STATE OF MADHYA PRADESH Vs. G S DALL AND FLOUR MILLS:MOHD ISMAIL:STATE OF MADHYA PRADESH:STATE OF MADHYA PRADESH:STATE OF MADHYA PRADESH:STATE OF MADHYA PRADESH:STATE OF MADHYA PRADESH
LAWS(SC)-1990-9-8
SUPREME COURT OF INDIA (FROM: MADHYA PRADESH)
Decided on September 19,1990

STATE OF MADHYA PRADESH,DURGA RICE AND DAL MILLS,GANESH RICE MILLS,VISHWANATH RICE MILLS,SRIRAM RICE MILLS,SHYAMJI RICE MILLS Appellant
VERSUS
STATE OF MADHYA PRADESH,G.S.DALL AND FLOUR MILLS,MOHD ISMAIL Respondents





Cited Judgements :-

OSWAL AGRO MILLS LIMITED VS. COLLECTOR OF CENTRAL EXCISE [LAWS(SC)-1993-4-102] [REFERRED TO]
DELHI DEVELOPMENT AUTHORITY VS. JOGINDER S MONGA [LAWS(SC)-2003-12-72] [REFERRED TO]
M P TEWARI VS. Y P CHAWLA ITO [LAWS(DLH)-1990-11-29] [REFERRED]
SIMBHAOLI SUGAR MILLS LIMITED VS. UNION OF INDIA [LAWS(DLH)-1992-3-49] [REFERRED]
S BALA BAWA VS. UNIVERSITY OF DELHI [LAWS(DLH)-1997-3-60] [REFERRED]
SITA JUNEJA AND ASSOCIATION VS. COMMISSIONER OF SALES TAX [LAWS(DLH)-1998-9-123] [REFERRED]
MUNICIPAL CORPORATION OF DELHI VS. A K TRAKRU [LAWS(DLH)-2004-2-24] [REFERRED TO]
COMMISSIONER OF CENTRAL EXCISE TRICHY VS. DALMIA CEMENT BHARAT LTD [LAWS(DLH)-2005-12-148] [REFERRED TO]
STATE OF GUJARAT VS. SANAND TEXTILE INDUSTRIES LTD [LAWS(GJH)-2008-12-48] [REFERRED TO]
ABU BAKER KHAN VS. VICE CHANCELLOR ALIGARH MUSLIM UNIVERSITY [LAWS(ALL)-2003-7-180] [REFERRED TO]
DUNCANS INDUSTRIES LIMITED VS. UNION OF INDIA [LAWS(ALL)-2003-11-13] [REFERRED TO]
SHAHNAZ AYURVEDICS VS. COMMISSIONER OF CENTRAL EXCISE [LAWS(ALL)-2004-1-28] [REFERRED TO]
VIJAY SINGH VS. STATE OF U P [LAWS(ALL)-2004-7-30] [REFERRED TO]
SURENDRA KUMAR SRIVASTAVA VS. STATE OF U P [LAWS(ALL)-2006-8-114] [REFERRED TO]
NEW OKHLA INDUSTRIAL DEVELOPMENT AUTHORITY N O I D A SECTOR 6 GHAZIABAD GAUTAM BUDH NAGAR VS. STATE PUBLIC SERVICE TRIBUNAL [LAWS(ALL)-2007-5-88] [REFERERD TO]
MD ROSHANLAL KHAN VS. GOVERNMENT OF ANDHRA PRADESH [LAWS(APH)-2003-1-71] [REFERRED TO]
MUNICIPAL CORPORATION OF GUNTUR VS. B SYAMALA KUMAI [LAWS(APH)-2006-9-99] [REFERRED TO]
ISRO DRIVERS ASSOCIATION VS. GOVT OF INDIA [LAWS(APH)-2008-9-6] [REFERRED TO]
M J EXPORTS LIMITED VS. CEGAT BOMBAY [LAWS(SC)-1992-5-6] [RELIED ON]
TANVI TRADING AND CREDITS PRIVATE LIMITED VS. NEW DELHI MUNICIPAL COUNCIL [LAWS(DLH)-2004-5-1] [REFERRED TO]
PARAMOUNT BIO TECH INDUSTRIES LTD VS. UNION OF INDIA [LAWS(ALL)-2003-11-19] [REFERRED TO]
