Promissory estoppel barred a retrospective sales tax restriction that sought to curtail an industrial exemption.

A retrospective sales tax notification could not impose a new restriction that denied an exemption when finished goods were sold outside the State, because the assessee had already set up the industrial unit and altered its position under the earlier unrestricted assurance. The delegated authority was held incapable of withdrawing or curtailing the promised benefit in a manner inconsistent with that assurance, and promissory estoppel applied. The amended notification and the consequential additional tax demand were therefore not sustainable, and the exemption benefit for the promised period was retained.

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Issues: Whether the amended sales tax notification, issued under section 6 of the Orissa Sales Tax Act, 1947 and given retrospective effect, could validly impose a new restriction that raw materials purchased on exemption would lose the benefit if the finished goods were sold outside the State, and whether the additional tax demand raised on that basis was sustainable.

Analysis: The petitioner had set up the industrial unit and commenced production under the earlier exemption notification, which allowed the concession for five years without any restriction as to sale of the finished product outside the State. The subsequent notification sought to add a new condition and was applied to the petitioner to justify the demand. The Court held that such a withdrawal or curtailment of the promised tax benefit, after the petitioner had altered its position by establishing the unit, attracted the doctrine of promissory estoppel. The retrospective attempt to impose an additional condition affecting the exemption was held to be beyond the competence of the delegated authority and inconsistent with the assurance on which the unit had been established.

Conclusion: The amended notification and the consequential additional demand were not sustainable against the petitioner, and the writ application succeeded.

Final Conclusion: The petitioner was entitled to retain the exemption benefit for the promised period, and the tax demand raised on the basis of the later restrictive notification was quashed.

Ratio Decidendi: A delegated authority cannot, by a retrospective notification, withdraw or restrict an exemption in a manner that defeats the assurance on which the assessee had altered its position, where promissory estoppel applies.

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