BAKUL CASHEW CO. & ORS. vs. SALES TAX OFFICER QUILON & ANR.

CIVIL APPEAL No. 1725/1977Supreme Court[1986] 1 S.C.R. 61012 March 1986Bench: 2 JudgesAuthor: E.S. VENKATARAMIAH, M.P. THAKKAR12 pages
AI SummaryDismissed

What were the facts?

The appellants, cashew processors importing raw nuts from African countries, were subject to sales tax assessments for the period 1970-1974. The Kerala Government issued a notification on October 12, 1973, granting retrospective exemption from sales tax for cashew manufacturers for the period September 1, 1970, to September 30, 1973. However, this exemption was withdrawn by a subsequent notification on November 9, 1973, within three weeks. The appellants filed a writ petition challenging the withdrawal and seeking to enforce the exemption, which was dismissed by the High Court. This appeal by special leave followed.

What did the Supreme Court hold?

The Tribunal held that the appellants were not entitled to any relief on the principle of promissory estoppel or on the basis of the earlier notification. Regarding promissory estoppel, the Tribunal found that the case lacked the necessary factual foundation, as there was no definite representation by the Government that tax would not be levied, nor was it established that the appellants altered their position to their prejudice based on such a representation. Vague statements by ministers were insufficient for estoppel. Concerning the withdrawal of the exemption, the Tribunal affirmed the State Government's power to cancel the notification under Section 10(3) of the Kerala General Sales Tax Act, 1963. Furthermore, the Tribunal ruled that the State Government did not have the power to issue a notification granting exemption with retrospective effect prior to the 1980 amendment to Section 10 of the Act. The amendment in 1980, by adding 'either prospectively or retrospectively', conferred this power. Therefore, the notification dated October 12, 1973, granting retrospective exemption was ineffective. The Tribunal also noted that it was not shown that the appellants acted upon the notification during the brief period it was in effect between October 12 and November 9, 1973. The appeal was dismissed, with the Tribunal expressly leaving undecided the effect of an amendment to the Central Sales Tax Act, 1956.

What were the issues?

1. Whether the Government is precluded by the principle of promissory estoppel from claiming purchase tax on cashewnuts imported from African countries, given the earlier notification granting exemption. Assessee's contention: The Government made a representation that led them to alter their position, thus invoking promissory estoppel. Revenue's contention: Not recorded. 2. Whether the withdrawal of the exemption granted by the notification dated October 12, 1973, is valid. Assessee's contention: The withdrawal is bad. Revenue's contention: Not recorded. 3. Whether the State Government had the power to issue a notification granting exemption with retrospective effect under Section 10 of the Kerala General Sales Tax Act, 1963, as it stood prior to the 1980 amendment. Assessee's contention: Not recorded. Revenue's contention: Not recorded.

Which sections of the Income-tax Act were involved?

Section 10,Section 10(3),Section 5

AI-generated summary — verify with the full judgment below

A B c D E F G H 610 BAKUL CASHEW CO. & ORS. ¥-- v. SALES TAX OFFICER QUILON & ANR. MARCH 12 , 198& [E.S. VENKATARAMlAH AND M.P. THAKKAR, JJ.] Promissory estoppel, plea of - Phrases used by Ministers ?"- which cannot form the basis for a plea of estoppel, detailed - Sales Tax exemption granted retrospectively by the State Government by GOMS 127/73/ID dated 12.10.1973 withdrawn. by a later GOMS 143/73/ID dated 9. ll.1973 is.sued under section 10(3) of the Kerala General Sales Tax Act, 1963 (Kerala Act 15 of 1963) as amended, validity of - Power of G6vemment to cancel the earlier Notification vis-a-vis the right of the Cashew Factory owners to secure the exemption. ... '

The appellants are Cashew Processors owning arW./or ' ~ working cashew factories wherein nearly about 80 per cent of the raw nuts processed were being imported during the relevant time from Af ~ican countries. The import of raw nuts were canalised through the Cashew Corporation of India and they were allotted to the appellants and various other factory owners who were engaged in the business of processing cashewnuts. There was delay in making the assessment of sales tax payable by them

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