the alleged “right” of the State to impose the ban or a new condition at any stage, Mr. Bajoria rightly submitted that it was not a “right” ; but the “power” of the State to amend the provisions in exercise of legislative or subordinate legislative power, was beyond question. He contended that in exercise of such right the State could not take away the vested right of individuals. We shall presently discuss the contention about vested right. But at this stage it is enough to say that the power of the State to amend the rules is not without any restriction. The provisions of the Constitution must be adhered to. That power is subject to the provisions of the Constitution.
12. Is the insertion of Clause (v) in the Explanation I clarificatory ? In our opinion, it is not so. The ban was existing under the rules framed under the Acts of 1941 and 1954. It was non-existent in the rules framed under 1994 Act which came into force from May 1, 1995. Then with effect from September 1, 1999 the ban on use of brand name came back in the form of the impugned amendment. It is difficult to understand how the amendment can be called clarificatory. If there is a mistake, either of drafting or printing, there can be a clarificatory amendment. Here, it is nobody’s case that the new Clause (v) was there in a mistaken form. According to Craies on Statute Law, Seventh Edition, page 517 :
“That, in fact, the language of an Act of Parliament may be founded on some mistake, and that words may be clumsily used, I do not deny. But I do not think it is competent to any court to proceed upon the assumption that the Legislature has made a mistake. Whatever the real fact may be, I think a court of law is bound to proceed upon the assumption that the Legislature is an ideal person that does not make mistakes.” Income-tax Special Purposes Commissioners v. Pemsel [1891] AC 531, 549, Lord Halsbury, L.C.
While framing Rule 98 under 1994 Act effective from May 1, 1995, the ban on use of brand name was not incorporated in the rule. The fact gives rise to the presumption that the subordinate legislative authority knew the state of the law and knowing that, did not incorporate that condition. The doctrine is thus stated in Craies (ibid, page 517) :
“‘We ought in general,’ said Lord Blackburn in Young & Co. v. Mayor Leamington Spa Corpn. (1883) 8 App Cas. 517 at 526, ‘in construing an Act of Parliament, to assume that the Legislature knows the existing state of the law’. In other words, it is presumed that the Legislature has informed itself as to the state of the law on any subject as to which it undertakes to legislate ; …………..”. That being the rule of interpretation, when there is no trace of the ban on use of other’s brand name in Rule 98 of 1995 Rules, prior to September 1, 1999, there could be no question of correcting or clarifying something. It is not a case where the Legislature made a provision but failed to properly express its intention in the words used. Therefore, if the contention of the respondents is to be accepted, the court has to supply the ban on use of other’s brand name with effect from May 1, 1995, when there was none. And then assume further that there was some mistake in the provision. The whole thing becomes imaginary. According to Craies (ibid P. 520), “as a general rule a court of law is not authorised to supply a casus omissus, or to alter the language of a statute for the purpose of supplying a meaning, if the language of the statute is incapable of one, even though they may be of opinion that a mistake has been made in drawing the Act”. In this case, of course, we hold no opinion that a mistake was made in drawing the rule. No material has been placed to hold any such opinion. Again, Craies (ibid P. 521) deals with the position of law about correction (clarification) : “But if there is an obvious misprint in an Act of Parliament the courts will not be bound by the letter of the Act, but will take care that its plain meaning is carried out. ‘It is our duty’,” said Tindal, C.J., in Everett v. Wells (1841) 2 M&G 269, “neither to add to nor to take away from a statute, unless we see grounds for thinking that the Legislature intended something which it has failed precisely to express”. In simple words, the present situation does not support any contention that Clause (v) was added to Explanation I as a clarificatory measure.
