Promissory estoppel and legitimate expectation protected a fixed-period tax exemption from later legislative withdrawal.

An exemption granted by notification under the Madhya Pradesh Vanijyik Kar Adhiniyam, 1994 for a fixed period could not be withdrawn before expiry merely because section 10-B was later inserted and soybean was subsequently treated as taxable. The earlier exemption had been availed on the basis of eligibility certificates and had not been rescinded in the manner required by statute. Applying promissory estoppel and legitimate expectation, the Court held that the State could not defeat an exemption already promised and acted upon for the notified term, and the impugned notices and consequential assessment proceedings were unsustainable.

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Issues: Whether the petitioners were entitled to continue the tax exemption granted under the notification dated 06.06.1995 until its validity period expired, and whether the impugned notices issued on the basis of the newly inserted section 10-B could be sustained.

Analysis: The exemption notification issued under section 17 of the Madhya Pradesh Vanijyik Kar Adhiniyam, 1994 granted tax relief for a fixed period and had been availed by the petitioners on the strength of the eligibility certificates. The subsequent insertion of section 10-B and the notification treating soybean as a taxable commodity could not defeat an exemption already operating for the notified period, particularly when the earlier exemption had not been rescinded in the manner contemplated by the statute. The Court applied the doctrines of promissory estoppel and legitimate expectation, holding that the State could not, by legislative or administrative device, take away an exemption already promised and acted upon for the specified term.

Conclusion: The petitioners were entitled to the exemption till 31.03.2005, and the impugned notices and consequential assessment proceedings were unsustainable.

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