KAILASH DIAGNOSTIC AND REHABILITATION CENTRE P LTD VS. D G OF HEALTH SERVICES [LAWS(APH)-2002-6-176] [REFERRED TO]
M N Dastur and Co LTD VS. Union of India [LAWS(CAL)-2005-2-64] [REFERRED TO]
SUMIT AGRAWAL VS. RAIPUR MUNICIPAL CORPORATION [LAWS(CHH)-2010-8-11] [REFERRED TO]
DINAKAR ULLAL VS. COMMISSIONER OF INCOME TAX [LAWS(KAR)-2010-2-18] [REFERRED TO]
M R F LIMITED VS. ASSISTANT COMMISSIONER [LAWS(KER)-1992-9-32] [REFERRED TO]
COMMISSIONER OF INCOME TAX VS. PULIKKAL MEDICAL FOUNDATION PRIVATE LIMITED [LAWS(KER)-1993-8-44] [REFERRED TO]
KASHI CONDUCTORS VS. UNION OF INDIA [LAWS(BOM)-1992-10-28] [REFERRED TO]
ARUN MORESHWAR PATANKAR VS. STATE OF MAHARASHTRA [LAWS(BOM)-1997-4-34] [REFERRED TO]
WARDEN CUM PRINCIPAL VS. DY COMMR OF LABOUR [LAWS(MAD)-2001-12-1] [REFERRED TO]
STATE OF JHARKHAND VS. GOVIND SINGH [LAWS(SC)-2004-12-52] [REFERRED TO]
V C BANARAS HINDU UNIVERSITY VS. SHRIKANT [LAWS(SC)-2006-5-56] [REFERRED TO]
JOINT ACTION COMMITTEE OF AIRLINES PILOTS ASSOCIATIONS OF INDIA VS. DIRECTOR GENERAL OF CIVIL AVIATION [LAWS(SC)-2011-5-23] [RFERRED TO]
MULTIPLEX ASSOCIATION OF GUJARAT VS. STATE OF GUJARAT [LAWS(GJH)-2009-6-62] [REFERRED]
SAHARA INDIA COMMERCIAL CORP LTD VS. STATE OF UP [LAWS(ALL)-2010-5-62] [REFERRED TO]
KHANDELWAL TEXTILES VS. COMMISSIONER OF SALES TAX M P [LAWS(MPH)-1996-8-50] [REFERRED TO]
VISHWA OIL PRODUCTS LTD VS. STATE OF M P [LAWS(MPH)-1997-8-38] [REFERRED TO]
MUNNALAL TIWARI VS. STATE OF MADHYA PRADESH [LAWS(MPH)-1998-1-34] [REFERRED]
PRIME SOLVENT EXTRACTION LTD VS. STATE OF M P [LAWS(MPH)-1999-8-30] [REFERRED TO]
PANKAJ C PATEL AND COMPANY VS. GENERAL MANAGER DISTRICT INDUSTRIES CENTRE-CUM-MEMBER SECRETARY STATE LEVEL [LAWS(MPH)-1999-8-42] [REFERRED TO]
NANHI BAI VS. NETRAM [LAWS(MPH)-2001-3-54] [REFERRED]
CENTURY YARN VS. COMMERCIAL TAX OFFICER [LAWS(MPH)-2003-3-65] [REFERRED TO]
M M NAGALINGAM NADAR SONS VS. STATE OF KERALA [LAWS(KER)-1993-4-19] [REFERRED TO]
FEDERAL MOGUL GOETZE INDIA LTD VS. ASSISTANT COMMISSIONER OF COMMERCIAL TAXES [LAWS(KAR)-2010-9-32] [REFERRED TO]
KASHI CONDUCTORS VS. UNION OF INDIA [LAWS(BOM)-1992-10-40] [REFERRED TO]
TAMIL NADU NEWSPRINT AND PAPERS LTD VS. COMMERCIAL TAX OFFICER [LAWS(MAD)-2002-10-90] [REFERRED TO]
LALAITA MALHARI BARVE VS. STATE OF MAHARASHTRA [LAWS(BOM)-2001-8-20] [REFERRED TO]
L Boomiraja VS. District Collector Dindigul District at Dindigul [LAWS(MAD)-2005-4-211] [REFERRED TO]
