TaxTMI 
TaxTMI 
TaxTMI 
2010 (3) TMI 1146
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....apter 72 of the First Schedule to the Central Excise Tariff Act, 1985 (the Tariff Act). 2. By this petition, the petitioner originally challenged Notification No.16/2008 CE dated 27.03.2008 (Annexure E). Subsequently vide amendment permitted on 10.07.2008 the petitioner has also challenged Notification No.33/2008 dated 10.06.2008. In other words, the petitioner has sought relief by way of a declaration that the petitioner is entitled to the exemption from duty of excise on the goods cleared by the petitioner as provided in Notification No.39/2001-CE dated 31.07.2001 (the Original Notification) and amendments thereto for a period of five years from the date of commencement of commercial production. 3. The backdrop in which the Original Notification dated 31.07.2001 was issued is the requirement to provide tax holiday in the wake of massive earthquake in the Kutch region of Gujarat, on the basis of the representations received by the Union of India from the State Government as well as representatives of the people, trade and industry. Government of India, considering the fact that a larger number of industries located in the earthquake affected areas were either totally destroyed o....
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.... the petitioner assailed the impugned Notification dated 27.03.2008 No.16 of 2008 and impugned new Notification dated 10.06.2008 No.33 of 2008 stating that the exemption benefit granted to the petitioner under the Original Notification was withdrawn within the period of five years by reducing the quantum in light of the change made in the basis for calculating the amount of exemption that may be available to the petitioner. Inviting attention to the Original Notification No.39 of 2001 it was submitted that the said Notification laid down that a unit located in Kutch district of Gujarat would be entitled to refund of the amount of duty of excise or additional duty of excise, as the case may be, leviable on the goods specified in the First Schedule to the Tariff Act, other than the goods specified in the Annexure appended to the said Notification, such duty being equivalent to the amount of duty paid by the manufacturer of goods, other than the amount of duty paid by utilization of CENVAT credit under the CENVAT Credit Rules, 2001. As against that the impugned Notifications changed the basis by substituting the same by the words to the duty payable on value addition undertaken ....
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.... vii. Dai Ichi Karkaria Ltd. Vs. Union of India and Ors., 2000 (4) SCC 57 : 2000(119) ELT 516; viii. Pawan Alloys & Castings Pvt. Ltd. Vs. U.P. State Electricity Board & Ors., 1997 (7) SCC 251; ix. Pournami Oil Mills & Ors. Vs. State of Kerala & Anr., 1986 (Supp.) SCC 728; x. Unicorn Industries Vs. Union of India, 2007 (218) ELT 175; xi. WA Nos.219 to 222 in WP(C)Nos.1470, 1525, 1881 and 2854 of 2001 dated 03.12.2002 Dharampal Satyapal Ltd. Vs. Union of India (UOI) and Ors.[High Court of Gauhati); AND xii. CWP No.589 of 2008 dated 18.12.2008- M/s. Gillete India Ltd. & Anr. Vs. Union of India & Ors. [Himachal Pradesh High Court, Shimla]. 9. On behalf of respondents it was submitted that in the field of taxation a wide discretion vests in the legislature to classify items for tax purpose, and same principle be applied for granting exemption and/or withdrawal, and/or modification of the exemption. Under Section 5A of the Central Excise Act, 1944 (the Act) Central Government is vested with statutory powers to issue necessary Notification to grant exemption from duty of Central Excise on being satisfied that it is necessary in public interest so to do. As such Notification is plac....
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....basis in relation to manufacture of similar goods. The Government therefore realized that purpose of exemption was being defeated, exemption being available only in respect of genuine manufacturing activities carried out in specified areas. That the policy manifesting the intention of the Government was to grant excise duty exemption only to actual value addition made in the specified areas. Hence the exercise of powers under Section 5A of the Act. 2. It was submitted that as a result of the modification the manufacturers are required to pay duty on the full value of goods manufactured and cleared in the same manner as per existing scheme, but refund would be granted only to the extent of duty paid on the actual value addition according to the percentages fixed in the Notification, or as may be fixed as a special case as provided in the Notification. In the written submissions filed by the Counsel the effect of modification is stated in the following words: The effect of modification is as follows : i. It is submitted that genuine manufacturers would not at all be affected inasmuch as they would be getting the refund of same amount under the present modification as also in the p....
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....es Tax, 2006(206) E.L.T. @ 6 (S.C.); xx. Adani Exports Pvt. Ltd. Vs. Union of India., 2004 (4) G.L.R. 2891 (Paragraphs 3.5, 5.2, 5.4, 5.6, 8.4, 8.5,9, 26 and 32.4); xxi. Assistant Collector, Central Excise Vs. Dunlop India, AIR 1985 SC 330 @ 333 & 334. 10. Original Notification No.39/2001 CE dated 31.07.2001 was titled Kutch (Gujarat) Exemption to excisable goods (except those specified in Annexure) and cleared from Units in Kutch District of Gujarat . The said Notification as originally issued in principle grants exemption by way of refund in relation to the duty of excise paid on the goods specified in the First Schedule to the Tariff Act, except the goods specified in the Annexure to the Notification. The goods have to be manufactured and cleared from a unit located in Kutch district. Payment of excise duty by utilization of CENVAT credit would not be entitled to exemption. A unit having an original value of investment exceeding Rs.20 crores in plant and machinery installed in the factory is entitled to the refund without any limit. In relation to a unit having original value of investment below Rs.20 crores on the date of commencement of commercial pr....
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....any installation of plant and machinery on such premises commences only on or after the date of publication of the Notification in the Official Gazette. 2. Vide Notification No.42/2001-CE dated 21.09.2001 Explanation-II has been added while numbering the original Explanation as Explanation-I. The second Explanation defines the phrase original value of investment in plant and machinery installed in the factory to mean original value as determined in accordance with the Accounting standards issued by the Institute of Chartered Accountants of India on Accounting for Fixed Assets. 3. Vide Notification No.45/2002 dated 2nd September, 2002 in Paragraph No.3, in condition No.(i), the date has been changed from 31st July, 2003 to 31st July,2004. Hence new industrial units set up by this date would also become entitled to exemption under the original Notification. 4. Notification No.60/2002 dated 19.12.2002 has been issued considering administrative exigency by specifying that in the Committee instead of Chief Commissioner of Central Excise, Vadodara, now Chief Commissioner of Central Excise, Ahmedabad will be a Member. 5. Notification No.5/2003-CE dated 13.2.2003 has been i....
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....ph Nos. 1A, 2 and 2A have been substituted with paragraph Nos. 2, 2A, 2B, 2C, 2.1 etc., and the said Notification has been made effective from 1st April, 2008. 1. Vide Notification No. 33/2008 Central Excise dated 10th June, 2008 once again major amendment has been carried out in Paragraph No.2 as well as paragraph No.2.1 etc. 2. Vide Notification No.51-Central Excise dated 3rd October, 2008 the table in paragraph No.2 has been modified in relation to certain entries. 3. The question that is therefore required to be considered is whether the Notifications dated 27.03.2008 and 10.06.2008 really achieve the purpose and object with which Notification No.39/2001 CE dated 31.07.2001 was issued. In the Explanatory memorandum to Notification No.39/2001-CE it is stated thus: Notification No.39/2001-Central Excise dated 31st July, 2001, seeks to provide exemption from excise duty on goods manufactured by factories located in the district of Kutch in the State of Gujarat. The exemption is applicable to all commodities with the exception of tobacco and tobacco products, goods attracting special excise duty and a few other specified goods. The exemption is available to new uni....
