Promissory estoppel protects industrial tax incentives where a unit relied on a State policy promise and later withdrawal lacked public interest.

A governmental tax incentive promised in an industrial policy remains enforceable where an industrial unit has acted on that promise and altered its position in reliance on it. A later departmental scheme or notification under the taxing statute cannot withdraw the promised sales tax exemption or eligibility certificate unless overriding public interest or another lawful basis is shown. The refusal to grant the benefit was therefore unsustainable to the extent it denied the promised exemption, while recovery of any tax actually collected was left open in accordance with law.

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Issues: Whether the Finance Department could deny sales tax exemption and eligibility certificate to an industrial unit that had acted on the State's Industrial Policy of 1991, and whether the later scheme and notification could override the promise of exemption.

Analysis: The Industrial Policy of 1991 held out a clear promise of sales tax exemption to eligible industrial units, and the petitioner altered its position by setting up the unit in reliance on that promise. The later industrial classification and the Scheme of 1995 were issued under the taxing statute, but the statutory power to frame a scheme had to be exercised consistently with the existing industrial policy and could not be used to negate benefits already promised to eligible units. The Court held that promissory estoppel applies against the Government where the promise is within legal power, has been acted upon, and no overriding public interest is established. The respondents failed to place material showing any supervening public interest or lawful basis to withdraw the promised concession, and the contention that exemption could arise only after the statutory notification was rejected. The argument based on alleged collection of tax did not defeat the entitlement to exemption, though recovery of any tax actually collected was left open in accordance with law.

Conclusion: The petitioner was entitled to the promised sales tax exemption and the eligibility certificate, and the impugned scheme and refusal order were unsustainable to the extent they denied that benefit.

Final Conclusion: The decision affirms that a governmental tax incentive announced in an industrial policy cannot be withdrawn by a later inconsistent departmental scheme in the absence of overriding public interest, where the promise has been acted upon and the statute empowers the grant of exemption.

Ratio Decidendi: A State Government is bound by a clear tax incentive promise made in an industrial policy when the promise is within statutory power and has been relied upon to alter position, and any later statutory scheme must conform to that promise unless the Government proves overriding public interest or a legal bar.

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