Government's Subsidy Scheme Modification Upheld as Valid; Promissory Estoppel Not Applicable.

The High Court held that the respondents did not have a vested right to claim the subsidy, and the Government's modification of the scheme was valid. The principle of promissory estoppel did not apply as there was no clear promise from the Government that induced the respondents to alter their position. The Court emphasized that the modification was in the public interest and set aside the Tribunal's orders, allowing the writ petitions.

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Issues Involved:
1. Applicability of the principle of promissory estoppel.
2. Legitimacy of the Government's modification of the purchase tax subsidy scheme.
3. Validity of the Tribunal's decision to grant relief based on promissory estoppel.

Detailed Analysis:

1. Applicability of the principle of promissory estoppel:
The primary contention from the respondents was that they acted on the Government's declared policy and altered their position by expanding their operations, invoking the principle of promissory estoppel. The Tribunal had earlier accepted this plea, asserting that the Government was bound by its promise to grant subsidies for five years. However, the High Court noted that both industries commenced their production well before any Government promise of subsidy, indicating no inducement from the Government to establish their units. The Court emphasized that for promissory estoppel to apply, there must be a clear, unequivocal promise that led the respondents to alter their position, which was not evident in this case.

2. Legitimacy of the Government's modification of the purchase tax subsidy scheme:
The Government modified the subsidy scheme to a deferral of purchase tax for four years, introducing ceilings based on production capacity and restricting subsidies to existing units. The High Court found that the Government had valid reasons for this modification, including financial strain and the need for uniformity in assistance. The Court observed that the Government's decision was backed by thorough discussions, recommendations from the Sampath Committee, and a detailed examination of the benefits and anomalies in the existing scheme. The modification aimed to rationalize the concession in light of public revenue considerations.

3. Validity of the Tribunal's decision to grant relief based on promissory estoppel:
The Tribunal had granted relief based on the principle of promissory estoppel, stating that the Government's promise bound it. However, the High Court disagreed, citing several precedents where the principle of promissory estoppel was not applicable if the promisee did not alter their position based on the promise or if enforcing the promise was against public interest. The Court highlighted that the respondents did not establish their units based on any Government promise and that the subsidy was a concession, not a vested right. The Government's decision to modify the scheme was justified in public interest, and the Tribunal's orders were set aside.

Conclusion:
The High Court concluded that the respondents had no vested right to claim the subsidy, and the Government's modification of the scheme was valid and justified in public interest. The principle of promissory estoppel did not apply as the respondents did not alter their position based on any Government promise. The writ petitions were allowed, and the Tribunal's orders were quashed.

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