TaxTMI 
TaxTMI 
2008 (5) TMI 723
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....d. It was declared that "Tourism" will be treated as an `Industry' and the concessions available to the' tourism industry' were: (i) Subsidy for preparation of feasibility/project report. (ii) Investment subsidy limited to 10% thereof. (iii) Incentive for training local manpower. (iv) Augmenting availability of funds from State Financial Corporations. (v) Concession in electricity and water charges. (vi) Allocation of land at concessional rate. (vii) Exemption from building tax levied by the Revenue Department. (Action to amend the Kerala Buildings Tax Act 1975 will be taken separately). 3. Apart from the concession in electricity and water charges and payment of building tax to be levied by the Revenue Department which was open ended in nature, other concessions were to be granted on a one time measure. 4. A new policy for grant of investment subsidy was also floated. Classified hotels (One to Five Stars) came within the purview thereof. In terms of the said policy decision, the Kerala State Electricity Board (the Board) was directed to grant tariff concessions to the classified hotels and motels c....
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....e is Rs. 24 crores. X X X 4. Having considered the entire issue in detail, Government are pleased to issue the following orders: (i) The Industries and the Agricultural Departments in Government will find the funds from their respective Budget required for giving subsidy to Industries and farmers for the year 1997-1998 by re-appropriation. The above departments will also provide required amounts in their department budget from the financial year 1998-99 onwards. (ii) The subsidy for electricity tariff admissible to Industrial consumers and farmers will be disbursed to the beneficiaries by the concerned Departments from the financial year 1998-99 onwards. 6. By an order dated 11.10.1999, the industrial tariffs granted to the hotels in the State stood cancelled w.e.f 15.10.1999. It was ordered that industrial tariff already granted by various officers of the Board from 15.5.1999 would be suspended by an order dated 8.11.1999, stating: The Board hereby orders that the institutions which were already enjoying industrial tariff prior to 15.5.99 on the strength of certificate issued by Director of Tourism shall continue to be charged at the indus....
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....sued again. Representations were made by the appellants which were rejected. 10. They preferred an intra court appeal. Fresh writ petitions were filed, inter alia, praying for quashing of the bill and the said Government Order as also for further classification of the hotel, as industrial units. By reason of a judgment and order dated 16.2.2005, the said writ petition was disposed of directing that 18% interest instead of 24% would be charged, if the demanded amount is paid till 31.5.2005. 11. Intra court appeals were preferred thereagainst and by reason of the impugned judgment, the same have been dismissed. 12. Mr. Patwalia, Mr. Venkataramani and Mr. Krishnamoorthy, learned senior counsel appearing on behalf of the appellants, would submit: (i) The concessions granted to the appellants should not have been withdrawn from an anterior date. (ii) The Board could not have directed application of commercial tariff despite the fact that the hotels are still considered to be an industry. (iii) In view of the provisions in Sub-section (2) of Section 56 of the Electricity Act, 2003, no bill could have been raised after a period of two years. 13. M....
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....have any vested right to enjoy the concessions granted to them forever, particularly when the Board is constituted and incorporated under the provisions of Electricity (Supply) Act, 1948. Any policy decision adopted by the State would not be binding on the Board, save and except provided for in the Act. The Board being an independent entity, the duties and functions of the Board vis-`-vis the State are enumerated in the Act. The Board, however, would be bound by any direction issued by the State Government on questions of policy. A dispute which may arise as to whether a question is or not a question of policy involving public interest, Central Government is the final arbiter. The policy decision adopted by the State on the basis whereof the Board felt obligated to grant electrical connection in favour of the appellants on the basis of industrial tariff must, therefore, be understood in the context of Section 78A of the 1948 Act. What is binding on the Board is the policy of the State. The direction of the State was to apply a particular category of tariff to the appellants. Such directions could have been withdrawn while making another tariff. The State indisputably has the power ....
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....89], it was opined: 25...we hold that the High Court was not right in observing that the orders under Section 22-B of the Act imposing restrictions on consumption of power could not legally and validly be passed by the Government "with retrospective effect" in the middle of a water year. But the position regarding disallowance of clubbing stands on an entirely different footing. If a consumer had been allowed the benefit of clubbing previously, that benefit cannot be taken away with retrospective effect thereby saddling him with heavy financial burden in respect of the past period where he had drawn and consumed power on the faith of the orders extending to him the benefit of clubbing.... 19. It is not necessary for us to notice a large number of decisions on promissory estoppel as the principle thereof has recently been noticed by this Court in Southern Petrochemical Industries Co. Ltd. v. Electricity Inspector & Etio and Ors. [(2007) 5 SCC 447] wherein it was stated: We are also unable to agree with Mr. Andhyarujina that exemption from tax is a mere concession defeasible by the Government and does not confer any accrued right to the recipient. Right of exempt....
