Dismissed

K. R. Selvakumar v. The State of Tamil Nadu

Madras HC28 Feb 2020WP/5246/2018

Case brief

AI extract

What is this about?

Private diesel bunk dealers in Tamil Nadu fishing harbours challenged a Government Order deleting private bunks from the sales tax exemption scheme for high speed diesel supplied to fishermen, and the consequential order stopping allotments. The court found the exclusion supported by cogent reasons and public interest, distinguished the petitioners' authorities, and dismissed the writ petitions.

What the court decided

AI extract

K. R. Selvakumar Vs The State of Tamil Nadu — GST and Indirect Tax | Madras HC (2020)

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IN THE HIGH COURT OF JUDICATURE AT MADRAS

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Reserved on : 28.01.2020

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Pronounced on : 28.02.2020

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CORAM

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THE HONOURABLE MR. JUSTICE C.V.KARTHIKEYAN

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W.P.Nos.5246, 7806, 7807, 7808, 7809, 7810, 7811, 14858 & 14859 of 2018

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and

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W.M.P.Nos.6437,6438, 6439, 9717, 9718, 9719, 9720, 9721, 9722, 9723, 9724, 9725, 9726, 9727, 9728, 9729, 9730, 9731, 9732, 9733, 9734, 17582, 17583, 17584, 17585, 17586 & 17587 of 2018

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K.R. SELVAKUMAR, PROP: FISHERMEN CORPORATIVE OIL DEALERS.

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... PETITIONER IN WP NO.5246 OF 2018

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M/S.SAMMATTI FUEL CENTRE ... PETITIONER IN WP NO.7806 OF 2018 S.ANNADURAI ... PETITIONER in WP No.7807 of 2018 SEASHELL AGENCIES ... PETITIONER in WP No.7808 of 2018 M/S.SAROJINI OIL DEALERS ... PETITIONER in WP No.7809 of 2018 N.RAGHUPATHY ... PETITIONER in WP No.7810 of 2018 K.K.AGENCY ... PETITIONER in WP No.7811 of 2018 M/S.GOVINDAMMAL DIESEL CENTRE

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... PETITIONER in WP No.14858 of 2018

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R.S.R.ENTERPRISES ... PETITIONER in WP No.14859 of 2018 ..Vs..

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1 THE STATE OF TAMIL NADU REP. BY ITS SECRETARY ANIMAL HUSBANDRY DAIRY AND FISHERIES (FS-3) DEPARTMENT FORT ST. GEORGE CHENNAI 9

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2 THE DIRECTOR OF FISHERIES CHENNAI 6

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https://hcservices.ecourts.gov.in/hcservices/

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3 THE STATE OF TAMIL NADU
REP. BY ITS SECRETARY COMMERCIAL TAXES
DEPARTMENT FORT ST. GEORGE CHENNAI 9
... RESPONDENTs in WP No.5246 of 2018
1 THE STATE OF TAMIL NADU
REP. BY ITS PRINCIPLE SECRETARY COMMERCIAL
TAXES SECRETARIAT CHENNAI-600 009.
2 THE DIRECTOR OF FISHERIES
CHENNAI-600 006. ... RESPONDENTs in WP No.7806 of 2018
1 THE STATE OF TAMIL NADU
REP. BY ITS PRINCIPLE SECRETARY COMMERCIAL
TAXES SECRETARIAT CHENNAI-600 009.
2 THE DIRECTOR OF FISHERIES
CHENNAI-600 006. ... RESPONDENTs in WP No.7807 of 2018
1 THE STATE OF TAMIL NADU
REP. BY ITS PRINCIPLE SECRETARY COMMERCIAL
TAXES SECRETARIAT CHENNAI-600 009.
2 THE DIRECTOR OF FISHERIES
CHENNAI-600 006. ... RESPONDENTs in WP No.7808 of 2018
1 THE STATE OF TAMIL NADU
REP. BY ITS PRINCIPLE SECRETARY COMMERCIAL
TAXES SECRETARIAT CHENNAI-600 009.
2 THE DIRECTOR OF FISHERIES
CHENNAI-600 006. ... RESPONDENTs in WP No.7809 of 2018
1 THE STATE OF TAMIL NADU
REP. BY ITS PRINCIPLE SECRETARY COMMERCIAL
TAXES SECRETARIAT CHENNAI-600 009.
2 THE DIRECTOR OF FISHERIES
CHENNAI-600 006. ... RESPONDENTs in WP No.7810 of 2018
1 THE STATE OF TAMIL NADU
REP. BY ITS PRINCIPLE SECRETARY COMMERCIAL
TAXES SECRETARIAT CHENNAI-600 009.

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2 THE DIRECTOR OF FISHERIES CHENNAI-600 006. ... RESPONDENTs in WP No.7811 of 2018

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1 THE STATE OF TAMILNADU REP. BY ITS PRINCIPAL SECRETARY ANIMAL HUSBANDRY DAIRYING AND FISHERIES DEPARTMENT SECRETARIAT CHENNAI-600 009.

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2 THE DIRECTOR OF FISHERIES CHENNAI-600 006. ... RESPONDENTs in WP No.14858 of 2018

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1 THE STATE OF TAMILNADU REP. BY ITS PRINCIPAL SECRETARY ANIMAL HUSBANDRY DAIRYING AND FISHERIES DEPARTMENT SECRETARIAT CHENNAI-600 009.

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2 THE DIRECTOR OF FISHERIES CHENNAI-600 006. ... RESPONDENTs in WP No.14859 of 2018

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PRAYER : Petition filed under Article 226 of the Constitution of India praying to issue a Writ of Certiorarified Mandamus, calling for the records relating to order of the 1^st respondent made in G.O.(Ms).No.238 Animal Husbandry Dairy and Fisheries (FS-3) Department dated 11.12.2017 and the consequential order of the 2^nd respondent made in Rc.No.21066/J4/2007 dated 19.02.2018 and to quash the same and to consequently direct the respondents to issue allotment to the petitioner's bunk towards supply of sales tax exempted diesel.

