Holding

The 1981 notification does not exclude traditional industries; the Director of Industries must grant the exemption certificate if the statutory conditions are satisfied and cannot impose extraneous restrictions.

Summary

The State of Madhya Pradesh issued a 1981 notification exempting certain classes of dealers from sales tax, but the Director of Industries denied certificates to flour and dal mill units on the ground that they were "traditional industries" excluded by earlier subsidy schemes. The assessees argued that the notification did not mention such a restriction and that the Director could not impose conditions not specified in the notification. The State relied on the 1983 Deferment of Payment of Tax Rules and executive instructions that excluded traditional industries. The Supreme Court held that the 1981 notification, read on its plain language, did not exclude traditional industries and that the Director must grant the certificate if the statutory conditions are met. Executive instructions and earlier schemes could not be read into the notification nor override its terms. Consequently, the Court dismissed the State's appeals and allowed the assessees' appeals, granting them the exemption.

Issues considered

The scope of the 23 October 1981 notification under Section 12 of the Madhya Pradesh General Sales Tax Act with respect to "traditional industries".
Whether the Director of Industries may refuse an exemption certificate on grounds not specified in the notification.
The validity of using the 1983 Deferment of Payment of Tax Rules and executive instructions to limit the notification's effect.
Whether the doctrine of contemporanea expositio or promissory estoppel can be invoked to expand or restrict the statutory exemption.

Legislation cited

Subjects

Sales tax exemptionStatutory interpretationNotificationExecutive instructionsTraditional industriesDoctrine of contemporanea expositioPromissory estoppelDelegation of legislative powerSection 12Eligibility certificateRule 13Rule 14Madhya Pradesh

Judgment

.•
~
STATE OF MADHYA PRADESH AND ANR.
A V.
G.S. DALL AND FLOUR MIJ.,LS

SEPTEMBER 19, 1990

B [SABYASACHI MUKHARJI, CJ., S. RANGANATHAN AND
K.N. SAIKIA, JJ.]

M.P. Sales Tax Act, 1958/M.P. (Deferment of payment of Tax)
Rules, 1983. Section 12/Rule 13-Sales Tax-Eligibility for exemption
-Effect of Notification dated July J, 1987. · .,...
c In exercise of the powers conferred by section 12 of the Madhya
Pradesh General Sales Tax Act, 1958 the State Government issued a
notification dated 23.10.1981 exempting the specified class of dealers
who had set up industry in any of the specified districts of Madhya
Pradesh and had commenced production after !st April, 1981 from
D payment of tax under the said Act for a specified period subject to
certain restrictions and conditions. However, when the assessees
approached the Director of Industries for the certificate of exemption, it
was denied to them on the ground that the industries run by them were ....
"traditional industries" which were not eligible for exemption.

E The assessees went to the court and urged that the concept of
"traditional industries" was one unspecified in the notification; and
that the authorities had 110 jurisdiction 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.
The State on the other hand, relied on the provisions of the M.P. ~
•
F '
(Deferment ~f payment of Tax) Rules, 1983, notified on 1.9.83 (in
particular, rule 13 thereof) and on certain instructions that had been
issued by the Government on 12.1.1983 pertaining to the "grant of
certificate of eligibility to new industrial units claiming exemption from
or deferment of payment of sales tax".
G The assessee's claim for exemption from sales tax was accepted by
the Division Bench of the High Court in the case of G.S. Dhall & Flour
Mills and, following it, in the case of Mohd. Ismail. The Division Bench
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
H
and that, in any event, the executive instructions could not override the
provisions of the statutory notification.
.'
590
stATE OF M:P .•. o.s. oALL 591

Subseqil~ni th tile decision of the Division Bench, the Staie
A
Goverrtriierit issiieci a riotificaiioii oit 3. 7.1987, intended obviously to
overcome the effect of the said decision.

StibseqiJeriily, however, a Full Bench of the High Court, in the
case ot Jagadamba industries disapproved the view taken by the Divi-
sioh Bench in G.S. bhait case. Tlie Full Bench attached iinpottance to B
the ruies and iiisi~tictibi\s referreil to aiiove and relied considerably on
his history of the saies-iax ievy ih the Staie as turilishlng ptopet and
necessary background iii Wllich ilie ierins of the notification ot
..., 23. Hl.i98i had io be read arid iiiierprelM:

The Full Bench, atier codsideririg the scheme and irlsfructions of
the (;ovenirilerii, cariie to the conciusioriihat the scope of the exempiioli t
notification of 1981 was noi intended tO be wider than that of the con-
cessions granted earlier, arid that the 198i notification was intended to
brirtg about oilly a change iii the mode of relief to the same categories ot
industries as Wete covered iiy the earlier schemes.
D
The contention that "lns!tuctlons'; could noi override llie effect
of the statutory notiflcaticln was repelled by the Fuil Bench on the
ground that the validity and effectivehess of the ihStructiolis could be
supported by retetellce to Article 162 of the Constitution as filling up a
Jack of guidelines in the notitlcaticlh.
E
The Full Bench considered the 1983 instructions to be conclusive
on two grounds on the doctrine of contempotanea expositio and on the
principle that executive instructions could always be issued to supple·
ment statutory instrumf!llts so as to fill up areas on which the latter
were silent.
F
The State, aggrieved by the judgment of the Division Bench in the
two cases, and the assessee by the judgment of the Full Bench in the
other case, have filed the appeals and Special Leave Petitions.

Before this Court the parties reiterated their submissions in sup-
port of either of the two judgnients. The main submission on behalf of G
the State was that, since the 1981 notification did not set out the CQndi-
tions on which, and the procedure in accordance with which the Di-
rector of Industries was to issue the eligibility certificate, the earlier
scheme of subsidy /loan and its procedure should be read into the notifi-
cation for this purpose. This contention was contested by the assessees
inter alia on the ground that the earlier scheme and the exemption now H
592 SUPREME COURT REPORTS [ 1990] Supp. 1 S.C.R.

.A pfoJiosed were totally different in their object and scope.

Dismissing the appeals of the State, and allowing the appeals pre·
ferred by the assessees, this Court while observing that the Division
Bench laid down the correct law and not the Full Bench,

El HELD: fl) The 1981 notification does not expressly, or even
by necessary implication, exclude "traditional" industries from its
scope.

(2) Prima facie. the Director of Industries cannot refuse the
exemption on a consideration not specified in the notification. All the
conditions for exemption have to be, and are, set out in the notification
c itself and all that the Director of Industries has to do is to satisfy himself
that those conditions are fulfilled; he cannot travel beyond the terms of
the notification.

(3) Even granting that the 1981 policy was to replace the earlier
D subsidy/loan by an exemption, it does not necessarily follow that the
units intended to be covered by the new scheme were only those that
were covc_red by the earlier scheme and that nu wider exemption was
contemplated.

(4) No factual foundation has been laid to establish the hypothesis
E that the exemption conferred in !981 was to be a mere extension or
substitution of the benefits conferred earlier.

(5) The notification does not authorise the Director of Industries
to say that, though the applicant fulfils the terms of the notification, he ,·
will not grant the eligibility certificate because,-under the previously
F prevalent schemes, he could not issue an eligibility certificate to "tradi-
tional indust.ries". For granting a certificate that the applicant is eligi-
ble for exemption under the notification, the director has to look to the
t:nnditions set out in the notification and nowhere else.

(6) Changing definition of eligibility for exemption also shows
G that there was no common or identical group of beneficiaries intended
under the various in.structions or notifications and that each set of
instructions or notification issued from time to time defined only the
categories exempted from its purview and nothing else. The exemption
iist under one was not meant to be carried over into another.

1-1 Hansraj Gordhan Das v. H.H. Dave, [1969) 2 SCR 253. referred
Ul.
•: -~ STAIB OF M.P. v. G.S. DALL 593

(7) The 1983 document is not a statutory instrument~neither a A
notification nor a rule framed under the statute.

(8) It is true that the principle of contemporanea exposiiio is
invoked where a statute is ambiguous but is shown to have been cleariy
and consistently understood and explained by the administrators of the
law in a particular manner. But, to apply the doctrine to widen the B
ambit of the statutory language would, however, virtually mean that
the State can determine the interpretation of a statute by its ipsi dixit.
That, certainly, is not; and cannot be the scope of the doctrine. The
-, doctrine can be applied to limit the State to its own narrower interpre-
tation to favour of the subject but not to clriim its interpretation in its
own favour as ~onclusive. C
Verghese v. i. T.O., [1982) l SCR 629 and Doypack Systems P.
Ltd. v. Union of India, [1988] 2 SCC 299, referred to.

(9) Executive instructions earl supplement a statute or cover areas
to which the statute does not extend, But they cannot run contrary to D
statutory provisions or whittle down their effect.