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....on No. 31/2008 to 38/2008 the same basis of value addition has been referred to in relation to the exemption scheme for North East States, Sikkim, Jammu and Kashmir and Kutch district in Gujarat. 14. Thus when one reads the Explanatory Memorandum to the Original Notification it becomes clear that the exemption is available to new units that are set up in the district of Kutch within the stipulated time limit. The exemption would be available for a period of five years from the date of commencement of commercial production. The said Explanatory Memorandum does not talk of any exemption in relation to value addition. A plain reading of the Notification No.39/2001 also indicates that the basis of eligibility is the amount of new investment in plant and machinery installed in the factory on or after the date of publication of the Notification in the Official Gazette with further condition that the new unit shall be set up and shall commence commercial production by the stipulated date. The focus and emphasis is on setting up new industry in an area ravaged by devastating earthquake which occurred on 26.01.2001. There is no question of any value addition in relation to the manufactured....
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....ally either absolutely or subject to such conditions (to be fulfilled before or after removal) as may be specified in the notification, excisable goods of any specified description from the whole or any part of the duty of excise leviable thereon: Provided that, unless specifically provided in such notification, no exemption therein shall apply to excisable goods which are produced or manufactured -- (i) in a [free trade zone [or a special economic zone]] and brought to any other place in India; or (ii) by a hundred per cent. export-oriented undertaking and [brought to any other place in India] Explanation: -- In this proviso, [ free trade zone [, special economic zone ]] and hundred per cent. export-oriented undertaking shall have the same meanings as in Explanation 2 to sub-section (1) of section 3. [(1A) For the removal of doubts, it is hereby declared that where an exemption under sub-section (1) in respect of any excisable goods from the whole of the duty of excise leviable thereon has been granted absolutely, the manufacturer of such excisable goods shall not pay the duty of excise on such goods.] [(2) If the Central Government is satisfied that it is ....
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.... in the Official Gazette; (b) also be published and offered for sale on the date of its issue by the Directorate of Publicity and Public Relations, Customs and Central Excise, New Delhi, under the Central Board of Excise and Customs constituted under the Central Boards of Revenue Act, 1963 (54 of 1963). (6) Notwithstanding anything contained in sub-section (5), where a notification comes into force on a date later than the date of its issue, the same shall be published and offered for sale by the said Directorate of Publicity and Public Relations on a date on or before the date on which the said notification comes into force.] 16. Under sub-section (1) of Section 5A of the Act powers are vested in the Central Government to issue notification to exempt generally, either with or without conditions, excisable goods as may be specified, from the whole or any part of the duty of excise, provided Central Government is satisfied that it is necessary in the public interest to grant such exemption. The Proviso thereunder lays down an embargo in relation to goods produced or manufactured in free trade zone, etc. unless specifically exempted by notification. 17. Sub-section (1A) of Sectio....
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....hich was not the object, when Original Notification No.39 of 2001 was issued by issuing subsequent notifications impugned herein. Thus, the authority has exceeded its powers and such an exercise cannot be upheld. At the cost repetition, it is required to be stated that the discussion in relation to the Explanatory Memorandum at both the stages, in 2001 and in 2008, makes this more than abundantly clear. 21. The contention that the power to modify/vary/ revoke a notification already issued is inherent in the power under Section 5A of the Act to issue a notification may in general be correct, but when such an exercise is challenged, like in the present case, it becomes necessary to examine as to whether such an exercise is within the scope and extent of power available under Section 5A of the Act. The authority has to be alive to the fact that the power under Section 5A of the Act is essentially a power to grant exemption in relation to duty of excise which is otherwise leviable under other provisions of the Act. Therefore, in exercise of such power under Section 5A of the Act the authority cannot be permitted to take recourse to the principles applicable for determining whether dut....
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.... rule, is amended, repealed, superseded or rescinded, then, unless a different intention appears, such amendment, repeal, supersession or rescinding shall not-- (a) revive anything not in force or existing at the time at which the amendment, repeal, supersession or rescinding takes effect, or (b) affect the previous operation of any rule, notification or order so amended, repealed, superseded or rescinded or anything duly done or suffered thereunder; or (c) affect any right, privilege, obligation or liability acquired, accorded or incurred under any rule, notification or order so amended, repealed, superseded or rescinded; or (d) affect any penalty forfeiture or punishment incurred in respect of any offence committed under on in violation of any rule, notification or order so amended, repealed, superseded or rescinded; or (e) affect any investigation, legal proceeding or remedy in respect of any such right, privilege, obligation, liability, penalty forfeiture or punishment as aforesaid. and any such investigation, legal proceeding or remedy may be instituted, continued or enforced and any such penalty, forfeiture or punishment may be imposed as if the rule, notification or or....
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....ng Rule, Notification, etc. An assessee, who is required to act in a particular manner as specified by the Rule, Notification, etc. as existing before the amendment, is obliged in law to act accordingly, and correspondingly the authority is equally obliged in law to act as if the amendment had not taken place, such act on part of the authority being not only in relation to collection of revenue and other attendant provisions like penalty, etc., but also in relation to the entitlements of an assessee. This provision, namely, Section 38A of the Act incorporates in the statute the principle of a completed contract between the parties, whereunder the parties are obliged to fulfill their respective part of the concluded contract, and in case of failure, the Court may step in and direct the defaulting party to specifically perform his part of the promise. To put it differently, one may say that the principle of promissory estoppel, as normally understood, has been incorporated in the statute. 25. Hence, neither by virtue of powers under Section 5A of the Act, nor by virtue of operation of Section 38A of the Act can the respondent authority be permitted to resile from the promise statuto....
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....stoppel. If one party abuses the concession it is always open to the other party to revoke such concession. But for this there has to be cogent material in the form of direct evidence pointing out misuse of the concession. When public interest is pleaded the same cannot be general and vague for the purpose of either modifying or revoking an exemption already granted. Supervening public interest is always a good ground for modifying or withdrawing an exemption. But once again such supervening public interest has to be established by direct cogent evidence in this regard, and not on basis of general and vague apprehensions. 27. In a case where the State invited new industries by offering concessional power tariff and thereafter withdrew the same on the ground that there was power theft on a large scale the Apex Court in case of U.P. Power Corporation Limited (supra), after detailed analysis of the law on the subject, struck down the action of the State by invoking principle of promissory estoppel and in the process stated: 28. In this 21st century, when there is global economy, the question of faith is very important. Government offers certain benefits to attract the entrepreneurs ....