TAMIL NADU ELECTRICITY BOARD VS. K S V COTTON MILLS PRIVATE LTD [LAWS(MAD)-2005-7-93] [REFERRED TO]
BANNARI AMMAN SPINNING MILLS LTD VS. TAMIL NADU ELECTRICITY BOARD [LAWS(MAD)-2006-12-176] [REFERRED TO]
MOHAN RAJARAM KAVLEKAR VS. UNION OF INDIA [LAWS(BOM)-2011-10-9] [REFERRED TO]
TAMIL NADU DRIVING SCHOOLS OWNERS FEDERATION VS. STATE OF TAMIL NADU [LAWS(MAD)-2009-10-34] [REFERRED TO]
MARITIME INSTITUTE ASSOCIATION VS. SECRETARY MINISTRY OF SHIPPING [LAWS(MAD)-2009-11-114] [REFERRED TO]
SAIRAM SHIPPING SCIENCE INSTITUTE VS. INDIAN MARITIME UNIVERSITY [LAWS(MAD)-2011-10-119] [REFERRED TO]
OSWAL FATS AND OILS VS. STATE OF PUNJAB [LAWS(P&H)-2000-12-1] [REFERRED]
PRAKASH CHAND SAINI VS. STATE OF RAJASTHAN [LAWS(RAJ)-1998-5-32] [REFERRED TO]
J K UDAIPUR UDYOG LTD VS. STATE OF RAJASTHAN [LAWS(RAJ)-2001-3-46] [REFERRED TO]
DEVSHREE CEMENT LTD VS. STATE OF RAJASTHAN [LAWS(ST)-1997-8-2] [REFERRED TO]
DELHI PETROL DEALERS ASSOC VS. COMMISSIONER NEW DELHI [LAWS(DLH)-2012-9-244] [REFERRED TO]
ARUN MORESHWAR PATANKAR VS. STATE OF MAHARASHTRA [LAWS(BOM)-1997-4-110] [REFERRED TO (PARA 10). 2.]
KOTHAMARAM NAGI REDDY VS. GOVERNMENT OF ANDHRA PRADESH [LAWS(APH)-2013-1-1] [REFERRED TO]
BHARAT PETROLEUM CORPORATION LTD VS. DELHI INTERNATIONAL AIRPORT PVT LTD [LAWS(DLH)-2013-2-61] [REFERRED TO]
T. N. ELECTRICITY BOARD VS. K. S. V. COTTON MILLS PVT. LTD. [LAWS(MAD)-2005-7-236] [REFERRED TO]
MADHU SUDAN JHA VS. STATE OF JHARKHAND [LAWS(JHAR)-2006-5-58] [REFERRED TO]
GLAXOSMITHKLINE PHARMACEUTICALS LIMITED VS. UNION OF INDIA [LAWS(SC)-2013-12-12] [REFERRED TO]
Rakesh Kumar Goswami VS. State of Jharkhand [LAWS(JHAR)-2013-7-69] [REFERRED TO]
Dinakar Ullal Prop. Devchand Constructions VS. Commissioner of Income-tax [LAWS(KAR)-2010-2-142] [REFERRED TO]
SIDDABLOINA LAXMINARAYANA VS. GOVERNMENT OF ANDHRA PRADESH [LAWS(APH)-2014-4-43] [REFERRED TO]
NARINDER BATRA VS. UNION OF INDIA [LAWS(DLH)-2009-3-156] [REFERRED TO]
U.P. JAL NIGAM KARMCHARI MAHASANGH VS. STATE OF U.P. [LAWS(ALL)-2005-4-238] [REFERRED TO]
INTERNATIONAL TRADE AND EXHIBITIONS INDIA PRIVATE LIMITED VS. REGIONAL DIRECTOR NORTH [LAWS(DLH)-2011-9-479] [REFERRED TO]
POULOSE VS. STATE OF KERALA [LAWS(KER)-1993-4-28] [REFERRED TO]
AWADHESH KUMAR GUPTA VS. BOARD OF DIRECTORS ALLAHABAD U.P. GRAMIN BANK AND OTHERS [LAWS(ALL)-2012-5-358] [REFERRED TO]
ROOFERS NUTRO PHARMA (PVT.) LTD. VS. STATE OF ANDHRA PRADESH [LAWS(ST)-1998-11-10] [REFERRED TO]
