Government tax concession promises cannot be withdrawn on mere allegations of misuse; substance of refund may still be a lawful exemption.

A Government promise of sales tax concession to new industrial units could not be withdrawn on a bare allegation of misuse; absent a counter-affidavit or other material establishing actual misuse or undue advantage, the State lacked a factual basis to resile from the assurance. The concession was also not ultra vires the Karnataka Sales Tax Act, 1957, because although described as a refund, it operated in substance as an exemption or reduction in tax liability. Section 8A authorised such relief, and the order remained valid even without an express recital of that source of power.

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Issues: (i) Whether the Government could resile from the sales tax concession granted to new industrial units on the ground of alleged misuse of the concession. (ii) Whether the refund concession granted by the Government order was ultra vires the Karnataka Sales Tax Act, 1957.

Issue (i): Whether the Government could resile from the sales tax concession granted to new industrial units on the ground of alleged misuse of the concession.

Analysis: The concession had been acted upon by entrepreneurs who established new industrial units on the faith of the Government's assurance. A mere recital in a later order that the earlier scheme had been misused was insufficient to justify withdrawal of the promise. In the absence of a counter-affidavit or material establishing actual misuse or undue advantage, the Government failed to lay the factual foundation required to avoid the promise.

Conclusion: The Government was not entitled to resile from the concession on the alleged ground of misuse.

Issue (ii): Whether the refund concession granted by the Government order was ultra vires the Karnataka Sales Tax Act, 1957.

Analysis: The validity of the order had to be judged by its substance. Although the concession was described as a refund, in effect it operated as an exemption or reduction in sales tax liability. Section 8A of the Karnataka Sales Tax Act, 1957 empowered the State Government to grant exemptions and reductions, and the absence of an express recital of that source of power in the order did not matter when the power could be traced to the statute.

Conclusion: The refund concession was within the State Government's power and was not ultra vires.

Final Conclusion: The concession granted to the new industries was upheld, and the appeals challenging the grant of relief failed.

Ratio Decidendi: A Government promise conferring tax concessions cannot be withdrawn on an alleged ground of misuse unless the alleged misuse is factually established, and a concession described as a refund may still be valid where, in substance, it operates as an exemption or reduction authorized by the governing statute.

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