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....cturer by misusing the scheme of exemption. The Jurisdictional Commissioner who is entrusted with the duty to undertake verification cannot be permitted to grant refund and not take any steps to recover duty, if erroneously refunded. The bogey of misuse and the scheme of exemption therefore cannot be permitted to be raised and under the guise of so called misuse. Central Government cannot be permitted to modify the exemption scheme before the stipulated period is over merely because the same may possibly have exceeded the estimated forego of revenue. 30. Original Notification in Paragraph No.3 also provides various checks and counter checks to ensure that only a genuine case where a new industrial unit is set up within the stipulated period and which actually commences commercial production after making investment as per the stipulated limit becomes entitled to benefit under the scheme. Not only the limits of investment but also the period during which the unit has to be set up and commence commercial production are specified, but the manufacturer is required to furnish a declaration regarding the original value of investment in plant and machinery installed in the factory as on t....
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....rst instance by exhausting the whole of CENVAT credit available to the manufacturer on the last day of the month under consideration and paying only balance amount of duty in cash. This would ensure that the actual cash outgo would be limited. 32. Thus when one considers the entire scheme as a whole it is more than abundantly clear that there is hardly any scope for misuse of the scheme. Furthermore, the period of the scheme is a self limiting one and only those manufacturers who have complied with the requirements of the Original Notification are entitled to the benefit. The said manufacturers therefore cannot be called upon to make payment of duty and seek a smaller amount of refund under the scheme considering the purpose of granting exemption. One of the purposes that is apparently discernible is to ensure that during gestation period a new industrial unit is able to recoup the capital outlay involved in setting up a new industrial unit so as to ensure that the new unit does not face cash crunch during the initial period and circulating capital is available to such new unit. 33. Applying the aforesaid principles to the facts of the case it becomes clear that the petitioner ha....
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....not be in the direction of the amount of revenue generated or the amount of excise duty refunded. Respondent authorities have thus failed to co-relate the modification of the basis for granting exemption midstream with the purpose and object with which Original Notification had been issued by considering extraneous factors not germane to the object, intent and purpose behind the issuance of Original Notification. 34. Various figures given in the form of charts and comparing the same with figures stated to have been obtained from similar industries situated elsewhere in India would have no bearing on the issue at hand because operation of Section 5A of the Act itself envisages foregoing of revenue when exemption is granted by issuing a notification. The entire approach is misconceived in law and is contrary to the legislative scheme which emanates from a plain reading of Section 5A of the Act. Therefore, the hypothetical illustrations given in the affidavit-in-reply and the written submissions of the respondent authority need not be considered in light of what is stated hereinbefore, as the entire exercise is misdirected considering the object, intent and purpose of the Original No....
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....es applicable for determining whether duty is correctly levied or not. ix. Once an exemption notification has been issued on the footing that it is in public interest, the authority cannot thereafter refer to loss of revenue as larger public interest for withdrawing such an exemption. x. The onus shall be on the respondent authority to establish superior public interest for curtailing or withdrawing an exemption already granted, and the same cannot be discharged by merely referring to a perceived loss of revenue on comparison with similar units in other areas which are not entitled to exemption. xi. The entire exercise of issuing impugned notifications dated 27.03.2008 and 10.06.2008 is without any basis, as the basis adopted has no nexus with the object, intent and purpose which formed the basis for issuing Original Notification in 2001. xii. The provision of Section 38A of the Act is not only a saving provision, but is a provision which correspondingly obligates both the person who was a beneficiary under the existing Rule, etc. and the authority under the existing Rule, etc. to continue to comply with the requirements of such Rule, etc. as it existed, even after amendment on....
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....iginal Notification No.39/2001-CE dated 31.07.2001 within the stipulated period. Accordingly, the two impugned notifications to the extent they curtail/modify/substitute the basis laid down in Original Notification No.39/2001-CE dated 31.07.2001 are declared to be bad in law. New industrial units, which have been set up and which have commenced commercial production within the specified period and by the specified date under Original Notification No.39/2001-CE dated 31.07.2001, shall be entitled to the benefit of exemption in the form of refund of excise duty payable / paid on the goods (as specified) manufactured and cleared from such new units set up in the Kutch District without any restriction by operation of the two impugned notifications provided all other conditions stand satisfied. 37. Where Excise Duty has already been paid and only a part is refunded on the basis of calculation made in accordance with the impugned notifications the differential amount of duty that such units would become entitled to shall be credited and such units shall be permitted to take credit thereof to the said extent by treating every debit to the said account as being payment of Excise Duty in c....
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.... minimum specific investments, in the Kutch district so as to help the entire Kutch region to over come untold miseries and hardships befallen it in wake of devastating earth quake of 2001. The incentives of exemption from payment of excise duty to newly set up industries was for bringing about some succor to the people of region in helping them rehabilitating themselves on securing employment in and on account of newly set up industries. The nature of total exemption from payment of duty to Industrial units set up after 31-7-2001 up to 31-7-2003 and thereafter extended up to 2005 came to be substantially changed as the respondent No. 1 issued impugned notifications dated 27-3-2008 and 10-6-2008, whereunder, the existing exemption from payment of excise duty came to be substantially withdrawn. Being aggrieved and dissatisfied with these notifications, the petitioners and other similarly situated, have approached this Court under Article 226 of the Constitution of India seeking appropriate writ in the nature of mandamus, prohibition or any other writ, order or direction for quashing and setting aside the notifications dated 27-3-2008 and 10-6-2008 being contrary to establish princip....
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....sh, by such unit. The said exemption was made available by way of refund as provided in Paragraph No. 2(b) of the said Notification. The refund was granted on the basis of a statement furnished by the unit under Paragraph No. 2(c) of the said Notification. Paragraph No. 3(i) of the said Notification provides that the exemption would be available to New Industrial Units, which are set up on or before 31-7-2003. Compliance with the said condition was to be certified under Paragraph No. 3(ii) by the Chief Commissioner of Central Excise, Vadodara and the Principal Secretary to the Government of Gujarat, Department of Industry (hereinafter referred to as the 'said Committee'). The unit interested in availing of the exemption was also required to furnish a declaration as to the original value of investment in plant and machinery installed in the factory, as on the date of commencement of commercial production, in order to show that the requirement of minimum specific investment on or before specified date was fully complied with. The exemption was available for a period not exceeding five years from the date of commencement of Commercial Production. The said Notification came to be amend....
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....goods 56 4. 34 All goods 38 5. 38 All goods 34 6. 39 All goods 26 7. 40 Tyres, tubes and flaps 41 8. 72 or 73 All goods 39 9. 74 All goods 15 10. 76 All goods 36 11. 85 Electric motors and generators, electric generating sets and parts thereof. 31 12 Any chapter Goods other than those mentioned above 36 46. In order to understand the effect of Notification, it is appropriate to set out the contention of the petitioners in Special Civil Application No. 6298 of 2008 in its own wordings. It is the case of the petitioners that the goods manufactured by the members of the petitioner No. 1 and the petitioner No. 2 are covered at Sr. No. 8 of the said table and the rate specified is 39%. Thus, while the entitlement of a manufacturer was to the tune of 100% of the duty paid by cash, the impugned Notification restricts the said entitlement to 39% of the total duty payable on the goods being cleared. Under Paragraph Nos. 2A, 2B and 2C of the impugned Notification, options are provided, to a unit, of either availing further credit or seeking fixation of a special rate by the concerned Commissioner for the purpose of determining the quantum of refund. All ....
