Promissory estoppel cannot override a statutory tax exemption limit; the discrimination challenge also failed.

Promissory estoppel cannot compel the State to grant a tax exemption beyond the limits fixed by a valid statutory notification issued under delegated power. The exemption was governed by the notification under Section 10 of the Kerala General Sales Tax Act, and once that notification operated retrospectively, the petitioners' rights were controlled by law as declared. The court rejected the claim for a fuller sales tax holiday because exemption can be granted only within statutory authority. The discrimination challenge also failed because the favoured categories of small-scale units were treated as separately classifiable and no impermissible or irrational classification was shown.

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Issues: (i) whether the State could be compelled, on the basis of promissory estoppel, to grant a full sales tax holiday contrary to the terms of the statutory notification issued under Section 10 of the Kerala General Sales Tax Act, 1963; (ii) whether the differential treatment under the Government policy and notification was invalid as discriminatory.

Issue (i): whether the State could be compelled, on the basis of promissory estoppel, to grant a full sales tax holiday contrary to the terms of the statutory notification issued under Section 10 of the Kerala General Sales Tax Act, 1963.

Analysis: The exemption from sales tax was ultimately governed by the notification issued in exercise of statutory power under Section 10, and that notification was made retrospective from 1 April 1979. Once the statutory notification came into force, the position of the petitioners was controlled by the law as so declared. Promissory estoppel cannot be used to require the Government to act contrary to statute or to extend an exemption beyond the limits fixed by a valid statutory notification. Tax exemption can be granted only within the authority conferred by law, and the Court cannot compel the State to disregard the statutory restriction on exemption.

Conclusion: The plea based on promissory estoppel was rejected, and the statutory notification was upheld.

Issue (ii): whether the differential treatment under the Government policy and notification was invalid as discriminatory.

Analysis: The categories of small-scale units identified for more favourable treatment were treated as separately classifiable, and no material was placed to show that the classification was impermissible or lacked a rational basis.

Conclusion: The discrimination challenge failed.

Final Conclusion: The petitioners were not entitled to any exemption beyond that permitted by the valid statutory notification, and the challenge to the notification failed in full. The Original Petitions were dismissed.

Ratio Decidendi: Promissory estoppel cannot compel the State to confer a tax exemption beyond, or contrary to, the limits of a valid statutory notification issued under delegated legislative power.

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