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WP No.7806 of 2018

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Calling for records relating to the 1st respondents G.O.Ms.238 Animal Husbandry Dairying and Fisheries (FS-3) Department dated 11.12.2017 and the 2nd respondents consequential proceedings Rc.No.21066/J4/2007 dated 19.02.2018 and quash the same and thereafter direct the respondents to issue allotment to the petitioners bunk of supply of Sales Tax exempted diesel

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WP No.7807 of 2018

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https://hcservices.ecourts.gov.in/hcservices/

WP No.7808 of 2018

WP No.7809 of 2018

WP No.7810 of 2018

WP No.7811 of 2018

WP No.14858 of 2018

Calling for records relating to the 1st respondents G.O.Ms.238 Animal Husbandry Dairying and Fisheries (FS-3) Department dated 11.12.2017 and the 2nd respondents consequential proceedings Rc.No.21066/J4/2007 dated 19.2.2018 and quash the same and thereafter direct the respondents to issue allotment to the petitioners bunk of supply of Sales Tax exempted diesel

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WP No.14859 of 2018

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Calling for records relating to the 1st respondents G.O.Ms.238 Animal Husbandry Dairying and Fisheries (FS-3) Department dated 11.12.2017 and the 2nd respondents consequential proceedings Rc.No.21066/J4/2007 dated 19.2.2018 and quash the same and thereafter direct the respondents to issue allotment to the petitioners bunk of supply of Sales Tax exempted diesel

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For Petitioner W.P.No.5246 of 2018 :Mr.L.Chandrakumar

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For Petitioners in all other WPs.

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:Mr.K.Sakthivel

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For Respondents :Mr.P.H.Aravind Pandian, AAG., for M.Hariharan, AGP.,

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COMMON ORDER

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All the Writ Petitions have been filed by the Dealers of Oil Marketing Companies having diesel bunks in Fishing Harbours at Royapuram - Chennai, Mandapam – Ramanathapuram, Kottaipattinam – Pudukottai, Mallipattinam – Thanjavur, Thonithurai – Nagapattinam and Port premises – Nagapattinam, in the nature of Writ of Certiorarified Mandamus, calling for the records relating to the 1^st respondent namely, the State of Tamil Nadu, represented by its Secretary, Animal Husbandry Dairy and Fisheries (FS-3) Department, Chennai in G.O.(Ms) No.238, Animal Husbandry Dairy and Fisheries (FS-3) Department dated 11.12.2017 and consequential order of the 2^nd respondent namely, the Director of Fisheries, Chennai, in R.C.No.21066/J4/2007 dated 19.02.2018 and quash the same and direct the respondents to issue allotment to the petitioner's bunk towards supply of sales tax exempted diesel.

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The affidavit of K.R.Selvakumar, Proprietor, Fishermen Corporative Oil Dealers, having diesel bunk in fishing harbour Kasimedu, Royapuram, Chennai, filed in support of W.P.No.5246 of 2018 is taken up for consideration and examination.

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The affidavits filed in support of the other writ petitions have also raised the same grounds to challenge the Government Order in G.O.(Ms).No.238 of 2017 and the Notification dated 19.02.2018. The respondents have also filed a common counter affidavit questioning the grounds raised by the Writ Petitioners.

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In the affidavit filed by K.R.Selvakumar in W.P.No.5246 of 2018, it had been stated that he is running a Diesel Bunk in the marine outlet in the Fishing Harbour, Royapuram, Chennai, from the year 1990. He has been a dealer of Indian Oil Corporation. He supplies High Speed Diesel Oil to the extent of 44 Kilolitres per month exclusively catering to the requirement of fishermen. It is stated in the affidavit that the Tamil Nadu Fisheries Development Corporation (TNFDC) has its Diesel Outlet

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Bunk in the same Fishing Harbour. It was stated that the excise duty component of the diesel price was reimbursed by the Central Government from the year 1994 and the petitioner had been availing the same from the year 1997. It had been stated that up to the year 2004, the petitioner was supplying diesel to an approximate extent of 44 kilolitres per month to around 225 registered mechanized boats and to motorized country boats owned by the fishermen. In view of the high demand of diesel, the Government issued G.O.Ms.No.170 Commercial Taxes (BL) Department dated 29.10.2004, granting exemption from payment of Sales Tax on sale of diesel oil to the fishermen who owned mechanized boats and motorized country boats. This exemption was granted considering the difficulties faced by the fishermen due to increase in price of high speed diesel. It was stated that inspite of grant of such exemption, the Director of Fisheries was issuing intent to the Public Sector Oil Companies fixing a huge quantity of diesel for the diesel bunks run by TNFDC. It was stated that unused stock was accumulated by the diesel bunk run by TNFDC. They were not utilized by the TNFDC run diesel bunks. In this connection, W.P.Nos.16993 & 16994 of 2007 and 24500 of 2008 were filed. The writ petitioners sought equal distribution of sale subsidy. This Court by order dated 15.06.2010, allowed the writ petitions.

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The respondents filed W.A.No.1798, 1799 and 1800 of 2011. A Division Bench of this Court, by order dated 26.11.2013, dismissed the Writ Appeals. It was stated that inspite of such orders, the Director of Fisheries had chosen to seek supply of huge quantity of diesel to TNFDC run diesel bunks. Thereafter, the 1^st respondent namely, the State of Tamil Nadu, represented by its Secretary, Animal Husbandry Dairy and Fisheries (FS-3) Department, Chennai passed G.O.(Ms) No.5 of 2017 dated 28.06.2017 reiterating the earlier G.O.(Ms).No.170 dated 29.10.2004. A further order in G.O.(Ms).No.238 dated 11.12.2017 was issued deleting private diesel bunks from the scope of G.O. (Ms).No.130, Animal Husbandry Dairy and Fisheries (FS-3) Department, dated 29.10.2004. The present Writ Petitions have been filed questioning the said Government Order.

