LLOYD ELECTRIC AND ENGINEERING LIMITEDversusSTATE OF HIMACHAL PRADESH AND OTHERS

                        [2015] 10 S.C.R. 362


A        LLOYD ELECTRIC AND ENGINEERING LIMITED
                           v.
       . STATE OF HIMACHAL PRADESH AND OTHERS
                   (CivilAppeal No.6838 of2015)
B                       SEPTEMBER 3, 2015
              [ANIL R. DAVE, KURIAN JO~EPH AND
                · ADARSH KUMAR GOEL, JJ.)
         Taxation - Central Sales Tax - On inter-State sales -At
C   concessional rate of 1% - Permissibility - The assessee
    enjoying the concessional rate upto 31.3.2009 - Policy
    decision taken by Council of Ministers to extend the period
    of concession upto 31.3.2013 or till the CST is phasedout-
D   Statutory Notification to that effect issued by the Excise and
     Taxation Department on 18. 06. 2009 - Revenue denying tax
    concession to the assessee from 1.4.2009 to 18.6.2009
    holding that assessee was entitled to the concession only
    from the date of issuance of the Notification i.e. 18. 6. 2009 -
E   Held: Once the Council of Ministers takes a policy decision,
    the implementing Department cannot issue a notification
    contrary to that policy decision - It was not an introduction of
    a new policy under the notification, but was an extension of
    the benefits under the extended policy - The State
F   Government is bound by the policy decision - The assessee
    is entitled to concessional rate of tax@ 1% w.e.f. 1.4.2009 till
    31.3.2013-CentralSales TaxAct, 1956-s. 8(5)(b).

        Allowing the appeal, the Court
G
        HELD: 1. Once the Cabinet takes a policy decision
    to extend its 2004 Industrial Policy in the matter of Central
    Sales Tax (CST) concession to the eligible units beyond
    31.03.2009, upto 31.03.2013, merely because the Excise
H                                362
LLOYD ELECTRIC AND ENGINEERING LIMITED v. STATE 363
            OF HIMACHAL PRADESH

and Taxation Department took some time to issue the A
notification, it cannot be held that the eligible units are
not entitled to the concession, till the Department issued
the notification i.e.18.06.2009. [Para 10] [369-G; 370-C]

    2. No doubt, the statutory notification issued by the B
Excise and Taxation Department u/s. 8(5)(b) of the Central
Sales Tax Act on 18.06.2009, has stated that the eligible
units will be entitled to the concession with immediate
effect. Merely because such an expression has been
used, it cannot be held that the State Government can C
levy the tax against its own policy. The State Government
is bound by the policy decision taken by the Council of
Ministers and duly notified by the Department concerned.
[Para 1O] (370-D-E]
                                                                D
    3. The High Court has gone wrong in not
appreciating the background of the case and the
decision of the Council of Ministers to extend its own
Industrial Policy announced in 2004 and the tax
concession beyond 31.03.2009. Once the Council of E
Ministers takes a policy decision, the implementing
Department cannot issue a notification contrary to the
policy decision taken by the Government. The High Court
also erred. in analyzing and understanding the
Notification dated 18.06.2009 as if it introduced the CST F
concession @ 1 per cent with effect from the date of
issuance of notification. It is not the introduction of a new
policy but an extension of the. benefits under the
extended policy. The appellant shall be entitled to the
concessional rate of CST @ 1 per cent with effect from G
01.04.2009 till 31.03.2013 until it is duly varied by the State
Government. [Paras 13 and 14] [371-E-G; 372-B]

     State of Bihar and others v. Suprabhat Steel
     Limited and Ors. (1999) 1 SCC 31: 1998 (2)                H
364        SUPREME COURT REPORTS                    [2015) 10 S.C.R.


A          Suppl. SCR 699; State of Jharkhand and Ors. v.
           Tata Communications Limited and Anr. (2006) 4
           sec 57: 2006 (3) SCR 443 - relied on.
                         Case Law Reference
B
        1998 (2) Suppl. SCR 699            relied on.     Para 9

        2006 (3) SCR 443                   relied on.     Para 13

         CIVIL APPELLATE JURISDICTION: Civil Appeal No.
C     6838 of 2015

          From the Judgment and Order dated 24.05.2013 of the
      High Court of Himachal Pradesh, Shimla in CWP No. 8170/
      2012-G.
D
         M.P. Devanath, Vivek Sharma,Ambarish Pandey for the
      Appellant.