(10) There is nothing in the language of the notification to suggest
that anything further is needed to enable the Director of Industries io
grant the exemption. Without the guidelines, the requirement for an
exemption certificate would not become an "empty formality". E

(11) If the statutory hotit'ication is construed as permitting the
State by rules or executive ihslructioiis lo prescribe otlier conditions for
exemption, whether new or iiased on past practice, it ts liable to be
/ struck down on the ground of impermissible deiegatiori Qf legisiative
power to the executive. This, certainly, they camioi di>. · F
(12) The 3/7 /87 notification cannot be treated as one merely
clarifying an ambiguity in the earlier one and hence capable of being
retrospectively; it enacts the resdssi<in of the earlier exemption anci,
hence, can operate only.prospectively. It cannot take away the exeinjl-
tion conforreed by the earlier noiification. d
CIVIL APPELLATB JURISDICTION: Civil Appeal No. 2211
(NT) of 1988 etc. etc.

" From the Judgment arid Order dated 7.10.1986 of the Matlttya
Ptadesli High Court in M.P. No. i86i df i983. H
594 SUPREME COURT REPORTS (1990] Supp. 1 S.C.R.

Prithvi Raj, R.B. Mishra, Uma Nath Singh, S.K. Gambhir,
A
Vivek Gambhir, Satish K. Agnihotri, Ashok Singh and Mrs. V.D.
Khanna for the Appellants.

Harish N. Salve, Ms. Lira Goswami and D .N. Misra for the
Respondent.
B
The Judgment of the Court was delivered by

RANGANATHAN, J. The Civil Appeal and S.L.P. 12054/87 are
by the Siate 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
c compendiously referred to as -'the assessees'). All these matters can be
conveniently disposed of by a.common judgment as they raise a com-
mon issue.

The assessees' claim for exemption from sales tax for certain
l) periods in question was accep,ted by the High Court in the case of G.S.
Dhall & Flour Mills and, following it, in the case of Mohd. Ismail (a
case where the exemption so1ight for was originally-gtanted-butsubse- o._
quently 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. Dhall & Flour Mills case and, <-
E following~he Full Bench, the writ petitions filed by certain other asses-
sees 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.

f Before dealing with the appeals on merits, an important cir-
cumstance needs to be referred to, which is this: The judgment of the
Full Bench in the case of Jagadamba Industries was itself the subject
matter of Special Leave Petitions in this Court but those petitions
(S.I'...P. Nos. 15688-90/87) were dismissed, at the stage of admission,
on 9.2.1988, with the observations: "We are in agreement with the
G views expressed by the High Court. The Special Leave Petitions are
.dismissed". In view of this, the State submits that C.A. 2211/87 should
be allowed and that the assessees' S.L.Ps. 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 "'. _
H which were considered sufficient to disentitle the assessees in those
STATE OF M.P. v. G.S. DALL [RANGANATHAN. J.)' 595

cases from claiming the exemption. They contend that, in view of this
and the fact that the G.S. Dhall & Flour Mills case is in appeal before'
A
us, we may grant leave in the S.L.Ps. and dispose of all the appeals on
merits. We accept this plea and grant leave in the S.L.Ps. condoning a
delay in the filing of S.L.P. 12054/87. We shall, however, touch upon
the above aspect of the matter in the course of our judgment.
B
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 exemptiori from the levy of sales tax in certain
·-, circumstances. It says:

"S. 12. Saving: (1) The State Government may, by notifi-
cation, and subject to such restrictions and conditions as c
may be specified therein, exempt, wheth.er prospectiv.ely or
·retrospectively, in whole or in part-

(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 D
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 section 'mdy be re- E
scinded before the expiry of the period for which it was to
have remained in force and on such rescission such notifica-
tion 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 F
notification on 23/26.10.1981 which it is necessary to extract in full
here along with its Annexure. It reads:

"In exercise of the powers conferred by section 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 G
(1) of the Schedule below who have set up industry in ahy ·of the
districts of Madhya Pradesh specified in the annexure to this notifica-
tion and have commenced production after !st April, 1981, from pay-
ment 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· I'
said schedule: H''
596 SUP!tEME COUR't ltEl'ORts It<J90l sti!'lll. 1 s.c.~. 1- •

' A Class of dea~rs Period Resttktlons and conditions
subject to which exemp1ion
has been gtanted
l 3

B t dealers who-- 1'wcr yeau the dealer spe~ified In ooluml'l
(11} hold. a certificate ftottJ the ( 1) !>hall continue to furnish
of te11lstratlon under date of the prescribed return~ undet
the M.f'. General eo111rrrencemenHht MJ•. General Sales fax
Safe& fal. A~, 1'158: of ptoduction Aa, 19$8 and shall ptoooo: ,.. -
before tlle assessing authority
{IY) are registered as at the time of his assessment
C Small Kale ind11strial a certificate issued by tire
units with the tndustries Oirectc!t of fndusiries, Madhya
Department of Govt. Pradesh or any offker autlio·
of M.P,, and rised by l!im lot the purpose,
certifying that welt deafer is
D (c) have set up industty eligible to claim: ilie eil:emptlot!
In' any of the di~I· and that he has not ;
opted for
ric!~ specified In part t the scheme of deferring the
of the t\nnexure payment of tax under the tule&
ftamed for this 15uqrose,

e 2. Dealet wlto .••
(a)' lwld"rtificate (a} 3 years in ·d0>
of tegl!tration under the case of an
tire M,P, General Sale&industry lm:liled
Tu Act, 1958 (No. 2 ill a disttict
ot 1959); S!'"ified in 'A'
p of pattll of lhe
Ar111exure,

(b) arereglsteteda5 .(b')4yean,in ·do·
Small ale lnd11srrial the .:ase of an
unit§ with the Indus- industry ~ated
a triet Department of in categoty ·a·
the Govt, ofM.P.or of Patt ff of the
are regillfered with the the Annexure;
Direc10t General of and
Technical Veveiap-
ment a; an industrial
H uni! ot ate registered
S'l'A'lt OF M.i'. '" G.S. DALL l'RANGANA'fHAN, j,J . · S'l'I
as lndusinal units by A
any authOtity duly em•
powered to do so by
the State Govt. ot Cett·
traf GoVt. or Mid a'
Hceilce undet the In•
dusties (Oevelopment B
& Regulation) Act ' ~- .

1951 (No. 65of 1951);
and

(c)_Mvesetupindus. (c) Syeau;in ~
tryTil any Of the the case of an
dlstrlcls specified in Industry located
part 11 of the ill a district
Aililexure speeified in ctt~
goty 'C' of part
11 of ihe Annex•
ute; ftOlll the
dateof<Xim'll!efi" ·
cemertt of ptoductkitt.

- · j, Dealers who•"
(a) ·hold certificate of (a) 3 years iii the dealer spmfled 111 collllilil
tegistratlo11 unde'tthe tfie case ofa11 · (1) shall produce before the
MJ 1• General Sales Industry located asse&Slttg authOrlfy at the time
Tax 1958 (No. 2 of ln any of tilt of his assesslllelit a cettit'it111!!
1959); . telisils ofa ·issuedbytheDiteetiitot'.
district specified lildustfie1, Madhyrt Pradesh
in f5litt I of the· or any officer authorised by
· Annexute; liim fot the purpose of i:ettii'y•
,il\g that the dealer iuligible'
(il') areregistet;idas (b) 5yearslfi todiiimsw:hexC'l)!JjtkmUlHftt
fodustiial units with the case ofan the sc:heme of the lnd\l!ttles.
the Oitectot General ·industry IOCllied Depatiillentbeiftg a tint .dealer
of technical Develop• iii any oftl\e to have commem:ed ~
ment'.ot by any autbo· ·tehsils of a iii tire industry stt up 15y bilil G
rityduly empowered diffiict specified 111 the tehsilsretetted to ill .
fo do so by Staie or in Category·· A' · 6'illllflil (2J liild thatmd! cfealer
Cenital Govemme'ilt of Part Il oiiite Ila& not lipted for tile ~
- ) or hold licence under Antteitute} of detming tiil! piiyment at w
the Industrle~ (Deve• · mr~f Ifie. fiile!I ftlllt!e'd for thlJ .. (
loQm.ent and Regula· ?Utf>l!SI!• ff
598 SUPREME COURT REPORTS [1990] Supp. 1 S.C.R.

