Retrospective cancellation of eligibility certificates under fiscal incentive schemes is unjustified after full enjoyment absent fraud or misrepresentation.

An eligibility certificate under a fiscal incentive scheme, once fully acted upon and exhausted, could not be retrospectively cancelled merely because it was later found to have been granted on an incorrect basis. The certificate had been issued for expansion rather than a new industrial unit, but no fraud, misrepresentation or suppression by the dealer was shown, and the error was attributable to the Screening Committee. Promissory estoppel was held inapplicable because the dispute concerned an erroneous grant, not withdrawal of an existing lawful concession. On these facts, later cancellation was unjustified and inequitable; any correction could operate only prospectively while the certificate remained in force.

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Issues: (i) whether an eligibility certificate granted under the incentive scheme could be cancelled retrospectively after the benefit had been fully availed of, (ii) whether the doctrine of promissory estoppel applied to prevent cancellation of the certificate, and (iii) whether the facts justified cancellation of the certificate in the circumstances of the case.

Issue (i): whether an eligibility certificate granted under the incentive scheme could be cancelled retrospectively after the benefit had been fully availed of.

Analysis: The Scheme treated new industrial units covered by the 1985 dispensation and expansion cases as distinct categories, and the power under clause 9(c) enabled the Screening Committee to amend, suspend, restore or cancel the eligibility certificate. On the facts, the certificate had been granted on the basis of expansion, the benefit had already been fully consumed, and the dealer was not shown to have committed fraud, misrepresentation, or suppression. The mistake was found to be that of the Screening Committee, and cancellation at a much later stage would require the dealer to make good tax not collected during the currency of the certificate.

Conclusion: Retrospective cancellation was not justified and the cancellation could not be sustained.

Issue (ii): whether the doctrine of promissory estoppel applied to prevent cancellation of the certificate.

Analysis: The doctrine was held to be inapplicable because the case was not one where a lawful concession already available to the dealer was later curtailed. The dispute concerned an erroneous grant of eligibility on an incorrect basis, and the department could have acted only prospectively while the certificate remained alive. The factual matrix did not establish the ingredients necessary to invoke promissory estoppel.

Conclusion: Promissory estoppel did not apply.

Issue (iii): whether the facts justified cancellation of the certificate in the circumstances of the case.

Analysis: The unit was not a new industrial unit, was not covered by the 1985 dispensation, and the claimed expansion had taken place before the Scheme became operative. Even so, the certificate had been acted upon and fully exhausted long before cancellation proceedings were initiated. In these circumstances, the later cancellation was held to be unjustified and inequitable.

Conclusion: The cancellation was not sustainable on the facts.

Final Conclusion: The revisional challenge failed because the certificate could not be cancelled after the benefit had been fully availed of, and the order cancelling it was set aside in substance.

Ratio Decidendi: Where an eligibility certificate under a fiscal incentive scheme has been erroneously granted and fully acted upon without fraud or misrepresentation, it cannot be retrospectively cancelled after expiry merely to recover tax benefits already enjoyed; any correction must operate, if at all, prospectively while the certificate is still in force.

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