Augustan Textile Colours Limited (Now Augustan Textile Colours Private Limited) vs Director of Industries

CIVIL APPEAL NO.2830 OF 2022 (Arising out of SLP(C)No. 24288 OF 2018)

Augustan Textile Colours Limited Appellant(s) (Now Augustan Textile Colours Pvt Limited)

VERSUS

Director of Industries & Anr. Respondent(s)

J U D G M E N T

Hrishikesh Roy, J.

Leave granted.

1. Heard Mr. Ritin Rai, the learned Senior Counsel

representing the appellant. Also heard Mr. C.K. Sasi,

the learned counsel representing the respondents. Signature Not Verified Digitally signed by Rajni Mukhi Date: 2022.04.09 11:59:38 IST Reason: 1

2. The issue to be considered here is whether the

benefit of tax exemption in respect of works contract

granted in the process of revival of the industry,

under the relevant provisions of the Sick Industrial

Companies Act, 1985 (for short “the SICA”) based on the

Kerala Government communication dated 20.3.2004 (Ext.

P-2) can be withdrawn, by the subsequent government

order dated 21.11.2006 (Ext. P-3).

3. It was the appellant’s say that they had taken over

a sick industrial unit by the name of M/s Teak Tex

Processing Complex Ltd., which was engaged in dyeing of

clothes. The Kerala based unit was not operational for

a considerable period when attempt was made, for

revival of the unit under SICA. In the proceedings

that were pending before the Board for Industrial and

Financial Reconstruction (for short “BIFR”), the

authorities were assessing the possibility of revival

of the unit. At that stage, the appellant offered to

make investment for revival of the company following

2 which, discussions were held amongst the stakeholders

and various concessions were offered to the appellant.

4.1 In tune with the recommendation of the Empowered

Committee constituted for the purpose, the Government

Order was issued on 20.3.2004 whereby the

recommendations of the Committee were accepted. The

relevant clause incorporating the measures relating to

Sales Tax/Works Contract Tax, are as under:-

“Sales Tax/Works Contract Tax

(a) The past arrears of Sales Tax/Works contract tax will be completely waived.

(b) Works contract Tax on processing of Fabrics like bleaching and dyeing etc. will be exempted in the State”

4.2 In furtherance of the 2004 Government Order, the

revival proposal envisaged the taking over by the

appellant entire assets of the sick unit for a sum of

Rs.10 crores and the BIFR Sanctioned Scheme dated

17.01.2005 mentioned the relief measures under clause

7.2.1 pertaining to sales tax/works contract tax. They

read as follows:-

“7.2.1 Sales Tax/Works Contract Tax

3

(a) To waive past arrears of Sale Tax Works Contract Tax completely

(b) To exempt works contract tax on processing of fabrics like bleaching and dyeing etc. in future.”

5. The appellant availed the waiver benefit of past

tax arrears of the sick unit on the basis of the BIFR

Sanctioned Scheme dated 17.01.2005 (Ext. P-1) which

assured waiver of Works Contract Tax on processing of

fabrics like bleaching and dyeing etc. After about 30

months of such arrangement, the Government issued

another Order on 21.11.2006 exercising the power under

Section 10(3) of the Kerala General Sales Tax Act, 1963

(for short “the KGST Act”) where it was said that the

benefit of exemption can only be granted to a specified

class of goods or a particular class of persons, and

the appellant who is one amongst several industrial

units doing similar nature of work within the State of

Kerala, cannot be allowed the benefits of exemption of

Works Contract Tax. After issuance of G.O. order dated

21.11.2006, withdrawing the concession in question, on

1.10.2007, the Government has withdrawn

4 G.O.No.110/06/1D dated 21.11.2006, as the concession

was one already allowed in the rehabilitation scheme of

the BIFR of the company. However, on 29.02.2008 again,

the Government in the Tax Department requested to

cancel the GO dated 01.10.2007 as it did not have any

legally binding effect and thereupon GO dated

01.10.2007 in turn was cancelled with immediate effect.

Accordingly, it was decided to withdraw the tax

waiver/exemption granted to the appellant which

prompted them to file the W.P.(C) No. 5677 of 2007

before the High Court of Kerala.

6. It was contended by the appellant that they

attempted to revive and nurse back a sick company under

BIFR and with due deliberations and the recommendations

of the Empowered Committee, the incentive measures to

be offered to the appellant, have been worked out and

finalized as per the scheme. The appellant is actively

working in the process of revival of the sick unit and

at that stage, it was not open to the State of Kerala

to resile from their promise by issuing the Government

5 Order dated 21.11.2006. According to the appellant, the

exemption granted vide the 2004 Government Order was

issued as a “package deal” in course of revival of the

sick unit in conformity with the relevant provisions of

the SICA and once consent was given and proceedings

were finalized in terms of Section 19(1) or 19(2), the

same would be binding upon all the stakeholders as is

provided under Section 19(3) of SICA. It was therefore

argued that the benefit of tax exemption granted by the

State under the Scheme, is binding on the State under

the provisions of Section 19(3) of SICA and the State

must be held accountable to their promise. It was the

say of the appellant that the incentives were not

granted under Section 10(1) of the KGST Act, and

therefore the tax exemption could not have been

withdrawn by invoking the powers under Section 10(3) of

the same Act. The appellant unequivocally rejected a

suggestion by this Court that the appellant might not

constitute a unique class of one, in whose favour a tax

exemption under Section 10(1) KGST Act can be granted

6 legally. The appellant however failed to point out any

other provision in any statute, which empowered the

State Government to grant such tax exemptions. While

reviving the sick unit, the appellant earned profit in

2015, but incurred loss in subsequent three years. The

recent years i.e., 2019 and 2020 are however profitable

years for the appellant.

7. The respondents, on the other hand, contend that

the 20.03.2004 Government Order confers various

benefits, and the exemption from sales tax/works

contract tax is only one of those benefits offered for

revival of the sick unit. According to the learned

Government Counsel, the source of power to grant tax

exemption is traceable only to Section 10(1) of the

KGST Act and merely because the 20.03.2004 Government

Order does not specifically refer to the source of

power, the same cannot aid the appellant, as specific

reference is made to Section 10(3) of the KGST Act,

while withdrawing the exemption. The learned government

advocate further argues that when exemption is given,

7 it is always open for the government to cancel, vary or

modify the same, bearing the public interest in mind,

and since no time limit was specified on the liability

in respect of sales tax/works contract tax, the

withdrawal of benefit by the Government Order dated

21.11.2006, is well within the power and competence of

the government.