A tion) Act, 1951 (No. 65
of 1951) have fixed a
capital investment
between Rs. 1 crore
and Rs. 10 crores and;
B
( c) are the first to (c) 7 years in
set up the industry the case of an
in any tehsil of the industry located
district of Madhya in any of the
Pradesh specified in tehsils of a dist-
the Annexure. rict specified in
c category 'B' of
Part II of the
Annexure;

(d) 3 years ih
the case of an
D
industry located
in any of the
tehslls o a dist-

E
rict specified in
category 'C' of
Part II of the
Annexure; ,
-
from the date of commencement
of production.
,
ANNEXURE
F
Part I
1. Indore 2. Ujjain 3. Bhopal 4. Jabalpur 5. Gwalior 6. Durg

. " Part II

G Catego;y 'A'

1. Bilaspur 2. Raipur 3. Dewas
4. Handsaur. 5. Morena 6. Vidisha
7. Hoshangabad 8. Ratlam 9. Khandwa
-

H.
10. Satna · ll. Shahdol
"
STATE OF M.P. v. G.S, DALL [RANGANATHAN, J.] 599
:.;,
Category 'B'
A
1. ·Geoni 2. Balaghat 3. Betul · .,
4. Raigharh 5: Guna 6. Chindwara
" 7. Dam oh 8. Sagar 9. Narsimhpur.
10. Senor 11. Rajmandgoo
B
Categoty 'C'

2. Sidhi 3. Rewa
.' 1.Panna
4. Chhatarpur
7. Surguja.
· 5. Tikamgarh
8.Mandla
6. Khargone
9. Bhind
10. Shivpuri 11. Datia 12. Raisen
13. Shajapur 14 .. .Phar _15. Rajgarh. ·
c
16. Jhooua 17. Bastar

It is not in dispute that the assessees before us fulfif· the qualifi-
cations mentioned in the notification. However, when they approa-
ched the Director of Industries for the certificate of exemption D'
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 s·aid, the
concept of "traditional industries" was one unspecified in the notifica_,
tion. The authorities had no jurisdiction to travel.outside.theterms of E·
the notification and import extraneous considerations to deny the
assessees an·exemptfon ihey were entitleCl to under the notifiC:ation.·lt is
this conti:ntio11 that was accepted in the G.S. Dhall and Flour Mills
case. The State'had relied on the provisions of the M.P. (Deferment of
Payment of Tax) Rules, -1983; notified on 1.9.83 (in particular, rule 13
thereoO and on certain instructions thai had been issued by the F.
Government on 12. L 1983 pertaining to the "grant of certificate of
eligibility .to new industrial units claiming exemption from/defenhent
of payment of sales tax". The High Court took the view that these
rules and in~~ructions had no relevance to the claim fot exemption put
furward under the .notification of 23.10.'1981 and that, in any event,·
the ·executive instructions could not override the pro~sions of the Ge
statutory notification. This judgI!Jent 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
- .J view. It has; in effect, a_ttached importance to the' rules 'and instruc-
tions referred to above and. relied considerably on the history of the l;I
600 I 1990] Supp. I S:'C.R.
SUl'REME COURT REPORTS
tfJ:,
,_ ,,
A .sales-tax levy in .the State as furnishing a proper and nece~ry b.a~
ground 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 n(lw in
order te appt~ciate the validity -0f the conclusions of the Full Bench.
Before doing tlils, it m~y be mentioni:d .lhat the Full Bench comprised
of Ojha C.J ., Faizanuddin, J, .and Adhikari, J. In fact, thll judgment
B was written by Faizanuddin, J. who has explained in detail the reasons
for bis 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. Dhal/
and Flour Mills, the State Govemmerat appears to have issued a notifi-
cation on 3. 7. )987, intended obviously to overcome the .effect of the
said decision. We shall refer to this!ater in this ju4gment.
c · N-OW, to tum t-0 the history relied on by the Full Bench, we sl\lrt
with a "scheme for the grant 9f ~ubsidy/interest free loan to new
indil5tries ~t up in Madhya Prades,h". The scheme was to be effective
fr-Orn lS.9,69 and till the end of the fourth Five Year Plan period
(1970) ''or Such further period as may be eJ1:tended by the State
p Government ff.om time to time". lt would appear ,that the scheme was
being administered informa)ly under executive instructions even
beyono 1970. Though certain "rules" appear to ha11e been framed for "
the first time on 30.8.73, these mies, it would seem, were not statutory
but were only in the nature of executive .instructions. We shall, how-
ever, rekt !Q ;them as "rules". Rule 3 was dear as to the persons
E w
eligible, av!lil ofit. It read:

"Rule. 3-"It shall be applicable to all new industrial ·units
e;ccept traditional .industries like oil mill, flour mill, dall
mill, .rice mill, ginning and printing facJOries, who set .up in
Madhya Pradesh, pr-0vided further that such applicants <
register themselves with the department after 15.9.69 but
" before 31.3. 74 and in case of SSI units go into production
within a period of one year . and in case .of ·Large and
Me4ium Industries go intci production within 3 years of
their date of registration provided further :th3t in case of
delay in going into production the period of availability of
G subsidy or concession will be reduced by the period of
delay in going inta production. This will come lnto force
from 1.4.74.

Note:-Small Scale Industr,ies who are alre-.idy registered
with the department need not register separately for this \_ ,
H com;ession."
601

U .wiluld al$<! 11ppe.ar ~hal lbe di$tr!Qts 0f the :State wete dMde1Bnto . A
tw!I caaj\ones-adva~lld and bl\Ckwar<1.,;,:,and ·the· .latter int() clhree
categories 'A'.; 'B', 'C' . The amPunt 11nd periP4 .of tile subsidy/loan
·depended upon tl)is i:lilssificati0n and wllS ·elabilrll~ly ~tout .in para 8 .
wb.ich need not •be .extracted her.e. A note .added 10 para 8 l!ad this to
•ay:
I
N.cte:-{l) Unit wlto' is otherwise..e.ntitled «i .1ub5idy may
l)n his r~est be ~n~idered fo~grant 9f i.nterest free foan to
the e~tent-0! entitlementchhe sul:tsidy. . ·
(2) No 11nit available ~11cession under the 'Wbeme will be
:allowed ta .change the l!!C3t4m of the who~ or a11y pJm.of C
.the industrial unit or eff\lCl any subst4il\tiat part pf lta •wtlll
fixed .i:apital ·investment withip a period pf five year lifter its
going in t0 prQduction.. ·
1
· Ol IJ'I i:ase the .llwners!lip of a new unit changed during
the. period of 11vailllbhity ()f this .concession; the 11Qw· D
.owner w.!luld be .entitled t!l this -co.ncession for tile balance
period.

(4) A ~olied unit, which is re•starUid by an .entreprene11r
Mil :nllt bl: ~nsi~.reii to ·J>e a !!CW ,unit for ilte pwpose of
itbis 4'1,lnce~il)n." · .8
Ailother set,of ''Nies" .came into force with effe!:l .fromt.4. 1977
ani!. ~upersede1f.the .earlier rules. Tll11se weri: on more or le~ the Sl!llle
as
'• ~.ines 1be ;eadier ones anc;I were to ap!)ly 10 "new ind11strial units";
and "existing industiial units'', as .defiped in rull!s 2(a) .anll (b), •on
fo'lfillmeni of certain tetrns and conditions blit indll5tries enumerated f
in rule J were ~ecifically cll'cluded from the purview of the ·definition.
Rule .~ made it clear that ,th~ l'Uie~ shall not be lip,plice.ble to "tbe
fo!l9wlng traditionl!l 'industries", The 'list cf sucll industries'. firi lld4ition
iii> tho.se meniia11ed in the .earlier i;et ·of t11les {excl11din3 toiler ai,,ur
mills .and ~!vent exttaetilln plan~ in .oil mills), t()ok in .a}S(l •SllW mills,
lice factories ,and "'slicli .l)ther 'industries as may be notifiell by th11 G
Government ftllm 'time ,to time". The period and extent of Ute sub$idy/
' loan here :again .\!ependeII up1m t~e .di~lri¢t--'.a4v.anced .or bPC!>war4,
and in tile J~tter ,~tegllry •,\•.or 'B' .or ~.c•,...,jp whieb the in4UJ!tly .vu
s.et ;up Rule 7is.,f1some relevance and m~y be,set1:1u11

·"'i. AnJndugtr<al :unit eligible for ,thiu~enee~l.cm wm . app!y H
602 SUPREME COURT REPORTS [1990] Supp. 1 S.C.R. I'

A to the Asst. Director of Industries of the district concerned
for verification of the date of going into commercial
production and other particulars of new industrial unit or
substantial expansion in respect of which the concession ·is
sought. The Asst. Director of Industries will make verifica-
tion in accordance with rules 5(1) and send within 15 days
B of the receipt of the application his report to the sanction-
ing authorities, Dy. Director of Industries or Director of
Industries indicating the date of going into commercial
production of the unit. A copy will be furnished to the
applicant." /'

The form of the certificate to be issued by the office of the Dire9tor of
c Industriesread thus:

"No. --------~·-Date:-----~-

The particulars furnished by Mis ............... , .
D .·........... have been checked and verified from records
including those of consumption of power and raw materials
and output of finished products. The date of·commence- "
ment of commercial production by the industria.1 unit is

The date from which the unit has exceeded, on a sustained
E basis production over the licensed or installed capacity of
the unit is ............. .

