Court upholds sales tax exemption for rural industrial units under promissory estoppel rule

The court ruled in favor of the petitioners, holding that the withdrawal of exemption on sales tax for rural industrial units did not apply to units established under the original notification. The petitioners were entitled to the full exemption as per the initial notification, regardless of their turnover, for the specified period. The court applied the principle of promissory estoppel and cited relevant precedents to support its decision, granting relief to the petitioners without awarding costs.

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Issues:
Challenge to withdrawal of exemption on sales tax for rural industrial units exceeding turnover limit.

Analysis:
The judgment addressed multiple petitions based on identical facts involving the withdrawal of exemption on sales tax for rural industrial units. The Government of Haryana initially exempted tiny rural industrial units from sales tax if their capital investment did not exceed a specified amount, subject to conditions. Subsequently, a new notification was issued withdrawing the exemption for units with turnover exceeding a certain limit. The petitioners argued that the withdrawal was against the principle of promissory estoppel as they had relied on the initial notification to set up their units.

The court held that the petitioners, who established their units under the original notification, were entitled to the full exemption for the specified period. The new notification could only apply prospectively to units established after its issuance. The court invoked the rule of promissory estoppel, citing precedents like Pournami Oil Mills v. State of Kerala and Assistant Commissioner of Commercial Taxes v. Dharmendra Trading Co., to support its decision.

The court rejected the argument that the new notification redefined the criteria for exemption, emphasizing that the original notification had been in force for several years without such limitations. It also distinguished the case of Shri Bakul Oil Industries v. State of Gujarat, clarifying that the rule of promissory estoppel applied in the present case due to the petitioners' reliance on the initial notification to establish their units.

Consequently, the court allowed the petitions, ruling that the withdrawal of exemption did not apply to the petitioners' industrial units. They were deemed eligible for the full exemption as per the initial notification, irrespective of their turnover. The exemption was to remain valid for the specified period from the date of issuance of the exemption certificates by the Assessing Authority.

In conclusion, the court granted relief to the petitioners, upholding their right to the initial exemption from sales tax based on the principle of promissory estoppel. No costs were awarded in the case.

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