8. The records available would show that the following

benefits/concessions were extended to the appellant for

revival of the sick unit:

“1) Sales Tax/Works Contract Tax

2) Electricity Dues

3) Water Charges

4) Pollution Control Water Cess

5) Panchayat Taxes and Levies

6) The ownership of land”

9. It is further seen that the benefits offered, inter

alia, were waiver of past arrears particularly under

the Sales Tax/Works Contract Tax. For other charges

like electricity dues, water charges, Pollution Control

Water Cess, the principal amount in the arrears were to

be paid without the obligation to bear the interest or

8 penalty burden, from the date of commencement of the

commercial production. Specifically for the Sales

Tax/Works Contract Tax, under clause 1(b), it is not

very clear as to whether the benefit intended for

process of fabrics like bleaching, dyeing etc. will be

available individually to the appellant or was intended

to be availed by this class of industries, many of

which are operating in the State of Kerala. It further

raises questions in regard to the scope and extent of

exemption that could be provided under Section 10 of

the KGST Act.

10. Adverting to the mandate of Section 10 of the KGST

Act, the learned Single Judge of the High Court doubted

whether the exemption could have been extended to the

appellant alone as opposed to a class of industries and

the court commented that “such a course of exemption

throughout the State was not brought about”. The

learned Judge observed that the 2004 Government Order

was based on the recommendation of the Empowered

Committee with due discussion amongst the stakeholders,

9 and those were with specific reference to the

concessions to be extended to new promoters for revival

of sick units, in light of the government order dated

25.11.1994.

11. It was noted by the learned Single Judge upon

perusal of the 1994 Government Order that there are two

separate channels of benefits/reliefs i.e. (a) non-

fiscal; and (b) fiscal, and under item no. 2, the

exemption was granted for works contract tax on

processing of fabrics like bleaching, dyeing etc.

12. The above would show that the fiscal measures refer

to exemption/deferment of sales tax, purchase tax,

electricity dues for two years, but not exceeding five

years or till the date, the net worth of the company

became positive, whichever is earlier. Thus, the outer

cap of five years was specified in the 1994 Government

order and the benefits could not have been intended to

continue without limit.

13. Even though the 2004 Government Order, and the BIFR

Sanctioned Scheme of 2005 were enacted in furtherance

10 of 1994 Government Order, both these documents do not

specify the time line for tax exemptions prescribed in

the 1994 government order.

14. Recently this Court in the case of State of Gujarat

Vs. Arcelor Mittal Nippon Steel India Ltd.1 has held

that exemption provisions and notifications are to be

strictly interpreted in accordance with legislative

intent without any addition or subtraction. A Division

Bench of this Court speaking through Justice M. R. Shah

held that:

“14.2 It is settled law that the notification has to be read as a whole. If any of the conditions laid down in the notification is not fulfilled, the party is not entitled to the benefit of that notification. An exception and/or an exempting provision in a taxing statute should be construed strictly and it is not open to the court to ignore the conditions prescribed in industrial policy and the exemption notifications.

14.3 The exemption notification should be strictly construed and given meaning according to legislative intendment. The Statutory provisions providing for exemption have to be interpreted in the light of the words employed in them and

1 (2022) SCC OnLine SC 76.

11 there cannot be any addition or subtraction from the statutory provisions.

14.4 As per the law laid down by this Court in catena of decisions, in the taxing statute, it is the plain language of the provision that has to be preferred, where language is plain and is capable of determining defined meaning. Strict interpretation to the provision is to be accorded to each case on hand. Purposive interpretation can be given only when there is an ambiguity in the statutory provision or it alleges to absurd results, which is so not found in the present case.”

15. Accordingly, in the present matter, the 2004

government order granting tax exemptions should be read

as a whole and in absence of any time line being

prescribed, such a time line in our opinion, cannot be

imported from the 1994 government order.

16. Furthermore, Sales tax in the State of Kerala is

chargeable under Section 5 of the KGST Act which makes

it obligatory upon the State to realize the tax in

respect of sales transaction. Section 10 deals with the

power of exemption and sub-Section (3) thereof confers

the power to have the order of exemption “varied or

modified”, in the manner specified.

12

17. The benefit of exemption to tax must therefore be

traceable to powers conferred under the KGST Act and

such benefits could not have been granted in terms of

the BIFR Scheme dated 17.01.2005 giving effect to the

Government Order issued on 20.3.2004. In the 2006

Government Order withdrawing the benefits, the

government has specifically adverted to Section 10 of

KGST Act and as such the non-mentioning of the

provisions of Section 10(1) of the KGST Act in the 2004

Government Order, would not assist the appellant in any

significant measure.

18. In Pournami Oil Mills and Others vs. State of

Kerala and Anr.2, Justice Ranganath Misra, as he was

then, opined as follows:-

“6……It is a well settled principle of law that where the authority making an order has power conferred upon it by statute to make an order made by it and an order is made without indicating the provision under which it is made, the order would be deemed to have been made under the provision enabling the making of it….”

2 1986 (Supp) SCC 728

13 The present understanding finds support from the

above proposition of law laid down by this Court in

Pournami Oil Mills (supra).

19. Insofar as the benefits of tax exemption from the

works contract on processing of fabrics, being in

conformity with the stipulations under paragraph 7.2.1

of the BIFR Scheme dated 17.01.2005, it must be noticed

that Sub-clause (b) of paragraph 7.2.1 is not exactly

the same as paragraph 1(b) of the 2004 Government

Order, as in the latter case, it is with reference to

proposed plan of action, to provide exemption to

similar units within the state of Kerala.

20. What is of significance is that similarly situated

fabric processing units in the state are obliged to

meet their tax obligation for the Works Contract Tax

and that is why in the 2006 Government Order, it was

specifically stated that exemption for such taxable

events, cannot be confined to the appellant alone. The

gap between the 2004 Government Order and the

Government Order dated 21.11.2006 shows that the

14 appellant was enjoying the benefit for a fair duration.

Significantly, the power to grant such tax benefit is

not seen in any other State Legislation but only in

Section 10(1) of the KGST Act. The power to grant

exemption under Section 10(1) is however in respect of

a class of persons and was never intended for an

individual industrial unit like the appellant. When

this aberration was noticed and it was seen that

amongst similarly engaged units in the same business,

the appellant was the only one enjoying the benefit of

exemption, the 2006 government order was issued

withdrawing the exemption granted on 20.3.2004.