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In the counter affidavit filed by the Director of Fisheries, it had been stated that the writ petitioners own diesel bunk in the Fishing Harbour / Port surrounding areas and they supply diesel to fishing boats to carry out fishing operations. It had been stated that originally, the Government, by G.O.Ms.No.550, Animal Husbandry Dairy and Fisheries Department, dated 12.11.1990, granted assistance in the form of reimbursement of Central Excise Duty levied on high speed diesel oil used by mechanized fishing vessels with length below 20 metres. One of the important conditions stipulated in the said

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Government Order was that the mechanized fishing vessels must be registered with the State Fisheries Department and they should draw oil from the diesel retail outlets maintained by TNFDC or Fishermen Co-operative Society or Co-operative Federation or any other Government undertaking within the fishery harbour complex.

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It was stated that W.P.No.18231 of 1991 was filed by M/s.Sarojini Oil Delears, a private oil dealer, Chennai. This Court had issued interim orders on 03.07.1992, stating that the same benefit should also be extended to retail diesel outlets outside the fishing harbour complex. Thereafter, G.O.Ms.No.184, Animal Husbandry Dairy and Fisheries (FS-V) Department dated 05.08.1994 had been issued. It was stated that with a view to reduce the operation cost of mechanized fishing boats and motorized crafts and to help the fishermen due to the increasing price of diesel, the Government of Tamil Nadu by G.O.Ms.No.130, Animal Husbandry Dairy and Fisheries (FS-1) Department, dated 29.10.2004 had introduced a scheme of supply of Sales Tax exempted diesel to mechanized fishing boats and motorized crafts. Subsequently, G.O.Ms.No.170, Commercial Taxes (BL) Department dated 29.10.2004 was issued towards implementation of the scheme. By this, the fishermen purchased diesel by reducing the Sales Tax amount by about 25% and pay only 75% of the cost price for diesel for every litre. It was also stated that G.O.Ms.No.130 dated 29.10.2004, was extended to 36 diesel bunks run by TNFDC and Tamil Nadu State Apex Fisheries Co-operative Federation Limited (TAFCOFED) and other private diesel bunks already approved by the Government. Thereafter, G.O.Ms.No.110 Animal Husbandry Dairy and Fisheries Department, dated 05.05.2005 was issued directing the Director of Fisheries to identify the private diesel bunks for issuing sales tax exemption. A committee was formed. During the meeting on 15.05.2005 it had identified the diesel bunks and granted permission to the following private diesel bunks:

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Sl.No.	Name of the Private Diesel Bunk	Location
1	Marine Fishermen Corporative Oil Dealer
2	KK Agency
3	Sarojini Oil Dealers	Chennai
4	Seashell
5	Samithra Agencies
6	S.Indira
7	Govindammal Diesel Centre	Nagapattinam
8	RSR Enterprises
9	Banu Filling Station	Thanjavur

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Sl.No. Name of the Private Diesel Bunk Location 10 Star Traders Pudukottai 11 S.Annadurai 12 Sammatti Fuel Centre, Mandapam Ramanathapuram 13 Neelakadal Enterprises, Rameswaram 14 Rohan Petroleum Kanyakumari 8. It was stated that the committee allotted 10% of the total quota eligible for an area to the private diesel bunks. The major portion of the allotment was made to the bunks owned by TNFDC and TAFCOFED. This was with an intention to ensure that the sales tax exempted diesel oil reaches the actual fishermen. Aggrieved by the decision to allot only 10% to private diesel bunks W.P.Nos.16993 and 16994 of 2007 and W.P.No.24500 of 2008 were filed. On 15.06.2010, a learned Single Judge of this Court ordered that the authorities are bound to supply without discrimination subject to the limits specified in the Government Order. Thereafter, the Department of Fisheries filed W.A.Nos.1798, 1799 and 1800 of 2011. The Division Bench stated that if the Government in public interest decides to restrict the tax exemption diesel for sale of diesel to the fishermen only to bunks run by TNFDC and TAFCOFED, then necessary modification will have to be brought in the Government Order. It had been further stated in the counter affidavit that the Director of Fisheries had obtained legal advise that the Government may amend the Government Order to restrict the tax exemption for sale of diesel only to Government operated outlets. It was stated that allotment made to private bunks was increased from 36 KL to 44 KL from July 2017. It was therefore stated that no bias was shown in the allotment of diesel. Thereafter, the Government of Tamil Nadu had issued an amendment order vide G.O.Ms.No.238, Animal Husbandry Dairy and Fisheries Department dated 11.12.2017. The following amendment was introduced:

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“In para-4 item No.(iii) of the said Government Order (Ms) No.5, AH,D & F Dept dated 28.06.2017 the words “and other private diesel bunks already approved by the Government” occurred shall be deleted;”

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It was stated that the diesel bunks operated by TNFDC and TAFCOFED are located inside the Jetty/Port area and exclusively cater to the needs of the fishermen. They are not authorized to sell diesel to other public. Such restriction was not available to private diesel bunks. Moreover TNFDC is also implementing various Government schemes, such as construction of the fishing boats and supply of the mechanized fishing boats,

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providing fish cold storage facilities, maintaining Ice Plants and Net making plants, supply of fish to the consumers in a hygienic condition at reasonable price. It was therefore justified that the said exemption should be granted only to diesel bunks operated by TNFDC and TAFCOFED. It was stated that in accordance with the Government order, a further direction was issued on 19.02.2018, that the department will not issue further allotment to private bunk for supply of sales tax exempted diesel from the month of March 2018. It was stated that the private diesel bunk dealers can approach new customers for their business development. It was also stated that allotment of sale tax exemption diesel to private diesel bunk cannot be claimed as a matter of right. It was therefore stated that the Writ Petition should be dismissed.

