Promissory estoppel protected a sales tax exemption, and coercively recovered tax under invalid assessments was ordered refunded.

A small-scale industrial unit that set up operations and began production after relying on an initial sales tax exemption notification was entitled to the full five-year concession, because a later notification could operate only prospectively and could not retrospectively curtail the accrued benefit. The State was bound by promissory estoppel once the unit altered its position on the basis of the representation. Assessments made on the footing of the later notification were therefore without authority of law. Tax recovered through coercive revenue proceedings under those invalid assessments was treated as money collected without authority of law and was refundable in writ jurisdiction under Article 226, with laches not barring relief on the facts.

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Issues: (i) Whether the small-scale industrial unit was entitled to full sales tax exemption under the first notification and whether the subsequent notification could curtail that benefit retrospectively. (ii) Whether the tax collected pursuant to the invalid assessments was liable to be refunded in writ jurisdiction despite the passage of time.

Issue (i): Whether the small-scale industrial unit was entitled to full sales tax exemption under the first notification and whether the subsequent notification could curtail that benefit retrospectively.

Analysis: The unit was established in response to the first notification and commenced production before the second notification came into force. The first notification granted a five-year exemption to eligible new small-scale industrial units, while the later notification curtailed the concession and was held to be prospective. The legal basis applied was promissory estoppel, as the State had made a representation on which the unit acted by setting up the industry and commencing production. The prior Supreme Court authorities on the same exemption scheme were treated as controlling.

Conclusion: The unit was entitled to the full exemption under the first notification, and the assessments made on the footing of the second notification were without authority of law and liable to be set aside.

Issue (ii): Whether the tax collected pursuant to the invalid assessments was liable to be refunded in writ jurisdiction despite the passage of time.

Analysis: Once the assessments were found unauthorised, the amounts recovered under coercive revenue recovery proceedings were treated as money collected without authority of law. The Court held that restitution could be ordered under the principles governing repayment of money paid under coercion and under Article 226, and that delay or laches did not bar relief on the facts because the petitioner had been pursuing the claim consistently. The refund case was distinguished from cases involving a mere promise to refund tax validly collected under law.

Conclusion: The collected tax was refundable, and the request for refund was allowed.

Final Conclusion: The impugned assessment and recovery actions were invalidated, and consequential refund relief was granted to the petitioner.

Ratio Decidendi: A governmental tax concession, once acted upon by an eligible unit, may be enforced against the State under promissory estoppel, and tax recovered under an unauthorised assessment and coercive collection is refundable in writ jurisdiction when discretionary relief is justified on the facts.

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