21. Undoubtedly, the government was empowered under

Section 10(3) to withdraw the exemption at any time and

therefore, it cannot be said that the principle of

promissory estoppel by itself, will facilitate the

appellant to challenge the 2006 Government Order. It

must be pointed out that a number of concessions were

offered to the appellant under the 2004 Government

Order and it is discernible that payments under several

15 heads were not set apart for the appellant,

notwithstanding their role in revival of the sick unit.

22. The present dispute pertinently is only with regard

to the exemption relatable to sales tax/works contract

tax and it is nobody’s case that past arrears of sales

tax/works contract tax payable by the sick units, were

completely waived. Factoring this, the writ court as

well as the Division Bench opined that sub-clause

(1)(b) of 2004 Government Order relating to waiver of

tax in the State is of such wide amplitude that the

same must be seen as uncertain and vague. Also

importantly, such exemption cannot continue

indefinitely and particularly not beyond the point at

which the revival of the sick unit is seen.

23. As earlier discussed, Section 10(1)(ii) of the KGST

Act enables the State to grant exemption from sales tax

only with respect to “any specific class of persons in

regard to the whole or any part of their turnover” and

since the 2004 Government Order benefitted only a

single unit i.e. the appellant, it is difficult to

16 accept that the solitary industrial unit which was

being revived under the BIFR Scheme, would form a class

by itself. Therefore, contention to the contrary by the

appellant is considered and rejected with the reasoning

that the exemption by 2004 Government Order was not

made applicable to all sick industrial units of the

state, engaged in the like activities of bleaching,

dyeing etc.

24. It is also relevant to point out that the

government order dated 25.11.1994 clearly reflected the

government’s intention to consider each sick industrial

unit on a case to case basis.

25. Next, the Court must examine whether the appellant

can raise contention on the validity of 2006 Government

Order in the context of the sanctioned scheme of

restriction approved by the BIFR and the binding nature

of the scheme under Section 19(3) of SICA. This

question arises since the contentions in this regard

were earlier argued and rejected by the learned Single

Judge, and the judgment, dated 13.3.2012 in Writ

17 Petition No.5677 of 2007 has worked itself out with the

representations submitted by the appellant pursuant to

the Writ Court’s judgment and the speaking order passed

thereafter by the government on 5.10.2012 rejecting the

appellant’s representation. Significantly, the speaking

order was not challenged. Instead, the appellant filed

the Writ Appeal against the learned Single Judge’s

order, granting limited relief of enabling them to file

a representation and directing the State to pass a

speaking order after affording hearing to the

appellant. As the appellant had presented their

representation on the strength of the order of the Writ

Court and thereby have accepted the judgment, the

appellant cannot thereafter in our view, challenge the

said judgment through a Writ Appeal when an adverse

order is passed against them, by the government.

26. One is certain that it would be legally

impermissible to grant tax exemption, contrary to the

provisions of the KGST Act. The special exemption is

provided to a single unit under the BIFR proceeding and

18 the State cannot in our opinion be compelled to act

contrary to the provisions of the KGST Act, on the

strength of binding nature of the scheme under Section

19(3) of SICA.

27. On the argument of the appellant based on the

principles of promissory estoppel, as earlier noted,

the tax exemption in the present matter was not given

to a class of persons and the appellant is made the

sole beneficiary. This is contrary to Section 10 of

the KGST Act. The 21.11.2006 withdrawal order was

therefore issued, when it was discovered that this was

a case of exemption to an individual unit and that is

impermissible under Section 10 of the KGST Act. Such

being the position, the benefit of the equitable

doctrine of estoppel cannot be extended for the

appellant as in that case the State authority would be

obliged to act in a manner which is contrary to the

legislative mandate.

28. The equitable principle of promissory estoppel was

propounded by this Court in the case of M/s. Motilal

19 Padampat Sugar Mills Vs. State of Uttar Pradesh & Ors.3

In the same very case, it was however observed that the

legal principle cannot be invoked to compel anyone to

do anything, contrary to law. Justice P. N. Bhagawati

for the Division Bench wrote the following:-

“28…It may also be noted that promissory estoppel cannot be invoked to compel the Government or even a private party to do an act prohibited by law…”

29. The above judgment in Motilal Padampat(Supra) was

followed in the case of Amrit Banaspati Co. Ltd. Vs.

State of Punjab & Anr.4 wherein, this Court carved out

unlawful/illegal promise as an exception to the

principle of promissory estoppel. But, the observation

in this case in reference to an unlawful promise was

not laid down as a ratio, but at best an Obiter dicta.

30. In the later case of Bangalore Development

Authority Vs. R. Hanumaiah5, it was however specifically

declared that the equitable principle of promissory

3 (1979) 2 SCC 409.

4 (1992) 2 SCC 411.

5 (2005) 12 SCC 508.

20 estoppel cannot be invoked for condoning or enforcing a

promise, expressly prohibited by a statute. This Court

speaking through Justice Ashok Bhan pronounced as

under:

“34. …In absence of any provision in the Act or the Rules framed thereunder authorizing BDA to reconvey the land, direction cannot be issued to BDA to reconvey a part of the land on the ground that it had promised to do so. The rule of promissory estoppel cannot be availed to permit or condone a breach of law. It cannot be invoked to compel the Government to do an act prohibited by law. It would be going against the statute. The principle of promissory estoppel would under the circumstances be not applicable to the case in hand.”

31. From the above reading of the relevant judgments,

it is abundantly clear that the equitable principle of

promissory estoppel cannot be invoked for enforcing

promises in the teeth of the provisions of law. Having

concluded that the Government Order (20.03.2004),

granting Sales Tax/ Works Contract Tax exemption was

ultra vires the Section 10(1) of the KGST Act, the

promise, in furtherance of Government Order, in the

21 form of BIFR Scheme dated 17.01.2005 being unlawful,

cannot in our view, be enforced on equitable

consideration.

32. Further, in Arcelor Mittal Nippon Steel (Supra)

this Court has held that:

“22….The principle of promissory estoppel shall not be applicable contrary to the Statute. Merely because erroneously and/or on misinterpretation, some benefits in the earlier assessment years were wrongly given, cannot be a ground to continue the wrong and to grant the benefit of exemption though not eligible under the exemption notification.”

33. In the case at hand, even though the appellant was

granted benefit of tax exemptions under the 2004

government order, this was ultra vires the Section 10

KGST Act. Such exemption cannot be continued for

further assessment years, as that would amounts to

perpetuating and condoning a wrong, which is opposed to

public policy.