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....caution or alert, completely altered the exemption by permitting it on actual value additions made by a manufacturer. The refund available for the same is equivalent to 39% of the total duty payable. Thus, the petitioners are put to loss, losing out on the benefit of 61% of the total amount refundable to it for the manufacture of steel related products. The said loss is estimated around Rs. 100 crores, making the unit unviable and facing inevitable closure. The petitioners submit that not only the basis of value addition unworkable, the same is in direct conflict to the scheme of the Exemption Notifications. Such substantial change to the basis ought not to have been done without according a reasonable opportunity of explaining the situations by the respondent No. 1. 48. The counsel for the petitioners has further contended that the action of respondent no. 1 of issuing the impugned Notifications is in breach of the principles of Promissory Estoppel. The exemption Notifications persuaded the manufacturers to make investment in the Kutch areas in view of the promise of a complete exemption from duty of excise, actually paid by them. The exemption Notifications contained various eli....
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..... The respondent no. 1 did not even consider it necessary to indicate to the manufacturers before withdrawing the exemption, as granted, vide the impugned Notification, knowing full well that such withdrawal would deal a death-blow to the manufacturing units who acted on the representation made by the respondent no. 1 vide the Exemption Notification. The petitioners further submitted that they are at the mercy of the respondent no. 1 without any say or right of representation, even when the respondent no. 1 completely negates its promise and render the investment made by the manufacturers useless, it was obligatory on the part of the respondent no. 1 to give suitable opportunity to the manufacturers and take measures to protect them from the impending losses and closure before issuance of the impugned Notification and thus, the impugned notifications are unfair, prejudicial and unilaterally issued without consultation or consent and therefore, the same are required to be quashed and set aside. The counsel for the petitioners further submits that the impugned Notification is ex facie an action to discriminate between those units that were set up early after the issuance of the said ....
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....owed by quashing and setting aside the impugned notifications. 49. Learned counsel for the petitioners have relied on the following authorities in support of their submissions. (i) AIR 2008 SC 693, U.P. Power Corporation Ltd. & Anr. v. Sant Steels & Alloys (P) Ltd. & Ors. (ii) 2007 (5) SCC 447, Southern Petrochemical Industries Co. Limited v. Electricity Inspector & ETIO and Anr. (iii) 2006 (206) E.L.T. 6, MRF Ltd. v. Assistant Commissioner (Assessment) Sales Tax. (iv) 2006 (3) SCC 620, Mahabir Vegetable Oil (P) Ltd. and Anr. v. State of Haryana & Ors. (v) 2004 (6) SCC 465, State of Punjab v. Nestle India Ltd. & Anr. (vi) 2000 (119) E.L.T. 516, 2000 (4) SCC 57, Dai Ichi Karkaria Ltd. v. UOI and Ors. (vii) 1997 (7) SCC 251, Pawan Alloys & Castings Pvt. Ltd. v. U.P. State Electricity Board & Ors. (viii) 1986 (Supp) SCC 728 = 1987 (27) E.L.T. 594 (S.C.), Pournami Oil Mills & Ors. v. State of Kerala & Anr. (ix) 2007 (218) E.L.T. 175 (Sikkim) = 2009 (13) S.T.R. 84 (Sikkim), Unicorn Industries v. Union of India. 50. The respondents have mainly contended that the impugned....
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.... Rs. 16/- and refunded only the same amount. However, the fact remains that the said manufacturer issues sales invoice showing excise duty payment to another buyer/manufacturer in other parts of the country entitling and making the buyer eligible to take Cenvat credit of Rs. 16/-. The subsequent buyer/manufacturer utilizes this credit of Rs. 16/- for payment of excise duty on goods manufactured by him and as a result, he pays excise duty less in cash to the extent of Rs. 16/- for which Cenvat credit though ineligible (on account of actual non-production of goods) is availed by him. In this way, there is a clear loss to the Government of Rs. 16/- and the manufacturer in Kutch illegally gains that amount as he is recovering this amount from his customers. Learned counsel for the respondent has also submitted that as a result of such modification which has been considered by the Central Government to be expedient in public interest and in the interest of the Revenue, such a modification has been brought out. The effect of such modification is as follows : (i) It is submitted that genuine manufacturers are not likely to be affected inasmuch as they would be getting the refund of same ....
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....ted in 1976 SC 2237 and in case of M.P. Sugar Mills case and submitted that the Courts will only bind the Government by its promise to prevent manifest injustice or fraud and will not make the Government a slave of its policy for all times to come when the Government acts in its governmental, public or sovereign capacity. It is further held in the said judgment in para 22 that it is a matter of policy and the courts would not bind the Government to its policy decisions for all times to come, irrespective of the satisfaction of the Government that a change in the policy was necessary in the 'public interest'. It is further held in the said judgment that the courts, do not interfere with the fiscal policy where the Government acts in 'public interest' and neither any fraud of lack of bona fides is alleged much less established. It is also held that the Government has to be left free to determine the priorities in the matter of utilization of finances and to act in the public interest while issuing or modifying or withdrawing an exemption Notification. It is also held in the said judgment that the power of exemption is with a view to enable the Government to regulate, control and prom....
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....se u/s. 5A of the Central Excise Act held that such notification was issued under Section 5A of the Central Excise Act, 1944 as delegate of Parliament. It is further held that in a Cabinet form of Government, the Executive is expected to reflect the views of the Legislature since it would be impossible for the Legislatures to deal in detail and cater to the innumerable problems which may arise in implementing a statute. 53. Learned counsel for the respondent also relied upon the decision in case of R.K. Garg v. Union of India, reported in 1981 (4) SCC 675, wherein, the Hon'ble [Court] in para-8 observed as under :- "Para-8 : The Court must always remember that "legislation is directed to practical problems, that the economic mechanism is highly sensitive and complex, that many problems are singular and contingent, that laws are not abstract propositions and do not relate to abstract units and are not to be measured by abstract symmetry", "that exact wisdom and nice adaptation of remedy are not always possible" and that "judgment is largely a prophecy based on meager and uninterrupted experience." Every legislation particularly in economic matters is essentially empiric and it is ....
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....st summarize the position of law as on date with regard to plea of promissory estoppel against the State. (i) AIR 1972 SC 1311 in case of Turner Morrison & Co. Ltd.; (ii) AIR 1973 SC 814 in case of Banwarilal v. Sukhdarshan Dayal; (iii) AIR 1979 SC 621 in case of M.P. Sugar Mills; (iv) AIR 1979 SC 1725 in case of Comm. of Income Tax v. B.N. Bhhatacharjee; (v) 1981 SCC 11 in case of Jit Ram v. Union of India; (vi) AIR 1981 SC 2138 = 1981 (4) SCC 675, in case of R.K. Garg v. Union of India; (vii) AIR 1985 SC 330 = 1985 (19) E.L.T. 22 (S.C.) in case of Assistant Collector, Central Excise v. Dunlop, India; (viii) AIR 1986 SC 806 = 1985 (22) E.L.T. 306 (S.C.), in case of Union of India v. Godfrey Philips (I) Ltd.; (ix) 1987 (1) SCC 31 = AIR 1987 S.C. 142 - 1987 (27) E.L.T. 572 (S.C.) in case of Shri Bakul Oil India v. State of Gujarat and another ; (x) 1990 (3) SCC 609, in case of R. Vora v. Bo....