Asst. Director of
Industries''

F It appears that the Government had announced "concessions''
regardfo:g the payment of sales tax by new industrial units including
pioneer units going into production after 1-4-1981 not only under the
notification dated 23/ 10/81 but also under other notifications dated
1-5-82 and 29-6-82. Two of ihese notifications are on record before
us. It is, however, unnecessary to extract them here. It is sufficient to
G set out their purport, quoting from the "instructions" of 12, 1-83; .re-
ferred to a little later: ·

"According to the first notification, the new industrial
units are exempted from the payment of sales tax. This
notification covered sales tax payable by them on the pro- <·
H ducts manufactured by them. It entitled them to exemption
STATE OF M.P. v. G.S. DALL IRANGANATHAN. J.] 603

from payment of purchase tax on purchase made by them
A
from unregistered dealers. According to the second notifi-
cation an industrial unit making purchases of its raw mate-
rial from a registered dealer is exempted from payment of
.sale.s tax on the raw materials so purchased by him from
the registered dealer. In other words, registered dealers
selling raw materials to a new industrial unit are not B
required to charge any sales tax from the new industrial
unit on sales made by them to such unit. The third notifica-
tion exempts the goods manufactured by the new industrial
~. units from the levy of sales tax even when these goods are
sold by the dealers who have purchased these goods from
the new industrial units. In other words, by issue of this C
notification, the goods manufactured by the new industrial
units are fully exempted from the payment of sales tax right
upto the stage they reach the consumer. These three notifi-
cations only deal with the grant of exemption from pay-
' ment of sales tax under the M.P. General Sales Tax Act.
that is to say from the payment of the State Sales Tax. D

The fourth notification exempts the new industrial
_, units from payment of the Central Sales Tax on the sale of
goods manufactured by them in the course of interstate
trade or commerce. This notification has exempted the new
units from payment of sales tax w.e.f. 1-7-82." E

In view of these notifications, the Government considered it necessary
to issue certain instructions "fo°r the grant of certificate of eligibility to
new industrial units claiming exemption from/deferment of payment
of sales tax" on 12-1-1983. These instructions also proceed on the same
lines as the earlier ones. "Traditional" industries, as listed in para 5, F
are said to be outside the purview of the scheme. Para 5 enumerated
the following as "traditional industries": flour mills (excluding roller
flour mills), oil mills (excluding solvent extraction plants, dall mills,
saw mills, rice mills, printing presses of all types, cotton ginning and
pressing factories, in factories and such other industries as may be
notified from time to time. It also stated (a) that "industrial units G
undertaking expansion/modification or diversification will not be eligi-
ble for these concessions, (b) that a closed unit revived by the
entrepreneur will not be considered as a new unit for the purpose of
availing of these concession and (c) that units claiming interest free
Joans as an existing unit will not be eligible for these concessions. A
certificate of eligibility had to be obtained in the prescribed manner H
604 SUPREME COURT REPORTS [1990] Supp. I S.C.R.

A and this procedure was made more elaborate. District Level Commit-
tees and a State Level Committee were constituted for this purpose
and they took a decision on the application of the unit read with the
comments thereon by the Director of Industries, though.the certificate
was actually issued by the Director of Industries or the General
Manager of the District Industries Centre in a prescribed form.
B
The Full Bench, after considering the scheme and instructions of
the Government discussed above, came to the conclusion that the
scope of the exemption notification of 1981 was not intended to be
wider than that of the concessions granted earlier. The 1981 notifica-
tion was intended to bring about only a change in the mode of relief to
the same categories of industries as were covered by the earlier
c schemes. The Court observed:

"It appears that the mode of concessions granted by the
aforesaid instructions involved some inconvenience to the
industrial units and duplication of procedure inasmuch as
D the industrial unit had to first collect the sales tax and the
tax so collected and paid along with the returns were later
on refunded to the industrial unit in the shape of subsidy.
To avoid the duplication of procedure the State Govern-
ment thought it fit to altogether exempt the industrial units
from payment of sales tax or defer the payment of sales
E tax.··

The Court observed, vis-a-vis the various instructions referred to
above:

"12 ......... These instructions also contain a complete • '.
f-'
F procedure for application and grant of eligibility certificate
by the Industries Department. Thus it is clear from these
instructions that the question of grant of eligibility certifi- •r
cate by the Industries Department is not an empty forma-
lity but before granting the certificate the Industries De-
partment has to see whether all the requirements as con-
G tained in the instructions are fulfilled and complied with or
!
not.

13. All the Government Instructions discussed above,
issued from time to time right from 1973 onwards till 1983
(Annexure R-I, II and III) clearly indicate not only the
H consistent Government policy in the matier of grant of
..,
.._
••, STATE OF M.P. v. G.S. DALL (RANGANATHAN, J.J 605

Sales Tax concessions to the New Industrial Units but also
A
the consistent practice that has been followed throughout
whereby these concessions were not at any time made
available to the Traditional Industries like Flour Mills and
Dall Mills etc. Not a single instance is available to show
that any of these concessions were ever made available to
any Traditional Industries. It may be pointed out that all B
these facts and the Government policy as also all the
af()resaid Government Instructions on the subject were not
••' placed before the Division Bench which heard and decided
: Misc. Petition No. 1861of1983 (G.S. Dall Mills v. State of.
M.P.). However, after\the decision of M.P. No. 1861/83
the State Government while issuing a Notification No. 351
dated ·21st October, 1986 under section 12 of the Act, a c
photostat copy of which has been filed on record of M.P.
No. 2710/87 (See at page 94 of the paper book) exempting
the Industrial Units specified therein from payment of tax
under section 6 and 7-AA of the Act again specifically
provided in clause (xiii) of the said Notification that the D
said exemption shall not'be available to the Industrial Units
. enumerated therein including Flour Mills and Dall Mills
etc."

It was true, the Court agreed, that a notification has generally to be
construed on its plain language. But, here: E

"as pointed out earlier, column 3 of the 198LNotification
. (Annexure B) does not contain any guidelines or a proce-
-, dure in the matter of grant of eligibility certificate or te-
fusal thereof by the Industries Department and as the grant or
refusal of such certificate cannot be an empty formality F
· and, therefore, in order to avoid the possibility of arbitrari-
ness and injustice to any one the State Governni.ent was
justified in issuing executive instructions laying down the
guidelines and procedure for the same."

The Full Bench, therefore, observed: G

"16. From what has been stated and discussed above it is
clear that at no point of time any concession or exemption
•
~4 :

from payment of sales tax was ever given to the Traditional
;: Industries and not a single example to that effect is avail-
able. The State Government while issuing instruction from H
606 SUPREME COURT REPORTS [1990] Supp. I S.C.R.

time to time have been specifically excluding the Tradi-
A
tional Industries. Thus the executive authorities and the
highest agency and its officers charged with the duty for the
administration and enforcement of the said Notification are
not only conversant with the underlying policy of the
Government but they are also intimately acquainted with
B the economic significance of the tax in question and exemp-
tion thereof. The interpretation of the Government regard-
ing the construction of 1981 Notification read with the
instructions (Annexure R. I, II and III) excluding the Tra-
ditional Industries, which has been consistently followed
,.
and acted upon accordingly for a period over a decade
cannot be given a go-by but has to be accepted.
c
17. In view of the above discussion the impugned Notifica-
tion dated 4-7-1987 (Annexure G) is hardly of any conse-
quence. More or less it is a clarificatio1wf 1981 Notification
and not rescission of any grant."
D
The contention that "instructions" could not override the effect of the
statutory notification was repelled by the Court on the ground that the
validity and effectiveness of the instructions can be supported by refe-
rence to Article 162 of the Constitution as filling up a lack of guidelines
in the notification. An argument based on the doctrine of promissory
E estoppel was also rejected as "the petitioners were well aware of the
fact that the exemption was not available to their new units and they
h"ad not established their units because of the exemption'): The Court
explained the position thu.s:

"20. In this behalf firstly it may be pointed out that all the
F petitioners had established'their Industrial Units after the
Government issued the executive instructions (Annexure
R. III) dated 12-1-1983, of which clause 5(b) specifically
speaks that the concessions will not be available to Tradi-
tional Industries like Flour Mills and Dall Mills etc. To say
that the petitioners were not aware of these executive
G instructions would be incorrect because clause 6 of these
instructions contemplates that New Industrial Units desi-
rous of availing the said concessions shall have to apply in
Form I accompanied with a declaration in Form II
appended to the said Instructions and the petitioners
applied in Form I with declaration in Form II (See Anne-
H xure D, D/l and D/2 in M.P. No. 2710/87). Further these
STATE OF M.P. v. G.S. DALL [RANGANATHAN, J.] 607

applications for exemption were made by the petitioners
A
only after the order dated 7- i0-1986 was passed in G1 S.
Fiour Mills v. State (Mf) No. 1861 of 1983) which
sbows that the petitioners were aware of the fact that they
were not entitled to exemption and it was only after the
aforesaid decisions that they considered to apply for
exemption. This fact is further fortified from the conduct of B
the petitioners themselves as they continued to submit
returns right from 1983 onwards. and continued to pay the
tax as assessed against them without taking any steps to
claim exemption. In this behalf paragraphs 8 and 9 of the
petitions are self explanatory. Thus having regard to all
these facts, the question of application of principle of C
promissory estoppel in the present case does not arise and
the petitions deserve to be dismissed.''