22 34. It would be apposite now to advert to Voltas Ltd.

Vs. State of A.P.,6 where a BIFR proceeding was being

considered and the ratio therein will shed some light

on the present matter. In that case, the Voltas Ltd.

agreed to take over the refrigeration unit of

‘Hyderabad Allwyn Ltd.’ (A Sick Company) vide a

Memorandum of Understanding with the state government,

subject to BIFR approval. The state government, for

incentivizing the appellant, issued government order

dated 20.01.1994 granting sales tax deferral for a

period of 7 years. The said deferral was reflected in

the BIFR Sanctioned Scheme dated 04.04.1994. Later, the

state government issued another order on 18.08.1995,

whereby 18% interest was levied on the sales tax

component so deferred. The interest sum was payable

after 7 years in lump sum. Dealing with the challenge

to the government decision, this Court by a short order

upheld the Government Order dated 18.08.1995 with the

observation that the interest was imposed under

relevant provisions of AP General Sales Tax Act, 1957 6 (2004) 11 SCC 569.

23 (APGST Act). Further, even though the payment of sales

tax was deferred for 7 years vide Government Order

dated 20.01.1994 and the BIFR sanctioned scheme dated

04.04.1994, both pertinently were silent on the

interest aspect. Hence, this Court held that as there

was no express waiver of interest, the provisions of

APGST Act would prevail over the BIFR scheme.

35. In the case at hand, the government order dated

20.03.2004, as well as the BIFR sanctioned scheme, are

silent on the duration of tax exemption for the works

contract. In any case the tax exemptions cannot

continue indefinitely. Hence, the ratio in Voltas Ltd.

(Supra) involving a BIFR scheme and a government

decision which diminishes the incentives for the

company, do lend support for the impugned decisions of

the High Court. In other words, the Kerala government,

notwithstanding the BIFR scheme for the sick company

was entitled to withdraw the tax exemptions, by issuing

the government order dated 21.11.2006 under Section

10(3) of the KGST Act.

24

36. Justice H. L. Gokhale, in his concurring judgment

in the case of Monnet Ispat & Energy Ltd. Vs. Union of

India,7 highlighted the difference between the doctrine

of promissory estoppel and the doctrine of legitimate

expectation:

“289. As we have seen earlier, for invoking the principle of promissory estoppel there has to be a promise, and on that basis the party concerned must have acted to its prejudice… 290…. Alternatively, the appellants are trying to make a case under the doctrine of legitimate expectations. The basis of this doctrine is in reasonableness and fairness. However, it can also not be invoked where the decision of the public authority is founded in a provision of law, and is in consonance with public interest…”

37. While the equitable principle of promissory

estoppel requires a valid promise, based on which the

promisee has changed its position, it is necessary to

observe that the principle of legitimate expectation

does not take into account such considerations.

7 (2012) 11 SCC 1.

25 Instead, it is rooted in fundamental ideas like

reasonableness, fairness and non-arbitrariness.

38. In the case of MRF Ltd., Kottayam Vs. Asst.

Commissioner (Assessment) Sales Tax & Ors.8 the Kerala

government in order to incentivize investment and

industrial growth, entered into a Memorandum of

Understanding on 06.10.1993, under which tax incentives

were offered to the company if they invested above Rs.

50 crores for expanding the existing industrial unit in

the State. In the government order dated 03.11.1993

issued under Section 10 of KGST Act, exemptions were

provided for 7 years for all expanding industrial

units. An addendum to the Memorandum of Understanding

was executed on 10.04.1996, explicitly stating that the

industry was eligible for tax exemptions under

government Order dated 03.11.1993. Pursuant to such

encouragement, MRF Ltd. invested Rs. 80 Crores for

expansion, and then commenced operations on 31.12.1996.

They were also issued the eligibility certificate on

8 (2006) 8 SCC 702.

26 10.11.1997, granting tax exemption from 31.12.1996 to

29.12.2003, by the Kerala government. Subsequently the

government order was issued on 15.01.1998, amending its

1993 Order adding sub-clause (h) to the negative list.

This excluded MRF’s activities from the definition of

‘manufacture’. The same in effect extinguished the tax

exemptions granted vide the 1993 government order. By

another Notification dated 31.12.1999, the Kerala

government notified that the exemptions sanctioned

before 01st January, 2000 in furtherance of 1993

government order would continue for full period of 7

years. In this background, the authorities issued a

demand notice, seeking to levy purchase tax from

15.01.1998, relying on the 15.1.1998 government order.

When this was challenged and the matter eventually came

to this Court, the Division Bench speaking through

Justice Ashok Bhan, held that the state authority’s

demand for purchase tax under KGST Act from 15.01.1998,

is barred by principle of promissory estoppel since the

state cannot renegade its earlier promise of tax

27 exemption for 7 years until 29.12.2003. This Court held

that the state’s action of retrospectively amending its

1993 government order, by subsequent order dated

15.01.1998 was arbitrary and unreasonable. The 1998

government order was found to be discriminatory and hit

by the principles of Article 14 of the Constitution.

Thus, holding the state bound to its promise, MRF was

found to be entitled for tax exemptions for the 7 year

period, in terms of government order dated 03.11.1993.

39. But, the above judgment of this Court in the case

of MRF Ltd., Kottayam(Supra) is distinguishable from

the facts in the present case. In the above case, the

government order granting tax exemptions, clearly

mentioned a period of 7 years, before which the tax

exemptions could not have been revoked. But, in this

case, no such time period was explicitly prescribed.

Neither did the state seek to revoke the exemption

retrospectively. The appellant here, enjoyed the

benefit of exemptions for a considerable period and is

now in profit. Hence, it is not open for the appellant

28 to claim legal entitlement to tax exemption for the

period of 5 years.

40. The learned Division Bench of the Kerala High Court

has given categorical findings in reference to the

20.03.2004 government order i.e. a) the said government

order is issued only in the appellant’s favor; b) It

was not contended that similar concessions were

accorded to any other sick industry engaged in

activities of bleaching, dyeing, etc.; c) Vide the 1994

government order, the state has simply promised to

consider other sick industries for similar exemptions.

