Promissory estoppel can bind the government but yields to overriding public interest; exemption withdrawal allowed without mandatory prior notice

SC held that promissory estoppel can bind the Government but yields to a supervening public equity; where public interest justifies rescinding a prior exemption, the State may withdraw its representation even if parties relied on it. The appellants failed to establish superior equity or that public interest did not warrant supersession of the earlier exemption; alleged economic hardship and unequal treatment were insufficient. The Court found no requirement for mandatory prior notice before withdrawal in these circumstances and dismissed the appeal.

---

---

Issues Involved:
1. Applicability of promissory estoppel against the Government.
2. Withdrawal of exemption notification in public interest.
3. Impact of specifying a period in the exemption notification.

Detailed Analysis:

1. Applicability of Promissory Estoppel Against the Government:
The appellants argued that they imported PVC resin based on the Government's assurance that no customs duty would be levied until 31-3-1981, as per Notification No. 66. They contended that the Government should be estopped from withdrawing this exemption. The High Court, relying on the Full Bench decision in the case of *Bombay Conductors and Electricals Ltd.*, concluded that imposition and withdrawal of taxes are legislative functions, and there can be no estoppel against the legislature. The doctrine of promissory estoppel can be invoked against the State, but not when public interest requires otherwise. The judgment in *Bombay Conductors* emphasized that estoppel cannot be pleaded against public interest, as it would hinder the Government's ability to act in the public good.

2. Withdrawal of Exemption Notification in Public Interest:
The Supreme Court referred to the case of *Kasinka Trading & Anr. v. Union of India & Anr.*, where the same Notification No. 205 was challenged. The Court upheld the withdrawal of the exemption, noting that the Government justified the exemption initially to equalize prices of indigenous and imported PVC resin. However, when international prices fell, making imports cheaper than domestic products, the Government decided to withdraw the exemption in public interest. The Court reiterated that the principle of promissory estoppel applies against the Government but can be overridden by a supervening public equity. The Government must provide adequate material to show that public interest necessitates withdrawal from the promise. In this case, the Government demonstrated that the changed economic circumstances justified the withdrawal.

3. Impact of Specifying a Period in the Exemption Notification:
The appellants argued that since Notification No. 66 specified the exemption period, the Government could not withdraw it before the end date. The Supreme Court disagreed, stating that public interest is a superior equity that can override individual equity, even if a period is specified. The Government can resile from a promise if it gives reasonable notice, allowing the promisee to restore the status quo ante. However, in cases of supervening public interest, the Government need not provide notice before withdrawing the exemption. The Court concluded that the judgment in *Kasinka Trading* correctly analyzed the facts and law, affirming that the Government's action was justified by public interest.

Conclusion:
The Supreme Court dismissed the appeal, upholding the High Court's decision. The judgment confirmed that the principle of promissory estoppel applies against the Government but can be overridden by public interest. The withdrawal of the exemption notification was justified by the changed economic circumstances, and the Government's action was in the public interest. The specified period in the exemption notification did not prevent the Government from withdrawing it when public interest required.

---