TaxTMI 
TaxTMI 
TaxTMI 
2013 (9) TMI 186
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....wners are suffering loss due to high rate of entertainment tax. The cinema owners had been taking up the issue with the Government to consider reduction in the entertainment tax. The petitioners pleaded that in response to the various representations, the Government took a decision to give 33% concession in the entertainment tax, if the tax is deposited in lump sum. Such decision was taken by the Cabinet and was incorporated in the annual budget for the year 2003-04 presented before the Legislative Assembly on 24.03.2003. The relevant extract from the budget proposal reads as under: "(v) Cinema owners are proposed to be allowed an option either to pay tax in lump sum or to opt for payment of tax on actual basis. The rate of lump sum tax is proposed to be reduced by 33% from the existing level and that of the entertainment duty from 125% to 50%." The petitioners have allegedly deposited the lump sum entertainment tax in pursuance of such budget proposal. It was later somewhere in September, 2004, the demand was raised against the petitioners on the ground that the petitioners have deposited entertainment tax availing rebate of 33%, whereas no notification ....
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....ment tax has been given and acting on such representation, the petitioners have not only deposited the entertainment tax at the reduced rate, but also invested in the renovation of the cinema theatres, thus, altering their status. Therefore, in terms of the judgment of the Hon'ble Supreme Court in M/s Motilal Padampat Sugar Mills Co. Ltd. Vs. The State of Uttar Pradesh & others AIR 1979 SC 621 and later judgment reported as State of Punjab Vs. Nestle India Ltd. & another (2004) 6 SCC 465. It is contended that the State is bound by such representation given by the highest functionary of the State. Reference is also made to the judgment reported as Mahabir Vegetable Oils (P) Ltd. & another Vs. State of Haryana & others (2006) 3 SCC 620. We have heard learned counsel for the parties and find no merit in the present bunch of writ petitions. In M/s Motilal Padampat Sugar Mills Co. Ltd. case (supra), the Supreme Court has dealt with doctrine of promissory estoppel. It has been held that it is 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 estoppels. The true principle of promiss....
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....tion was filed by the appellant asking for a writ directing the State Government to exempt the sales tax on Vanaspati manufactured by the appellant for a period of 3 years by issuing a notification under Section 4A of the U.P. Sales Tax Act. The Hon'ble Supreme Court concluded that the doctrine of promissory estoppel has been adopted in its fullness but it has been recognized as affording a cause of action to the person to whom promise has been made and that if a citizen acting in reliance on the terms has altered his position, it did not release the Government from its obligation to honour the promise made by it. The doctrine of promissory estoppel in such a case is applicable against the Government and it could not be defeated by undertaking the defence of executive necessity. It was pointed out that the doctrine of promissory estoppel must yield when the equity so requires. If it can be shown by the Government that having regard to the facts as they have subsequently transpired, it would be inequitable to hold the Government to the promise made by it, the Court would not raise an equity in favour of the promisee and enforce the promise against the Government. Still further, it....
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....ef Minister of Punjab made an announcement on 26.02.1996 while addressing dairy farmers at a State-level function, that the State Government had abolished purchase tax on milk and milk products; (ii) In the Budget Speech given by the Finance Minister while presenting the Budget for the year 1996-97, the announcement of the Chief Minister abolishing the purchase tax was reiterated: (iii) A memo was issued by the Financial Commissioner on 26.04.1996 conveying the decision of the State Government in principle to abolish the purchase tax; (iv) A circular was issued by the Excise and Taxation Commissioner on 18.05.2006 pursuant to memo dated 26.04.1996, to all the Deputy and Assistant Excise & Taxation Commissioners and the Deputy Directors (Enforcement) in the State in relation to abolition of purchase tax; (v) The representatives of the petitioner and others were informed of the decision of the State Government exempting milk and milk products from purchase tax: (vi) On 27.06.1996 in a meeting held under the Chairmanship of the Chief Minister attended by the Finance Minister, the Excise & Taxation Commissioner and various Financial Commissioners, the decision to abolish purchase t....
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....ple can a Government, committed to the rule of law, claim immunity from the doctrine of promissory estoppel."" xxx xxx xxx 47. The appellants have been unable to establish any overriding public interest which would make it inequitable to enforce the estoppel against the State Government. The representation was made by the highest authorities including the Finance Minister in his Budget Speech after considering the financial implications of the grant of the exemption to milk. It was found that the overall benefit to the state's economy and the public would be greater if the exemption were allowed. The respondents have passed on the benefit of that exemption by providing various facilities and concessions for the upliftment of the milk producers. This has not been denied. It would, in the circumstances, be inequitable to allow the State Government now to resile from its decision to exempt milk and demand the purchase tax with retrospective effect from 1st April 1996 so that the respondents cannot in any event re-adjust the expenditure already made. The High Court was also right when it held that the operation of the estoppel would come to an end with the 1997 decision of the Cabine....
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....facts of each case and not straitjacketed into pigeonholes. In other words, there cannot be any hard-and-fast rule for applying the doctrine of promissory estoppel but the doctrine has to evolve and expand itself so as to do justice between the parties and ensure equity between the parties i.e. both the promisor and the promisee. 26. The principles of promissory estoppel is not applicable in the instant case as the decision to put the solvent extraction plant in the negative list was taken in public interest since the industry is in the category of polluting industry. It has never been the case of the respondent that the solvent extraction plant is a non-polluting industry. There is also no allegation that the decision to put the solvent extraction plant in the negative list was actuated by fraud or that the said decision was not bona fide. 27. In cases where the Government on the basis of material available before it, bona fide, is satisfied that public interest would be served by granting, withdrawing, modifying or rescinding an exemption already granted, it should be allowed a freehand to do so. The withdrawal of exemption "in public intere....
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....t being arbitrary or unreasonable. In other words, the State may formulate or reformulate its policies to attain its obligations of governance or to achieve its objects, but the freedom so granted is subject to basic constitutional limitations and is not so absolute in its terms and it would permit even arbitrary actions. xxx xxx xxx 101. Cases of this nature can be classified into two main classes: one class being the matters relating to general policy decisions of the State and the second relating to fiscal policies of the State. In the former class of cases, the courts have expanded the scope of judicial review when the actions are arbitrary, mala fide or contrary to the law of the land; while in the latter class of cases, the scope of such judicial review is far narrower. Nevertheless, unreasonableness, arbitrariness, unfair actions or policies contrary to the letter, intent and philosophy of law and policies expanding beyond the permissible limits of delegated power will be instances where the courts will step in to interfere with government policy." In view of the above, we find that the petitioners are not entitled to raise the plea of promissory estoppel. One of the ess....