Industrial tax incentive deferment can be reconsidered when later CST reductions make the promised benefit ineffective.

Industrial tax incentive concessions may warrant reconsideration when a subsequent reduction in CST rates substantially undermines the deferred-tax benefit promised to the unit. The Court applied promissory estoppel and legitimate expectation to hold that a rigid refusal to modify the sales tax deferment scheme could defeat the scheme's purpose and make the concession illusory. It therefore declined to sustain the refusal order and directed reconsideration of the petitioner's request, leaving room for the State to frame appropriate ameliorative measures rather than insisting on the original form of relief alone.

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Issues: Whether the petitioner was entitled to reconsideration and consequential relief against the refusal to modify the sales tax deferment scheme after the reduction in the CST rate made the incentive substantially ineffective.

Analysis: The incentive package was granted to promote industrial expansion and to provide a meaningful deferred-tax benefit over the specified period. The subsequent statutory reduction in CST rates, brought about by central tax reforms, materially diminished the tax component that could be retained under the deferment mechanism. The Court held that the State had not adequately addressed the resulting frustration of the incentive scheme and that a rigid refusal would render the concession illusory, contrary to the purpose of the industrial incentive. In this context, the principles of promissory estoppel and legitimate expectation, as applied to industrial incentives, supported reconsideration by the State Government. The Court also treated the matter as one where the State could evolve appropriate ameliorative measures rather than confining itself to the precise relief sought.

Conclusion: The refusal order was not sustained and the petitioner succeeded in obtaining a direction for reconsideration of its request.

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