13. Let us now address the question of ‘Vested right”. According to Black’s Law Dictionary, Fifth Edition, page 1189, a right is “a power, privilege, or immunity guaranteed under a Constitution, statutes, or decisional laws, or claimed as a result of long usage”. In this case, the right to get tax holiday, may be conditional, but nevertheless it is a right ; it is an immunity. Once conditions are fulfilled, it cannot be denied. According to Black, ibid., page 1402, a vested right is a “right complete and consummated, and of such character that it cannot be divested without the consent of the person to whom it belongs, and fixed or established, and no longer open to controversy”. Again, it consists of “such interests as cannot be interfered with by retrospective laws ; interests which it is proper for the State to recognise and protect and of which individual cannot be deprived arbitrarily without injustice”. In this case, the right of the applicants to enjoy the tax holiday became complete and consummated, when EC was granted for five years. It has, therefore, become a vested right. It cannot be interfered with by even a retrospective amendment of the rule. Interestingly, the undisputed position is that the impugned amendment of Explanation I to Rule 98 is expressly prospective. Under Section 104(1) of 1994 Act, the State Government was given the delegated authority to make rules with prospective or retrospective effect. But the State Government decided to make the amendment by the Clause (v) manifestly with prospective effect from September 1, 1999. Despite that, the statutory authorities are implementing it as if it is a retrospective amendment so that it can be applied even to the dealers who have a vested right of enjoying tax holiday. On behalf of applicants two reported decisions were cited. In the case of Health Guard Laboratories [2000] 117 STC 537 ; (1999) 33 STA 74, a Bench of this Tribunal constituted of two of us held that the nature of statutory right as to the tax holiday being dependent on the rule prevailing on the date the person becomes eligible to the right, it cannot be moulded by the promptitude or the procrastination of the officer in disposing of the application praying for the benefit under Rule 99 of 1995 Rules (i.e., same Rules as involved in this case). It was further held that the nature of such right gets settled according to the relevant provisions of law prevailing on the date. Subsequent amendment, if any, shall not change its nature unless the amending Act/Rules make provisions otherwise. This decision was upheld by the Division Bench of the High Court, according to the learned advocates for the applicants. We have already discussed the case of Industrial Coal Enterprises [1999] 114 STC 365 (SC) ; [1999] 2 JT 6 SC. That decision gives support to the contention of Mr. Bajoria that tax holiday, once granted when there was no ban on use of brand name, cannot be withdrawn or nullified during the period allowed by freshly imposing the ban. The contention of the learned State Representatives appearing for the respondents, is that it is not a retrospective amendment. So, why the operation of Clause (v) in respect of the dealers who were granted EC before September 1, 1999 is being resisted ? But they made a basic fallacy. The right or vested right of tax holiday of these applicants were settled on the basis of the Explanation I as existing before September 1, 1999. So, their right cannot be interfered with till the end of their periods, except under Rule 101. That being so, unless Clause (v) of the Explanation 1 is made retrospective, it cannot apply to the applicants. The reasoning is like this. The right of the applicants relate back to the dates of granting the same to them, and to the dates of their first sales. So, if the new Clause (v) is to apply to them, it should apply with retrospective effect from those dates. But the new Clause (v) is manifestly only prospective. At page 313 of Francis Bennion’s Statutory Interpretation (1984), the following doctrine is laid down :
“It is a principle of legal policy that, except in relation to procedural matters, changes in the law should not take effect retrospectively. The court, when considering, in relation to the facts of the instant case, which of the opposing constructions of the enactment would give effect to the legislative intention, should presume that the legislator intended to observe the principle”. Thus, changes in law disturbing vested rights should not be effective retrospectively. In view of the above discussion we hold that the new Clause (v) does not and cannot apply to the present applicants.
