Promissory estoppel protected an industrial unit's sales tax concession on black tea despite a later restrictive scheme.

An industrial unit established in reliance on Assam's 1991 Industrial Policy retained entitlement to the promised sales tax concession on black tea as a raw material. A later concession scheme excluding tea could not override the earlier policy assurance for units already set up and operating on that basis, because the State's promise attracted promissory estoppel and the unit was also entitled to the legitimate benefits of the incentive scheme already extended. The concession applied from the date of commercial production until expiry of the eligibility certificate, and the subsequent denial by the sales tax authority was unsustainable.

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Issues: Whether the assessee, having set up its industrial unit in reliance on the Industrial Policy of Assam, 1991 and the concessions then available on raw materials, could be denied sales tax concession on black tea by a subsequent scheme excluding tea from the list of eligible raw materials.

Analysis: The petitioner had established the industrial undertaking and commenced commercial production after acting on the policy assurance given by the State. At the time of setting up the unit, tea was included among the raw materials eligible for exemption. The subsequent notification under the later concession scheme could not be permitted to override the benefit already promised under the earlier industrial policy in relation to units set up in reliance on that promise. The binding effect of the State's promise was held to attract the doctrine of promissory estoppel, and the petitioner was also entitled to the legitimate benefits flowing from the incentive scheme already extended to it.

Conclusion: The petitioner was entitled to sales tax concession on black tea as a raw material from the date of commercial production until expiry of the eligibility certificate, and the denial by the sales tax authority was unsustainable.

Ratio Decidendi: Where an industrial unit is established in reliance on a governmental incentive policy, the State cannot withdraw or curtail the promised tax concession by a later scheme to the detriment of the unit during the promised concession period, unless exceptional circumstances justify departure from the promise.

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