TaxTMI 
TaxTMI 
1992 (3) TMI 163
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....y a manufacturer. 2. Facts, found by the learned single Judge, which were sufficient to direct the government to honour its commitments of refunding sales tax to the appellant on principle of promissory estoppel were announcement of policy by the Government to refund sales tax, as an incentive to those who were willing to set up large scale selective industries in the focal points, letter of the appellant seeking details of policy as he was willing to set up a Vanaspati manufacturing unit, favourable response from the Director of Industries followed by exchange of letters and meetings between appellant's representatives and Secretary of Industries extending assurance that the incentives shall be available to the appellant acting on which it purchased land, machinery etc., laying of foundation stone by the Governor and issuance of notification declaring the land, on which unit was established, in focal point. The order was set aside in appeal and it was held that even though rule of equitable estoppel should be observed by all government and public authorities but its scope was restricted and it could not be extended, too widely so as to bind a government even where its officials i....
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....ns, the party has changed or altered the position by relying on the assurance or the representation. The alteration of position by the party is the only indispensable requirement of the doctrine. It is not necessary to prove further any damages, detriment or prejudice to the party asserting the estoppel." 4. What, therefore, requires to be examined, is if any promise was made by the Government or its officials to the appellant that sales tax shall be refunded to it and if the appellant acting on it altered its position. For this it is necessary to narrate few facts even though both the learned Single Judge and Division Bench have dealt with it elaborately. Admittedly, a brochure was issued in December 1966 by the Government of Punjab announcing its 'New Policy' declaring that incentive and concession, one of them being refund of sales tax, would be available to those persons who set up selective large scale industries in the focal point. Whether this brochure was authorised or not and its legal effect on rights of parties shall be adverted to later. But it is undisputed that acting on it the appellant's representative met the Chief Minister of the State personally and found that h....
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....... and also informally to FS also at that stages and it was decided that we get this party located at Rajpura. Unfortunately, the demand of land by this party was in one place to the tune of 15 to 20 acres and since our plots were only of 1-1.5 acres of size it was decided that they may be allowed to locate their plot nearabout our focal point so that it could be integrated finally in our future expansion of the Industrial Estate at Rajpura which yet shows no sign of life and consequently it was felt that by bringing this party more industries of allied nature would come here. In plan for 1969-70 the F.D. are aware that we have very little money set aside for further acquisition of land. Realising this, we, therefore, suggested to this party to go in for purchase of land themselves as we were not sure whether we would be able to have enough funds to acquire more land at Rajpura particularly when our earlier plots had not been sold out. This party was keen to come in as it wanted to do into production from November 1969. The party has purchased that piece of land which has approval of the Town and Country Planning department, it has also submitted its plan for construction of build....
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.... the Government by its officials in pursuance of and in line with the declaration of policy by the Government that a new unit shall be entitled to concession. Acting on the assurance, both express and implied, the appellant invested substantial amount in setting up the unit requesting, in the meanwhile, for grant of written sanction from the Government which, too, came. But even if it would not have made any difference in law as the equity arose in favour of appellant not by the letter dated 16th June 1969 but by altering its position on assurance given by authorities. In Godfrey Philips (supra) it was observed, "Now the dbctrine of promissory estoppel is well-established in the administrative law of India. It represents a principle evolved by equity to avoid injustice and, though commonly named promissory estoppel, it is neither in the realm of contract nor in the realm of estoppel. he basis of this doctrine is the interposition of equity which has always, true to its form, stepped in to mitigate the rigour of strict law." Basic ingredients of promise by the Government, belief of the appellant that it was true and if acted upon shall entitle it to refund of sales tax, and finall....
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....by the layout plan of industrial estate with assurance that the plot shall be in focal point at Rajpura and if necessary steps shall be taken to include it in focal point. The letter mentioned that according to the policy the concession available to the appellant would be refund of purchase and sales tax including inter-state sales tax for a period of five years. In paragraph 6 of the letter the appellant wanted clarification that the period of five years shall be counted from the date of production. Paragraph 7 of the letter read, "7. We would very much like to spend money on further industrial development, staff and labour welfare activities, housing for staff and labour, research and development of agricultural products for use in industry in the State of Punjab. In order to enable us to do so, it is requested that instead of refunding the amount of the purchase and sales tax including inter-state sales tax as such an amount equivalent to the amount of purchase and sales tax including inter-state sales tax to be paid by us every quarter is paid to us as Capital grant quarterly for a period of five years commencing from the date of production. If our request is accepted, we on o....
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....s faithful reproduction of the decision taken on 2nd May 1979 informing the appellant that, 'the State Government have agreed to give the concessions and incentives admissible to a unit in the focal point of industrial growth to the unit proposed to be set up by you for the manufacture of Vanaspati Ghee'. The entire argument founded an offer and counter offer, thus, was misconceived. 7. Two reasons were given, by Division Bench of the High Court, to permit the Government to escape from rigour of the principle of promissory estoppel one that the brochure itself was unauthorised and Other that when the decision of the Government came the policy had already undergone change. Neither appear to be well founded. Cabinet Sub-Committee's decision of 15th December 1968 which formed the basis for the finding that the brochure was unauthorised, are minutes of a decision of a Committee comprising of the Industries Minister and Secretary Industries which did not see light of the day till it was filed by way of supplementary affidavit before the Division Bench. As against it, the Chief Minister and Industries Minister in an inaugural speech of Conference of Industries at Chandigarh after five d....
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....had extended promise, unauthorisedly and beyond scope of their authority. Reliance on Vasantkumar Radhakisan Vora v. Board of Trustees of the Port of Bombay &Another [1991 (1) SCC 761] was not apposite as the Estate Manager at whose instance the lessee had deposited the amount for grant of tenancy after reconstruction was authorised to collect rent only. Further the letter indicated that if the lessee complied with conditions he would recommend to the Board for grant of lease. And recommendation was made. But it was not accepted. 9. Nor there is any merit in the finding that by the time the Government agreed, in writing, to grant concession the policy had undergone change, therefore, the appellant was entitled to the concession under the new policy only, Estoppel arose against Government not by the letter dated 16th June 1969 but by the promise made by it in December 1968 to those who were willing to set up new unit, assurance by its officials both in writing and oral leading appellant to belief that it was intended to create an agreement that sales tax paid shall be refunded as a result of which it not only purchased land, machinery and other parts much before the policy went int....
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....ment, cannot enact a law or issue an order or agree to refund the tax realised by it from people in exercise of its sovereign powers, except when the levy or realisation is contrary to a law validly enacted. A promise or agreement to refund tax which is due under the Act and realised in accordance with law would be a fraud on the Constitution and breach of faith of the people. Taxes like sales tax are paid even by a poor man irrespective of his savings with a sense of participation in growth of national economy and development of the State. Its utilization by way of refund not to the payer but to a private person, a manufacturer, as an inducement to set up its unit in the State would be breach of trust of the people amounting to deception under law. 11. Exemption from tax to encourage industrialisation should not be confused with refund of tax. They are two different legal and distinct concepts. An exemption is a concession allowed to a class or individual from general burden for valid and justifiable reason. For instance tax holiday or concession to new or expanding industries is well known to be one of the methods to grant incentive to encourage industrialisation. Avowed objecti....