Fiscal incentive promise under industrial policy can survive delayed implementation, with prospective notification challenged as arbitrary.

A State industrial policy promising fiscal incentive for captive power plants can create enforceable expectations when implementation is delayed and the follow-up notification is issued only prospectively. The Court stated that unexplained administrative delay may defeat the substance of the promise and, without public interest justification, the prospective operation of the notification can be arbitrary under Article 14. It also noted that technical objections such as delay, alternate remedy and unjust enrichment do not necessarily bar relief where the challenge is to the manner of implementation of the promised exemption. The benefit was confined to the eligible financial years under the policy framework.

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Issues: (i) Whether the respondent was entitled to a rebate or deduction of electricity duty under the Industrial Policy 2012 notwithstanding the prospective operation of the exemption notification dated 8 January 2015; (ii) whether the State's delay in issuing the exemption notification and making it prospective defeated the respondent's claim under promissory estoppel and legitimate expectation and rendered the action arbitrary under Article 14; (iii) whether the technical defences of delay, alternate remedy and unjust enrichment barred relief.

Issue (i): Whether the respondent was entitled to a rebate or deduction of electricity duty under the Industrial Policy 2012 notwithstanding the prospective operation of the exemption notification dated 8 January 2015.

Analysis: The Industrial Policy 2012 contained a clear representation that captive power plants would receive 50% exemption from electricity duty for five years, and it also contemplated prompt follow-up notifications to implement the policy. The statutory notification under Section 9 of the Bihar Electricity Duty Act, 1948 was ultimately issued, but only prospectively, after the policy period had already run for a substantial time. The respondent had commenced production on 17 August 2011, so under the policy the benefit could run only from the financial year following commencement of production.

Conclusion: The respondent was entitled to the rebate or deduction, but not for FY 2011-12; the entitlement was confined to FYs 2012-13 and 2013-14.

Issue (ii): Whether the State's delay in issuing the exemption notification and making it prospective defeated the respondent's claim under promissory estoppel and legitimate expectation and rendered the action arbitrary under Article 14.

Analysis: The policy expressly held out a promise of exemption and required departmental notifications within one month. The delay of nearly three years in issuing the notification, followed by making it prospective, defeated the substance of the representation and deprived eligible units of the promised benefit. The Court treated the State's failure as administrative lethargy inconsistent with the assurance given in the policy and held that the respondent had a legitimate expectation flowing from the State's own commitments. In the absence of any public interest justification for the delay or for making the exemption prospective, the action was found to be arbitrary and violative of Article 14.

Conclusion: The State's conduct was held to be contrary to promissory estoppel, legitimate expectation and Article 14.

Issue (iii): Whether the technical defences of delay, alternate remedy and unjust enrichment barred relief.

Analysis: The writ petition was entertained on merits, and mere delay in approaching the High Court did not bar relief because no altered position or prejudice to the State was shown. The availability of an appeal under the duty statute did not preclude recourse to Article 226 where the challenge was to the prospective operation of the exemption notification itself. The plea of unjust enrichment also failed because the respondent had asserted that the duty burden had not been passed on to customers, and the relief granted was by way of adjustment rather than refund.

Conclusion: These technical defences did not defeat the respondent's claim.

Final Conclusion: The appeals were disposed of by upholding the respondent's entitlement to electricity duty exemption in principle, while confining the relief to FYs 2012-13 and 2013-14.

Ratio Decidendi: Where a State policy contains a clear promise of fiscal incentive and requires prompt implementation, an unexplained and prolonged delay in issuing the implementing notification cannot be used to defeat the promised benefit, and a prospective notification issued without public interest justification may be struck down as arbitrary.

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