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The 3^rd respondent namely, the Commercial Taxes Department also filed their counter affidavit in which they claimed that they are not a necessary party to the writ petitions. It was stated that the entire issue relates to the Fisheries Department. It was stated that G.O.Ms.No.170, Commercial Taxes (B2) Department, was issued on 29.10.2004, granting exemption from payment of sales tax on the sale of high speed diesel oil by the Public Sector Undertaking Oil Companies to the Director of Fisheries for distribution to the fishermen. It was stated that, it was the Fisheries Department, who makes allotment quota to various oil companies. It was therefore stated that the writ petition should be dismissed.

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Heard arguments advanced by Mr.L.Chandrakumar and Mr.K.Sakthivel, learned counsels for the petitioners and Mr.P.H.Aravind Pandian, learned Additional Advocate General for Mr.M.Hariharan, learned Additional Government Pleader for R1 to R3.

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The Writ Petitioners are running diesel bunks in fishing harbours at Chennai, Nagapattinam, Thanjavur, Pudukottai, and Ramanathapuram. They are all dealers of Oil Marketing Companies. They supply high speed diesel, which is required by fishermen who operate mechanized boats and motorized country boats and use them for fishing purposes. They have been supplying high speed diesel to an extent of 44 KL per month.

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It has been stressed by Mr.L.Chandrakumar, and Mr.K.Sakthivel, learned counsels for the writ petitioners, that the petitioners are supplying high speed diesel only to the fishermen who operate mechanized boats and motorized country boats. It has been very specifically further stressed that the writ petitioners do not supply diesel to any 3^rd party outside the area of the fishing ports. The only customers are the fishermen who operate the mechanized boats. Therefore they do

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not have the benefit of other diesel bunks which cater to every customer who has access to the diesel bunks. It is further stated that the 3^rd parties / private operators / other customers do not even have access to the diesel bunks run by the petitioners. It had been stated that sales tax exemption is meant to help the fishermen to overcome financial difficulties. It is not extended with a view to assist the diesel bunks to gain more profit. It was stated that originally G.O.Ms.No.170, Commercial Taxes (B2) Department, was issued on 29.10.2004, granting exemption from payment of sales tax on the sale of diesel oil to the fishermen. However, it is claimed that the Director of Fisheries who is a respondent in the writ petitions, has been issuing intent to the Public Sector Oil Companies and fixing a larger quantity of diesel to be supplied to the diesel bunks run by TNFDC and TAFCOFED and the diesel bunks run by the petitioners were given only negligible quantity of diesel. Therefore, three of the diesel bunk owners filed W.P.Nos.16993 & 16994 of 2007 and W.P.No.24500 of 2008. They sought equal distribution of sales subsidies. A learned Single Judge of this Court had observed and ordered as follows by judgment dated 15.06.2010:

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“29. .......The claim in the writ petitions is by the authorised private diesel outlets who are duly authorised by the competent authority, namely, Director of Fisheries. Therefore, a right flows out the G.O.Ms.Nos.170 and 130 in favour of the Petitioners. The authority cannot discriminate between one category or the other in the absence of a specific provision in the G.O. Or any other law. The executive cannot impose a restriction not contemplated in the Government order. Hence, the decision will not apply to the facts of the present case.

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31.In view of the above, if the petitioners in all these cases satisfy the authority the requirement for supply of sales tax exempt diesel and if they make an indent for supply of sales tax exempt diesel to eligible fishermen, the authorities are bound to verify the claim and supply the same without discrimination subject to the limit specified in the G.O. All the Writ Petitions stands allowed as above. No costs.”

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This judgment was taken up in appeal by the State Government and by the Director of Fisheries, in Writ Appeal Nos.1798, 1799 and 1800 of 2011.A learned Division Bench of this Court after examining the entire issue had observed and laid down as follows:

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“24. Similarly, as rightly observed by the learned Single Judge, when such restrictions were not imposed by the Government Orders, under the guise of memo / recommendations, the respondent cannot impose such restrictions. From the facts placed before us, we also see that there is more demand in the areas where Authorized Private Dealers operate and the Government outlets are unable to sell their indented quota. Therefore, the argument that when sale is made, the revenue goes directly to the Government Agency cannot be applicable to the present facts. Because of the restriction imposed, the objects of the Government Orders are defeated. Not even a single case where there is misuse of the exemption in the sale made by Authorized private outlets is reported before this Court. Therefore, mere apprehension cannot be the ground for imposing restrictions, not contemplated under the Government Orders. The indent itself contains check and balance measures.

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Therefore concurring with the view of the learned Single Judge and keeping in mind the public interest, we hold that the actions of the appellants are discriminatory and arbitrary and affirm the common order dated 15.06.2010. However, we make it clear that the Government if in public interest decides to restrict the tax exemption for sale of diesel to Government operated outlets alone, necessary modifications have to be brought about in the Government Orders.”

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In the impugned G.O.MS.No.238, Animal Husbandry Dairy and Fisheries (FS-3) Department dated 11.12.2017, among the references are the judgments in the above Writ Petitions and Writ Appeals. By the said Government Order, after extracting relevant portions of the orders of this Court in the Writ Petitions and in the Writ Appeals, the letter of the Director of Fisheries in Rc.No.21066/J4/2007, dated 17.12.2013 is also referred and it was stated as follows:

