Promissory estoppel protects industrial tax exemptions where a unit was set up on a clear government promise of benefit.

Where an industrial unit was set up in reliance on a clear governmental promise of five years' sales tax exemption, the State could not later curtail that benefit to three years because promissory estoppel bound it to the representation on which the entrepreneur acted. The adverse finding that the unit's capital investment was below the prescribed limit was also unsustainable, as contemporaneous certificate and payment records showed investment above Rs. 3 lakhs. The impugned modification of the eligibility certificate was therefore invalid, and the five-year exemption was upheld.

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Issues: (i) whether the reduction of the period of sales tax exemption from five years to three years could be sustained despite the earlier representation made by the Government; (ii) whether the finding that the unit's capital investment was less than Rs. 3 lakhs was justified.

Issue (i): whether the reduction of the period of sales tax exemption from five years to three years could be sustained despite the earlier representation made by the Government.

Analysis: The unit was established after the State had held out a clear representation of five years' exemption under the earlier notification, and the petitioner acted on that representation in setting up the industry. The subsequent notification curtailing the exemption could not operate to the petitioner's detriment where the factual foundation for promissory estoppel stood established. The rule applied was that a governmental concession inducing industrial setup cannot be withdrawn contrary to the promise on which the entrepreneur acted.

Conclusion: The reduction of the exemption period was invalid and the petitioner remained entitled to exemption for five years.

Issue (ii): whether the finding that the unit's capital investment was less than Rs. 3 lakhs was justified.

Analysis: The contemporaneous certificate and subsequent record showed investment above Rs. 3 lakhs. The later view that the investment was below the limit rested on an untenable basis regarding the date of the motor purchase, while the receipt and payment evidence showed that the amount had already been paid by the relevant date. On the material available, the adverse finding had no proper foundation.

Conclusion: The finding that the petitioner's investment was less than Rs. 3 lakhs was unsustainable.

Final Conclusion: The impugned modification of the eligibility certificate could not stand, and the petitioner's exemption for five years from the commencement date was upheld.

Ratio Decidendi: Where an industrial unit is established in reliance on a clear governmental promise of tax exemption, the State is bound by promissory estoppel and cannot later curtail the promised benefit to the prejudice of the unit.

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