Retrospective fiscal ceiling on incentive loans upheld; promissory estoppel cannot defeat a valid statute or non-discriminatory policy.

A retrospective fiscal enactment limiting interest-free sales tax loans to a fixed ceiling was upheld as a valid legislative measure. The Court held that the ceiling was supported by objective financial and policy considerations, did not infringe Article 14 or Article 19(1)(g), and was not an unreasonable restriction on trade or business. It also held that promissory estoppel could not override a valid statute, so earlier executive assurances could not compel continuation of the incentive. A further challenge based on alleged discrimination failed because the later incentive scheme was confined to specified backward districts and no hostile discrimination was established.

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Issues: (i) whether sections 1(2), 2 and 3 of the A.P. Interest-free Sales Tax Loans for Industries (Imposition of Ceiling) Act, 1987, retrospectively limiting the interest-free sales tax loan to Rs. 10 lakhs, were unconstitutional under Articles 14 and 19(1)(g) of the Constitution of India; (ii) whether the State was bound by promissory estoppel to continue the incentive promised under G.O. Ms. No. 224, dated 9 March 1976; and (iii) whether the impugned action was discriminatory because of concessions granted to other industries and under the later incentive scheme in G.O. Ms. No. 375, dated 23 August 1985.

Issue (i): whether sections 1(2), 2 and 3 of the A.P. Interest-free Sales Tax Loans for Industries (Imposition of Ceiling) Act, 1987, retrospectively limiting the interest-free sales tax loan to Rs. 10 lakhs, were unconstitutional under Articles 14 and 19(1)(g) of the Constitution of India.

Analysis: The Act expressly operated retrospectively from 1 January 1976 and superseded the earlier incentive regime by fixing a ceiling on the amount of interest-free sales tax loan. The legislative power to enact retrospective law was treated as well settled. The Court accepted the State's explanation of financial stringency, relied on the earlier recommendation of the State Level Committee for a ceiling, and held that the limit of Rs. 10 lakhs was based on objective criteria. The Court found no arbitrariness or unreasonable restriction on trade or business.

Conclusion: The challenge under Articles 14 and 19(1)(g) failed, and the impugned provisions were held valid.

Issue (ii): whether the State was bound by promissory estoppel to continue the incentive promised under G.O. Ms. No. 224, dated 9 March 1976.

Analysis: The Court held that promissory estoppel cannot prevail against a statute. Once the Legislature enacted a law with retrospective effect limiting the incentive, any prior executive assurance stood overridden. The doctrine could not be invoked to compel the State to act contrary to a valid legislative enactment.

Conclusion: The plea of promissory estoppel was rejected.

Issue (iii): whether the impugned action was discriminatory because of concessions granted to other industries and under the later incentive scheme in G.O. Ms. No. 375, dated 23 August 1985.

Analysis: The Court noted that the later scheme applied only to specified backward districts and was not a general State-wide incentive. It further accepted the State's explanation that concessions granted to other companies had not been implemented in the face of the new Act and that recovery steps were being taken. The Court therefore found no hostile discrimination and no basis to invalidate the Act on that ground.

Conclusion: The discrimination challenge failed.

Final Conclusion: The retrospective ceiling on interest-free sales tax loans was upheld, the constitutional challenge failed, and the writ petitions were dismissed, leaving only the limited entitlement contemplated by the Act.

Ratio Decidendi: A retrospective fiscal enactment fixing or restricting an incentive cannot be invalidated on promissory estoppel grounds, and it will withstand constitutional scrutiny where the restriction is supported by objective policy reasons and applied without hostile discrimination.

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