Sri Harish Salve, appearing for the G. S. Dhal/ & Flour Mills,
apart from pleading that the view taken in this case is the correct one
and not that enunciated by the Full Bench, also raised an alternative D
contention on the footing that, at best, the notification of 1981 was
ambiguous and lent itself to two plausible interpretations; Assuming
that there was initially some ambiguity regarding the applicability of
the Notification .of 23.10.81 to traditional indus•ries, it had been dis-
pelled by the instructions of 12, 1.83. Once these instructions were
published, any assessee setting up a traditional industry took a B
calculated risk on the issue as to whether the Notification should be
confined, on proper interpretation, only to non-traditional industries
and could not rely on the ·doctrine of equitable estoppel. Pointing out
that the assessees in the Full Bench case were persons who had set up
their industry after 12.1.83, Sri Salve argued that the dismissal of the
Special Leave Petition against the Full Bench judgment will not affect F
his case as this assessee had set up its industry, admittedly, before
12.1.1983. The position is similar in the case of Mohd. Ismail. Learned
counsel, therefore, submitted that,.even if the 1983 instructions were·
rightly held by the High Court to have validly supplemented the terms
of the 1981 Notificat\on; they can have no application to the two
earlier cases which had to be decided solely on the terms .of the 1981 G
Notification.

To answer these contentions, one has to look first at the statu·
tory instruments in this case viz. S. 12 of the Act and the notification
thereunder. S. 12(1)(i), with which we are concerned, lays down four
requirements for the grant of exemption from the provisions of the H
Ac.t:
608 SUPREME COURT REPORTS [1990] Supp. l S.CR.

(i) that any exemption to be granted under the section has to be
A
by a notification;

(ii) that the notification may exempt any class of dealers or any
goods or class of goods from the payment of tax under the Act in
whole or in part but on! y for a definile period to be specified in
B the notification;

(iii) that the exemption will be subject to such restrictions and
conditions as may be specified in the notification;

(iv) that such exemption could be prospective or retrospective.
'
c We are concerned here with the scope of the second and third
requirements mentioned above. So far as the class of dealers entitled
to the exemption are concerned, the notification spells out the follow-
ing requisites:

D (i) they must belong to one of the classes of dealers specified in
column No. (I) of the schedule; ·

(ii) they must have set up industry in any of the districts of
Madhya Pradesh specified in the annexure;

E (iii) they must have commenced production after 1.4.1981. The
period of exemption is also specified in the notification. So far as
the "restrictions and conditions" subject to which the exemption
has been granted, they are, as per column No. (3) of the
Schedule:

F (a) that the dealer should continue to furnish the prescribed
..
returns under the Sales Tax Act; and (b) that they should pro-
duce, at the time of their assessment, a certificate from the
Director of Industries certifying that such dealer is eligible to
claim exemption and has not opted for the "scheme of deferring
the payment of tax under the rules framed for the purpose".
G
It is not anybody's case that the assessees before us did not fall within
the class of dealers specified in column (!)or that they did not eomply
with (a) above or that they had opted for the scheme of deferment of
tax. This being so, the assessees claim that they are eligible for the
exemption under the notification and that the Director of Industries
H should have granted them a certificate to this effect. It is the denial of
STATE OF M.P. v. G.S. DALL [RANGANATHAN. J.J 609

this certificate which has brought the assessees to Court. The ques-
tion for consideration is whether the Director of Industries can refuse A
the exemption certificate on a consideration not specified in the notifi-
cation. Prima facie, no. All the conditions for exemption have to be.
and are, set out in the notification itself and all that the Director of
Industries has to do is to satisfy himself that those conditions are
fulfilled; he cannot travel beyond the terms of the notification.IHe can B
see whether the dealer falls under the description in column ( 1),
whether he has set up a new industry in M.P. State, whether he has
commenced production after 1.4.1981 and whether has opted for the
.._ deferment scheme. The condition about the dealer filing returns regu-
larly would seem to be one under the purview of the sales Tax Officer
rather than one under that of the Director of Industries. If these condi-
tions are fulfilled, the exemption certificate will have to be granted. c
That seems the straight and simple interpretation of the notification.

But, it is said for the State, this is not the intendment or effect of
the notification. It is said that the argument overlooks the reference in
column (3) to the grant of an eligibility certificate by the Director of D
Industries. This is one of the important conditions for the grant of this
exemption. It is pointed out, in this context, that there had been in
force in the State, for several years past, a scheme of subsidy/loan.
That scheme was also dependant on a certificate of the Director of fl'
Industries but that certificate could be denied to "traditional indus-
tries". It is argued that, since the notification does not set out the E
conditions on which, and the procedure in accordance with which the
Director of Industries is to issue the eligibility certificate, that earlier
scheme and procedure should be read into the notification. Sri Salve
objected to this reading of the notification, inter alia, on the ground
that the earlier scheme and the exemption now proposed are totally
different in their object and scope and that, while the former scheme F
was intended as an· 'incentive to any one who set up a new industry in
the State so that "traditional" industries did not get any benefit, the
notification presently under consideration was issued with the object
of industrialising the backward areas of the State and so it was immate-
rial what type of industry went in there and whether the industry
proposed to be set up was a "traditional" one or not. This contention _G
does not appear to be quite correct. It has been pointed earlier that
even the earlier schemes provided for graded incentives for industriali-
sation effective for varying periods depending upon the backwardness
or otherwise of the district in which the industry was proposed to be set
up. But, even granting that the 1981 policy was to replace the earlier
subsidy/loan by an exemption, it does not necessarily follows that the H
'•
610 SUPREME COURT REPORTS I 1990] Supp. I S.C.R.
units intended to be covered by the new scheme were only those that
A
were covered by the earlier scheme and that no wider exemption was
contemplated. Indeed, there were four new concessions introduced in
1981-82 and there is no material which would justify these being tied
down to the parameters of the earlier schemes. No factual foundation
has been laid to establish the hypothesis that the exemption conferred
B in 1981 was to be a· inere extension or substitution of the benefits
conferred earlier. There are other difficulties in reading the provisions
of the earlier schemes into the notification. In the first place, the
earlier schemes specifically provided that "traditional industries" were
outside their purview ..The language of the notification, which is a /"
ot
piece subsequent legislation, is silent about this. This is itself indica-
tive of a legislative intent to widen the scope of relief and grant exemp-
c tion to traditional industries as well: vide, G.P. Singh: Interpretation
of Statutes, 4th Edition, pp. 767-8. The omission to specifically exc-
Jude "traditional industries" as was done in the earlier schemes the
notification gains added significance in view of S. 12 which specifically
requires that all conditions and restrictions governing an exemption
D should be specified in the notification. Secondly, the attempt of the
State to read a further condition into the notification excluding "tradi-
)..
tional industries" from the exemption is based on the words which
require that the Director of Industries should grant a certificate (a)
that the dealer is entitled to claim the exemption and (b) that he has
not opted for the scheme of deferring the payment of tax under the
E rules framed for the purpose. But these words do not carry the State's
case further, for what the Director of Industries has to do is to certify
that the applicant is entitled to the exemption on the terms and condi-
tions set out in the notification and not on the basis of any further
requirements not so set out. The notification does not authorise him to
I-
say that, though the applicant fulfills the terms of the notification, he
F will not grant the eligibility certificate. because, under the previously
prevalent schemes, he could not issue an eligibility certificate to "tra-
ditional industries". He could not grant an eligibility certificate under
the earlier schemes because the instructions which outlined the scheme
specifically excluded traditional industries. Actually, even under the
earlier schemes, neither the application form nor the form of certifi-
G cate, which have been extracted earlier, make any reference to the
assessee concerned not being a 'traditional industry'. Be that as it may,
for granting a certificate that the applicant is eligible for exemption
under the (IOtification, the director has to look to the conditions set out
in the notification and nowhere else. To say that, when the notification
requires an eligibility certificate from the Director it means a certifi- ..'
H cate on the terms prescribed under the earlier scheme is to read into
STATE OF M.P. v. G.S. DALL [RANGANATHAN. J.] 61 I

the notification something which is not there. Thirdly, the interpreta-
A
tion advocate by the State really narrows down the class of dealers
entitled to the exemption as set down in column (1) of the notification.
It amounts to substituting, for the word "dealers" in column 1 of the
notification the words "dealers other than those carrying on traditional
industries". Such an interpretation also virtually amounts to allowing
certain exeCutive instructions issued in a different context to cut down B
the scope of a statutory notification. This cannot clearly be done.
Lastly, a perusal of the earlier schemes would show that the concept of
"traditional industries" is a vague one. The nomenclature of these
industries has varied from time to time. The note in the 1977, and the
definition in the 1983, instructions show the eligibility under the
earlier schemes .was denied not only to "traditional industries" but also
certain other industries such as revived or reconstructed industries .. c
We may also mention in this context a notification of 21.10.1986 refer-
red to by the High Court outlining exemptions under Ss. 6 and 7AA. It
excludes, from exemption, in addition to saw mills, flour mills etc.
(which the State calls traditional industries) various other industries
(total numbering 26) specified in cl. (xiii) thereof. This changing de- D
finition of eligibility for exemption also shows that the.re was no com-
mon or identical group of heneficiaries intended ·under the various
instructions or notifications and· that each set of instructions or notifi-
cation issued from time to time defined only the categories exempted
from its purview and nothing else. The exemption list under one was
not meant to be carried over int0 another. We are, therefore, of E
opinion that it is not permissible to restrict the scope of the notification
in the manner suggested.

