Court upholds withdrawal of GST exemption, introduces limited support scheme. Petitioner lacks vested right.

The court upheld the validity of withdrawing the exemption notification and introducing a limited budgetary support scheme under the new GST regime. It ruled that the petitioner did not have a vested right to claim complete exemption or full budgetary support, as the previous exemptions were no longer applicable after the GST overhaul. The principle of promissory estoppel could not compel the government to continue the previous exemptions. The court dismissed the petition, affirming the government's actions as consistent with the new tax laws and GST Council recommendations.

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Issues Involved:
1. Whether the withdrawal of the exemption notification and introduction of the limited budgetary support scheme is valid.
2. Whether the principle of promissory estoppel can be invoked against the legislative act of rescinding the exemption notification.
3. Whether the petitioner has a vested right to claim complete exemption or full budgetary support under the new GST regime.

Detailed Analysis:

Issue 1: Validity of Withdrawal of Exemption Notification and Introduction of Limited Budgetary Support Scheme
- The petitioner, engaged in manufacturing two-wheelers in Uttarakhand, was initially granted 100% Central Excise Duty exemption for 10 years under the 2003 notification. However, with the introduction of GST on 01.07.2017, this exemption was rescinded by Notification No. 21/2017-CE.
- The petitioner argued that the withdrawal of the exemption caused financial hardships and sought complete exemption or full budgetary support for the residual period.
- The court noted that the GST regime overhauled the entire indirect tax structure, making the Central Excise Act, 1944, and related exemptions obsolete. The new GST laws did not envisage such exemptions, and the government provided partial budgetary support instead.
- The court concluded that the withdrawal of the exemption and the introduction of the limited budgetary support scheme were consistent with the new tax regime and the recommendations of the GST Council.

Issue 2: Applicability of Promissory Estoppel Against Legislative Act
- The petitioner invoked the principle of promissory estoppel, arguing that the government should adhere to its promise of granting 100% exemption for 10 years.
- The court referred to several judgments, including Shree Sidhbali Steels Ltd. Vs. State of U.P and I.T.C Bhadrachalam Paperboards Vs. Mandal Revenue Officer, to establish that promissory estoppel cannot be invoked against legislative acts or statutory provisions.
- The court emphasized that Section 174 (2) (c) of the CGST Act explicitly states that any tax exemption granted as an incentive through a notification shall not continue as a privilege if the notification is rescinded.
- Therefore, the court held that the principle of promissory estoppel could not be applied to compel the government to continue the exemptions under the new GST regime.

Issue 3: Vested Right to Complete Exemption or Full Budgetary Support
- The petitioner claimed a vested right to complete exemption or full budgetary support under the new GST regime, based on the 2003 policy and exemption notification.
- The court clarified that the fiscal benefits promised under the previous regime were privileges granted under laws that no longer existed. With the introduction of GST, the entire tax structure and the basis for exemptions had changed.
- The court noted that the new GST laws provided for input tax credit and seamless transfer of credits, which were not available under the previous regime. This change fundamentally altered the nature of tax exemptions and benefits.
- The court concluded that the petitioner did not have a vested right to claim complete exemption or full budgetary support under the new GST regime. The limited budgetary support provided by the government was a measure of goodwill and not a continuation of the previous exemptions.

Conclusion:
- The court dismissed the petition, holding that the withdrawal of the exemption notification and the introduction of the limited budgetary support scheme were valid and consistent with the new GST regime.
- The principle of promissory estoppel could not be invoked against the legislative act of rescinding the exemption notification.
- The petitioner did not have a vested right to claim complete exemption or full budgetary support under the new GST regime.

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