Promissory estoppel protected a fixed-period tax exemption, but no mandamus compelled a fresh VAT exemption.

A fixed-period sales tax exemption granted under the repealed law was treated as a protected benefit, and the repeal-and-saving provision was read as preserving accrued rights and notifications. On that basis, withdrawal of the exemption before expiry was found unsupported by sufficient justification or overriding public interest, and promissory estoppel prevented the State from resiling from the benefit already granted. However, a fresh exemption or extension under the new VAT regime remained a matter of policy and statutory discretion, so no mandamus could compel the State to grant it, though a representation could be considered in accordance with law.

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Issues: (i) Whether the notifications dated 31 March 2006 withdrawing the exemption earlier granted to the petitioners could be sustained in view of the doctrine of promissory estoppel and the repeal and saving provision in the Gujarat Value Added Tax Act, 2003. (ii) Whether the petitioners were entitled to a direction to extend the earlier sales tax exemption or grant a fresh exemption under the Gujarat Value Added Tax Act, 2003.

Issue (i): Whether the notifications dated 31 March 2006 withdrawing the exemption earlier granted to the petitioners could be sustained in view of the doctrine of promissory estoppel and the repeal and saving provision in the Gujarat Value Added Tax Act, 2003.

Analysis: The exemption certificate issued under section 49(2) of the Gujarat Sales Tax Act, 1969 was operative for a fixed period. The Court held that the petitioners had acquired a protected interest in the continuance of that exemption for its stated duration. Section 100 of the Gujarat Value Added Tax Act, 2003 was construed as saving rights, liabilities and notifications arising under the repealed law, and the withdrawal of the exemption before expiry was found to be unsupported by any sufficient justification or overriding public interest. The Court applied the doctrine of promissory estoppel and held that the State could not resile from the exemption already granted.

Conclusion: The impugned notifications rescinding the earlier exemption were invalid and liable to be quashed, in favour of the petitioners.

Issue (ii): Whether the petitioners were entitled to a direction to extend the earlier sales tax exemption or grant a fresh exemption under the Gujarat Value Added Tax Act, 2003.

Analysis: Although the Gujarat Value Added Tax Act, 2003 contained enabling provisions for exemption and the Court noticed the policy background and comparable entries in the VAT schedule, the grant of a fresh exemption under the new regime was treated as a matter of governmental policy and statutory discretion. The Court declined to compel the State to extend the earlier exemption into the VAT regime by mandamus, but left it open to the petitioners to make a representation for consideration in accordance with law.

Conclusion: No mandamus was issued to grant or extend exemption under the Gujarat Value Added Tax Act, 2003, against the petitioners.

Final Conclusion: The petitioners succeeded in having the premature withdrawal of the existing exemption set aside, but they did not obtain a judicial direction compelling continuation of that benefit under the new VAT regime.

Ratio Decidendi: An exemption granted for a fixed period under a taxing statute, once validly conferred and acted upon, cannot be withdrawn before expiry without adequate justification or overriding public interest, and the repeal and saving provision may preserve such accrued benefit.

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