We may point out that, in construing the notification thus, we
are only giving effect to a well settled rule that may be illustrated by a
reference to the decision in Hansraj Gordhandas v. H.H. Dave, I1969] F
2 SCR 253. In that case notifications had been issued under S. 8 of the
Central Excises and Salt Act, 1944 granting exemption to (a) "cotton
fabrics produced by any cooperative society formed of owners of
cotton powerlooms ..... " and (b) "cotton fabrics produced on
power looms owned by any cooperative society or owned by or allotted
to the members of the society ..... ". The appellant had sought G
exemption from excise duty under these notifications in respect of
cotton fabrics which had been got manufactured by him on the power-
looms belonging to a cooperative society in pursuance of an agreement
entered into with it. The excise authorities rejected the claim on the
ground that the exemption under the notifications could be claimed
only when the cotton fabrics were manufactured by a cooperative so- H
612 SUPREME COURT REPORTS [1990] Supp. I S.C.R. t
ciety for itself. Upholding the assessee's claim, this Court observed:
A
"It was contended on behalf of the respondent that
the object of granting exemption was to encourage the for-
mation of co-operative societies which not only produced ',.

cotton fabrics but which also consisted of members. not
B only owning but having actually operated not more than
four power-looms during the three years immediately pre-
ceding their having joined the society. The policy was that
instead of each such member operating his looms on his
own. he should combine with others by forming a society ~
which. through the cooperative effort should produce
cloth. The intention was that the goods produced for which
c exemption could be claimed must be goods produced on its
own behalf by the society. We are unable to accept the
contention put forward on behalf of the respondents as
correct. On a true construction of the language of the
notifications. dated July 31, 1959 and April 30. 1960 it is
D clear that all that is required for claiming exemption is that
the cotton fabrics must be produced on power-looms
A ..
owned by the cooperative society. There is no further
requirement under the two notifications that the cotton
fabrics must be produced by the Cooperative Society on the
power-looms "for itself'. It is well-established that in a
E taxing statute there is no room for any intendment but
regard must be had to the clear meaning of the words. The
entire matter is governed wholly 6y the language of the
notification. If the tax-payer is within the plain terms of the
exemption it cannot be denied its benefit by calling in aid '.I'
·any supposed intention of the exempting authority. If such
F intention can be gathered from the construction of the
words of the notification or by necessary implication there-
from, the matter is different, but that is not the case here.
In this connection we may refer to the observations of Lord
Watson in Salomon v. Salomon & Co., [ 1897] A.C. 22, 38:

G "Intention of the legislature is a common but
very slippery phrase, which, popularly understood
may signify anything from intention embodied in
positive enactment to speculative opinion as to what
the legislature probably would have meant. although
there has been an omission to enact it. In a Court of
H Law or Equity, what the Legislature intended to be
STATE OF M.P. v. G.S. DALL [RANGANATHAN. J.J 613

' done or not to be done can only be legitimately
. ;1

ascertained from that which it has chosen to enact, A ·
either in express words or by reasonable and necessary
implication."

It is an application of this principle that a statutory notifica-
tion may ilot be extended so as to meet a casus omissus. As B
appears in the judgment of the Privy Council in Ci'awford
v. Spooner, 6 Mod. P.C.C. 8.

" ...... We cannot aid the legislature's defec-
tive phrasing of the Act, we cannot add, and mend,
and, by construction, make up deficiencies which are C
left there."

Learned Counsel for the respondents is possibly right ih his
submission that the object behind the two notifications is to
encourage the actual manufacturers of handloom doth to
switch over to power:1ooms by constituting themselves into D
Cooperative Soeieties. But the operation of the hdtifica"
tions has to be judged not by the object which the rule•
making authority had in mind but by the words which it has
employed to effectuate the legislative intent."

In -our view, this principle applies here squarely. Indeed, even IE
granting that ihe notification may be interpreted having regard to the
past history and the possible intention of ihe Government while issu-
ing the notification, the position of the assessees here is much stronger
for, white in the reported case the Staie was trying only ttl effectuate
the dear object of the notification, here it is not at ail dear, for the
reasons discussed above; that the State intended the exempiiofi to be p
confined only to the cases covered by the subsidy/loan schemes pre-
valent earlier. the 1981 notification does not expressly; or (for the
reasons discussed above) even by necessary implication, exclud1
"traditional" industries from its scope.

·Sri Salve contends that, even if.a lenient view is taken and a more t;
liberal construction is sought to be placed on the notification, the best
that could be said for the State would be that the notification was
-ambiguous. One could either say that the previous procedure atttl
re'luirements prevalent for obtaining an exemption certificate were
interlded to be ihcorpotated by the words requiring such a certificate
(as suggested for the appeliant) ot otte couid say, With equal piausibi" H
614 SUPREME COURT REPORTS [1990] Supp. I S.C.R.

lity, that the exemption certificate is to be based only on the conditions
A
and requirements mentioned in the notification (as contended for by
the assessees). In such a state oflaw, he contends, one can have regard
to the conduct of the parties and how they understood the notification.
His argument is that the State, by its conduct, had held out to the
assessee that it would also be eligible for the exemption. In this con-
B text, he drew our attention to the following .circumstance:

(1) The M.P. Audhyogik Vikas Nigam, a State instrumen-
tality, which was administering the notification issued, in
November 1981, a pamphlet setting out the various incentives
the State was offering for new industries proposed to be set up in
the State. As to •'exemption from sales tax", the pamphlet stated
c that "new industrial units coming into production after 1.4.81"
will be entitled to an exemption for a period depending upon the
district where it is set up or could alternatively exercise an option
to defer payment of sales tax by a period of 10 years. It did not
mention anywhere that the industry should not be a traditional
D industry.

(2) The Nigam allotted a plot of land of the extent of 1 acre
to enable the assessee to establish its unit in the Industrial Area,
Mandideep, Dt. Raisen.

E (3) Other incentives as to power, interest and capital sub-
sidy were extended to the assessee. Thus, says counsel, the State
"lured"' the assessee to set up a unit in the record time of ten
months and with a substantial capital outlay of over Rs. IO lakhs
in a backward area. These incentives were meant to be co-
extensive with the concession regarding sales tax. He contends
F that these representations and acts are sufficient to found a claim
of "equitable estoppel'· against the State. We are unable to
accept this argument. The respondents have stated in their
counter affidavit that the Nigam had acted in error and miscon-
strued the notification and was not acting under the authority of
the Government in issuing'the pamphlet. The other concessions
G extended to the assessee pertained to the setting up of a small
scale industry in the State and were unrelated to the exemption
from sales tax. In our opinion, there is force in these submis-
sions. The circumstances and material relied on by the assessee
do not spell out any clear promise of exemption from sales tax
even for traditional industries. The notifications or guidelines
H under which the other facilities were granted have not been
STATE OF M.P. v. G.S. DALL [RANGANATHAN, J.J 615

placed before us and no .material is available on record to corre-
A
late them to the sales tax exemption or to show that al~ these
were inextricably connected so as to fonn part of a single "relief
packet". We, therefore, reject thiHontention of Sri Salve. How-
ever, on the interpretation of the notification, we accept the
contention of the assessees that the notification does not warrant
denial of exemption .solely on the ground that the applicant is B
having a "traditional industry".

We have indicated earlier that the assessees whose writ petitions
were disposed of by the Full Bench had sei up their industries after
12.1.1983 by which time elaborate instructions had been issued to
explain the State's point of view.· The question is whether this makes a
difference. We think not. Even the 1983 document is not a statutory c
lnstrument-neitber a notifica\jott'<nor a rule framed under the statute.
The -Full Bench has considered those·tnstructions to be conclusive on
two grounds-on the doctrine of contemporanea expositio and on t~e
principle that executive instructions can always be issued to supple-
ment statutory instruments so as to fill up areas on which the latter are D
.A silent. In our opinion, neither of these grounds is tenable. It is true
that the principle of contemporanea expositio is invoked where a
statute is ambiguous but is·sbown to have been clearly and consistently
under~tood and explained by the administrators of the law in a particu-
lar manner. This doctrine has been explained and applied in a nun1ber
of cases of this Court (e.g. See Verghese v. l.T.O., [1982] l S.C.R. E
629;-in addition to the cases referred to by the Full Bench). As pointed
out by Sri S~lve: its applicability in the construction of recent statutes.
and that too in the first few years of their enforcement, bas been
·1 doubted, vide: Doypack Systems P. Ltd. v. Union of India, [1988] 2
S.C.C. 299, para 61. But, this apar·t, the principle will not be applic-
able here for-two reasons. In tlie first place, the instructions of 1983 do F
not ,anywhere "expound" the termsqf the notification. They do not
give any indication that the. state had applied its mind to the precise
terms of the notification or their interpretation. They do not explain or
clarify that, though the notification is silent, it has been intended that
the limitations of the previous schemes should be read into it.
Secondly, the cases referred to will show that the doctrine applies in G
cases where the plea is that, though the language of the statute may
appear to be wide enough to seem applicable against the subject in
,particular situations, the State itself-which was the progenitor of the
statute-had not understood it in that way. But, to apply the doctrine
to widen the ambit of the statutory language would, however, virtually
mean that the State can determine the interpretation of a statute by its H
616 SUPREME COURT REPORTS I 1990] Supp. I S.CR.