          Suryanarayana Singh, AAG, Varinder Kumar Sharma for
      the Respondents.
 E
          The Judgment of the Court was delivered by

          KURIAN, J. 1. Leave granted.

 F     2. Whether the appellant is liable to pay Central Sales Tax
  (hereinafter referred to as "CST")@ 2 per cent on the inter-
  state sales for the period 01.04.2009 to 17.06.2009 or@ 1
  per cent in view of the Industrial Policy of the state, is the dispute
  arising for consideration in this case. It is not in dispute that as
G per the Industrial Policy of the State of Himachal Pradesh, the
  appellant had been enjoying the concessional rate in CST@
  1 per cent upto 31.03.2009. It is also not in dispute that the
  Cabinet had taken a policy decision to extend the period of
  concession upto 31.03.2013 or till the CST is phased out. Still
H further, it is not in dispute that the Department of Industries
LLOYD ELECTRIC AND ENGINEERING LIMITED v. STATE 365
       OF HIMACHAL PRADESH [KURIAN, J.]

had, accordingly, issued a notification extending the A
concessions from 01.04.2009 to 31.03.2013 or till the time
the CST is phased out. The dispute arose on account of the
Notification dated 18.06.2009 issued by the Excise and
Taxation Department granting the concessional rate of the CST
@ 1 per cent wherein the expression "... with immediate effect B
for the period ending 31.03.2013" was used.

     3. The High Court, as per the impugned judgment, took
the view that the expression " ... with immediate effect" has to
be given a plain meaning, and therefore, the appellant is not C
entitled to the concession which it had been enjoying upto
31.03.2009 till the Notification dated 18.06.2009 is issued by
the Excise and Taxation Department.

     4. Heard Shri M.P. Devanath, learned Counsel appearing          D
for the appellan~ and Shri Suryanarayana Singh, learned
Additional Advocate General appearing for the respondent-
State.

      5. In order to appreciate the contentions advanced by the      E
p·arties, it is necessary for us to refer to the background of the
dispute. Industrial Policy-2004 was notified by the State of
Himachal Pradesh, providing for, inter a/ia, at Clause 10.3
concessional rate in Central Sales Tax:

     "10.3      Central Sales Tax at a concessional rate of 1% F
     shall be leviable on the goods manufactured by new and
     existing industrial units (as defined under these Rules)
     unless provided otherwise elsewhere under these Rules,
     upto 31-03-2009. This incentive will not be provided to G
     industrial unit engaged in the production of breweries,
     distilleries, non-fruit based wineries and bottling plants
     (both for country liquor and Indian made foreign Liquor)."

    6. It is not in dispute that the appellant was found eligible    H
    366         SUPREME COURT REPORTS                   [2015) 10 S.C.R.


    A     for the said concession since it satisfied the parameters
          prescribed in the notification till 31.03.2009. It is seen from
          the Cabinet Note on extension of the incentive of concessional
          rate of CST@ 1 per cent beyond 31.03.2009 to industrial
          enterprises of the State of Himachal Pradesh prepared on
    B     19.05.2009, the issue whether the concession should be
          extended beyond 31.03.2009 for some more time, was
          specifically addressed. To quote the relevant discussion:

               "3 .... The State Government has been vigorously pursuing
    c          at various levels with Government of India the case for
               the extension of the Special Package for our State
               announced in January 2013 till at least March 2013 as it
               expires in March 2010. In the absence of any decision
               or any positive indications so far, it is imperative that the
     D         State Government also at its own level considers taking
               such initiatives by way of which Industrial Enterprises
               being set up in our State could be provided some basic
•              attraction in the form of tax incentives and a facilitating
               environment. Availability of such incentives in the
     E         neighbouring State such as Uttarakhand where the
               incentive of1 % CST is available to the industrial units till
               March, 2014 renders our State uncompetitive and
               Unattractive to industrial investors. During the year 2007-
               08 the Industrial Enterprises of the Ste had contributed a
     F
               sum of Rs.113.4 7 Crores to State exchequer through 1%
               CST. In case the incentive of 1% CST is not restored till
               the time the CST is phased out by Central Government it
               will affect the viability of units adversely and majority of
     G         big Enterprises may resort to branch transfer/
               consignment sales outside the State to avoid 2% CST
               to maintain their competitiveness. It is therefore
               proposed that the incentive of concessional rate of
               Central Sales Tax @ 1% be allowed to be continued
     H         beyond 31st March, 2009 till March 2013 or till the time
LLOYD ELECTRIC AND t:.NGINEERING LIMITED v. STATE 367
       OF HIMACHAL PRADESH [KURIAN, J.]

