Promissory estoppel barred retrospective purchase tax recovery after government promised abolition and dealers relied on that assurance.

An unequivocal governmental promise to abolish purchase tax on milk, supported by public announcements, budget speech, circulars, departmental approval and cabinet decision, was treated as binding once the dealers altered their position in reliance on it. The absence of a formal notification was regarded as a ministerial step that could not defeat the representation already acted upon, and the State's plea of later policy change or revenue loss was insufficient. The later cabinet decision could operate only prospectively, not retrospectively from 1 April 1996. Recovery notices and demands for the intervening period were therefore unsustainable, and promissory estoppel applied against the State.

---

---

Issues: Whether the Government was bound by its declaration and subsequent administrative actions to abolish purchase tax on milk from 1 April 1996, so as to prevent levy of the tax in the absence of a formal notification, and whether the doctrine of promissory estoppel could be invoked against recovery notices issued for the intervening period.

Analysis: A clear and unequivocal promise to abolish purchase tax was found in the Chief Minister's public announcement, the Finance Minister's budget speech, the departmental circulars, the approval by the Finance Department, and the decision of the Council of Ministers. The petitioners altered their position on that representation by not collecting the tax, increasing payments to milk producers, and spending substantial sums on dairy development activities. The assessing authorities also accepted returns without insisting on tax payment. In these circumstances, the absence of a formal notification was treated as no more than a ministerial step, and the plea of changed policy or revenue loss was held insufficient to undo the representation already acted upon. The later decision of the new Council of Ministers could operate prospectively, but not so as to impose liability retrospectively from 1 April 1996.

Conclusion: The doctrine of promissory estoppel applied against the State, and the impugned notices and demands for purchase tax for the period from 1 April 1996 to 4 June 1997 were unsustainable.

Final Conclusion: The petitions succeeded and the recovery proceedings were set aside, with the State left free to enforce any later decision only prospectively.

Ratio Decidendi: When the Government makes an unequivocal promise, intending that it be acted upon, and the promisee in fact alters position in reliance on it, the State is bound by promissory estoppel unless overriding public interest justifies departure, and a merely formal or ministerial step cannot defeat the binding effect of the promise.

---