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“4. ..... the Director of Fisheries has stated that considering the supply of sales tax exempted diesel oil to the private bunks without any discrimination on par with Tamil Nadu Fisheries Development Corporation Limited, Tamil Nadu State Apex Fisheries Cooperative Federation Limited owned bunks is implemented, it may lead to black market supply of diesel and the objective of the scheme viz., enhancing fish production through supply of Sales tax exempted diesel oil to mechanized and motorized crafts will be defeated. He has also stated that the objective of the Government in permitting private diesel bunks also to supply sales tax exempted diesel oil to fishermen is only for the benefit of the fishermen community and not for the improvement or enhancing the income of private bunk dealers. All the diesel bunks being operated by Tamil Nadu Fisheries Development Corporation Limited and Tamil Nadu State Apex Fisheries Co-operative Federation Limited are located inside the Jetty / Portarea and are exclusively catering to the needs of the fishermen and not authorized to sell diesel to the other public whereas there in no such restriction on private diesel bunks. Further, the Director of Fisheries is also the Managing Director of Tamil Nadu Fisheries Development Corporation Limited and Functional Registrar of the Tamil Nadu State Apex Fisheries Co-operative Federation Limited is having better control over the implementation of the scheme. It is very easy to monitor and control their selling of diesel, accounts verification and other transactions in these two organizations. Besides, the Tamil Nadu Fisheries Development Corporation Limited is also implementing various Government Schemes such as construction of the fishing boats and supply of the Mechanized fishing boats, providing fish storage facilities and providing cold storage facilities, erecting Ice plants and net making plants, supply of fish to the consumers in a hygienic condition at reasonable price.”

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(Emphasis Supplied)

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It was also stated after referring to G.O.Ms.No.5, Animal Husbandry, Dairying and Fisheries (FS-3) Department,

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dated 28.06.2017, as follows:

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“6. In the Government Order seventh read above, orders were issued,

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i. to enhance the quantity of supply of Sales Tax exempted High Speed diesel oil from 15,000 litres to 18,000 litres per boat for 5000 mechanized boats. The maximum limit allowed is 90,000 Kilo litres per year for 5,000 mechanized boats;

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ii. to enhance the quantity of supply of Sales Tax exempted High Speed diesel oil from 3,600 litres to 4,000 litres per year per boat for 15,200 motorized traditional boats. The maximum limit allowed is 60,800 Kilolitres per year for 15,200 motorized traditional boat; and

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iii. to sell the Sales Tax exempted high speed diesel oil to the fishermen through the diesel bunks run by the Tamil Nadu Fisheries Development Corporation Limited (TNFDC), Tamil Nadu State Apex Fisheries Co-operative Federation Limited (TAFCOFED) and other private diesel bunks already approved by the Government.”

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It was finally stated that the opinion of the Advocate General of Tamil Nadu, was sought and opinion was received that the Government may amend the Government Orders to restrict tax exemption for sale of diesel only to Government operated outlets. Accordingly, in the Government Order, the following amendment was incorporated:

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9.Accordingly, the following amendment is issued to G.O(Ms) No.5, Animal Husbandry, Dairying and Fisheries (FS-3) Department, dated 28.06.2017.

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AMENDMENT

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In para-4 item No.(iii) of the said Government Order the words “and other private diesel bunks already approved by the Government” occurred shall be deleted.”

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(Emphasis Supplied)

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In pursuant to this amendment, consequential order was issued by the Director of Fisheries in Rc.No.21066/J4/2007 dated 19.02.2018, stating that,

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“ ..... it is informed that in accordance

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with the Government order, the Fisheries Department will not issue any further allotment to private bunks for supply of ST exempted diesel from the month of March 2018.”

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(Emphasis Supplied)

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The Government order in G.O.Ms.No.238 dated 11.12.2017 from which a relevant portion had been extracted above and the consequent letter issued by the Director of Fisheries are being impugned in these writ petitions.

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Even before examining, the contentions of the writ petitioners reference must be made to G.O.Ms.No.130 Animal Husbandry & Fisheries (FS-I) Department dated 29.10.2004. By this Government order, after examining requests made by the Fishermen Associations, it had been stated as follows:

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“3.After careful examination of the request of the above Association seeking sale tax exemption on the sale of High Speed Diesel Oil to fishermen for fishing activities, the Government have decided to exempt the sale tax on sale of High Speed Diesel Oil to be supplied to fishermen through 36 diesel bunks run by the Tamil Nadu Fisheries Development Corporation Limited (TNFDC), Tamil Nadu State Apex Fisheries Co-operative Federation Limited (TAPCOFED) and other private diesel bunks already approved by the Government.”

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(Emphasis Supplied)

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The words 'other private diesel bunks already approved by the Government' was deleted by the impugned G.O.Ms.No.238 dated 11.12.2017. This amendment is the grievance of the writ petitioners.

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The learned counsel Mr.L.Chandrakumar, pointed out the above amendment, and stated that the amendment excluding the diesel bunks owned by the petitioners, from grant of exemption of sales tax on sale of high speed diesel oil for fishermen, has to be interfered with by this Court on the ground that, they violated the spirit of the order of the Division Bench of this Court in W.A.Nos.1798, 1799 and 1800 of 2011. It was stated that the Division Bench had observed that there is more demand in the areas where the Authorized Private Dealers operate and that the Government outlets are unable to sell their indented quota. It was stated that because of the restriction imposed, which was challenged in the Writ Appeals, the objectives of the Government order are defeated. It was also pointed out by the Division Bench that not even a single case of misuse of the exemption in the sales made by Authorized Private Outlets had been reported before this Court.

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This decision of the respondents in completely excluding diesel bunks run by the petitioners from purview of exemption in sales tax, according to the learned counsel, must be set aside. It was also pointed out that the respondents have failed to note that the writ petitioners cater to the needs of the fishermen only and there is no sale to any 3^rd party outside the Fishing Port areas. It was also pointed out by the learned counsel, that when the petitioners have been granted an exemption, and conferred with a right, denial of such legitimate expectation that the right would be extended continuously, violates the fundamental principles relating to promissory estoppel. The learned counsel further insisted that as observed by the Division Bench, the respondents have not been able to point out even one single incidence where grant of exemption of sales tax has been misused by the writ petitioners. The learned counsel therefore, stated that the Writ Petitions should be allowed and the exemption from sales tax should also be extended to the diesel bunk run by the writ petitioners.