     CST is phased out.                                            A

 4. With this proposal there would be no adverse financial
    implication and State will continue to earn the same
    rate of revenue through CST sale as Industrial
    Enterprises will prefer to pay 1% CST instead of               B
    resorting to branch transfer of goods.

 5. The Department of Excise & Taxation and Finance
    Department have concurred with proposal.

 6. Permission of the Hon'ble Chief Minister has been              c
    obtained through the Chief Secretary to place the
    matter before the Council of Ministers.

             POINTS FOR CONSIDERATION
                                                                   D
     Whether to extend the incentive of concessional rate of
     CST@ 1% for all the Industrial Enterprises beyond 31"1
     March 2009 till 31 91 March 2013 or till the time the CST
     is phased out by the Central Government?"
                                                                   E
     7. The Council of Ministers, in the Meeting held on
20.05.2009, approved the above proposal and, accordingly,
the State Government through Principal Secretary (Industries)
issued the following Notification on 29.05.2009:
              "Government of Himachal Pradesh,                     F

              Department of Industries (A)
     No. lnd.A(F) 6-3/2008 Dated Shimla - 02,291h May,
     2009.
                                                                   G
                       NOTIFICATION
     In partial modification of this department notification No.
     lnd.A(F)6-7/2004 dated 301h December, 2004 notifying
     Industry Policy 2004 regarding grant of Incentives,
                                                                   H
368       SUPREME COURT REPORTS                    [20.15) 10 S.C.R.


A        Concessions and Facilities to Industrial Units Himachal
         Pradesh - 2004, the Governor. Himachal Pradesh i_s
         pleased to extend the incentive of validitv of concessional
         rate of CST@ 1% upto 31.03.2013 in Rules 10.3 of
         Industry Policy, 2004 or till the time CST is phased out.
B        whichever is earlier.
                                                            By Order

                                                              Sd/-

c                                        Pr. Secretary (Inds.) to the
                                       Govt. of Himachal Pradesh."
                                              (Empyhasis supplied)
       8. Thereafter, the Excise and Taxation Department of the
D State Government issued statutory Notification under Section
  8(5)(b) of the Central Sales TaxAct, 1956 (hereinafter referred
  to as "the Act"). The relevant portion of the Notification reads
  as follows:
E         "2. Now, therefore, in exercise of the powers conferred
        . by clause (b) of sub-section (5) of section 8 of the Central
          Sales Tax Act, 1956 (Central Act No. 74 of 1956), the
          Governor of Himachal Pradesh is pleased to direct that
          in respect of the sale in the courses of inter-State trade
 F
          or commerce of the goods (other than those
          manufactured by the breweries, distilleries, nonfruit/
          vegetable based wineries and bottling plants (both of
          country liquor and Indian made foreign liquor)
G         manufactured by the dealers running any existing
          industrial unit or new industrial unit (other than those new
          industrial units which are located in the tax free industrial
          zone) in the State of Himachal Pradesh, and are
          registered as dealer with Excise and Taxation
H         Department, Himachal Pradesh, the tax levied under' sub-
LLOYD ELECTRIC AND ENGINEERING LIMITED v. STATE 369
       OF HIMACHAL PRADESH [KURIAN, J.]

      section (1) of section 8 of the said Act shall be calculated A
      and payable at the rate of 1% of the taxable turnover of
      such goods with immediate effect for the period ending ·
      31.03.2013."

                                          (Emphasis supplied)     B

     9. The whole thrust of th.e contention advanced by the State
is that since the notification under the Act providing for tax
concession was issued only on 18.06.2009 wherein it was
specifically mentioned that the notification would have C
immediate effect and would operate for the period ending on
31.03.2013, the appellant is not entitled to the CST concession
@ ·1% for the intervening period between 01.04.2009 to
18.06.2009. The appellant, however, submits that in view of
the policy decision taken by the State Government extending D
the tax concession beyond 31.03.2009 to 31.03.2013, the
Excise and Taxation Department of the State Government
cannot take a different view and deny the tax concession for
the period between 01.04.2009 to 18.06.2009-the date of the
notification issued under Section 8(5)(b) of the Act. Heavy E
reliance is also placed on the decision of this Court in State
of Bihar and others v. Suprabhat Steel Limited and
Others 1•

    10. We do not think it necessary to go into the various F
contentions raised by the parties in view of the undisputed
factual position we have referred to above. The State
Government cannot speak in two voice. Once the Cabinet
takes a policy decision to extend its 2004 Industrial Policy in
the matter of CST conc~ssion to the eligible units beyond G
31.03.2009, upto 31.03.2013, and the Notification dated
29.05.2009, accordingly, having been issued by the
Department concerned, viz., Department of Industries,

, (1999) 1   sec 31                                               H
370          SUPREME COURT REPORTS                    [2015) 1OS.C.R.


