2020 (12) TMI 1241 - SC - Indian Laws

50% Electricity Duty Rebate Affirmed for FYs 2012-14; Promissory Estoppel Applied Against State's Delay.

The HC affirmed the Respondent's entitlement to a 50% rebate on electricity duty for FYs 2012-13 and 2013-14, based on the Industrial Policy 2012. The ... Promissory estoppel - legitimate expectation - arbitrariness under Article 14 - representation in industrial policy - follow-up notification delay and retrospective effect - statutory notification under Section 9 of the Bihar Electricity Duty ActPromissory estoppel - legitimate expectation - representation in industrial policy - follow-up notification delay and retrospective effect - statutory notification under Section 9 of the Bihar Electricity Duty Act - arbitrariness under Article 14 - Entitlement to 50% rebate/deduction from electricity duty in terms of the Jharkhand Industrial Policy 2012 and the exemption notification dated 8 January 2015, and the temporal scope of that entitlement for the assessment years in dispute. - HELD THAT: - The State's Industrial Policy 2012 expressly represented that eligible captive power plants would receive a 50% exemption for five years and envisaged follow-up departmental notifications within one month. The State subsequently issued a statutory notification under Section 9 on 8 January 2015 but made it prospective, thereby depriving eligible units of the full period of exemption promised by the policy. The Court held that this constituted a breach of the representation and gave rise to a legitimate expectation; absence of any justification or public-interest reason for the delay rendered the State's conduct arbitrary and violative of Article 14. Applying the principles in Motilal Padampat and subsequent authorities, the Court upheld relief grounded in the substantive promise made by the State. However, Clause 35.7(b) of the Industrial Policy - entitlements arising from the financial year following the Date of Production - precludes relief for FY 2011-12 where production commenced on 17 August 2011. On this basis the High Court's conclusion that the respondent was entitled to the exemption was affirmed but confined to FYs 2012-13 and 2013-14. [Paras 43, 44, 46, 51]Respondent entitled to the 50% rebate for FY 2012-13 and FY 2013-14; not entitled for FY 2011-12.Assessment procedure and Form-III - delay and laches - unjust enrichment - alternative statutory remedy - writ jurisdiction under Article 226 - Whether procedural and technical defences advanced by the State (failure to claim in returns, delay in filing writs, unjust enrichment, and availability of statutory remedies) barred relief. - HELD THAT: - The Court rejected the technical objections. The absence of a Section 9 notification made a writ challenge to the terms of the exemption notification available; assessing officers were bound by the prospective terms of the issued notification and thus the remedy lay in challenging the notification. The State did not raise delay or laches before the High Court and has not shown that its position or that of third parties was altered to its detriment by the respondents' late institution of writs; the Court declined to overturn a merits-based High Court order on delay alone. The plea of unjust enrichment failed on the facts because the respondent averred (and the High Court accepted) that it had not passed on the duty to its customers. The availability of an alternative statutory appeal did not oust the High Court's exercise of writ jurisdiction where arbitrariness in State action was alleged and established. [Paras 47, 48, 49, 51]Technical and procedural defences raised by the State were not accepted; writ relief was maintainable and rightly granted on merits.Final Conclusion: The High Court's judgment is affirmed in part: the respondent is entitled to the 50% electricity-duty exemption promised by the Industrial Policy 2012 for FYs 2012-13 and 2013-14 (but not for FY 2011-12); the State's delayed and prospective notification was arbitrary and contrary to the representation in the policy, and procedural/technical defences do not defeat the respondents' claim. Issues Involved:1. Captive power plant: assessment to electricity duty2. Industrial Policy 20123. Exemption from Electricity Duty4. Doctrine of Promissory Estoppel5. Legitimate Expectations6. Delay in issuance of notification7. Technical defenses to the claim8. Unjust enrichmentDetailed Analysis:Captive power plant: assessment to electricity dutyThe Respondent commenced commercial production on 17 August 2011 and was liable to pay duty for distribution and/or consumption of energy from 1 October 2011. Assessment orders were passed for FY 2011-12, 2012-13, and 2013-14 based on returns submitted by the Respondent.Industrial Policy 2012The Industrial Policy 2012, notified on 16 June 2012, provided an exemption from the payment of 50% of electricity duty for five years for captive power plants established for self-consumption. Clause 35.7(b) stipulated that entitlements would begin from the financial year following the Date of Production (DoP).Exemption from Electricity DutyDespite the policy's stipulation that notifications enforcing its terms should be issued within one month, the State failed to comply. An exemption notification was eventually issued on 8 January 2015, but it was made effective prospectively, contrary to the policy's representation.Doctrine of Promissory EstoppelThe High Court relied on the doctrine of promissory estoppel, holding that the State's failure to issue a timely exemption notification was contrary to the representation in the Industrial Policy 2012. The doctrine was applied based on precedents like Motilal Padampat and Kalyanpur Cement Ltd., which emphasize that a promise made by the State must be honored to prevent injustice.Legitimate ExpectationsThe State's representation in the Industrial Policy 2012 created a legitimate expectation for the Respondent to receive a 50% rebate on electricity duty for five years. The High Court noted that the delay in issuing the notification was due to 'bureaucratic lethargy,' and the prospective application of the exemption negated the legitimate expectation created by the policy.Delay in issuance of notificationThe State's delay in issuing the exemption notification was unjustified. The High Court found no specific reason for the delay and held that the State's lethargy should not deprive the Respondent of the promised benefit. The notification was deemed effective from the date of the Industrial Policy 2012 (1 April 2011).Technical defenses to the claimThe State argued that the Respondent did not claim the exemption in its assessment returns and paid the duty without protest. However, the Court noted that the Respondent's only remedy was to challenge the terms of the exemption notification, which it did through writ proceedings. The issue of delay in filing the writ petition was not raised before the High Court or in the Special Leave Petition, and thus could not be a ground for denying relief.Unjust enrichmentThe High Court did not order a refund but allowed an adjustment of future payments. The Respondent had specifically pleaded that the burden of the differential amount of electricity duty was not passed on to its customers, negating the State's claim of unjust enrichment.ConclusionThe Court affirmed the High Court's judgment that the Respondent was entitled to a rebate/deduction from electricity duty for FYs 2012-13 and 2013-14. The Respondent would not be entitled to a rebate/deduction for FY 2011-12, as the entitlement ensues from the financial year following the commencement of production. The appeals were disposed of accordingly, with no order as to costs.