What happens when the citizens act on the representation of the Government (particularly its Ministers and Policy) only to find to their detriment that the Government machinery has failed to act on time? Can a citizen be penalized for following the Government Policy on the ground that even though the Government promised yet it failed to act? Can benefit of a benevolent industrial policy be denied to the citizen on such grounds? These were some of the questions which were put before the Supreme Court by a tax payer to claim that in the absense of any fault on its part, the benefit of Industrial Policy announced by the State Government should not be denied and the Supreme Court concurred.
In its recent decision in Lloyd Electric & Engineering Ltd. v. State of Himachal Pradesh [Civil Appeal No. 6838/2015] (now reported at (2016) 1 SCC 560) the Supreme Court was dealing with the decision taken by Cabinet of Himachal State Government which extended benefit of a tax concession from 1st April onwards. However the enabling legislative notification was issued in middle of June and it stated that benefit was available "with immediate effect". On this count the High Court declined to decide in favour of the tax-payer giving strict effect to the notification. The Supreme Court reversed the decision of the High Court taking into context the Cabinet's resolve and the decision taken by the highest body of the State Government i.e. the Council of Ministers.
Making the Government answerable and responsible for the statement / decision of its Council of Ministers, the Supreme Court sternly declared the impermeability of the Government to say one thing and effectuate another. The Court declared the legal position inter alia in the following terms;
10. We do not think it necessary to go into the various 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 concession to the eligible units beyond 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, 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 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 entitled to the concession till the Department issued 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 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 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.…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 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 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 Communications Limited and another become relevant.
In terms of Article 141 of the Constitution of India, this declaration of legal position by the Supreme Court amounts to law of the land and is binding on one and all, including all Government functionaries and even the High Courts. We hope that Government departments will take due note of this decision and ensure that there is no dichotomy in their public declarations and functioning.
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