41. Based on the above findings, the learned Division

Bench concluded that the appellant does not form a

separate class of its own. Hence, the 2004 government

order was held to be ultra vires the Section 10(1) of

the KGST Act. The appellant has failed to bring to our

attention, any intelligible differentia, based on which

it can be said that they constitute a unique, separate

class of its own. In absence of such differentiating

factor, the benefit of tax exemptions being granted to

29 the appellant, to the exclusion of all other sick

industries involved in similar activities, do not

appear to be reasonable and should be seen as

arbitrary. The 2004 government order was not only ultra

vires Section 10(1) of KGST Act, but also falls short

by principle of reasonableness, fairness, and non-

arbitrariness. The 2006 government order withdrawing

the tax exemption was in fact issued to remedy this

very mischief. Hence, the appellant cannot invoke the

principle of legitimate expectation against the 2006

government order.

42. Reverting now to another appropriate aspect as

presented in Pawan Alloys & Casting Pvt. Ltd., Meerut

Vs. U.P. State Electricity Board and Others9 where it

was propounded that if the state, in exercise of its

sovereign powers, grants any tax exemptions for a

specified period, the principle of promissory estoppel

does not bar the grantor from prematurely withdrawing

such exemptions, if such measure is necessitated for

9 (1997) 7 SCC 251

30 protecting public interest. In other words, public

interest would outweigh the interest of the individual

grantee.

43. While reflecting upon the element of public

interest as enunciated in Pawan Alloys (supra), in

granting or refusing relief on the principle of

promissory estoppel, the last public address of the

lawyer statesman Abraham Lincoln who served as the 16th

President of USA, intrudes into our thought process.

Taking a strong stand in support of Black suffrage,

Abraham Lincoln, soon after winning the Civil War,

refused to give in to his earlier promise of re-

construction to the state of Louisiana, with the

following resounding words:-

“But, as bad promises are better broken than kept, I shall treat this as a bad promise, and break it, whenever I shall be convinced that keeping it is adverse to the public interest. But I have not yet been so convinced.”

Taking a cue from above, and bearing in mind that

the appellant here has already availed the exemption

31 benefits for a substantial period and was the only one

of its category which enjoyed such advantage in the

State of Kerala and also regard being had for the fact

that now the appellant is out of the red and more

importantly in a situation where enforcing the promise

against the State is likely to affect public interest,

we find supplementary support for our present

conclusion, in the above quoted insightful words of

Abraham Lincoln.

44. In view of the foregoing discussion, this Court,

with the additional reasoning in the preceding

paragraphs, is persuaded to uphold the impugned

judgment of the High Court. Accordingly, the appeal

stands dismissed without any order on cost.

……………………………………………………J. [HRISHIKESH ROY] NEW DELHI APRIL 8, 2022

32 Reportable

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 2830 OF 2022 (Arising out of SLP (CIVIL)NO.24288/2018)

AUGUSTAN TEXTILE COLOURS LIMITED (NOW AUGUSTAN TEXTILE COLOURS PVT LTD) ..APPELLANT(S)

VERSUS

DIRECTOR OF INDUSTRIES & ANR. ..RESPONDENT(S)

JUDGMENT K.M. JOSEPH, J.

1. While I am in agreement with the final conclusion

reached by my esteemed and learned brother that the

appeal must be dismissed, in the nature of the

questions which arise and the reasoning which appeals

to me, I am inclined to author a separate though

concurring judgment.

2. The facts have been set out by my learned brother.

The principal contention of the appellant is that

Section 10 of the Kerala General Sales Tax Act, 1963

1 (hereinafter referred to as ‘the State Act’) does not

exhaust the power to grant exemption inter alia.

Section 10 of the State Act reads as follows:

“10. Power of Government to grant exemption and reduction in rate of tax: -

(1) The Government may, if they consider it necessary in the public interest, by notification in the Gazette, make an exemption or reduction in rate, either prospectively or retrospectively in respect of any tax payable under this Act,

(i) on the sale or purchase of any specified goods or class of goods, at all points or at a specified point or points in the series of sales or purchases by successive dealers, or

(ii) by any specified class of persons in regard to the whole or any part of their turnover (2) Any exemption from tax, or reduction in the rate of tax, notified under sub- section (1) -

(a) may extend to the whole State or to any specified area or areas therein,

(b) may be subject to such restrictions and conditions as may be specified in the notification (3) The Government may by notification in the Gazette, cancel or vary any notification issued under sub-section(1).

3. In order to appreciate whether the exemption in

favour of the appellant would be ultra vires Section

10 of the State Tax Law and whether there is merit in

2 the case of the appellant that actually the exemption

was not given under Section 10, I may briefly evaluate

the Sick Industrial Companies (Special Provisions) Act,

1985, hereinafter referred to as ‘the Act’. The Act

defined ‘Sick Industrial Company’ w.e.f. 01.02.1994 as

follows:

“3(o) sick industrial company means an industrial company (being a company registered for not less than five years) which has at the end of any financial year accumulated losses equal to or exceeding its entire net worth.

Explanation: For the removal of doubts, it is hereby declared that an industrial company existing immediately before the commencement of the Sick Industrial Companies (Special Provisions) Amendment Act, 1993, registered for not less than five years and having at the end of any financial year accumulated losses equal to or exceeding its entire net worth, shall be deemed to be a sick industrial company;”

4. The Act envisaged a Board and also an appellate

authority. Section 15 contemplated a reference by the

Board of Directors of Sick Companies. The Board under

the Act was to conduct an inquiry as to whether any

industrial unit had become a sick industrial company.

3 Section 17 contemplated, inter alia, suitable orders

being passed on completion of inquiry. Section 17 reads

as follows: -

“17. Powers of Board to make suitable order on the completion of inquiry. — (1) If after making an inquiry under section 16, the Board is satisfied that a company has become a sick industrial company, the Board shall, after considering all the relevant facts and circumstances of the case, decide, as soon as may be by order in writing, whether it is practicable for the company to [make its net worth exceed the accumulated losses] within a reasonable time.

(2) If the Board decides under sub-section (1) that it is practicable for a sick industrial company to make its net worth positive within a reasonable time, the Board, shall, by order in writing and subject to such restrictions or conditions as may be specified in the order, give such time to the company as it may deem fit to [make its net worth exceed the accumulated losses].

Sub-Section (3) of Section 17 dealt with a

different class of sick company:

(3) If the Board decides under sub-section (1) that it is not practicable for a sick industrial company to [make its net worth exceed the accumulated losses] within a reasonable time and that it is necessary or expedient in the public interest to adopt all or any of the measures specified in section 18 in relation to the said company it may, as soon as may be, by order in writing, direct any operating agency specified in the order to prepare, having regard to such guidelines as

4 may be specified in the order, a scheme providing for such measures in relation to such company.

