Promissory estoppel preserved sales tax exemption where an industrial unit relied on an earlier incentive promise

Promissory estoppel protected the petitioner's sales tax exemption under the Industrial Policy, 1996 and Incentives Code, 1996 because it had materially altered its position by acquiring land, securing licences and registrations, arranging finance, and substantially setting up the unit before the State introduced later restrictive notifications. The State's earlier communication had confirmed eligibility under the existing incentive framework, and the subsequent notifications could not be used to defeat the accrued benefit on the facts stated. The petitioner's entitlement to the promised exemption was therefore preserved, and the later cut-off conditions were ineffective against it absent overriding public interest.

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Issues: Whether the petitioner company was entitled to sales tax exemption under the Industrial Policy, 1996 and the Incentives Code, 1996, and whether the later notifications dated 17.6.2002 and 12.9.2002 could validly defeat that entitlement on the facts of the case.

Analysis: The industrial policy and the earlier notification dated 26.4.2000 held out a fiscal incentive framework on the basis of which the petitioner altered its position by acquiring land, obtaining industrial licence and registrations, arranging finance, securing clearances and substantially setting up the unit. The State's own communication confirmed eligibility under the earlier regime. The later notifications introduced a further cut-off for commencement of production and were relied upon to deny the exemption even though the petitioner had already substantially acted on the promise and had materially progressed before those changes. In the circumstances, the doctrine of promissory estoppel applied, and the State could not withdraw the promised benefit to the petitioner's prejudice by the subsequent notifications.

Conclusion: The petitioner was entitled to sales tax exemption, and the subsequent notifications dated 17.6.2002 and 12.9.2002 could not be used against it.

Final Conclusion: The writ petition succeeds, the rejection letters are quashed, and the petitioner's eligibility for the promised sales tax exemption under the earlier policy framework stands protected on the basis of promissory estoppel.

Ratio Decidendi: Where a State fiscal incentive has been substantially acted upon and the promisee has irreversibly altered its position, a later restrictive amendment cannot be applied to defeat the accrued entitlement unless overriding public interest justifying withdrawal is established.

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