RANGANATOAN - (1.) THE civil appeals and Special Leave Petition No. 12054 of 1987 are by the State of Madhya Pradesh (M.P.). THE respondents in these two matters and the petitioners in the other five special leave petitions are certain concerns in M.P. assessable to sales tax (hereinafter compendiously referred to as 'the assessees'). All these matters can be con155 veniently disposed of by a common judgment as they raise a common issue.
(2.) THE assessees' claim for exemption from sales tax for certain periods in question was accepted by the High court in the case of G.S. Dall and Flour Mills[1987 20 STL 206 (MP)] and, following it, in the case of Mohd. Ismail (a case where the exemption sought for was originally granted but subsequently revoked). However, subsequently, a full bench of the High court, in the case of Jagadamba Industries, disapproved the view taken by the Division bench in the G.S. Dall and Flour Mills case and, following the full bench, the writ petitions filed by certain other assessees were dismissed by the High court. THE State is aggrieved by the judgment in the first two cases and the assessees by the High court's decision in the other cases. Hence these appeals and special leave petitions. Before dealing with the appeals on merits, an important circumstance needs to be referred to, which is this: The judgment of the full bench in the case of Jagadamba Industries[Jagdamba Industries v. State of M.P., 1988 MPU 620 (FB)] was itself the subject matter of special leave petitions in this court but those petitions (SLP Nos. 15688-90 of 1987 were dismissed, at the stage of admission, on 9/02/1988, with the observations: "We are in agreement with the views expressed by the High court. The special leave petitions are dismissed." In view of this, the State submits that C.A. No. 2211 of 1987 should be allowed and that the assessees' Special Leave Petitions should be dismissed in limine. On the other hand, counsel for the assessees seek to distinguish the Jagadamba case by contending that this court had refused leave against the full bench judgment on account of certain special facts which were considered sufficient to disentitle the assessees in those cases from claiming the exemption. They contend that, in view of this and the fact that the G.S. Dall and Flour Mills case is in appeal before us, we may grant leave in the Special Leave Petitions and dispose of all the appeals on merits. We accept this plea and grant leave in the SLPs, condoning a delay in the filing of Special Leave Petition No. 12054 of 1987. We shall, however, touch upon the above aspect of the matter in the course of our judgment. The issue raised is, at first blush, a simple one. S. 12 of the M.P. Sales Tax Act (hereinafter referred to as 'the Act') enables the State government to grant exemption from the levy of sales tax in certain circumstances. It says: "12. Saving.(1 The State government may, by notification, and subject to such restrictions and conditions as may be specified therein, exempt, whether prospectively or retrospectively, in whole or in part- 156 (i) any class of dealers or any goods or class of goods from the payment of tax under this Act for such period as may be specified in the notification; (ii) any dealer or class of dealers from any provision of the Act for such period as may be specified in the notification. (2 Any notification issued under this S. may be rescinded before the expiry of the period for which it was to have remained in force and on such rescission such notification shall cease to be in force. A notification rescinding an earlier notification shall have prospective effect." In exercise of this power, the State government issued the following notification on October 23/26, 1981 which it is necessary to extract in full here along with its Annexure. It reads: "In exercise of the powers conferred by S. 12 of the Madhya Pradesh General Sales Tax Act, 1958 (No. 2 of 1959 the State government hereby exempts the class of dealers specified in column (1 of the Schedule below who have set up industry in any of the districts of Madhya Pradesh specified in the Annx. to this notification and have commenced production after 1/04/1981, from payment of tax under the said Act for the period specified in column (2, subject to the restrictions and conditions specified in column (3 of the said schedule: JUDGEMENT_150_SUPP1_1992Html1.htm ANNEXURE Part I 1. Indore 2. Ujjain 3. Bhopal 4. Jabalpur 5. Gwalior 6. Durg Part II Category 'A' 1. Bilaspur 2. Raipur 3. Dewas 4. Mandsaur 5. Morena 6. Vidisha 7. Hoshangabad 8. Ratlam 9. Khandwa 10. Satna 11. Shahdol Category 'B' 1. Seoni 2. Balaghat 3. Betui 4. Raigarh 5. Guna 6. Chhindwara 7. Damoh 8. Sagar 9. Narsimhpur 10. Sehore 11. Rajnandgaon Category 'C' 1. Panna 2. Sidhi 3. Rewa 4. Chhatarpur 5.Tikamgarh 6. Khargone 7. Surguja 8. Mandia 9. Bhind 10. Shivpuri 11. Datia 12. Raisen 13. Shajapur 14. Dhar 15. Rajgarh 16. Jhabua 17. Bastar."
(3.) IT is not in dispute that the assessees before us fulfil the qualifications mentioned in the notification. However, when they approached the Director of Industries for the certificate of exemption envisaged under column (3 of the notification, it was denied to them on the ground that the industries run by them are "traditional industries" which were not eligible for exemption. The assessees went to court contending that this was totally unjustified. They said, the concept of "traditional industries" was one unspecified in the notification. The authorities had no jurisdic160 tion to travel outside the terms of the notification and import extraneous considerations to deny the assessees an exemption they were entitled to under the notification. IT is this contention that was accepted in the G.S. Dall and Flour Mills case. The State had relied on the provisions of the M.P. (Deferment of Payment of Tax) Rules, 1983, notified on September 1, 1983 (in particular, Rule 13 thereof) and on certain instructions that had been issued by the government on 12/01/1983 pertaining to the "grant of certificate of eligibility to new industrial units claiming exemption from/deferment of payment of sales tax". The High court took the view that these rules and instructions had no relevance to the claim for exemption put forward under the notification of 23/10/1981 and that, in any event, the executive instructions could not override the provisions of the statutory notification. This judgment was delivered on 7/10/1986 by Sohani, C.J. and Faizanuddin, J. The full bench, in its judgment of 2/11/1987 took a different view. It has, in effect, attached importance to the rules and instructions referred to above and relied considerably on the history of the sales tax levy in the State as furnishing a proper and necessary background in which the terms of the notification of 23/10/1981 have to be read and interpreted. This history has, therefore, to be set out now in order to appreciate the validity of the conclusions of the full bench. Before doing this, it may be mentioned that the full bench comprised of Ojha, C.J., Faizanuddin, J. and Adhikari, J. In fact, the judgment was written by Faizanuddin, J. who has explained in detail the reasons for his change in view. It may also be mentioned, as a matter of record, that, subsequent to the decision of the division bench in G.S. Dall and Flour Mills, the State government appears to have issued a notification on 3/07/1987, intended obviously to overcome the effect of the said decision. We shall refer to this later in this judgment.;