Section 17 further provided:

(4) The Board may, —

(a) if any of the restrictions or conditions specified in an order made under sub-section (2) are not complied with by the company concerned, 1 [or if the company fails to revive in pursuance of the said order,] review such order on a reference in that behalf from any agency referred to in sub-section (2) of section 15 or on its own motion and pass a fresh order in respect of such company under sub-section (3);

(b) if the operating agency specified in an order made under sub-section (3) makes a submission in that behalf, review such order and modify the order in such manner as it may deem appropriate.”

5. It is clear that under Section 17(3) if the Board

decided that it is not practicable within a reasonable

time to make the company’s net worth exceed the

accumulated losses, a scheme may be provided as provided

under Section 18. Section 18, therefore, dealt with the

circumstances obtaining under Section 17(3) to prepare

and sanction the scheme. Section 18 provided in detail

as to what could be provided for in the scheme. It reads

as follows: -

“18. Preparation and sanction of schemes. — (1) Where an order is made under sub-section (3)

5 of section 17 in relation to any sick industrial company, the operating agency specified in the order shall prepare, as expeditiously as possible and ordinarily within a period of ninety days from the date of such order, a scheme with respect to such company providing for any one or more of the following measures, namely:—

(a) the financial reconstruction of the sick industrial company;

(b) the proper management of the sick industrial company by change in, or take over of, management of the sick industrial company;

(c) the amalgamation of—

(i) the sick industrial company with any other company, or

(ii) any other company with the sick industrial company;

(hereafter in this section, in the case of sub-clause (i), the other company, and in the case of sub-clause (ii), the sick industrial company, referred to as “transferee company”;

(c) the sale or lease of a part or whole of any industrial undertaking of the sick industrial company;

(da)the rationalisation of managerial personnel, supervisory staff and workmen in accordance with law;

(d) such other preventive, ameliorative and remedial measures as may be appropriate;

(f) such incidental, consequential or supplemental measures as may be necessary or expedient in connection with or for the

6 purposes of the measures specified in clauses

(a) to (e).

(2) The scheme referred to in sub-section (1) may provide for any one or more of the following, namely: —

(a) the constitution, name and registered office, the capital, assets, powers, rights, interests, authorities and privileges, duties and obligations of the sick industrial company or, as the case may be, of the [transferee company];

(b) the transfer to the transferee company of the business, properties, assets and liabilities of the sick industrial company on such terms and conditions as may be specified in the scheme;

(c) any change in the Board of Directors, or the appointment of a new Board of Directors, of the sick industrial company and the authority by whom, the manner in which and the other terms and conditions on which, such change or appointment shall be made and in the case of appointment of a new Board of Directors or of any director, the period for which such appointment shall be made;

(d) the alteration of the memorandum or articles of association of the sick industrial company or, as the case may be, of the transferee company for the purpose of altering the capital structure thereof or for such other purposes as may be necessary to give effect to the reconstruction or amalgamation;

(e) the continuation by, or against, the sick industrial company or, as the case may be, the transferee company of any action or other legal proceeding pending against the sick industrial company immediately before the date of the order made under sub-section (3) of section 17;

7

(f) the reduction of the interest or rights which the shareholders have in the sick industrial company to such extent as the Board considers necessary in the interests of the reconstruction, revival or rehabilitation of the sick industrial company or for the maintenance of the business of the sick industrial company;

(g) the allotment to the shareholders of the sick industrial company of shares in the sick industrial company or, as the case may be, in the [transferee company] and where any shareholder claims payment in cash and not allotment of shares, or where it is not possible to allot shares to any shareholder the payment of cash to those shareholders in full satisfaction of their claims—

(i) in respect of their interest in shares in the sick industrial company before its reconstruction or amalgamation; or

(ii) where such interest has been reduced under clause (f) in respect of their interest in shares as so reduced;

(h) any other terms and conditions for the reconstruction or amalgamation of the sick industrial company;

(i) sale of the industrial undertaking of the sick industrial company free from all encumbrances and all liabilities of the company or other such encumbrances and liabilities as may be specified, to any person, including a co-operative society formed by the employees of such undertaking and fixing of reserve price for such sale;

(j) lease of the industrial undertaking of the sick industrial company to any person, including a co-operative society formed by the employees of such undertaking;

8

(k) method of sale of the assets of the industrial undertaking of the sick industrial company such as by public auction or by inviting tenders or in any other manner as may be specified and for the manner of publicity therefor;

(l) transfer or issue of the shares in the sick industrial company at the face value or at the intrinsic value which may be at discount value or such other value as may be specified to any industrial company or any person including the executives and employees of the sick industrial company;

(m) such incidental, consequential and supplemental matters as may be necessary to secure that the reconstruction or amalgamation or other measures mentioned in the scheme are fully and effectively carried out.

(3) (a) The scheme prepared by the operating agency shall be examined by the Board and a copy of the scheme with modification, if any, made by the Board shall be sent, in draft, to the sick industrial company and the operating agency and in the case of amalgamation, also to any other company concerned, and the Board shall publish or cause to be published the draft scheme in brief in such daily newspapers as the Board may consider necessary, for suggestions and objections, if any, within such period as the Board may specify;

(b) The Board may make such modifications, if any, in the draft scheme as it may consider necessary in the light of the suggestions and objections received from the sick industrial company and the operating agency and also from the transferee company and any other company concerned in the amalgamation and from any shareholder or any creditors or employees of such companies:

9

Provided that where the scheme relates to amalgamation the said scheme shall be laid before the company other than the sick industrial company] in the general meeting for the approval of the scheme by its shareholders and no such scheme shall be proceeded with unless it has been approved, with or without modification, by a special resolution passed by the shareholders of the company other than the sick industrial company.

(4) The scheme shall thereafter be sanctioned, as soon as may be, by the Board (hereinafter referred to as the “sanctioned scheme”) and shall come into force on such date as the Board may specify in this behalf:

Provided that different dates may be specified for different provisions of the scheme.

(5) The Board may on the recommendations of the operating agency or otherwise, review any sanctioned scheme and make such modifications as it may deem fit or may by order in writing direct any operating agency specified in the order, having regard to such guidelines as may be specified in the order, to prepare a fresh scheme providing for such measures as the operating agency may consider necessary.

(6) When a fresh scheme is prepared under sub-

section (5), the provisions of sub-sections (3) and (4) shall apply in relation thereto as they apply to in relation to a scheme prepared under sub-section (1).

