Promissory estoppel protects industrial tax incentives where beneficiaries acted on a policy promise and statutory remission remained operative.

The State could not withdraw a sugar policy to deny purchase tax exemption to units that had already acted on the promise, made substantial investments and obtained eligibility certificates; promissory estoppel, legitimate expectation and Article 14 barred arbitrary resilement without a substantiated public interest basis. The executive withdrawal also did not override the statutory notification granting remission under the Purchase Tax Act, so the notified exemption continued for the remaining period and demand notices could not stand. For the Maqsudapur unit, exemption could be considered only from the date of commercial production and subject to verification of eligibility by the State authorities.

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Issues: (i) whether the State could withdraw the sugar policy and deny purchase tax exemption to units that had already acted upon the policy and been issued eligibility certificates; (ii) whether the statutory notification granting remission of purchase tax under the Purchase Tax Act survived the withdrawal of the policy and continued to confer benefit for the remaining period; (iii) whether the unit at Maqsudapur, which commenced production after the policy withdrawal, could claim exemption.

Issue (i): whether the State could withdraw the sugar policy and deny purchase tax exemption to units that had already acted upon the policy and been issued eligibility certificates.

Analysis: The policy was held out as an inducement for industrial investment, and the petitioner altered its position by making substantial investments, establishing units, and obtaining eligibility certificates. The Court applied the doctrines of promissory estoppel and legitimate expectation, holding that the State could not resile from a clear promise after the petitioner had acted on it, absent a demonstrated and adequately supported public interest justification. The withdrawal was found to be arbitrary and inconsistent with the requirement of fairness under Article 14.

Conclusion: The State was bound by its promise and could not deny the exemption to the eligible units that had already acted upon the policy.

Issue (ii): whether the statutory notification granting remission of purchase tax under the Purchase Tax Act survived the withdrawal of the policy and continued to confer benefit for the remaining period.

Analysis: The Court distinguished the executive policy from the statutory notification issued under Section 14(1) of the Uttar Pradesh Sugarcane (Purchase Tax) Act, 1961. It held that the executive withdrawal of the policy did not automatically revoke the statutory notification, and that a statutory benefit could not be nullified by an executive order. So long as the notification remained in force, the petitioner was entitled to the exemption and the demand notices could not stand.

Conclusion: The statutory notification continued to operate and the petitioner remained entitled to the purchase tax exemption for the notified period.

Issue (iii): whether the unit at Maqsudapur, which commenced production after the policy withdrawal, could claim exemption.

Analysis: The Court held that the petitioner's eligibility certificate and the policy framework were not confined in the manner suggested by the State, but exemption for the Maqsudapur unit could arise only from the date it commenced commercial production and upon verification of supporting documents by the State Government or its Committee.

Conclusion: The Maqsudapur unit was left to establish its entitlement from the date of commercial production upon verification by the State Government.

Final Conclusion: The demand notices for purchase tax on the petitioner's existing units were quashed, and the petitioner was held entitled to the incentives and exemptions under the policy and the statutory notifications for the remaining period, while the Maqsudapur unit was directed to have its claim examined on proof of eligibility.

Ratio Decidendi: A statutory exemption notification issued pursuant to a policy-based promise cannot be withdrawn or defeated by a subsequent executive order where the beneficiary has already acted on the promise and the notification remains operative; in such circumstances, promissory estoppel, legitimate expectation, and Article 14 prohibit arbitrary denial of the accrued benefit.

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