A ipsi dixit. That, certainly, is not, and cannot be, the scope of the
doctrine. The doctrine can be applied to limit the State to its own
narrower interpretation in favour of the subject but not to claim its
interpretation in its own favour as conclusive.

The second ground on which the Full Bench has sought to invoke
B the instructions is also not correct. Executive instructions can supple-
ment a statute or cover areas to which the statute does not extend. But
they cannot run contrary to statutory provisions or whittle down their
effect. The Full Bench seems to think that, unless the instructions are
brought in, the notifications would have been in danger of abuse for
want of proper guidelines as to the grant of exemption certificates. It is
suggested that the notification contemplates rules to be issued for the
c purpose and that, since no rules had been issued, Directors of In-
dustries were left with no parameters for the issue of exemption certifi-
cates and might act capriciously or arbitrarily in granting or refusing
certificates. The instructions, it is said, have been issued to fill in this
lacuna and are heflce valid. There are two misconceptions in this line
D of reasoning. The first is that, though the last few words in column (3)
of the notification are capable of a wider meaning, it would appear
that these words govern only the immediately preceding words; rules
"·
envisaged are not in relation to the grant of exemption certificates and
conditions therefor b.ut in respect of the circumstances in which the
assessees can exercise the option between exemption and deferment of
E sales tax. This view derives support from the instructions of 1983. As
pointed out earlier, the instructions first set out the scope of the vari-
ous notifications as granting exemption from sales tax; the instructions
thereafter proceed to say:

"The grant of exemption from the payment of sales
F tax is contingent upon the issue of a certificate of eligibility
to the new industrial units. This certificate of eligibility is
required to be issued by the Director of Industries or an
officer authorised by him for this purpose.

In so far as the grant of concessions relating to the
G exemption from payn1ent of sales tax is concerned, no
:t further notifications are required to be issued. For enabling
if
the new industrial units to avail of the second concession
viz., that of deferment of paynJent of sales tax, a scheme is
~-!~ being issued separately. For availing of the benefit of the ,\.
,, deferment of concession too, a certificate of eligibility is
:g H required to be obtained by the industrial unit. However,
;::;

.,.
.ffi
STATE OF M.P. v. G.S. DALL (RANGANATHAN, J.l 617

pending the issue of the scheme, the grant of certificate :if
A
eligibility should not be held up."

(underlining ours)

Incidentally, we may point out, the first part of the para does not
clarify that the eligibility certificate is not to be granted to "traditional B
industries". But, so far as the present point is concerned, it is categori-
cally stated that no further notifications are required to be issued and
that they are needed only to define the scheme for deferment of tax.
•, Indeed, rules were framed in order to implement the deferment
scheme which came into force with effect from 1-4-1983. We shall refer
a little later to these rules. Secondly, there is no warrant for ~ssuming C
that the notification envisages conditions for the issue of the eligibility
certificate other than those sepcified by itself. There is nothing in the
language of the notification to suggest that anything further is needed
to enable the Director of Industries to grant the exemption. Without
the guidelines, the requirement for an exemption cerificate would not
becoine an "empty formality" as suggested by the Full Bench . .The D
Director of Industries has to issue the same after satisfying himself that
the applicant industry falls within the terms of the notification in the
following respects-

(a) that the assessee is one of the class of dealers .set out in
column (1); E

(b) that he has set up an industry in the State;

(c) that it has been set up in one of the districts set out in the
annexure and the eategory tO which it belongs;
F
(d) that the industry has commenced production after 1-4-81;

(e) that the assessee has not opted for the deferment scheme.

These condi.tions are many and detailed and do not leave anything to
the discretion of the Director of Industries. We fail to understand what G
need there was to lay down.any elaborate procedure therefor. Even if
there was, and the earlier procedure by way of application form, decla-
ration form and form of certificate were to be adapted, that procedure,
by itself, did not, as pointed out earlier, contain any reference to the
assessee being a traditional industry or otherwise. To assume first that
the conditions specified in the notification are not exhaustive or suffi- H
618 SUPRE~IE COLiRT REPORTS [1990) Supp. I S.C.R. /'·/

cient and may lead to abuse of power by executive authorities unless·
A
canalised by procedural guidelines and then to say that such a conclu-
sion is borne out by the mere reference to a certificate being granted
by the Director of Industries because, under some earlier schemes,
such certificate was being granted on a restricted basis, does not
appear to be sound logic. We are, therefore, of opinion that the notifi-
B cation is q tiite clear and leaves no area of vacuum which needs to be
supplemented by guidelines. Thirdly, if we read the last part of the
entry in column (3) of the notification as envisaging rules to be framed
. for the grant of the eligibility certificate, no such rules were framed.
Only instructions were issued. These instructions say that even an
assessee, who fulfills all the requirements of the notification, will not
be eligible for exemption unless he fulfills one more condition outside
c the notification. They travel beyond and counter to the notification.
They restrict the scope of exemption under the notification. They deny
exemption to a person who qualifies for it under the statutory notifica-
tion. Indeed, there is force in the contention that if the statutory
notification is construed as permitting the State by rules or executive
D instructions to prescribe other conditions for exemption, whetber new
or based on past practice, it is liable to be struck down on the ground
of impermissible delegation of legislative power to the executive. This,
...
certainly, they cannot do.

A further development which has been relied on by the State but
E does not really seem to help iJs case may now be referred to. State Act
25 of 1982 inserted S. 22 Din the Act in the following terms:

"22-D. Special provisions relating to deferred payment of
tat by Industrial Units-Notwithstanding anything con-
tained in any other provisions of this Act, a registered
F dealer, who is-

(a) registered as a small scale industrial unit with Industrial
,, Department of the Government of Madhya Pradesh; or

(b) registered with the Director General of Technical
G Development as an industrial unit; or

(c) registered as an industrial unit by any authority duly
empowered to do so by the Government of Madhya
Pradesh or the Central Government; or

H (d) holding a licence under the Industries (Development
and Regulation) Act, 1951 (No. 65 of 1951).
STATE OF M.P. v. G.S. DALL [RANGANATHAN. J.J 619

and who in each case has or may set up a new industrial unit
in any district of Madhya Pradesh if eligible for grant of the A
facility of deferred payment of tax under the scheme pro-
viding for grant of incentive to enterpreneurs for setting up
new industrial units in the state as the State Government
may make in this behalf may make deferred payment sub-
ject to such restrictions and conditions as may be specified B
in such scheme."

Thereafter, the State Government framed the M.P. Deferment of Pay-
ment of Tax Rules, 1983 which were gazetted of 1. 9.83 but with
retrospective effect from 1.4.1981 (that is, even anterior to the date of
the notification). Rules 3, 4 and 14 are relevant and may be set out
here. c
"3. Eligibility for grant of Facility of Deferred payment of
tax-(1) A new industrial unit other than a unit specified in
rule 14 which is covered by any of the categories specified
in section 22D and of the Act and which is engaged in the D
manufacture and sale of any goods shall qualify for defer-
red payment of the tax payable by it_provided it is eligible
for grant of the concession of exemption from payment of
tax in terms of notification No. A 3-41-81 (35)-ST-V, dated
the 23rd October, 1981 and No. A-3-41-81(31) ST-V, dated
the 29th June, 1982 as amended from time to time subject E
to the provisions of the act. The period pertaining to which
the tax which the new industrial unit can defer will be the
same for which it could have obtained the concession of the
exemption from payment of tax, i.e., the period pertaining
to which the tax can be deferred will be the period shown in
column (2) of the said notification. (2) The new industrial F
unit shall be eligible to defer only·the payment of tax which
is due from it under the Act.

4. Application for Scheme of deferred payment and grant
of certificate of eligibility-( 1) A new industrial unit opting
for the scheme of deferred payment of tax shall apply for G
and obtain a certificate of eligibility in accordance with the
instructions issued by State Government in the Commerce
and Industries Department for the said purpose. An appli-
cation in writing shall be submitted within forty five days of
the publication of these rules or of commencement of the
production whichever is later. In the application form the H
620 SUPREME COURT REPORTS ( 1990) Supp. I S.C.R. ,• .·
new industrial unit shall indicate that it has opted for
A
scheme of deferred payment of tax. The option once exer-
cised shall be irrevocable. The form of the application as
well as the certificate of eligibility shall be as specified in
the said instructions. The application shall be made to the
General Manager, District Industries Centre of the district
B where the new industrial unit is or is proposed to be located
and shall be processed further in accordance with the said
instructions. The certificate of eligibility in respect of large
and medium scale units shall issued by the Director of
Industries (Government of Madhya Pradesh) and in res- t
pect of small scale units by the said General Manager, and
shall carry a specific and district number given by the said
c officer.

