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Issues: Whether the State could withdraw the sales tax holiday granted to small-scale industries by later notifications and compel the petitioners to pay tax, despite the earlier incentive notification and the petitioners having altered their position in reliance on it.
Analysis: The exemption notification under section 42 of the Himachal Pradesh General Sales Tax Act, 1968 induced the petitioners to set up industrial units and invest substantial sums. The later notifications did not disclose any overriding public interest justifying departure from the earlier representation. The governing principle is that when the Government makes a promise intended to be acted upon and the promisee alters position on that faith, the Government is bound by promissory estoppel unless it establishes a sufficiently compelling public interest or other legal justification to depart from the promise.
Conclusion: The withdrawal of the tax holiday was ineffective against the petitioners. The petitioners were entitled to continue to receive the exemption promised under the earlier notification, and the impugned notifications could not be enforced against them.
Ratio Decidendi: A governmental promise inducing reliance and change of position is enforceable in equity by promissory estoppel unless the State proves overriding public interest or some other legally sufficient ground to resile from it.
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