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....itted to take a different stand as the doctrine of promissory estoppel would apply against them. The said doctrine is premised on the conduct of party making a representation to the other so as to enable him to arrange its affairs in such a manner as if the said representation would be acted upon. It provides for a cause of action. It need not necessarily be a defence. Yet again in U.P. Power Corporation Ltd and Anr. v. Sant Steel & Alloys (P) Ltd. and Ors. [2007 (14) SCALE 36], it was held: In this background, in view of various decisions noticed above, it will appear that the Court's approach in the matter of invoking the principle of promissory estoppel depends on the facts of each case. But the general principle that emerges is that once a representation has been made by one party and the other party acts on that representation and makes investment and thereafter the other party resiles, such act cannot stated to be fair and reasonable. When the State Government makes a representation and invites the entrepreneurs by showing various benefits for encouraging to make investment by way of industrial development of the backward areas or the hill areas, and the....
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....e `public interest' to withdraw, modify or rescind the earlier notification. The plain language of Section 25 of the Act is indicative of the position that it is the public interest and public interest alone which is the dominant factor. It is not the case of the appellants that the withdrawal of Notification No. 66 of 1979 by the impugned notification was not in `public interest'. Their case, however, is that relying upon the earlier notifications they had acted and the Government should not be permitted to go back on its assurance as otherwise they would be put to huge loss. The courts have to balance the equities between the parties and indeed the courts would bind the Government by its promise `to prevent manifest injustice or fraud'. It was further held: 23. The appellants appear to be under the impression that even if, in the altered market conditions the continuance of the exemption may not have been justified, yet, Government was bound to continue it to give extra profit to them. That certainly was not the object with which the notification had been issued. The withdrawal of exemption "in public interest" is a matter of policy and the courts wo....
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....promise even if there is no manifest public interest involved, provided, of course, no one is put in any adverse situation which cannot be rectified. To adopt the line of reasoning in Emmanuel Ayodeji Ajay v. Briscoe quoted in M.P. Sugar Mills even where there is no such overriding public interest, it may still be within the competence of the Government to resile from the promise on giving reasonable notice which need not be a formal notice, giving the promise a reasonable opportunity of resuming his position, provided of course, it is possible for the promise to restore the status quo ante. If, however, the promise cannot resume his position, the promise would become final and irrevocable. The same principle was reiterated in Sales Tax Officer and Anr. v. Shree Durga Oil Mills and Anr. [(1998) 1 SCC 572]. 25. In Pawan Alloys & Casting Pvt. Ltd. v. U.P. State Electricity Board and Ors.: [(1997) 7 SCC 251], it was held: 60. So far as Point No. 3 is concerned the appellants are on a weaker footing. It is true that by earlier notifications dated 29-10-1982, 13-7-1984 and 28-1-1986 the scheme of incentives by way of development rebate of 10% was continued to be off....
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....pply of electricity to their concerns lost the benefit for that unexpired period which otherwise would have been available to them from 1-8-1986 onwards till the entire three years' period which had already commenced would have been over. Both these effects of the notification of 31-7-1986 were purely prospective in character and had no retrospective effect. Consequently it cannot be said that the said notification was liable to be struck down on the score of being retrospective in nature. The third point for consideration, therefore, is answered in the negative. Similar view has been taken in Bannari Amman Sugars Ltd. v. Commercial Tax Officer & Ors. [(2005) 1 SCC 625]; Kuldeep Singh v. Govt. of NCT of Delhi [(2006) 5 SCC 702]; and M.P. Mathur & Ors. v. DTC & Ors. [(2006) 13 SCC 706]. 26. The law which emerges from the above discussion is that the doctrine of promissory estoppel would not be applicable as no foundational fact therefore has been laid down in a case of this nature. The State, however, would be entitled to alter, amend or rescind its policy decision. Such a policy decision, if taken in public interest, should be given effect to. In certain situations, it ma....
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....By reason of withdrawal of concession with retrospective effect, the accrued right of the appellants had been affected. In Kuldeep Singh v. Govt. of NCT of Delhi [(2006) 5 SCC 702], this Court held: In a case of this nature, where the State has the exclusive privilege and the citizen has no fundamental right to carry on business in liquor, in our opinion, the policy which would be applicable is the one which is prevalent on the date of grant and not the one, on which the application had been filed. If a policy decision had been taken on 16.9.2005 not to grant L-52 licence, no licence could have been granted after the said date. We, however, are not concerned with a similar situation. 28. However, in Ramchandra Murarilal Bhattad and Ors. v. State of Maharashtra and Ors. [(2007) 2 SCC 588], it was held: 64. It is not a case where the court is called upon to exercise its equity jurisdiction. It is also not a case where ex facie the policy decision can be held to be contrary to any statute or against a public policy. A policy decision may be subject to change from time to time. Only because a change is effect, (sic) the same by itself does not render a pol....