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Mr.K.Sakthivel, learned counsel who also appeared for the writ petitioners also supported the arguments advanced by Mr.L.Chandrakumar. The learned counsel stated that the respondents, when directed to examine the said issue by the Division Bench in the Writ Appeals have excluded all the private dealers. It was stated that by this policy, the hardships which accrued to the private dealers have not been taken into consideration by the respondents. The learned counsel stated that the writ petition should be allowed and the impugned Government order and consequential letter should be set aside.

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In this connection, the learned counsels for the writ petitioners relied on 2005 AIR (Calcutta) 129, Hindustan Detergent Corporation and another V. W.B.Small Industries Development Corporation Ltd., and others, wherein it had been stated as follows:

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“14. ...... While cancelling a contract they have not only to follow a procedure, which should be consistent with Article 14 of the Constitution, that is, after observing the rules of fair play and the principles of natural justice, but the grounds for such cancellation should, also, be reasonable and not arbitrary. Any executive decision has to be tested on the touchstone of Article 14 of the Constitution not only so far as its procedural part is concerned, but also in respect of its substantive part. Even in a case where the procedural part has been followed still the Court can examine whether the ultimate decision is consistent with the

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requirement of Article 14 of the Constitution.”

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The learned counsels also relied on 1999 (3) MLJ 347, S.Pappa and Ors. V. Government of Tamil Nadu, and Ors, wherein, it had been stated as follows:

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“31. ......Likewise, even though it is stated in many places that the first impugned Order as well as the subsequent Orders were emanated in view of the policy decision of the Government, it is settled law that even the policy decision cannot violate the fundamental rights enshrined in Articles 14 and 16 of the Constitution of India. In this regard, it is worthwhile to refer a decision of the Hon'ble Supreme Court reported in K.Narayanan V. State of Karnataka (1991) 1 SCC. (Supp) 44, wherein their Lordships have held thus:

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“... A policy decision taken by the Government is not liable to interference, unless the court is satisfied that the rule-making authority has acted arbitrarily or in violation of the fundamental rights guaranteed under Articles 14 and 16....”

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I have already demonstrated how the impugned Order is violative of Articles 14,16 and 39(d) of the Constitution of India.”

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The learned counsels also relied on (2004) 2 MLJ 314, V.Krishnamurthy, Proprietor V. Airports Authority of India, wherein, a learned Single Judge held as follows: 18.18. The concept of equal treatment in terms of Article 14 of the Constitution of India applies also to matters of Governmental policy or any action of the Government relating to contractual matters. If the contractual matters fail to satisfy the test of reasonableness, it would be unconstitutional. The basic requirement of Article 14 is fairness in action by the State, and non-arbitrariness in essence and substance is the heartbeat of fair play. Actions are amenable, in the panorama of judicial review only to the extent that the State must act validly for a discernible reason, not whimsically for any ulterior

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purpose. The meaning and true import and concept of arbitrariness, is more easily vizualised than precisely defined. When the discretion to change the policy in exercise of the executive power untrammelled by any State or Rule cannot be labelled as arbitrary. Even State action must be informed by reason and it follows that an act uninformed by reason is arbitrary. [Followed Union of India v. International Trading and Company (2003) 5 SCC 437 ]”

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Placing reliance on the above judgments, the learned counsels stated that the concept of equal treatment applies also to matters of Governmental policy any action of the Government relating to contractual matters. It was argued that even policy decisions cannot violate the Fundamental Rights enshrined in Articles 14 and 16 of the Constitution of India.

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The Judgment relied on in 2005 AIR (Calcutta) 129, Hindustan Detergent Corporation and another V. W.B.Small Industries Development Corporation Ltd., and others, related to a writ petition filed by a registered partnership firm, running a small-scale industrial unit, who had been issued with a show cause notice for alleged supply of bad quality of 'WEBSI' detergent powder. It was found that the samples collected after testing were below the standards. Questioning the show cause notice, the writ petition had been filed. During the pendency of the writ petition, an order was passed, whereby, the petitioner was debarred as manufacturer of 'WEBSI' detergent powder and also from supplying the detergent powder to the W.B.Small Industries Development Corporation Limited. Since that decision was taken pending the writ petition, the relief was amended to challenge the order debarring the writ petitioner and forbearing them from supplying detergent powder. On the facts of that case, the learned Single Judge of the Calcutta High Court held that Principles of Natural Justice should have been followed and grounds for cancellation should also be reasonable and not arbitrary.

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In the instant case, the grounds for issuing the impugned Government order has been stated in the Government order itself as follows: “4. ......All the diesel bunks being operated by Tamil Nadu Fisheries Development Corporation Limited and Tamil Nadu State Apex Fisheries Co-operative Federation Limited are located inside the Jetty / Port-area and are exclusively catering to the needs of the fishermen and not authorized to sell diesel to the other public whereas there in no such

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restriction on private diesel bunks. Further, the Director of Fisheries is also the Managing Director of Tamil Nadu Fisheries Development Corporation Limited and Functional Registrar of the Tamil Nadu State Apex Fisheries Cooperative Federation Limited is having better control over the implementation of the scheme. It is very easy to monitor and control their selling of diesel, accounts verification and other transactions in these two organizations. Besides, the Tamil Nadu Fisheries Development Corporation Limited is also implementing various Government Schemes such as construction of the fishing boats and supply of the Mechanized fishing boats, providing fish storage facilities and providing cold storage facilities, erecting Ice plants and net making plants, supply of fish to the consumers in a hygienic condition at reasonable price.”

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A perusal of the above shows that the grounds for the amendment excluding Private Diesel Bunks are,

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i).Diesel bunks operated by TNFDC and TAFCOFED are erected inside the Jetty / Port area and cater exclusively to the needs of the fishermen.