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....cognized a cause of action founded upon it in the Ganges Mfg. C. v. Sourujumull, (1880) ILR 5 Cal 669. The doctrine of promissory estoppel, was also applied against the Government in a case subsequently decided by the Bombay High Court in Municipal Corporation of Bombay v. Secy. of State, (1905) ILR 29 Bom 580. 20. The facts of this last-mentioned case in Municipal Corporation of Bombay v. Secy of State (supra) are a little interesting and it would be profitable to refer to them. The Government of Bombay, with a view to constructing an arterial road, requested the Municipal Commissioner to remove certain fish and vegetable markets which obstructed the construction of the proposed road. The Municipal Commissioner replied that the market were vested in the Corporation of Justices but that he was willing to vacate certain municipal stables which occupied a portion of the proposed site, if the Government would rent other land mentioned in his letter, to the Municipality at a nominal rent, the Municipality undertaking to bear the expenses of levelling the same and permit the Municipality to erect on such land "stables of wood and iron with rubble foundation to be removed at six months'....
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....rring to Ramsden v. Dyson, (1866) 1 HL 170 observed that the Crown also came within the range of this equity. This decision of the Bombay High Court is a clear authority for the proposition that it is open to a party who has acted on a representation made by the Government to claim that the Government shall be bound to carry out the promise made by it, even though the promise is not recorded in the form of a formal contract as required by the Constitution. That is how this decision has in fact been interpreted by this court in Union of India v. Indo-Afghan Agencies, (1968) 2 SCR 366: (AIR 1968 SC 718). 21. We don't find any decision of importance thereafter on the subject of promissory estoppel, until we come to the decision of this Court in Collector of Bombay v. Municipal Corporation of the City of Bombay, 1952 SCR 43 : (AIR 1951 SC 469). The facts giving rise to this case were that in 1865 the Government of Bombay called upon the predecessor in title of the Municipal Corporation of Bombay to remove old markets from a certain site and vacate it and on the application of the Municipal Commissioner, the Government passed a resolution approving and authorizing the grant of another ....
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....uch importance. Courts must do justice by the promotion of honesty and good faith, as far as it lies in their power." This was of course the solitary view of Chandrasekhara Aiyer, J., but it was approved by this Court in no uncertain terms in Indo-Afghan Agencies case (supra). 22. Then we come to the celebrated decision of this Court in the Indo-Afghan Agencies case (AIR 1968 SC 718) (supra). It was in this case that the doctrine of promissory estoppel, found its most eloquent exposition. We may briefly state the facts in order to appreciate the ratio of the decision. Indo-Afghan Agencies Ltd. who were the respondents before the Court, action in reliance on the Export Promotion Scheme issued by the Central Government, exported woollen goods to Afghanistan and on the basis of their exports claimed to be entitled to obtain from the Textile Commissioner import entitlement certificate for the full f.o.b. value of the goods exported as provided in the scheme. The Scheme was not a statutory Scheme having the force of law but it provided that an exporter of woollen goods would be entitled to import raw material of the total amount equal to 100% of the f.o.b. value of his exports. The res....
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....will be competent to and indeed would be bound to, protect the rights of the aggrieved citizen". The defence of executive necessity was thus clearly negatived by this Court and it was pointed out that it did not release the Government from its obligation to honour the promise made by it, if the citizen, acting in reliance on the promise, had altered his position. The doctrine of promissory estoppel, was in such a case applicable against the Government and it could not be defeated by invoking the defence of executive necessity. 23. It was also contended on behalf of the Government that if the Government were held bound by every representation made by it regarding its intention, when the exporters have acted in the manner they were invited to act, the result would be that the Government would be bound by a contractual obligation even though no formal contract in the manner required by Article 299 was executed. But this contention was negatived and it was pointed out by this Court that the respondents "are not seeking to enforce any contractual right: they are seeking to enforce compliance with the obligation which is laid upon the Textile Commissioner by the terms of the Scheme, a....
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....ion of the law is concerned : the former is equally bound as the latter. It is indeed difficult to see on what principle can a Government, committed to the rule of law, claim immunity from the doctrine of promissory estoppel? Can the Government say that it is under no obligation to act in a manner that is fair and just or that it is not bound by considerations of "honesty and good faith"? Why should the Government not be held to a high "standard of rectangular rectitude while dealing with its citizens"? There was a time when the doctrine of executive necessity was regarded as sufficient justification for the Government to repudiate even its contractual obligations, but, let it be said to the eternal glory of this Court, this doctrine was emphatically negatived in the Indo-Afghan Agencies case (AIR 1968 SC 718) and the supremacy of the rule of law was established. It was laid down by this Court that the Government cannot claim to be immune from the applicability of the rule of promissory estoppel, and repudiate a promise made by it on the ground that such promise may fetter its future executive action. If the Government does not want its freedom of executive action to be hampered or....
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....round of necessity or expediency", nor can be Government claim to be the sole judge of its liability and repudiate it "on an ex parte appraisement of the circumstances". If the Government wants to resist the liability, it will have to disclose to the Court what are the subsequent events on account of which the Government claims to be exempt from the liability and it would be for the Court to decide whether those events are such as to render it inequitable to enforce the liability against the Government. Mere claim of change of policy would not be sufficient to exonerate the Government from the liability, the Government would have to show what precisely is the changed policy and also its reason and justification so the Court can judge for itself which way the public interest lies and what the equity of the case demands. It is only if the Court is satisfied, on proper and adequate material placed by the Government, that overriding public interest requires that the Government should not be held bound by the promise but should be free to act unfettered by it, that the Court would refuse to enforce the promise against the Government. The Court would not act on the mere ipse dixit of the....
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.... pointed out (at p. 1024 of AIR) : "Public bodies are as much bound as private individuals to carry out representations of facts and promises made by them, relying on which other persons have altered their position to their prejudice. The obligation arising against an individual out of his representation amounting to a person who acts upon the promise : when the law against a public body shall be in certain form or be executed in the manner prescribed by statute, the obligation may be if the contract be not in that form be enforced against it in appropriate cases in equity." The learned Judge then referred to the decision in the Indo-Afghan Agencies case (AIR 1968 SC 718) and observed that in that case it was laid down by this Court that "the Government is not exempt from the equity arising out of the acts done by citizens to their prejudice relying upon the representations as to its future conduct made by the Government." It was also pointed by the learned Judge that in the Indo-Afgan Agencies case this Court approved of the observations made by Denning J. in Robertson v. Minister of Pensions (1949) 1 KB 227 (supra) rejecting the doctrine of executive necessity and held them to ....
