Promissory estoppel in tax incentive schemes bars midstream withdrawal of benefits after industries invest and commence production.

Industrial units that had taken effective steps, made substantial investments, and in some cases commenced production before the cut-off date under a sales tax incentive scheme could not be denied the promised benefit by a later amendment excluding oil extracting or manufacturing units. The schemes were held out as inducements for investment, and the affected units had materially altered their position in reliance on those representations. The principle applied was estoppel against the State's conduct, not estoppel against statute, so the midstream exclusion could not defeat accrued incentive benefits where installation and production had already occurred within the operative period.

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Issues: Whether the amendment notification dated 7 May 1990 excluding oil extracting or manufacturing s from the sales tax incentive scheme could be enforced against industrial units that had already taken effective steps, invested substantial sums, and in some cases commenced production before the relevant cut-off date.

Analysis: The incentive schemes notified in 1987 and 1989 were operative up to 31 March 1992 and were publicly held out as inducements for setting up industries. The petitioners had altered their position by making heavy investments and proceeding with installation and production in reliance on those representations. The Court held that the grievance was not one of estoppel against statute, but estoppel against the State's conduct reflected in the impugned notification. Since the units had been installed and production had commenced, or at least effective steps had been taken well before the scheme period ended, the midstream exclusion of oil industries could not defeat the accrued benefit in such cases.

Conclusion: The impugned notification could not be applied to deny sales tax incentive benefits to the petitioners whose industries had been installed and had commenced production within the operative period of the schemes.

Ratio Decidendi: Where the State induces industrial investment through a tax incentive scheme and industrial units act on that representation before the scheme's operative period expires, the State cannot, by a subsequent amendment, withdraw the promised benefit to the prejudice of those units that have materially altered their position in reliance on the scheme.

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