(6A) Where a sanctioned scheme provides for the transfer of any property or liability of the sick industrial company in favour of any other company or person or where such scheme provides for the transfer of any property or liability of any other company or person in favour of the sick industrial company, then, by virtue 10 of, and to the extent provided in, the scheme, on and from the date of coming into operation of the sanctioned scheme or any provision thereof, the property shall be transferred to, and vest in, and the liability shall become the liability of, such other company or person or, as the case may be, the sick industrial company.

(7) The sanction accorded by the Board under sub-section (4) shall be conclusive evidence that all the requirements of this scheme relating to the reconstruction or amalgamation, or any other measure specified therein have been complied with and a copy of the sanctioned scheme certified in writing by an officer of the Board to be a true copy thereof, shall, in all legal proceedings (whether in appeal or otherwise) be admitted as evidence.

(8) On and from the date of the coming into operation of the sanctioned scheme or any provision thereof, the scheme or such provision shall be binding on the sick industrial company and the transferee company or, as the case may be, the other company and also on the shareholders, creditors and guarantors and employees of the said companies.

(9) If any difficulty arises in giving effect to the provisions of the sanctioned scheme, the Board may, on the recommendation of the operating agency or otherwise, by order to anything, not inconsistent with such provisions, which appears to it to be necessary or expedient for the purpose of removing the difficulty.

(10) The Board may, if it deems necessary or expedient so to do, by order in writing, direct any operating agency specified in the order to implement a sanctioned scheme with such terms and conditions and in relation to such sick 11 industrial company as may be specified in the order.

(11) Where the whole of the undertaking of the sick industrial company is sold under a sanctioned scheme, the Board may distribute the sale proceeds to the parties entitled thereto in accordance with the provisions of section 529A and other provisions of the Companies Act, 1956 (1 of 1956).

(12) The Board may monitor periodically the implementation of the sanctioned scheme.”

6. Section 19 provided for rehabilitation giving

financial assistance. It reads as follows:

“19. Rehabilitation by giving financial assistance.—(1) Where the scheme relates to preventive, ameliorative, remedial and other measures with respect to any sick industrial company, the scheme may provide for financial assistance by way of loans, advances or guarantees or reliefs or concessions or sacrifices from the Central Government, a State Government, any scheduled bank or other bank, a public financial institution or State level institution or any institution or other authority (any Government, bank, institution or other authority required by a scheme to provide for such financial assistance being hereafter in this section referred to as the person required by the scheme to provide financial assistance) to the sick industrial company.

(2) Every scheme referred to in sub-section (1) shall be circulated to every person required by the scheme to provide financial assistance for his consent within a period of sixty days from the date of such circulation [or within such further period, not exceeding sixty days, 12 as may be allowed by the Board, and if no consent is received within such period or further period, it shall be deemed that consent has been given].

(3) Where in respect of any scheme the consent referred to in sub-section (2) is given by every person required by the scheme to provide financial assistance, the Board may, as soon as may be, sanction the scheme and on and from the date of such sanction the scheme shall be binding on all concerned.

(3A) On the sanction of the scheme under sub-

section (3), the financial institutions and the banks required to provide financial assistance shall designate by mutual agreement a financial institution and a bank from amongst themselves which shall be responsible to disburse financial assistance by way of loans or advances or guarantees or reliefs or concessions or sacrifices agreed to be provided or granted under the scheme on behalf of all financial institutions and banks concerned.

(3B) The financial institution and the bank designated under sub-section (3A) shall forthwith proceed to release the financial assistance to the sick industrial company in fulfilment of the requirement in this regard.

(4) Where in respect of any scheme consent under sub-section (2) is not given by any person required by the scheme to provide financial assistance, the Board may adopt such other measures, including the winding up of the sick industrial company, as it may deem fit.”

(Emphasis supplied)

7. Section 20 provided for winding up. Even though

the Sick Industrial Companies (Special Provisions)

13 Repeal Act, 2003 was passed repealing the Act, it was

not enforced, and it is only with effect from 1.12.2016

when the IBC came into force that the Act was repealed.

8. The definition of Sick Industrial Company has been

noticed. It is to be further noticed that not every

sick industrial company becomes the subject matter of

a scheme contemplated under Section 18 read with

Section 19 of the Act. Not every sick industrial unit

which becomes the subject matter of the draft scheme

becomes the beneficiary of the final scheme or

sanctioned scheme. The procedure by which it attains

finality does involve affording an opportunity to every

person required by the scheme to providing financial

assistance. Either express consent is granted or there

is deemed consent under Section 19(2). It may be

possible to find that a sick industrial company as

defined is different from a sick industrial company

which is the subject matter of the final scheme under

Section 19(3). The processes that are involved and the

procedures that are undergone may result in the

particular company which is at the centre stage of the

14 final scheme being entitled to be treated in terms

thereof.

9. Therefore, on the scheme of the Sick Industrial

Companies Act, the law contemplated concessions, and

sacrifices inter alia being undertaken by the State

Government inter alia in terms of financial assistance.

Section 19(4) appears to indicate that if consent is

not given to any person, the Board is free to adopt

other measures including winding up of the sick

industrial company. A sick industrial company is

defined in the Act. In terms of the definition, it is

undoubtedly true that there may be more than one sick

industrial companies operating in the same business or

rather dealing in the same goods and services. The

scheme of Section 17 appears to be that such sick

industrial companies that could be nursed back to

health under section 17(1) and 17(2), did not go on to

be dealt with under Section 18 and 19. It is in regard

to a sick industrial company which fell within the four

walls of Section 17(3) that the special provisions

under sections 18 and 19 were applicable. It is such a

company on account of the acuteness of the problem that

15 cried out to be dealt with, as contemplated in Sections

18 and 19. The law contemplated the deliberative

process involving all parties having a stake. Draft

scheme may give way to a final one. Section 19 dealt

with a scheme envisaging financial assistance. Having

regard to Section 19(1), which, inter alia,

contemplated financial assistance in the form of

concessions or sacrifices from the State Government,

it may be incongruous to not read the words ‘reliefs

or concessions or sacrifices’ as not meaning a tax

exemption or a reduction in the rate of tax. It is only

when the State gave consent or there was deemed consent

under Section 19(2), that Section 19(3) kicked in, and

the scheme on being sanctioned by the Board was binding

on all concerned.