14. Now, some of the applicants took the plea of promissory estoppel, though Mr. Bajoria did not urge that aspect. Their contention was that relying on and acting upon the provisions regarding tax holiday, they made the investments and set up the SSI units newly on the basis of the Explanation I as it stood on the relevant dates. The State Government is the rule-making authority under 1994 Act. It later amended the Explanation I and insisted upon compliance of the newly added restriction. That goes to the applicants’ great disadvantage. According to the applicants, the State Government cannot do so on account of the doctrine of promissory estoppel. After granting EC and allowing tax holiday for a specified period, the State Government, according to them, is estopped from asking the applicant to comply the new restriction about brand name. They do not challenge the State Government’s power to amend the rules or to impose a new restriction, but they urge that any such new restriction cannot be made applicable to the applicants on the basis of the doctrine of promissory estoppel. Because they had altered their position on the basis of the incentive offered through the rules, framed for implementation of Section 39. The learned State Representatives appearing for respondents, argued that the doctrine of promissory estoppel has no role to play. The State Government cannot be estopped from amending the rules in the public interest. Their main contention was that it was learnt’ from experience that big and well-established industrial units who were ineligible for tax holiday, were deriving the benefits of tax holiday indirectly by allowing the SSI units like those of the applicants to use their brand names. According to the learned State Representatives, the objectives of tax-holiday scheme is to encourage new entrepreneurs, who need financial incentives, to set-up small-scale industries in the State. Government need not give such assistance to others, who masquerading as newly set-up units take advantage of trade mark or brand name of established industry. They can stand on their own without such support from the Government and the limited resources of the State could be profitably utilised for boosting comparatively weaker entrepreneurs. In this connection they cited a decision of this Tribunal in the case of P.C.I. Papers reported in [1995] 96 STC 251 ; (1990) 23 STA 298 (paragraph 18), to which one of us was party. But the case of P.C.I. Papers [1995] 96 STC 251 (WBTT) ; (1990) 23 STA 298 was in relation to the provisions under the old Act, when the ban on use of other’s brand name was a specific restriction. That means, when such ban is a specified restriction, the object of tax holiday would be as stated in the case of P.C.I. Papers [1995] 96 STC 251 (WBTT) ; (1990) 23 STA 298. Otherwise, as held in the case of Industrial Coal Enterprises [1999] 114 STC 365 (SC) ; (1999) 2 JT 6 (SC), the object of granting exemption from payment of sales tax has always been for encouraging capital investment and establishment of industrial units for the purpose of increasing production of goods and promoting the development of industry in the State. The learned advocates for the applicants argued (but learned State Representatives appearing for respondents could not show any fault in that argument) that by using brand name or trade mark of another industrial unit the SSI units were actually promoting the object of the tax holiday scheme, as propounded in the case of Industrial Coal Enterprises [1999] 114 STC 365 (SC) ; (1999) 2 JT 6 SC. But it is another matter if the State Government decides as a matter of policy to impose the ban on use of brand name with the object as said in the case of P.C.I. Papers [1995] 96 STC 251 (WBTT) ; (1990) 23 STA 298. Learned advocates for applicants rightly argued that the respondents have not taken the case that the units of the applicants are set up by big industrial units or fake units or they are benami units of big industries. Therefore, they contended, the new policy of the State Government could not be applied to them, and particularly when no such provision has been made in the Rules. On behalf of respondents the cases of Anglo Afghan Agencies AIR 1968 SC 718, Century Spinning & Manufacturing Co. Ltd. AIR 1971 SC 1021, State