ORDER
Anand Byrareddy, J.
1. Heard the Counsel for the petitioner and the Counsel for the respondents.
2. The facts are as follows:
The petitioner is an industry engaged in Agro Food Processing and is a Partnership Firm. It is the petitioner’s contention that the Government of Karnataka had announced a Comprehensive Industrial Policy, which had extended a package of incentives and concessions for new industries. The object of the New Industrial Policy for the period 2006-2011 was to increase the share of export of Karnataka in the national export market and to generate additional employment. The petitioner was registered under the small-scale sector in the Department of Industries and Commerce. The petitioner was permitted to procure agricultural produce directly from Fanners without going through the Agricultural Produce Marketing Committee constituted under the Agricultural Produce Marketing (Regulation) Act, 1966. Therefore, the New Industrial Policy had announced incentives for setting up of new agricultural produce processing industries by exempting the payment of market cess in respect of such procurement, by the Processing Industries, such as the petitioner, which were procuring the produce directly from the Farmers. This, according to the Policy declaration was to come in to force with effect from 1.4.2006. The Policy declaration dated 27.8.2006 was effective retrospectively, from 1.4.2006. The petitioner had set up its unit and commenced agricultural production on 5.10.2006. The petitioner had thereafter made a representation to the third respondent and requested the necessary certificate to seek exemption from payment of market cess in terms of the New Industrial Policy. It is the petitioner’s contention that he was fully eligible and qualified to seek such exemption in terms of the Industrial Policy. The second respondent, however, demanded that the petitioner should pay the market cess and under duress had obtained a cheque for a sum of Rs. 1,70,687/- towards the market fees and penalty for the period from 6.5.2007 to 5.6.2007. It is the petitioner’s contention that this action of the respondents was highly illegal and opposed to the declared Industrial Policy. It is in this background that the petitioner is before this Court.
3. The Counsel for the petitioner would contend that in terms of the Industrial Policy published in the Karnataka Gazette, dated 14.9.2006, and in terms of the Government Order dated 26.8.2006, the Industrial Policy and the incentives package would be deemed to have come in to effect from 1.4.2006 and thereafter, for a span of five years there from up to 31.3.2011. Further, insofar as the Agro Processing Industries, such as the petitioner are concerned, it is declared that as an incentive for setting up of new agricultural produce processing industries the market cess in respect of procurement of produce by the Processing Industries directly from the Farmers would be exempted and that necessary amendment to the existing law would be brought about by the Cooperation Department in this regard. This is found at Clause 3.14 of the said Gazette Notification at page 5 thereof. Pursuant to this, the Karnataka Agricultural Produce Marketing (Regulations) (Amendment) Act, 2007 was enacted and published in the Gazette as on 16.8.2007, wherein in amending Section 65, Sub-Section 4 is incorporated, which reads as follows:
4. Notwithstanding anything contained in this Act, no market fee is payable for a period of five years by a New Agricultural Produce Processing Industries in respect of purchases of agricultural produce by such Processing Industries, in accordance with the Industrial Policy of the Government vide Government Order No. CI 319 SPI 2005 dated 26.8.2006.
4. The Counsel would therefore submit that by virtue of the declared Industrial Policy to exempt market cess for a period of five years being with effect from 1.4.2006 onwards and the consequent amendment to the Statue, which required the petitioner to pay such market cess and the very amendment to the Section incorporating the declaration under the Industrial Policy, it follows that the petitioner is exempted from payment of market cess, as declared in the Industrial Policy for a period of five years. In the result, the obligation of the petitioner to pay such market cess for the period during which the second respondent has imposed and collected market cess, namely from 6.5.2007 to 5.6.2007, is wholly illegal and impermissible and therefore, would seek an appropriate writ to declare the same as illegal and arbitrary.
5. Per contra, the Government Advocate would submit that insofar as declaration in the Industrial Policy of the State Government is concerned, there was an assurance by the Government of such concession or exemption of market cess being offered and this was subject to the amendment to the Act. As contended by the petitioner himself, the said amendment having been given effect to from the date of publication of the amendment in the Gazette, namely on 16.8.2007, the exemption or concession, if any, is available to the petitioner from the date of such amendment having been brought in to force. The amendment itself not indicating that it is with retrospective effect, the amendment cannot be read in to Statute Book prior to the date of publication of the said amendment in the Gazette. Hence, the petitioner’s contention that he is entitled to exemption from payment of market cess in accordance with the declaration under the Industrial Policy from 1.4.2006 onwards is not tenable and in this regard, the Government Advocate seeks to place reliance on an order of this Court passed in STRP. No. 66/1999 dated 16.3.2004 in the case of State of Karnataka v. Sree Jayalakshmi Spinners, Chitradurga, which was a revision petition under the Karnataka Sales Tax Act, 1957, wherein the question whether the Government Order which approved the undertaking of several programmes to ensure the objects of the Textile Policy declared by the Government and to be achieved in the next five years thereafter would have the effect of granting exemption.
6. When the respondent therein having been granted the exemption, the State was in Revision before the Division Bench of this Court and after considering the case law on the matter, this Court has held that the Government Order merely contemplates setting up or undertaking programmes and according approval for forming a scheme for relief would not amount to a promise to give relief and that the Government Order does not contain any promise to exempt tax and therefore, the doctrine of Promissory Estoppel could not be pressed in to service to avoid payment of tax. Accordingly, the Government Advocate would submit that the ratio of the said decision would apply on all fours to the present case and hence, the petitioner is not entitled to claim exemption from payment of market cess.
7. In the above facts and circumstances, it is not in dispute that the Industrial Policy of the State Government declares that there would be exemption of market cess insofar as Industries, such as that of the petitioner are concerned, for a period of five years with effect from 1.4.2006 and that this would be subject to amendment to the necessary provision of law in this regard and the amendment itself having come about, which is published in the Gazette on 16.8.2007, the question arises whether the petitioner would be entitled to claim exemption with effect from 1.4.2006, as declared under the Industrial Policy.
8. In the light of Sub-Section 4 of Section 65, which is incorporated by way of amendment, itself indicating that no market cess would be payable for a period of five years by a new agricultural produce processing industry in accordance with the Industrial Policy of the Government vide Government Order dated 26.8.2006, would set at rest any doubts as to the exemption being with effect from 1.4.2006, as declared under the Industrial Policy. If not for specific reference to the Industrial Policy, it would be possible to hold that the amendment takes effect from the date of such incorporation and in the absence of any express declaration, it could not be held to be retrospective. In the instant case, it is clear that the amendment is with reference to the Industrial Policy, which clearly declares that a new agricultural produce processing industry would be entided to exemption from payment of market cess for a period of five years, and that is with effect from 1.4.2006. Hence, there is no difficulty in finding a case in favour of the petitioner and hence, the collection of market cess and penalty for the relevant period, as collected by the second respondent, is irregular and would require to be refunded, if it has been credited in favour of the respondents.
9. In so far as the contention by the Government Advocate and the reliance sought to be placed on the decision, the finding is with reference to the particular notification and with reference to an assurance put forth in the Government Order and it does not deal with a situation similar to the present case on hand. Therefore, the same can be distinguished with reference to the present case on hand.
10. Accordingly, the petition is allowed. The respondents are directed to refund any amounts that might have been collected and credited to the accounts of the respondents, as alleged.
11. The petition is disposed of accordingly.