Statutory tax concession withdrawal upheld; promissory estoppel, arbitrariness, and Article 301 challenges all failed.

A statutory tax concession for tourist buses may be withdrawn by the State where the governing taxing statute permits withdrawal, and a Central Government communication that is only a request does not curtail that power. Promissory estoppel cannot compel continuation of a concession against public interest or statutory authority, and an arbitrariness challenge fails where similarly situated operators are treated alike. A tax does not infringe Article 301 unless it directly and immediately restricts trade; compensatory or regulatory levies are not barred on that basis. Withdrawal of the concession merely restored the original charging regime, so no fresh levy notification was required.

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Issues: (i) Whether the State Government's withdrawal of the concessional tax notification for tourist buses was invalid because the Central Government's communication constituted a binding directive and the State lacked power to cancel the concession. (ii) Whether the withdrawal was barred by promissory estoppel or was otherwise arbitrary. (iii) Whether the levy offended the freedom of trade and commerce under Article 301 of the Constitution of India or required relief under Article 304. (iv) Whether a fresh notification was necessary for the tax levy after withdrawal of the concession.

Issue (i): Whether the State Government's withdrawal of the concessional tax notification for tourist buses was invalid because the Central Government's communication constituted a binding directive and the State lacked power to cancel the concession.

Analysis: The communication from the Joint Secretary to the Government of India was only a request to the States to incorporate composite-fee provisions and was not a law, subordinate legislation, or binding directive. The relevant constitutional provisions governing Union executive power and Union control over States did not apply because no parliamentary law laying down principles of taxation on the subject existed. The power to levy, exempt, or withdraw tax concessions under the State taxation statute remained with the State Legislature and its delegate, and the impugned withdrawal was made under the taxing statute itself.

Conclusion: The withdrawal notification was valid and the Central Government's letter did not curtail the State's taxing power.

Issue (ii): Whether the withdrawal was barred by promissory estoppel or was otherwise arbitrary.

Analysis: A tax concession can be withdrawn in public interest, and promissory estoppel cannot compel the State to continue a concession where the governing statute permits withdrawal. The doctrine yields to larger public interest and cannot override statutory power. The challenge on arbitrariness also failed because all similarly situated operators were treated alike and no manifest arbitrariness or discrimination was shown.

Conclusion: The plea of promissory estoppel and the challenge based on arbitrariness were rejected.

Issue (iii): Whether the levy offended the freedom of trade and commerce under Article 301 of the Constitution of India or required relief under Article 304.

Analysis: A tax does not, by itself, infringe Article 301; the decisive question is whether it directly and immediately burdens trade. A compensatory or regulatory levy that does not hinder the movement of trade is outside the prohibition of Article 301. The Court approved the principle that regulatory measures and compensatory taxes facilitating trade are not hit by Article 301, and it clarified that a mere assertion that a tax is compensatory is insufficient. On the facts, the levy was not shown to be a prohibited restriction. The broader claim under Article 304 was also not entertained as a factual foundation had not been laid in the pleadings.

Conclusion: The challenge under Article 301 failed, and no relief under Article 304 was warranted.

Issue (iv): Whether a fresh notification was necessary for the tax levy after withdrawal of the concession.

Analysis: The original levy under the taxation statute remained operative, and the later concession did not supplant the original charging provision. The withdrawal of the concession merely restored the earlier position and did not require a fresh levy notification.

Conclusion: No fresh notification was required.

Final Conclusion: The tax concession withdrawal was upheld, and the constitutional and statutory challenges to the levy failed in entirety.

Ratio Decidendi: A statutory tax concession may be withdrawn by the State in public interest, promissory estoppel cannot defeat the exercise of a lawful taxing power, and a levy does not violate Article 301 unless it directly and immediately restricts trade in a manner that is not merely regulatory or compensatory.

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