10. There is the aspect of fairness involved. An

exemption under Section 10 cannot ordinarily be claimed

as a legal right. The provisions of Section 19 of the

Act made an inroad into the said principle. In other

words, when to a scheme under Section 19 of the Act the

State Government has given consent or its deemed

consent, the law commanded the State Government to

16 honour its consent. In this regard we may notice that

under Section 19(4), if consent is not given, the Board

was left free to take appropriate steps including the

winding up of the company. To give consent and to allow

the State to renege on its consent and defy the binding

nature of the sanctioned scheme would enable the State

to frustrate the scheme. In fact, if consent is refused

at the early and appropriate stage, as contemplated

under Section 19(4), then the Board is left free to

take action including winding up the company as is

considered appropriate.

11. There is merit in the contention of the appellant

that the exemption granted initially, dated 20.03.2004,

was not one which is premised under Section 10 of the

Act. The exemption was granted in terms of the scheme

under Section 19 of the Act. This is an exemption which

was given under statutory provisions. In other words,

consent being forthcoming from the state, a scheme

being sanctioned under section 19 providing for

financial assistance in the form of tax exemption,

inter alia, the Government became obliged to honour its

consent and the dictate of the statute.

17

12. It will be inequitable to the company and against

public interest also, as it frustrates the object of

law to allow a scheme to be sanctioned inducing all

parties to proceed on the basis that a company would

be redeemed from its financial dire-straits and the

crucial financial assistance indispensable to the said

process is not forthcoming from the State. The

aforesaid interpretation placed in para 11 hereinbefore

would harmonise the Central and the State Act. It will

also give life to the Sick Companies Act as it would

clearly further the object of the law. Therefore, the

exemption granted can be understood as springing from

the provisions of Section 19(3) read with 19(1) in this

regard. Thus, the exemption is not to be treated as

falling under Section 10 of the State Act. In other

words, Section 10 cannot be treated as the sole

repository of power to grant exemption.

13. The Government of Kerala, had in fact issued

G.O.M.S. dated 25th November 1994. It, inter alia,

deals with the aspect of benefits given under the Act.

In fact, the said order provided for guidelines in the

model package which is appended to be followed by

18 government while formulating rehabilitation scheme

within the purview of the Sick Industrial Companies

(Special Provisions) Act, 1985. Relief and concessions

were to be extended on a case-to-case basis, keeping

in view all relevant factors by the government in the

Industries Department. Therein, under the heading

‘fiscal’, the following is relevant:

“FISCAL

1. Exemption/deferment of sales tax, purchases tax and electricity duty for two years but not exceeding 5 years or the date the net worth of the company become positive, which ever is earlier.

The deferment will be interest free/simple interest not exceeding 12 per cent per annum. Dues deferred repayable in, say, 36 monthly instalments, repayment commencing after one/two years’ moratorium from date of sanction of B.I.F.R. scheme.”

14. This again fortifies the view that no resort to

Section 10 of the State Act is necessary. The

Government Order dated 25.11.1994 provides support to

the working of the scheme.

15. The expression ‘class of persons’ in Section 10 of

the State Act, no doubt, acts as a limitation on the

19 power of the state in exercise of its power. It also

is an indication of the extent of the power. Then the

question would arise as to whether a class of persons

includes a single person. To break it down, whether the

words ‘persons’ is capable of comprehending a single

person. Would the plural include the singular?

16. The High Court has proceeded on the basis that the

power under Section 10(1) can be exercised in favour

of only a class of persons and not qua an individual

unit like the appellant. It has also proceeded on the

basis that had the exemption been made applicable to

all sick industrial units which is in the activity of

bleaching etc, there would have been force in the

contention that the appellant would form a class by

itself. The sick company, which falls to be dealt with

under Section 17(3) read with Section 18 and finally

Section 19, is clearly distinct from the generality of

sick companies both under the definition of a sick

company and even those which are covered by Section

17(1) and 17(2) of the Act. Therefore, the question

would arise as to whether the appellant would

constitute a class by itself. In this regard, we may

20 notice the decision of Andhra Pradesh High Court in

Mahindra and Mahindra Limited and Ors. vs. State of

Andhra Pradesh and Ors.1. Section 9 of the Andhra

Pradesh General Sales Tax Act is similarly worded as

Section 10 of the State Tax Law with which we are

concerned. A reduction of tax was given to the second

respondent therein. The second respondent was a

Government Company. We notice the following

observations:

“27. …. Apart from that, we are of the opinion taking into account that the second respondent is a Government company, and, it is established in a centrally notified backward area, and it provides employment opportunities to those people in that area and it is a new entrant in the filed, the concession shown to the second respondent is clearly sustainable as the second respondent unit constitutes a class by itself and the classification so made in its favour is justified with the object in view as stated above.”

17. A sick industrial company which is the subject

matter of the sanctioned scheme may constitute a class

by itself. However, it is not necessary to explore this

1 1986 (63) STC 274 21 aspect further as the exemption granted to the sick

company covered by Section 19(3) is safely anchored in

Section 19 of the Act.

18. The question would arise as to whether on the said

view the appellant should be granted relief? There is

merit in the view that the exemption does not envisage

any outer time limit. But it is obvious that it could

not be an unending bonanza even after the company

breaks even and even made profits.

19. It is quite clear that the appellant cannot pitch

its case higher than at the limit under Order dated

25.11.1994 referred to in paragraph-14. Therefore,

exemption of sales tax is contemplated for a period of

two years. However, it further provides that it cannot

be for more than five years or beyond the date the net

worth of the company becomes positive whichever is

earlier. Therefore, the maximum period in any case is

5 years. In the case of the appellant, the appellant

enjoyed the benefit of the exemption till it was

withdrawn on 21.11 2006. The said order in turn was

withdrawn on 01.10.2007. It is no doubt true that on

29.02.2008, the order dated 01.10.2007 came to be

22 withdrawn. The writ petition was filed by the

appellant. It would appear that for a period of nearly

4 years, the appellant enjoyed the benefit of exemption

in all. No doubt, the learned counsel for the appellant

did point out that there is no exercise carried out to

find out as to when the net worth has turned positive.

The conduct of the appellant submitting a

representation in terms of the judgment of the learned

judge has been noticed by my learned brother.

20. As noted in the Judgment of my learned Brother,

appellant is a company which is out of the woods and

making profits. Therefore, I would concur with the

final conclusion that the appeal must fail though on

grounds as stated hereinbefore. The appeal will stand

accordingly dismissed, however, without any order as

to costs.

………………………………………….J. [ K.M. JOSEPH ]

NEW DELHI, DATED: 8TH APRIL, 2022

23