Promissory estoppel protected industrial tax incentives where investment was made in reliance on the State's promise.

Promissory estoppel barred the State from amending an industrial sales tax incentive scheme to exclude oil extraction and manufacturing units after the assessee had altered its position by acquiring land, investing in construction and machinery, and commencing production in reliance on the government promise. The Rajasthan HC held that the subsequent amendment could not operate to the detriment of accrued benefits, and the plea of public interest was insufficient on these facts to defeat the promisee's entitlement. The writ petition succeeded, the amending notification was quashed, and entitlement under the earlier incentive schemes was upheld.

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Issues: Whether the State was bound by promissory estoppel from amending the sales tax incentive scheme so as to exclude oil extraction and manufacturing industries, and whether the petitioner remained entitled to the benefit of the earlier incentive schemes.

Analysis: The incentive schemes were issued to encourage new industries and the petitioner altered its position by obtaining land, investing substantial in construction and machinery, and commencing production on the faith of the governmental promise. The amendment excluding oil industries was made after the petitioner had acted on that assurance. In these circumstances, the State could not change the scheme to the petitioner's detriment. The Court followed the settled principle that a governmental promise inducing investment in an industrial scheme can be enforced against the State, and that the plea of public interest was not sufficient on these facts to defeat the petitioner's accrued benefit.

Conclusion: The State was estopped from withdrawing the incentive benefit as against the petitioner, and the petitioner was entitled to the benefit of the Sales Tax Incentive Scheme for Industries, 1987 and 1989.

Final Conclusion: The writ petition succeeded, the amending notification was quashed, and the petitioner's entitlement under the incentive schemes was upheld.

Ratio Decidendi: Where an is set up and substantial investment is made in reliance on a governmental tax incentive scheme, the State cannot, to the detriment of the promisee, withdraw the promised benefit by a subsequent amendment.

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