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....y that the appellant could not possibly be led into the belief that the post would not be abolished. If the post was temporary to the knowledge of the appellant, it is obvious that the appellant knew that the post would be liable to be abolished at any time and if that be so, there could be no factual basis for invoking, the doctrine of promissory estoppel, for the purpose of precluding the Government from abolishing the post. This view taken by the Court was sufficient to dispose of the contention based on promissory estoppel, and it was not necessary to say anything more about it, but the Court proceeded to cite a passage from American Jurisprudence, Vol. 28 (2 d) at 783, paragraph 123 and observed that the High Court rightly held "that the courts exclude the operation of the doctrine of estoppel, when it is found that the authority against whom estoppel, is pleaded has owed a duty to the public against whom the estoppel, cannot fairly operate." It was this observation which was heavily relied upon on behalf of the State but we fail to see how it can assist the contention of the State. In the first place, this observation was clearly obiter, since, as pointed out by us, there w....
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....so be noted that promissory estoppel, cannot be invoked to compel the Government or even a private party to do an act prohibited by law. There can also be no promissory estoppel, against the exercise of legislative power. The Legislature can never be precluded from exercising its legislative function by resort to the doctrine of promissory estoppel. Vide State of Kerala v. Gwalior Rayon Silk Mfg. (Wvg.) Co. Ltd. (1974) 1 SCR 671: (AIR 1973 SC 2734)." (emphasis supplied) 59. The Apex Court in case of Comm. of Income tax v. B.N. Bhatacharjee reported in AIR 1979 SC 1725 has observed as under :- "56. The soul of estoppel is equity, not facility for inequity. Nor is estoppel against statute permissible because public policy animating a statutory provision may then become the casualty. Halsbury has noted this sensible nicety. "Where a statute, enacted for the benefit of a section of the public, imposes a duty of positive kind, the person charged with the performance of the duty, cannot by estoppel, be prevented from exercising his statutory powers." [Maritime Elec. Co. Ltd. v. General Diaries Ltd. 1937 AC 610 and Halsburys Laws of England para 1515.] "A petitioner in a divorce su....
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.... be no promissory estoppel, against the Legislature in the exercise of its legislative functions nor can the Government or public authority be debarred by promissory estoppel from enforcing a statutory prohibition. It is equally true that promissory estoppel, cannot be used to compel the Government or a public authority to carry out a representation or promise which is contrary to law or which was outside the authority or power of the officer of the Government or of the public authority to make. We may also point out that the doctrine of promissory estoppel, being an equitable doctrine, it must yield when the equity so requires, if it can be shown by the Government or public authority that having regard to the facts as they have transpired, it would be inequitable to hold the Government or public authority to the promise or representation made by it, the court would not raise an equity in favour of the person to whom the promise or representation is made and enforce the promise or representation against the Government or public authority. The doctrine of promissory estoppel, would be displaced in such a case, because on the facts, equity would not require that the Government or pub....
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....pecial Civil Application came to be heard by the High Court in the year 1972. Be that as it may, we find that the appellants have not made out any case of Promissory Estoppel either on the basis of the averments made in their petition or with reference to the facts which have emerged from the affidavits filed in the case. In order to claim the benefit of Promissory Estoppel the appellants must establish : (i) that a representation was made to grant the exemption for a particular period to a new industry established in view of the representation held out by the State Government; and (ii) that the appellants had established the new industry acting upon the representation made by the State Government. The facts in the present case do not go to establish that the appellants had put up the new industry in question subsequent to and in pursuance of the promise held out by Notification dated 29-4-1970 granting exemption. Putting it differently the appellants have not proved that but for the concession offered in the first Notification, they would not have established the industry in question and that the entire venture was attributable only to the inducement offered by the Government.....
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....nd sales tax is unconstitutional and against public policy - Not enforceable in Court. 63. The Apex Court in case of Kasinka Trading v. Union of India reported in AIR 1995 SC 874 has observed as under : "&.......The exemption Notification, was therefore, issued with a view to offset those losses to the extent possible. The exemption Notification was not issued as a potential source of extra profit for the importer. Again at the time when the Notification was withdrawn by the Government there was no scope for any loss to be suffered by the importers. The exemption Notification did not hold out to the appellants any enforceable promise. Moreover, the Notification cannot be said to have extended any "representation" much less a "promise" to a party getting the benefit of it to enable, to invoke the doctrine of promissory estoppel, against the State. A Notification issued under Section 25 of the Act cannot be said to be holding out of any such unequivocal promise by the Government which was intended to create any legal relationship between the Government and the party drawing benefit flowing from of the said Notification. It cannot, therefore be said that even if the public interest ....
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....n of law." (Emphasis supplied) 65. The Apex Court in case of M/s. Pawan Alloys and Casting Pvt. Ltd. v. U.P. State Electricity Board reported in AIR 1997 3910 observed as under : "24. Shri Dave, learned Senior Counsel for the Board next contended that the Board in exercise of its statutory powers had earlier decided to grant rebate of 10% on the bills of electricity consumed by new industries. In the exercise of the same statutory power it was open to the Board to withdraw the said concession or rebate on the ground of public policy and doctrine of promissory estoppel, cannot be pressed in service for thwarting such an exercise by the Board. For supporting this contention he vehemently pressed in service two decisions of this Court in the case of Kasinka Trading v. Union of India, (1995) 1 SCC 274 : (1995 AIR SCW 680) and in the case of Shrijee Sales Corporation v. Union of India, (1997) 3 SCC 398. In fact these two decisions were the sheet anchor of the challenge mounted by Shri Dave for the Board against the finding of the High Court on Issue No. 1. We, therefore, now proceed to deal with these decisions. 25. In the case of Kasinka Trading, (1995) 1 SCC 274 : (1995 AIR SCW 68....
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....of promissory estoppel, is applicable against the Government also particularly where it is necessary to prevent fraud or manifest injustice. The doctrine, however, cannot be pressed into aid to compel the Government or the public authority 'to carry out a representation or promise which is contrary to law or which was outside the authority or power of the officer of the Government or of the public authority to make'. There is preponderance of judicial opinion that to invoke the doctrine of promissory estoppel, clear, sound and positive foundation must be laid in the petition itself by the party invoking the doctrine and that bald expressions, without any supporting material, to the effect that the doctrine is attracted because the party invoking the doctrine has altered its position relying on the assurance of the Government would not be sufficient to press into aid the doctrine. In our opinion, the doctrine of promissory estoppel, cannot be invoked in the abstract and the courts are bound to consider all aspects including the results sought to be achieved and the public good at large, because while considering the applicability of the doctrine, the Courts have to do equity and the....
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....blic interest by way of an incentive for a class of importers and even though such public interest continued to subsist during the currency of such an exemption notification and that promisees for whose benefit such exemption was granted had changed their position relying on the said exemption notification, it could still be withdrawn before the time mentioned therein even though public interest did not require the said exercise to be undertaken and even though there were subsisting equities in favour of the promisee-importers. As such a situation had not arisen in that case it was not adjudicated upon. 26. The said decision, therefore, cannot be of any real assistance to learned Senior Counsel Shri Dave for the respondent-Board on the facts of the present group of matters. In the present case, as we have seen earlier a clear-cut scheme of incentives for new industries was put forward by the Board presumably at the behest of the U.P. Government so that more and more industries could be attracted to State of U.P. The Board also in its wisdom adopted the said scheme of incentives while fixing schedule of tariff rates as that was also in the interest of the Board for the obvious reas....
