Government's replacement of Budgetary Support Scheme with Turnover Incentive Scheme held constitutional and rational

The J&K HC dismissed a petition challenging withdrawal of the Budgetary Support Scheme through SO 239 dated 16-07-2021. Petitioners alleged violation of promissory estoppel, legitimate expectation doctrines, and Article 14. The court held that the scheme was replaced by Turnover Incentive Scheme 2021 to avoid overlapping benefits, not withdrawn arbitrarily. Since petitioners continued receiving incentives in different form without prejudice, neither promissory estoppel nor legitimate expectation doctrines applied. The government's action was rational and constitutional, merely changing the mode of providing industrial incentives.

---

---

Issues Involved:

1. Whether the withdrawal of the Budgetary Support Scheme by SO 239 dated 16-07-2021 violates the doctrine of promissory estoppel.
2. Whether the withdrawal of the Budgetary Support Scheme violates the doctrine of legitimate expectation.
3. Whether the withdrawal of the Budgetary Support Scheme is arbitrary or in violation of Article 14 of the Constitution of India.

Issue-wise Detailed Analysis:

1. Doctrine of Promissory Estoppel:

The petitioners argued that the withdrawal of the Budgetary Support Scheme violated the doctrine of promissory estoppel. They claimed that they set up their industrial units based on the incentives offered by the government, including the reimbursement of IGST under SRO 431. The petitioners contended that the government made a clear and unequivocal promise that the scheme would remain in force until 31-03-2026, and thus, could not withdraw it prematurely. However, the court found that the representation made in SRO 431 was conditional, as clause 7 of the SRO allowed for an annual review of the scheme's viability. The court concluded that the petitioners failed to demonstrate that they acted to their detriment based on a clear promise, and thus, the doctrine of promissory estoppel was not applicable.

2. Doctrine of Legitimate Expectation:

The petitioners also argued that the withdrawal of the scheme violated their legitimate expectation that the scheme would continue until 2026. The court noted that legitimate expectation is based on reasonableness and fairness, and can be invoked if the denial of expectation leads to a violation of Article 14 of the Constitution. The court observed that the Budgetary Support Scheme was replaced by the Turnover Incentive Scheme 2021, which provided similar incentives based on gross turnover. The court found that the petitioners were not deprived of incentives, but rather received them in a different form. Therefore, the court held that the doctrine of legitimate expectation was not violated, as the government acted reasonably and fairly.

3. Arbitrariness and Violation of Article 14:

The petitioners claimed that the withdrawal of the scheme was arbitrary and violated Article 14 of the Constitution. The court examined the transition from the Budgetary Support Scheme to the Turnover Incentive Scheme and found that the change was made to avoid overlapping benefits and to streamline the incentive process. The court concluded that the government's action was not arbitrary, as it continued to provide incentives to the industrial units, albeit in a different manner. The court emphasized that the two schemes could not operate simultaneously, and the new scheme subsumed the benefits of the old one. Consequently, the court determined that there was no violation of Article 14.

Conclusion:

The court dismissed the writ petitions, finding no merit in the petitioners' claims. The doctrines of promissory estoppel and legitimate expectation were not applicable, and the government's actions were neither arbitrary nor in violation of Article 14. The court upheld the withdrawal of the Budgetary Support Scheme and the implementation of the Turnover Incentive Scheme 2021.

---