Industrial incentive protection limits withdrawal of sales tax exemption where a unit relied on policy and certificates.

A departmental sales tax concession scheme framed to implement the Industrial Policy, 1991 could not be amended to withdraw incentive benefits already promised to an eligible unit. Where the petitioner had altered its position by establishing the unit and obtaining eligibility and authorisation certificates for the notified exemption period, the amendment was treated as repugnant to the governing policy and unsupported in law. The court accepted the factual foundation in the absence of rebuttal and reiterated that inconsistent governmental policies cannot override a Cabinet-approved industrial policy. The amended scheme was therefore held unconstitutional and non est to the extent of the inconsistency, and the exemption continued for the covered period.

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Issues: Whether the Amended Scheme, 1999, which brought coal washing units within the list of industries ineligible for sales tax concession, was invalid for being contrary to the Industrial Policy, 1991, and whether the State could withdraw the concession in the face of the eligibility and authorisation certificates already issued to the petitioner.

Analysis: The concession scheme was framed to implement the Industrial Policy, 1991 and was required to remain compatible with that policy. The petitioner had altered its position by setting up the unit and securing eligibility and authorisation certificates for the notified period of exemption. In the absence of any rebuttal from the respondents, the factual foundation for the plea was accepted. The Court followed the earlier view that different wings of the Government cannot adopt inconsistent policies and that a departmental notification cannot defeat a Cabinet-approved industrial policy. The amendment, to the extent it withdrew the concession already promised under the policy and earlier scheme, was held to be repugnant to the governing policy and unsupported in law.

Conclusion: The amended scheme, insofar as it was inconsistent with the Industrial Policy, 1991, was held unconstitutional and non est in law, and the petitioner was held entitled to continue receiving the sales tax exemption for the covered period.

Ratio Decidendi: A departmental scheme framed to implement a Cabinet-approved industrial policy cannot validly be amended so as to withdraw accrued incentive benefits in a manner inconsistent with that policy, particularly where the affected unit has acted on the representation and satisfied the eligibility conditions.

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