(2) A copy of the certificate of eligibility shaH be for-
warded by the officer issuing the certificate to the appro-
priate Sales Tax Officer, i.e. the Sales Tax Officer in whose
D circle the industrial unit is registered as a dealer. The Sales
Tax Officer receiving the copy of the certificate of eligibi-
lity shall maintain a record of the same in such forn1 as n1ay
....
be directed by the Commissioner and shall not enforce
recovery of the tax payment whereof has been shown to
have been deferred in the certificate of eligibility.
E
(3) The new industrial unit shall be entitled to defer the
payment of the tax for a period of ten years. This entitlement
shall be available only on receipt of the certificate of eligi-
bility to it under sub-rule (I). The certificate of eligibility
shall show the duration for which the payment of the tax •
F has been deferred. The year in which the tax pertaining to
any accounting year of the industrial unit is required to be
paid consequent upon deferment of tax shall also be shown
in the certificate of eligibility. The entire tax assessed per-
taining to any accounting year shall be payable by the
industrial unit in lump sum on the expiration of duration of
G deferment and payment of such tax shall be made within
thirty days of the date on which the period of ten years
~if
from the end of the relevant accounting year expires.
''I'\
'fr 14. Non-availability of facility of deferred payments-The
,',·::
result of the scheme of deferred payment of tax shall not be ~
r·;r
·'·'t H available to the following new industrial units, namely:
ui

~ ~'
u
••
STATE OF M.P. v. G.S. Df\LL [RANGANATHAN, J.] 621

(A) (1) flour mills (Excluding Roller Flour Mills);
A
(2) Oil mills (excluding Solvent Extraction Plants);
(3) dall mills;
(4) saw mills;
(5) rice mills; B
(6) printing presses of all types;
(7) cotton ginning and pressing factories;
(8) ice factories;
(9) such other industries as may be notified by Govern- C
ment from time .to time.

(B) industrial units undertaking expansion, modernisation
or diversification;

(C) a closed unit revived by an entrepreneur; D.

(D) units claiming interest free loans as an existing unit
establishing a new unit;

(E) an industrial unit set up by transferring or shifting or
dismenting an existing industry. E

A note was also published in the Gazette explaining the background of
the rules. It reads thus:

"NOTE EXPLAINING THE BACKGROUND OF THE
SCHEME OF DEFERRED PAYMENTS TAX F

The Government of Madhya Pradesh, with a view to
accelerating the pace of industrialisation have announced
concessions regarding the payment of tax under the
Madhya Pradesh General Sales Tax Act, 1958 and the
Central Salex Tax Act, 1956 by ·new industrial units going G
into production after 1st April, 1981 which contemplate-

(a) total exemption from payment of tax whether State or
Central by new industrial units going into production after
Ist April, 1981 for verying periods depending upon the dis-
trict in which the new industrial unit is set up; H
....
622 SUPREME COURT REPORTS [1990] Supp. 1 S.C.R. "

(b) deferment of the payment of tax in lieu of the above
A
said exemption for a period of ten years.

To give effect to the concession of exemption from
payment of tax, the Government in the Separate Revenue
Department have already issued the following notifications:
B
(i) F. No. A3-41-81(35)-ST-V, dated 23rd October, 1981.

(ii)F. No. A3-41-81 (25)-ST-V, dated Ist May, 1982.
+
(iii) F. No. A3-41-81(24)-ST. V, IstMay, 1982.
c (iv) F. No. A3-41~81 (31)-ST-V, dated 29th June, 1982.

With a view to enabling those new industrial units who opt
for the alternative concession of deferment of payment of
tax, a special provision in the shape of section 22-D has
D been inserted in the Madhya Pradesh General Sales Tax
Act, 1958 with effect from Ist April, 1981, according to "'
which the facility of deferring the payment of tax which'.
become available subject to the provisions of the sche~e
providing for the grant of incentives for setting up the new
industrial ~nits;
E
The aforesaid rules have therefore been framed to formu-
late the scheme of deferred payment of tax."

It might appear, at first sight, that since the relief by way of deferment ~
of tax is only in the nature of an alternative to the provision for exemp-
.F ti on and the former is not available to traditional industries because of
rule 14 above, the same should be the position in regard to the exemp-
tion provision also. There are, however, several difficulties in accept-
ing this suggestion. In the first place, the rules relate to tax deferment
and not tax exemption. It is open to the State Government, particu-
larly in view of S. 220, to frame such scheme for the purpose as it may
G deem fit. The provision for exemption, however, needs to be spelt out,
under S. 12, in a statutory notification. Secondly if, as is being urged
on behalf of the State, it is explicit even on the terms of the notification
that traditional industries are excluded, it is not necessary for the rules
of deferment to specifically provide that they will not be available to ~ .
the industries listed in rule 14 particularly when rule 4 has incor-
H porated the requirement of an eligibility certificate in accordance with
STATE OF M.P. v. G.S. DALL [RANGANATHAN, J.J 623

the previous instructions for the said purpose. Thirdly rule 14 excludes
from the scheme not merely "traditional industries" covered by para
(A) but also industrial units (which may not be 'traditional industries')
falling under paras (B) to (E). Fourthly, the rules are not inconsistent
with the interpretation that, while all industries fulfilling the terms of
the notification can claim exemption under it, only some of those
units, which do not fall under rule 14," can opt for the alternative of B
determent. We are, therefore, of opinion that even the retrospective
promulgation of these rules provide no assistance in the interpretation
of the notification.
t
A reference has now to be made to the notification of 3/7/87
amending the 1981 notification with retrospective effect so as to
exclude what may be· described in brief as 'traditional industries' c
though, like rule 14 of the deferment rules, the exclusion extends even
to certain other non-traditional units operating in certain situations.
Though this notification purports to be retrospective, it cannot be
given such effect for a simple reason. We have held that the 1981
notification clearly envisages no exclusion of any industry which fulfills D
the terms of the notification from availing of the exemption granted
'· under it. In view of this interpretation, the 1987 amendment has the·
effect of rescinding the exemption granted by the 1981 notification in
respect of the industries mentioned by it. S. 12 is clear that, while a
notification under it can be prospective or retrospective, only prospec-
tive operation can be given to.a notification rescinding an exemption
granted earlier. In the interpretation we have placed on the notifica-
tion, the 3/7/87 notification cannot be treated as one merely clarifying
an em biguity in the earlier one and hence capable of being retrospec-
tive; it enacts the rescission of the earlier exem.ption and, hence, can
J operate only prospectively. It cannot take away the exemption confer-
red by the earlier notification. F

We would like to add that we agree with the view of the Full
Bench that, if the notification is interpreted as done by it or even hold
it to be ambiguous, there is no scope for the assessee to invoke the
doctrine of promissory estoppel. We have already dealt with this
aspect in regard to the cases in which the State has appealed. In the G
other cases covered by the Full Bench decision, the mere fact that an
exemption was initially granted and then revoked would be insufficient
to found the claim of estoppel particularly when it has been found that
the assessees started production after 12. 1.1983 and claimed exemp-
-" tion very much later. But.since, in our view, the terms of the notifica-
tion are clear and envisage no denial of exemption to traditional H
industries, this question does not survive.
624 SUPREME COURT REPORTS [ 1990] Supp. I S.C.R . .,. .-

Before we conclude, we have to refer to one aspect which we
A
have touched upon at the very beginning of the judgment and that is
the dismissal, in limine, of the Special Leave Petition filed in this Court
by the petitioners before the Full Bench. It has been pointed out that
the above petition was dismissed notwithstanding that the Special
Leave Petition in the case of G.S. Dhall & Flour Mills was also then
n pending for admission. It would perhaps have been better if both the
S.L.Ps. had been taken up and dealt with together. However, the
S.L.P. against the Full Bench was dismissed and, two of us having
been members of the Bench that dismissed it, we may observe that Sri
Salve is perhaps right in saying that it was the content of paras 20 and f
21 of the Full Bench judgmet that persuaded this Court to dismiss the
S.L.P. there against. The Full Bench has there pointed out that even if
c it could be said that two interpretations of the notification were
equally plausible. the assessees in those cases had set up the industries
after the explicit instructions of 12. 1.1983 were made public and thus
took a deliberate risk and had only themselves to thank. Nevertheless,
the fact is that the view taken by us on the scope of the notification
D runs counter to the Full Bench decision which must be treated as
overruled.

For the above reasons, we have come to the conclusion that the
G. S. Dhall and Flour Mills case laid down the correct law and not the
Full Bench. We would like to add that we are not quite happy to arrive
E at this decision. It does seem likely that the State Government had not
intended the exemption to be availed of by certain categories of
industries. But it has failed to achieve this purpose on account of the
wide language in which it couched the exemption notification. We find
ourselves unable, for the reasons discussed above, to discover any
valid legal basis on which the exemption clearly granted can be with-~
F held from the assessees here. We, therefore, dismiss the appeals of the
State and allow the appeals preferred by the assessees and hold them
entitled to the exemption under the 1981 notification. We, however,
make no order regarding costs.

R.S.S. Appeals
filed by State dismissed
and other appeals allowed.