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.... liability. This is the essence of the rule of law. The burden would be upon the Government to show that the public interest in the Government acting otherwise than in accordance with the promise is so overwhelming that it would be inequitable to hold the Government bound by the promise and the Court would insist on a highly rigorous standard of proof in the discharge of this burden. But even where there is no such overriding public interest, it may still be competent to the Government to resile from the promise 'on giving reasonable notice, which need not be a formal notice, giving the promisee a reasonable opportunity of resuming his position' provided of course it is possible for the promisee to restore status quo ante. If however, the promisee cannot resume his position, the promise would become final and irrevocable. Vide Emmanuel Ayodeji Ajayi v. Briscoe, (1964) 3 All ER 556.' Two propositions follow from the above analysis : (1) The determination of applicability of promissory estoppel, against public authority/Government hinges upon balance of equity or 'public interest'. (2) It is the Court which has to determine whether the Government should be held exempt from the li....
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....e to uphold the contention based on the principle of promissory estoppel, raised by the respondents in this case. No particulars have been given by the respondents as to when the decision was taken to set up the industry, the date when the loan was obtained from the bank, and exactly when land was purchased or the plant and machinery were acquired for setting up of the small scale industrial unit. The IPR on which reliance has been placed by the respondent was issued on 18-7-1979. A provisional registration certificate in respect of the respondent's industry was issued on 28-11-1979. The respondent has not given factual details of how in the short span of about four months, it set up its industry on the basis of the IPR. 14. Moreover, the Government may change its industrial policy if the situation so warrants. Merely because, the IPR was announced for the period 1979-1983, it does not mean that the Government cannot amend or change the policy under any circumstance. As a matter of fact, in this case the Government had published another IPR on 31-7-1980 modifying the earlier IPR. The vires of the second IPR has not been challenged. The two IPRs have not bee....
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.... Oil Mill and was granted exemption from sales tax, it should have known that the notification granting exemption of tax under S. 6 could be withdrawn at any point of time. Therefore, the case of promissory estoppel, is without any basis. There cannot be any estoppel, against statute. 17. Moreover, it is well settled that any IPR can be changed if there is an overriding public interest involved. It has been stated on affidavit by the State of Orissa that after a package of incentives was given to the industries, the Government was faced with severe resource crunch. On a review of its financial position, it was felt that for the sake of the economy of the State, it was necessary to limit the scope of exemption granted to various industries. Accordingly, further notifications were issued under S. 6 of the Orissa Sales Tax Act from time-to-time. Because of this new perception of the economic scenario, the scope of the earlier notifications was restricted by subsequent notifications issued under S. 6. This also led to issuance of the second IPR dated 31-7-1980. &...24. In our opinion, the plea of change of policy trade (sic) on the basis of resource crunch sho....
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.... administrative action may be questioned. In cases where power vested in the Government is a power has got to be exercised in public interest, as is the case in the present case, the court may require the Government to exercise that power in a reasonable way in accordance with the spirit of the Constitution. The mere fact that a notification issued under Section 25 of the Customs Act is required to be laid before Parliament under Section 159 of the Customs Act does not make any substantial difference as regard the jurisdiction of the court to pronounce on its validity. Section 25 of the Customs Act under which notifications are issued confers a power on the Central Government coupled with a duty to examine the whole issue in the light of public interest. If the Central Government is satisfied that it is necessary in the public interest so to do, it may exempt generally either absolutely or subject to such conditions, goods of any description, from the whole or any part of the customs duty leviable thereon. Power exercisable under Section 25 of the Customs Act is no doubt discretionary, but it is not unrestricted. The pattern of the law imposing customs duties and the manner in whic....
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....2006) 3 SCC p620 held that subordinate legislature cannot take away accrued right. 72. The Apex Court in case of State of Punjab v. Nestle India Ltd. reported in (2004) 6 SCC 465, held that plea of promissory estoppel would be available for establishing the right. 73. The broad proposition of law developed over the years as could be seen from the aforesaid authorities could be summarized as under. 74. The Doctrine of Promissory Estoppel was originated as valid defense rather than ground giving rise to any actionable or enforceable rights to the party wielding the same. In good old days it was a strong proposition of law that the Doctrine of Promissory Estoppel being a Doctrine available for resisting a claim of the other side, it presupposed existing contractual relationship between the parties. Thus, it was held as a shield rather than sword in the hands of the defendant. 75. Before the ruling of the Apex Court in case of Motilal Padampat (supra), the five judges Bench of Apex Court in case of M. Ramanath Pillai v. State of Kerala reported in (1973) 2 SCC 650, held that there shall be no applicability of promissory estoppel against the State. But that has been explained by the....
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....erest requires the State to act unfettered by its earlier promises and in such situation the Court would not be justified in enforcing the promise against the Government and State. vi. The doctrine of promissory estoppel cannot be invoked to compel the Government, State or even a private party to do and act prohibited by law. There cannot be any promissory estoppel against the exercise of legislative power. The legislature cannot be precluded from exercising its Legislative function by resorting to doctrine of promissory estoppel as per Apex Court decision in matter of State of Kerala v. Gwalior Rayon Silk Manufacturing and Wind Co. - AIR 1973 SC 2734. vii. As observed by the Apex Court in case of B.N. Bhattacharji (supra), the soul of estoppel is equity and not facility for inequity nor is estoppel against statute permissible because public policy animating a statutory provision may than become the causality. The Apex Court quoting from the Halsbury noted that where a statute, enacted for the benefit of a section of public, imposes a duty of positive kind, the person charged with the performance of the duty cannot be estopped and be prevented ....
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.... which is exercising delegated functions has a right to revoke the same in exercise thereof and the same was found just and proper. The five Judges Bench of the Apex Court in case of Indian Express News Paper v. UOI reported in AIR 1958 SC 578, every notification and orders issued under the statutorily power of rule making authority has to be read as if they are forming part of the Statute and rule making. xv. The Apex Court has in case of Union of India v. Palivad Electric reported in AIR 1996 SC 3106 = 1996 (83) E.L.T. 241 (S.C.) observed that the burden of proof lies upon the person who challenge the legality and propriety of the notification that it is against the public interest. The Five Judges Bench of the Apex Court in case of State of Punjab and Another v. Devans Modern Breweries Ltd. And another, reported in (2004) 11 SCC 26 held that the effect of legislation when validly made is a same of Statute under which it is made, (paras 120, 105 and 119). xvi. The Apex Court in case of Tilakramji v. State of U.P. reported in AIR 1956 SC 676 has held that the notification issued under statute has to be regarded as a part of the statute. The similar view ....
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....eed to be mindful of the fact that it is called upon to take judicial review of statutory notifications in realm of fiscal policy of Union of India. 80. It is also required to be borne in mind that Original Notification dated 31-7-2001 contained that for getting benefit of exemption the Unit with specific minimum investment had to start commercial production on or before 2003 and than it was to enjoy the exemption for period of five years namely till 2008. Of course later on the time for starting commercial production was extended up to December, 2005 but all the industries put up in the initial period and which have commenced commercial production as per the initial dates have exhausted their period of five years in the year 2008 itself, in which the impugned notifications amending the scheme were issued. In fact petitioners have therefore taken up a specific pleas of discrimination qua those industries which were put up in the initial period that they enjoyed full benefit whereas the industrial units like petitioners who were established subsequently within the extended period did not receive the identical benefits. 81. The fact remains to be noted that the Central Government h....
