Fiscal exemption is a concession, not a vested right; retrospective tax relief cannot be compelled by promissory estoppel.

A fiscal exemption on milk powder and vitaminised infant milk foods was treated as a concession, not an enforceable right. The Gujarat High Court held that withdrawal of the concessional sales tax notification for the intervening period was a bona fide policy decision taken in public interest when the State moved to a value added tax regime, and it was not arbitrary merely because the concession was later reintroduced prospectively. The Court also rejected any claim to retrospective extension of the reintroduced exemption, holding that promissory estoppel and vested right could not compel a tax concession for the earlier period absent detrimental reliance. The challenge therefore failed.

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Issues: (i) whether the withdrawal of the concessional sales tax notification for the intervening period was arbitrary or unsupported by public interest; (ii) whether the petitioner could a retrospective extension of the reintroduced exemption on the basis of promissory estoppel or any vested right.

Issue (i): whether the withdrawal of the concessional sales tax notification for the intervening period was arbitrary or unsupported by public interest.

Analysis: The concessional rate on milk powder and vitaminised infant milk foods had been granted under the power to issue exemption notifications under the Central Sales Tax Act and was later rescinded when the State moved to a value added tax regime and sought greater uniformity in tax policy. The withdrawal was part of a broader rescission of exemption notifications and was held to be a bona fide policy decision taken in public interest. The subsequent reintroduction of the concession from a later date, after representations, did not by itself show that the earlier withdrawal lacked public interest or was irrational.

Conclusion: The withdrawal of the exemption for the intervening period was upheld and was not found to be arbitrary.

Issue (ii): whether the petitioner could a retrospective extension of the reintroduced exemption on the basis of promissory estoppel or any vested right.

Analysis: Exemption from tax is a concession and not an enforceable right that can be insisted upon for all time or for a retrospective period. The petitioner did not establish any alteration of position to its detriment on the faith of a promise of continued exemption. The later grant of exemption from 02.08.2006 did not create a vested entitlement to demand the same benefit for the earlier period between 01.04.2006 and 01.08.2006.

Conclusion: The claim for retrospective exemption based on promissory estoppel or vested right was rejected.

Final Conclusion: The challenge to the non-grant of exemption for the intervening period failed, and the petitions were dismissed.

Ratio Decidendi: A fiscal exemption is a concession that may be withdrawn or reintroduced prospectively in public interest, and a beneficiary has no vested right or promissory-estoppel claim to compel retrospective extension of the concession.

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