Sales tax exemption rescission upheld: promissory estoppel, legitimate expectation, and notice objections failed against legislative withdrawal.

Withdrawal of a sales tax exemption by legislative notification was upheld because promissory estoppel failed without a clear promise and proved reliance, and the exemption had been obtained on misrepresentation. Legitimate expectation also failed because the rescission formed part of a public-interest policy change to augment State revenue. The Government was held competent to rescind the exemption under the enabling sales tax provision read with the General Clauses Act, and no prior notice, hearing, or waiver could defeat a legislative act. The common challenge to the rescission was therefore dismissed.

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Issues: (i) Whether the withdrawal of sales tax exemption was hit by promissory estoppel; (ii) Whether the petitioners could invoke legitimate expectation against rescission of the exemption; (iii) Whether the Government had power to rescind the exemption and whether the impugned action was vitiated for want of notice or waiver.

Issue (i): Whether the withdrawal of sales tax exemption was hit by promissory estoppel.

Analysis: Promissory estoppel requires a clear promise, intended to create legal relations, and actual reliance on that promise. The petitioners failed to establish any such promise made to them individually or any proved alteration of position by starting new industries on the strength of the exemption. The exemption was also obtained on misrepresentation as to the tax position in neighbouring States. A grant or withdrawal of exemption under the sales tax regime, when issued by notification and published in the gazette, is legislative in character, and promissory estoppel does not operate against legislative action.

Conclusion: The plea of promissory estoppel was rejected and the challenge failed.

Issue (ii): Whether the petitioners could invoke legitimate expectation against rescission of the exemption.

Analysis: Legitimate expectation can be defeated by an overriding public interest. The withdrawal of the exemption was part of a larger policy decision to augment State revenues in view of prohibition policy and resulting financial needs. Since the action was taken in public interest and concerned a policy change of general application, no enforceable legitimate expectation arose so as to prevent rescission.

Conclusion: The plea of legitimate expectation was rejected and the challenge failed.

Issue (iii): Whether the Government had power to rescind the exemption and whether the impugned action was vitiated for want of notice or waiver.

Analysis: Section 9 of the General Sales Tax Act empowered the State Government to grant exemption or reduction in tax, and section 15 of the General Clauses Act supplied the power to rescind or revoke that exemption. The power to grant exemption included the power to withdraw it, and the rescinding notification could not be assailed merely because the earlier concession was for a fixed period. Since the impugned action was legislative in nature, no prior notice or hearing was required. The plea of waiver also failed because it was not pleaded or proved and could not be raised for the first time as a factual contention.

Conclusion: The Government was held competent to rescind the exemption, and no violation of natural justice or waiver was established.

Final Conclusion: The common challenge to the rescission of sales tax exemption was found untenable on all grounds, and the writ petitions were dismissed.

Ratio Decidendi: A sales tax exemption granted by legislative notification may be withdrawn under the same enabling power, and doctrines such as promissory estoppel and legitimate expectation cannot prevent rescission made in public interest by a legislative act.

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