Promissory estoppel barred purchase tax on raw materials where industrial policy promised exemption and production began within the covered period.

Purchase tax on raw materials could not be levied where the industrial policy had promised exemption and the unit commenced production within the covered period. The denial of relief was rejected because the State was bound by the exemption assured under the Industrial Policy Resolution, 1979, and the absence of a notification under section 6 of the Orissa Sales Tax Act did not defeat that promise. Applying promissory estoppel and its earlier ruling on the same issue, the assessment order refusing exemption was quashed and the authority was directed to reassess liability in accordance with that position.

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Issues: Whether purchase tax on raw materials could be levied despite the exemption held out under the Industrial Policy Resolution, 1979, and whether the assessment order denying such relief was sustainable.

Analysis: The petitioner had commenced production within the period covered by the Industrial Policy Resolution, 1979, under which purchase tax relief on raw materials was available. The denial of relief was based on the absence of a notification under section 6 of the Orissa Sales Tax Act. The Court relied on its earlier decision on the same question and applied the principle of promissory estoppel, holding that the State and its instrumentalities were bound by the relief promised in the Resolution. In view of that binding position, the assessment of purchase tax on raw materials could not stand.

Conclusion: The assessment order denying exemption was quashed, and the authority was directed to reassess the petitioner's liability in accordance with the earlier ruling; the challenge succeeded.

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