A     thereafter, the Excise and Taxation Department cannot take a
      different stand. What is given by the right hand cannot be taken
      by the left hand. The Government shall speak only in one voice.
      It has only one policy. The departments are to implement the
      Government policy and not their own policy. Once the Council
 B    of Ministers has taken a decision to extend the 2004 Industrial
      Policy and extend tax concession beyond 31.03.2009, merely
      because the Excise and Taxation Department took some time
      to issue the notification, it cannot be held that the eligible units
      are not emtitled to the concession till the Department issued
C     the notification. It has to be noted that the Finance Department
      of the State Government had concurred with the proposal of
      the Department of Industries to extend the tax concession
      beyond 31.03.2009 till 31.03.2013 and the Council of Ministers
D     had accordingly taken a decision also. No doubt, the statutory
      notification issued by the Excise and Taxation Department
      under Section 8(5)(b) of the Act on 18.06.2009 has stated that
      the eligible units will be entitled to the concession with
      immediate effect. Merely because such an expression has
E     been used, it cannot be held that the State Government can
      levy the tax against its own policy. The State Government is
      bound by the policy decision taken by the Council of Ministers
      and duly notified by the Department concerned, viz.,
      Department of Industries.
 F
      11. That apart, it appears, the Excise and Taxation
  Department itself has not actually intended the notification to
  take effect from 18.06.2009. The definition given to the new
  and the existing industrial units in the Notification dated
G 18.06.2009 would indicate so. To quote:

            "Explanation 1:- For the purposes of this notification,-

        (i) 'new industrial unit' means an industrial unit located
            in Himachal Pradesh which commenced/
H           commences production on or after 31.012.2004, but
LLOYD ELECTRIC AND ENGINEERING LIMITED v. STATE 371
       OF HIMACHAL PRADESH [KURIAN, J.]

      will not include any industrial unit which is formed as      A
      a result of reestablishment, mere change of
      ownership, change in the constitution, re-structuring
      or revival of an existing industrial unit;
  (ii) 'existing industrial unit' means an industrial unit which   B
       commenced production before 31.12.2004;"
     12. Even otherwise, it is not altogether a new concession
that has been notified by the Excise and Taxation Department
in the impugned Notification dated 18.06.2009. As we have c
noted above, it is an extension of the 2004 Industrial Policy
and the resultant tax concession to the eligible units which was
available upto 31.03.2009. Therefore, for all purposes, what
is notified by the Excise and Taxation Department on
18.06.2009 is an extension of the said concession beyond D
31.03.2009 and that is why the notification has used the
expression "... for the period ending 31.03.2013" without
otherwise indicating the concession already being enjoyed by
the eligible units till 31.03.2009.
                                                                   E
       13. The High Court, with great respect, has gone wrong in
not appreciating the background of the case and the decision
of the Council of Ministers to extend its own Industrial Policy
announced in 2004 and the tax concession beyond
31.03.2009.. Once the Council of Ministers takes a policy F
decision, the implementing Department cannot issue a
notification contrary to the policy decision taken by the
Government. The High Court also erred in analyzing and
understanding the Notification dated 18.06.2009 as if it
introduced the CST concession@ 1 per cent with effect from G
the date of issuance of notification. As we have already clarified,
it is not the introduction of a new policy but an extension of the
benefits under the extended policy. It is in this context, the
decision of this Court in Suprabhat Steel Limited (supra)
and State of Jharkhand and others v. Tata H
372          SUPREME COURT REPORTS                [2015] 105.C.R.


A Communications Limited and another2 become relevant.

        14. Accordingly, the appeal is allowed, the impugned
  judgment is set aside. It is declared that the appellant shall be
  entitled to the concessional rate of CST @ 1 per cent with
B effect from 01.04.2009 till 31.03:2013 until it is duly varied by
  the State Government.
           15. There shall be no order as to costs.

      Kalpana K. Tripathy                             Appeal allowed.




      2 (20oa) 4 sec 57