of Kerala v. Gwalior Rayan Silk Mfg. (Wvg.) Co. Ltd. AIR 1973 SC 2734 (2745), Motilal Padampat Sugar Mills [1979] 44 STC 42 (SC) ; AIR 1979 SC 621, Excise, Commissioner v. Ram Kumar AIR 1976 SC 2237, B.D.J. Stamping Industries Ltd. (1994) 93 STC 494 (WBTT) ; (1992) 25 STA 319 (WBTT), Radhakrishna Agarwal AIR 1977 SC 1496 (para 13) were cited. Mr. J.K. Goswami, State Representative, cited the case of Roxy Roller Flour Pvt. Ltd. [1994] 94 STC 464 (AP). In that case it was held that grant of exemption from sales tax was not in the nature of promise, that the power of grant of exemption under Section 9 of A.P. General Sales Tax Act included the power to rescind the same, and the State Government had power to rescind the exemption granted earlier. At this stage we may say that withdrawal of an exemption altogether, is a different matter. But according to the Andhra Pradesh judgment also, such withdrawal would be in the public interest or in the interest of State revenue. Respondents did not put forward or establish any such defence in the present case. On the contrary, the applicants cited the case of Civil Asbestos v. State of Gujarat [1995] 96 STC 154 (Guj) in which it was held that exemption granted by State Government under the Sales Tax Act constitutes a promise, and though the Government is entitled to withdraw the benefits of exemption under a scheme, the power is operative only prospectively, and does not affect rights already vested in entrepreneurs to claim the benefit of the scheme. The Gujarat High Court further held that the dealer would be entitled to the benefit for the full period for which EC was granted. In that case, the case of Pournami Oil Mills v. State of Kerala [1987] 65 STC 1 (SC) was followed. For the applicants the case of Krisons Electronic Systems Private Limited [1996] 100 STC 289 (All.) was cited. It was held there that the doctrine of promissory estoppel can be invoked against Government orders and notifications issued in exercise of powers conferred by statute. Applicants also cited a single Bench decision of Kerala High Court in Jayalakshmi Granite Metal Industries [1998] 111 STC 705. It was held in that case that subsequent notification modifying earlier notification shall not affect the scope of exemption to a unit which was set up on the basis of earlier exemption notification. The respondents cited two decisions of the Supreme Court. The judgment in Pappu Sweets and Biscuits [1998] 111 STC 425 (SC) is on the point that the exclusionary part of an exemption notification has to be construed rather strictly. In the case of Mahaveer Oil Industries [1999] 115 STC 29 (SC) it was held that where the State makes a promise in the form of an incentive scheme which is available for a specified period of time, when new industries are set up on the basis of that scheme relying on the promise of benefits held out by it, public interest requires that the State be held bound by the promise held out by it in such a situation. But this does not preclude the State from withdrawing the benefit prospectively even during the period of the scheme, if public interest so requires. Even in a case where the party has acted on the promise, if there is any supervening public interest which requires that the benefit be withdrawn or the scheme be modified, that supervening public interest would prevail over any promissory estoppel. (1995) 1 SCC 274 (Kasinka Trading v. Union of India), (1997) 3 SCC 398 (Shrijee Sales Corporation v. Union of India) and (1997) 11 SCC 173 (Union of India v. Godhawani Brothers) were followed in that case. In the present case the respondents have not been able to plead or establish any “supervening public interest” for denying the benefit to the applicants for the rest of their period of tax holiday. It has not been pleaded or established that by using the brand name of other industries the applicants were causing loss of revenue to the State, or frustrating the object of promoting development of industry in the State. In these circumstances, we hold that the doctrine of promissory estoppel will apply in favour of the applicants and they cannot be denied their right to enjoy the full period of tax holiday to which they are entitled to. The new Clause (v) of Explanation I to Rule 98 will not apply to these applicants.
