Tax exemption as a revocable fiscal concession upheld against promissory estoppel, equality, delegation and trade-clause challenges.

A statutory sales tax exemption was treated as a revocable fiscal concession, so its prospective withdrawal was not barred by promissory estoppel and did not create a vested right to continue the benefit for the full original period. The amendment was also upheld against article 14 challenge because it did not create an impermissible classification among eligibility certificate holders and reflected a rational fiscal policy choice. Rule 101A was held within the delegated rule-making power under the Act. The measure further did not violate articles 301 or 304(b), as it amounted only to withdrawal of a tax concession and not a direct restraint on trade.

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Issues: (i) whether the withdrawal of sales tax exemption under section 39(4) of the West Bengal Sales Tax Act, 1994 was barred by promissory estoppel or on the footing that the exemption had become a vested right; (ii) whether the amendment offended article 14 by creating impermissible classes among eligibility certificate holders; (iii) whether rule 101A of the West Bengal Sales Tax Rules, 1995 was ultra vires section 39 of the Act; and (iv) whether the amendment violated articles 301 and 304(b) of the Constitution of India.

Issue (i): whether the withdrawal of sales tax exemption under section 39(4) of the West Bengal Sales Tax Act, 1994 was barred by promissory estoppel or on the footing that the exemption had become a vested right.

Analysis: The exemption granted under the scheme was treated as a fiscal concession and not as an indefeasible right. The reasoning proceeded on the principle that promissory estoppel does not prevent the State from altering or withdrawing a tax concession in the exercise of legislative power, particularly where the change is justified by public interest. The amendment was held to be prospective and linked to revenue considerations and fiscal policy, and the beneficiaries' entitlement was described as defeasible rather than vested.

Conclusion: The plea of promissory estoppel failed and no vested right to continue the exemption for the full original period was recognized.

Issue (ii): whether the amendment offended article 14 by creating impermissible classes among eligibility certificate holders.

Analysis: The challenge under equality was rejected on the footing that the amended provision did not fix different rates of tax benefit among similarly situated dealers. The distinction drawn by the petitioners was held to be unreal because the ceiling of benefit remained uniform and the measure of benefit depended on the tax forgone under the statutory scheme, not on a constitutionally impermissible classification. The amendment was therefore treated as a policy change with a rational fiscal basis.

Conclusion: The amendment was not violative of article 14.

Issue (iii): whether rule 101A of the West Bengal Sales Tax Rules, 1995 was ultra vires section 39 of the Act.

Analysis: Section 104 of the West Bengal Sales Tax Act, 1994 was treated as a wide rule-making provision authorising rules necessary to carry out the purposes of the Act and to prescribe matters required by the Act to be prescribed. On that basis, rule 101A was held to be within the delegated power. The reliance placed on a different statutory scheme was distinguished because the rule-making language there was narrower and did not confer equivalent authority.

Conclusion: Rule 101A was not ultra vires section 39.

Issue (iv): whether the amendment violated articles 301 and 304(b) of the Constitution of India.

Analysis: The court treated the impugned measure as withdrawal of a tax concession and not as a direct or immediate restriction on trade, commerce or intercourse. The burden alleged by the petitioners was considered only incidental to the fiscal amendment. Since the scheme was withdrawn in public interest and the provision did not amount to a direct impediment to movement of goods or business, the constitutional challenge under the freedom of trade clauses was rejected.

Conclusion: The amendment did not violate articles 301 or 304(b) of the Constitution of India.

Final Conclusion: The constitutional and statutory challenges to the curtailment of sales tax exemption failed, and the amendment was upheld as a valid prospective fiscal measure in public interest.

Ratio Decidendi: A statutory tax exemption is a revocable fiscal concession, and its prospective withdrawal in public interest does not attract promissory estoppel, create a vested right, or amount to unconstitutional discrimination or an impermissible restraint on trade.

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