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ii).They are not authorized to sell diesel to public.

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iii).TNFDC implements Government schemes such as,

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(a). construction of fishing boats,

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(b).supply of Mechanized fishing boats,

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(c).providing fish storage facilities,

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(d).providing cold storage facilities,

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(e).erecting Ice plants,

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(f).net making plants, and

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(g).supplying fish in hygienic condition at reasonable price to consumers.

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Thus in G.O.Ms.No.238 dated 11.12.2017, which is also impugned in this writ petition, cogent and specific reasons have been given why the sales tax benefit is extended only to the diesel bunks operated by TNFDC and TAFCOFED and the private diesel bunks are excluded. It had been further stated that,

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(i)There is no restriction on private diesel bunks to sell diesel to other public.

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(ii)Monitoring and control of sales and verification is better since, the Director of Fisheries is also the Managing Director of Tamil Nadu Fisheries Development Corporation Limited and Functional Registrar of the Tamil Nadu State Apex Fisheries Co-operative Federation Limited, whereas by implication, such monitoring and control and verification is not possible with respect to other private dealers.

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(iii).Supply of sales tax exempted diesel oil may also lead to black marketing the supply of diesel. I hold the judgment of the Calcutta High Court is not applicable to the facts of this case.

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In the judgment reported in 1999 (3) MLJ 347, S.Pappa and Ors. V. Government of Tamil Nadu, and Ors, the Writ Petitioners were Secondary Grade Teachers who had been appointed and whose appointments had been approved by the District Educational Officer. The other petitioners were working in different aided Private Management Schools. The school Managements announced that the scale of pay had been reduced to a consolidated sum. Further, vacancies of Secondary Grade Teachers which were likely to arise on account of retirement, resignation and promotion shall be filled up by posting incumbents on consolidated pay. These Government orders were challenged on the ground of exercise of arbitrary discretion. The learned Single Judge had held that,

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“31. ......down-grading the post of Secondary Grade Teacher as Secondary Grade (Junior Teacher) and asking both of them namely, the existing Secondary Grade Teacher and the newly appointed Secondary Grade (Junior) Teacher doing same work, however, on a consolidated pay of Rs.800/- is not found on intelligible differential and the same has no relation with the object sought to be achieved. Broadly speaking, the concept of equality has an inherent limitation arising from the very nature of the guarantee under the Constitution and those who are similarly circumstanced are entitled to equal treatment. If there is a rational classification consistent with the purpose for which such classification was made, equality is not violated. Article 16 of the Constitution does not bar a reasonable classification of employees or reasonable tests for selection. Equality of opportunity of employment means equality as between the members of the same class of employees and not equality between the members of separate independent classes. Thus it could be held that Article 14 read with Article 16(1) accords right to an equality or an equal treatment consistent with the principles of natural justice. In other words, an employee in a public employment also must not be arbitrarily, unjustly and unreasonably be deprived of his/her livelihood which is ensured in continued employment till

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it is terminated in accordance with just, fair and reasonable procedure.”

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It was under these circumstances, that the learned Single Judge held that the impugned order should be interfered with.

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In the instant case, granting of sales tax exemption, even originally under G.O.Ms.130 dated 29.10.2004 was on the basis of the demand made by Fishermen Association due to increase in price of High Speed Diesel Oil. This exemption of sales tax cannot be termed as a fundamental right of the writ petitioners. It was granted in the peculiar circumstances which prevailed in the year 2004. Subsequently, the operations of TNFDC had widened and as stated above they also extend benefits to the fishermen in a wide range of activities including construction and supplying of fishing boats / mechanized boats, providing / erecting cold storage facilities, Ice plants and net making plants. These are all objects meant for public interest and therefore, I hold that the facts of the present Writ Petitions are distinguishable from the said judgment.

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In the judgment reported in (2004) 2 MLJ 314, V.Krishnamurthy, Proprietor V. Airports Authority of India, the writ petitioner had challenged a notice inviting tender for licensing indoor and outdoor advertisement sites at International and Domestic Airports. In the said notification, there were conditions relating to experience and turnover. It was also found that Civil Aviation Ministry had advised the Airport Authority of India for clubbing of airports so that one or two big airports would be clubbed with smaller airports which would make it possible for the intending bidders to bid for the entire group as a whole. However, this was also amended and fresh tenders were invited for clubbing of airports and widening the scope of experience and to include advertisements in public place and also persons having a minimum of 12 months of prescribed reserve license as a turnover. This grouping of various Airports into four groups was challenged. As seen, it was found by the Court as a fact, that the amended conditions suited only the 3^rd respondent in the writ petition. As a matter of fact, the learned Single Judge had dismissed the writ petition. It was stated that the Airport Authorities of India can accept or reject the bids supplied by the tenderers and therefore, it was stated that the conditions imposed are not affected by bias or malafides.

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In the instant case, to reiterate, cogent reasons had been given in the Government order as to why the Private Diesel Bunks have been excluded from grant of exemption from sales tax. The said judgment relied on by the learned counsels will not be of any help to them.

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The learned Additional Advocate General relied on (1997) 3 SCC 398, Shrijee Sales Corporation and Another V. Union of India. The appellant before the Hon'ble Supreme Court had originally filed a writ petition challenging a Notification which was issued in supersession of an earlier notification, whereby, the Government had granted exemption to import Polyvinyl Chloride Resins (PVC) falling within the First Schedule to the Customs Tariff Act, 1975 from the duty of customs leviable thereon specified in the First Schedule.