15. Some of the applicants have submitted that at the time of granting EC the authorities were aware and informed that brand name or trade mark of other industries were being used by them. So, when EC was granted with such knowledge, the new ban could not be applied to them. This contention was not directly opposed on behalf of respondents, but it was argued for the respondents that use of brand name was not mentioned in the EC, As regards RN-375 of 1999 (Pacific Health Care Pvt. Ltd.), the order dated January 6, 1998 under which EC for five years from May 30, 1998 was issued, was passed after considering all the requirements under the Rules. In quite some of the documents examined at that time there was clear reference to use of brand names of Himani Ltd. Orders dated July 6, 1998 and July 9, 1998 relate to issuance of registration certificate under Section 26 of 1994 Act. It appears therefrom that the buy-back agreement with Himani Ltd., was seen by the officer. That agreement dated March 25, 1998 contains Clause 5 regarding use of brand names of Himani Ltd, The drug licence refers to the brand names. So, it is clear that in the case of Pacific Health Care, the respondents were aware of use of brand names. In the case of Shashi Malik (RN-420 of 1999) it was clearly known to the EC granting authority that her unit was using brand names of others. So, by order dated September 7, 1999 the Assistant Commissioner issued EC making it valid from February 26, 1998 to August 31, 1999, thereby denying the tax holiday for the period from September 1, 1999 till completion of five years. But under Rule 100(3) the EC was to be issued for the whole of five years, once the Assistant Commissioner was satisfied about compliance of requirements under Section 39 and rules made thereunder. Such satisfaction should be as on the date of first sale and the date of application. So, here also the respondents were aware that the unit was using other’s brand name. In the case of Quality Home Products (RN-425 of 1999) the undisputed assertion (para 7 of application) is that on receipt of application for EC the respondent No. 2 visited the unit and examined books of account and found as a fact that the unit was using others’ brand names. The EC was granted on December 27, 1998 for the period from April 1, 1996 to February 3, 2001. In the case of Universal Systems Incorporate (RN-338 of 1999) the EC was granted on December 11, 1997 for the period from October 17, 1997 to October 16, 2002. In para 6 of the main application it was stated that the unit was using brand names, etc., of reputed companies. In para 5 of the opposition of the respondents, it was stated that respondents were not responsible or bound by such use by way of private arrangement. At page 8 of the reply the applicant stated that before issuance of EC the respondent No. 2 was informed of the fact that there was a proposal of franchise agreement with Philips India Ltd. No affidavit was filed by respondents and no contention was made denying this assertion. So, there is no doubt that the EC granting authority was aware of the proposed franchise agreement. In the case of Jesie Household Care Products (RN-372 of 1999) the EC was granted on October 30, 1998 for the period from March 27, 1998 to March 26, 2003. In para 8 of the application the applicant has stated that it was using other’s brand names. In para 9 of the opposition the respondents took the same plea that they were not bound by or responsible for any such use by franchise agreement. They did not deny knowledge. In the case of Ronix Electronics (RN-357 of 1999), the EC was granted on January 18, 1999 for the period from May 21, 1998 to May 20, 2003. In paras 7 and 8 of the application the applicant stated that the respondent No. 2 was informed of the use of the brand name– “Oscar”–and at the time of enquiry on the application for EC the respondent No. 2 noticed such use. From order dated November 18, 1998 passed by the assessing authority for granting registration certificate it is clear that the authorities were aware of use of brand names. In para 5 of the opposition the respondents did not deny the assertion by the applicant, and rather there is an admission.
16. In the result, it is hereby declared that the Clause (v) added to the Explanation I to Rule 98 of 1995 Rules by means of the Notification No. 2425-FT dated August 12, 1999, published in the Calcutta Gazette on the same date (effective from September 1, 1999), is not applicable to the newly set up SSI units of the present applicants up to the expiry of respective periods of five years from the respective dates of first sale, i.e., from the dates of commencement of validity of EC granted to them. The applicants are entitled to tax holiday for the full period of five years under Section 39. If EC has not been granted yet to any of them or has not been granted for the full period of five years from the date of first sale of manufactured product, the appropriate respondents shall issue such EC for the full period of five years within four weeks of this date. The use of brand name, trade mark or logo of any other company shall be no ground to deny the benefit of tax holiday to them. The notice issued by the Commissioner of Commercial Taxes on August 31, 1999 to give effect to Clause (v) of Explanation I with effect from September 1, 1999 shall be of no effect in respect of the newly set up SSI units of the present applicants. We direct that way bills shall not be refused by the respondents to the applicants particularly to the applicants in RN-420 and 425 of 1999, on the ground of non-compliance of Clause (v) of the Explanation I to Rule 98. All the six applications are thus finally disposed of. No order for cost.
J. Gupta, Judicial Member
17. I agree.
D. Bhattacharyya, Technical Member
18. I agree.