Promissory estoppel protects industrial tax incentives when a unit acts on a clear State policy promise despite a later restrictive notification.

A clear State promise of entry tax exemption in an industrial policy can bind the government where an industrial unit sets up and commences production in reliance on that promise. The delayed issuance of a later notification narrowing the exemption to units commencing production on or after 1 November 2004 could not defeat the earlier promise, because the unit had altered its position on the faith of the policy and the recognised exceptions to promissory estoppel were not made out. The State could not rely on its own delay and inaction to deny the promised fiscal incentive.

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Issues: Whether the respondent was entitled to exemption from entry tax for seven years on the basis of the State's promise under the industrial policy and the doctrine of promissory estoppel, despite the later notification restricting the benefit to units commencing production on or after 1 November 2004.

Analysis: The policy promised entry tax exemption for thrust-sector industries and contemplated follow-up notifications within 60 days. The respondent established its unit and commenced production in reliance on that promise, and the State itself delayed issuance of the exemption notification for more than three years. The restriction inserted by the later notification could not be used to defeat the earlier promise where the respondent had altered its position on the faith of the policy. The recognised exceptions to promissory estoppel were not attracted, and the State could not take advantage of its own delay and inaction.

Conclusion: The respondent was entitled to exemption from entry tax for seven years from 16 June 2004, and the appeal was liable to be dismissed.

Ratio Decidendi: Where the State makes a clear policy promise of fiscal incentive and an industrial unit acts upon it by altering its position, the State is bound by promissory estoppel and cannot defeat the benefit by relying on a later delayed notification that narrows the promised exemption.

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