MAHESH LAXMAN GANDHI AND OTHERS VS. STATE OF MAHARASHTRA AND OTHERS [LAWS(BOM)-1993-2-153] [REFERRED TO]
THE CHIEF OFFICER TOWN PANCHAYATH VS. GUNASUNDARAMMANNI AND ORS. [LAWS(KAR)-2015-1-236] [REFERRED TO]
PRAMOD MISHRA VS. STATE OF MADHYA PRADESH & OTHERS [LAWS(MPH)-2012-8-311] [REFERRED TO]
BEAUTY SYIEMLIEH AND ORS. VS. THE STATE OF MEGHALAYA AND ORS. [LAWS(MEGH)-2015-7-9] [REFERRED TO]
SAYAJI HOTELS LTD. VS. STATE OF M.P. AND ORS. [LAWS(MPH)-2015-3-216] [REFERRED TO]
SANJAY KUMAR DAS AND ORS. VS. STATE OF ORISSA AND ORS. [LAWS(ORI)-2016-3-6] [REFERRED TO]
KUMAGAI SKANSKA HCC ITOCHU GROUP VS. THE COMMISSIONER OF VALUE ADDED TAX AND ORS. [LAWS(DLH)-2016-4-82] [REFERRED TO]
SMT. CHANDRAWALI VS. STATE OF CHHATTISGARH & ORS [LAWS(CHH)-2010-3-61] [REFERRED TO]
LT. COL. S.S. CHAHAL VS. UNION OF INDIA AND ANOTHER [LAWS(P&H)-2004-9-121] [REFERRED]
VODAFONE MOBILE SERVICES LIMITED THROUGH B. ARUTSIVAN VS. STATE OF U.P. AND ANOTHER [LAWS(ALL)-2016-9-383] [REFERRED TO]
AKBARUDDIN OWAISI VS. GOVERNMENT OF ANDHRA PRADESH AND ORS [LAWS(APH)-2013-7-163] [REFERRED]
M/S. RAMA MEDICAL STORES VS. THE COMMISSIONER INCOME TAX LUCKNOW [LAWS(ALL)-2016-9-404] [REFERRED TO]
INDORE DEVELOPMENT AUTHORITY VS. SHAILENDRA [LAWS(SC)-2018-2-88] [REFERRED TO]
COMMISSIONER, AVADI MUNICIPALITY, AVADI, CHENNAI VS. U GEETHA [LAWS(MAD)-2018-4-640] [REFERRED TO]
APRAJITA KUMARI AND ORS VS. JOINT DIRECTOR, ENFORCEMENT DIRECTORATE AND ORS [LAWS(DLH)-2018-1-641] [REFERRED TO]
R. LALTHLAMUANA @ R.L.T MUANA, COURT OFFICER (RTD.), AND ORS. VS. STATE OF MIZORAM AND ORS. [LAWS(GAU)-2017-9-113] [REFERRED TO]
ALL INDIA PUNJAB NATIONAL BANK OFFICERS ASSOCIATION VS. UNION OF INDIA AND ANOTHER [LAWS(DLH)-2018-8-576] [REFERRED TO]
SHAILA MATHIAS VS. NITESH ESTATES LIMITED [LAWS(KAR)-2019-1-7] [REFERRED TO]
KRISHNA GANDHI VS. STATE OF MADHYA PRADESH & OTHERS [LAWS(MPH)-2018-4-435] [REFERRED TO]
RAM ANAND VS. STATE OF U.P. [LAWS(ALL)-2020-3-95] [REFERRED TO]
K I P L VISTACORE INFRA PROJECTS J V , VS. ICHALKARANJEE MUNICIPAL COUNCIL OFFICE AT COUNCIL OFFICE [LAWS(BOM)-2020-10-78] [REFERRED TO]
ASHOK KUMAR TIWARI VS. MOHIT KUMAR [LAWS(CHH)-2019-11-133] [REFERRED TO]
ARUN KUMAR VS. STATE OF KARNATAKA [LAWS(KAR)-2021-10-27] [REFERRED TO]
S. MURUGANANDAM VS. J. JOSEPH [LAWS(MAD)-2022-2-15] [REFERRED TO]


JUDGEMENT

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.

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