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This exemption was removed, when such PVC resins were imported into India by a fresh Notification. This notification was challenged since, the appellants alleged that they had imported PVC resins only on the assurance that there would not be customs duty imposed and it was only owing to such exemption that they had imported PVC resins. It is thus seen that originally an exemption was granted and later it was restricted and the concession was removed when PVC resins were imported into India. This removal of the concession which is much akin to the removal of the sales tax concession in the instant Writ Petitions was challenged by the writ petitioner therein. They were challenged before the Delhi High Court. An appeal was later filed before the Hon'ble Supreme Court. Examining this aspect, the Hon'ble Supreme Court relied on an earlier judgment in Motilal Padampat Sugar Mills Co. Ltd. v. State of U.P., (1979) 2 SCC 409, and extracted paragraph Nos.43 and 44 from the said judgment which are as follows:

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“43. Estoppel cannot be invoked where the result will be to compel the Government to continue the exemption which a competent enactment has validly authorised the executive to withdraw in the public interest at any time. In public interest exemption can be granted. In public interest exemption can be rescinded. In other words, the rights of individuals are subordinated to the paramount interest of the public good. Section 25 underlines the importance of the common good. ‘Public interest’ dominates the economic scene. If in public interest the Central Government finds that it is necessary to protect its own industry by putting up a tariff wall it will be futile to say that it cannot do so because it is bound by its promise to continue the exemption up to a particular time. The traders may feel incensed at the behaviour of the executive at its imposition, exemption, reimposition and

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re-exemption of taxes and levies. But when to exempt and when to impose duty is left to the executive by the legislature. It will depend on the economic climate. New times require new measures. In a world of growing interdependence the first thing every country wants is protection for its domestic industry.

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Governed by the market forces and the laws of supply and demand, if the Government finds that it must withdraw the exemption notification at once it can do so. What actuated the Government to take the step of exemption and reimposition was enlightened self-interest, such self-interest as would subserve the common good. The imposition and exemption of customs duty are the chief vehicles of the Government to protect a domestic market and to steady the level of prices. The tariffs are its chosen instruments to shield domestic production from foreign competition.”

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The Hon'ble Supreme Court also relied on (1995) 1 SCC 274, Kasinka Trading V. Union of India, and paragraph 5 had extracted the relevant portion from the said judgment.

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“5. ...... The reasons given by the Union of India justifying withdrawl of the exemption notification, in our opinion, are not irrelevant to the exercise of the power in 'public interest', nor are the same shown to be insufficient to support the exercise of that power. .......”

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Finally, with respect to the averment, that import of PVC resins would have been avoided if the exemption was not in force, the Hon'ble Supreme Court held as follows:

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“6. ...... All that they have alleged is that they would not have imported the PVC resin without the exemption as that would have been “unviable” and “uneconomical” and further that many persons took full advantage of the exemption; moreover, the exemption accorded preferential treatment to some persons, but not to the appellants. The facts of the economic situation explained in the judgment of Kasinka Trading v. Union of India [

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(1995) 1 SCC 274 : JT (1994) 7 SC 362] have not been controverted. Nor is it alleged by the appellants that public interest did not call for supersession of the Notification No. 66.”

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It was finally held as follows:

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“8. However, in the present case, there is a supervening public interest and hence it should not be mandatory for the Government to give a notice before withdrawing the exemption.”

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In the instant case also public interest is predominant. The State Government has a duty to protect the activities of TNFDC and TAFCOFED. It is seen that TNFDC implements various Government Scheme such as,

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(a).construction of fishing boats,

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(b).supply of Mechanized fishing boats,

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(c).providing fish storage facilities,

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(d).providing cold storage facilities,

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(e).erecting Ice plants,

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(f).net making plants, and

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(g).supplying fish in hygienic condition at reasonable price to consumers.

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Therefore, I hold that it is only appropriate that they are granted exemption from sales tax. The Private Diesel Bunk operators have not offered to participate in such implementation of Government schemes. All that is said is, they would not sell diesel to private parties. However, it has been made very clear, in the Government order that there is no such restriction.

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In view of all the reasons, I hold that the Government order impugned and the consequential Notification do not suffer from any infirmity. Reasons had been given. Explanations have been given. The reasons are cogent and acceptable. By the said reasons malafide had not been impugned on the petitioners, but as the Hon'ble Supreme Court said in Motilal Padampat Sugar Mills Co. Ltd. v. State of U.P., (1979) 2 SCC 409 as followed in Shrijee Sales Corporation and Another Vs. Union of India, (1997) 3 SCC 398.

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“43. ......If in public interest the Central Government finds that it is necessary to protect its own industry by putting up a tariff wall it will be futile to say that it cannot do so because it is bound by its promise to continue the exemption up to a particular time. The traders may feel incensed at the behaviour of the executive at

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its imposition, exemption, reimposition and re-exemption of taxes and levies. But when to exempt and when to impose duty is left to the executive by the legislature. It will depend on the economic climate. New times require new measures. In a world of growing interdependence the first thing every country wants is protection for its domestic industry.”

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(Emphasis Supplied)

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In view of all the above reasons, I hold, the averments in the Writ Petitions do not merit consideration and accordingly, the Writ Petitions are dismissed. No order as to costs. Consequently, connected Writ Miscellaneous Petitions are closed. s/dAssistant Registrar(CS-III) True Copy Sub-Assistant Registrar smv To 1.The State of Tamil Nadu Rep.by its Secretary, Animal Husbandry Dairy and Fisheries (FS-3) Department, Fort St.George, Chennai – 600 009. 2.The Director of Fisheries, Chennai – 600 006. 3.The Secretary State of Tamil Nadu Commercial Taxes Department, Fort St., George, Chennai – 600 009. +1 CC to Mr.L. Chandra Kumar, Advocate sr 17963. +8 Ccs to Mr.K. Sakthivel, Advocate sr 18024, 18025, 18026, 18027, 18028, 18029, 18030, 18031.

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W.P.No.5246, 7806, 7807, 7808, 7809, 7810, 7811, 14858 & 14859 of 2018 VSNII(CO) SP(04/03/2020)

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K. R. Selvakumar v. The State of Tamil Nadu

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K. R. Selvakumar v. The State of Tamil Nadu

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