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....l calamities but that would not change the real object of introducing the exemption schemes and as such when it is noticed that on account of certain glaring lacunae in the original scheme the real purpose of exemption scheme is not served or is likely to be defeated than correctional measures like amendments notifications would always be required to be issued and if they are made applicable to all the regions then a region cannot claim or that as in their case the reasons for exemption scheme was different they cannot be treated at par with other regions. 82. It is required to be noted that in the instant case, the exemption in question was provided by way of notification issued under Section 5A of the Central Excise Act and as such it cannot be characterized as promise held out to any particular section, trade, industry or person. The Court hastened to add here that the exemption embedded in notification dated 31st July, 2001 nonetheless could be construed as scheme of incentive offered to the interested entrepreneur for putting up new industries in the Kutch region so as to infuse new life in the economic condition of the region which had received severe shock on account of dev....
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.... have exhausted the period of five years or must be in the verge of exhausted for five years when the impugned notifications came to be promulgated. These factors borne to be in mind while examining the impugned notification dated 27-6-2008 and 10-6-2008. 85. The purpose of the notification dated 31-7-2001 was to help the people of Kutch region in overcoming the crises that had befallen in the area on account of devastating earthquake. The incentive to entrepreneur for setting up industries in this area was to help the people of region in getting more employment opportunity. Therefore also it is required to be noted that the Central Government was under obligation to see to it that the benefit of duty exemption really gets trickled down to the people who were aimed for being helped under the same notification. The notification dated 31-7-2001 cannot be said to be for the purpose of benefiting the trade and industry as such. The notification naturally had been implemented for overall development of the Kutch district and its industrial growth which had suffered badly on account of devastating earthquake. Keeping this view in mind, the development during the period of exemption and ....
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.... essence of pragmatic approach which must guide and inspire the Legislature in dealing with complex economic issues. Thus, when the Central Government upon noticing the various abuses and misuses of the provisions of notification dated 31-7-2001, brought about suitable amendment in form of Notification Nos. 16 and 33 respectively dated 27-3-2008 and 16-6-2008 cannot be said to be unjustified in exercising its power under Section 5A of the Act. 88. The learned Counsel for the respondent Central Government has elaborately pointed out in the course of the hearing as to how the various agencies participated in deliberation for bringing about the appropriate changes and amendments in the existing scheme of exemption applicable to regions, the respondent Central Government has aptly demonstrated unscrupulous practices of duty evasion and misuse by unscrupulous dealers and traders which resulted into tremendous losses to the Government on account of illegal duty evasion available on account of loopholes in the notification dated 31-7-2001. The Court need not reiterate what is stated in paragraphs on page 22 of this judgment. The mis-use of provisions of Notification dated 31-7-2001 in fa....
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....o-senso cannot be invoked by the petitioner in challenging the notifications dated 27-3-2008 and 16-6-2008. The notification though statutory in nature has nonetheless effect of carving out an exception to statutory obligation of paying duty. The petitioners were therefore under duty to establish manifest injustice in promulgating of said notifications. The respondent Central Government has pointed out the dire need of bringing out the amendments which were aptly demonstrated and therefore, the said notifications cannot be struck down on the ground of plea of promissory estoppel alone. At this stage it would not be out of place to reiterate that the benefits which have so far been taken are not to be taken away on account of issuance of impugned notifications. The impugned notifications are of 2008 only and the petitioners have so far not established that on account of implementation of new scheme they are in fact on the verge of being close down as they have expressed their apprehension in the memo of petition. The court therefore, is of the view that the impugned notification did not call for any interference under Article 226 of the Constitution of India. 92. The plea of promis....
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....of any rule, notification or order so amended, repealed, superseded or rescinded or anything duly done or suffered thereunder; or (c) affect any right, privilege, obligation or liability acquired, accrued or incurred under any rule, notification or order so amended, repealed, superseded or rescinded; or (d) affect any penalty, forfeiture or punishment incurred in respect of any offence committed under or in violation of any rule, notification or order so amended, repealed, superseded or rescinded; or (e) affect any investigation, legal proceeding or remedy in respect of any such right, privilege, obligation, liability, penalty, forfeiture or punishment as aforesaid. And any such investigation, legal proceeding or remedy may be instituted, continued or enforced and any such penalty, forfeiture or punishment may be imposed as if the rule, notification or order, as the case may be, had not been amended, repealed, superseded or rescinded.] 95. It is also required to be noted that Section 38A clearly provides that 'unless a different intention appears', now that contingency would go to show that it is open to the amending agency to specifically provide for exigency despite provisio....
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....roversy in the present group of petitions. (1) Whether any declaration was made by the Central Government in formulating fiscal policy and if yes, whether the same was by way of exemption simplicitor or by way of an incentive offered for establishment of the industry in a particular area or a specific region, to new entrepreneur? (2) Whether the petitioner could be said to have altered the position based on the aforesaid declaration of fiscal policy brought into force? (3) Whether bar of promissory estoppel would apply and if yes, to what extent in fiscal matters? (4) Whether the impugned policy could be said to be for withdrawal of the benefit/incentive retrospectively, assured to the petitioners or can be said as rationalising the benefit by making it retroactive? (5) Whether the bar of promissory estoppel would operate to the respondent Central Government, if yes, to what extent? (6) Whether the impugned change in fiscal policy could be said as acting in contravention to the bar of promissory estoppel, if yes, to what extent? 104.....
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....r in personal ledger account of the unit concerned. 107. On 27-3-2008, vide notification No. 16/2008, the words and the figure "to the amount of duty paid by the manufacturer of the goods other than the amount of duty paid by utilisation of the CENVAT credit under CENVAT Credit Rules" was substituted by the words "to the duty payable on value addition undertaken in the manufacture of the said goods by the said unit". In the said notification, the duty payable on the value addition was made as equivalent to the amount calculated as a percentage of total duty payable on the said excisable goods as per the table contained in the said notification. The said table provided for various rates in different chapters of the First Schedule for different categories. In the said notification, it did provide for an option available to a particular manufacturer to move for modification of the rates prescribed in the table and the enabling powers were given to the Commissioner of Customs or Central Excise to alter the rates. It is under these circumstances, all the petitioners have approached to this Court by the present petitions. 108. It may be recorded that pursuant to the interim order passe....
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....on-compliance of conditions for establishment of new industrial units. If based on the aforesaid fiscal policy of the Central Government by way of incentive for establishment of new industrial unit in Kutch District, the petitioners have established their industrial unit in Kutch District, it could hardly be said that the petitioners have not altered their position. Even otherwise also, if the condition of notification of new industrial units is not fulfilled. Even otherwise also, none of petitioners would be entitled to the benefit of the policy of refund of the actual duty paid, but since such is neither pleaded nor comes up for consideration, the same is not required to be examined further. However, if the petitioners have established new industrial units in Kutch district based on the aforesaid policy of the Central Government by way of a special incentive of refund of actual duty paid, it can be said that the petitioners have altered their position and such alteration of the position would be the making of requisite investment for establishment of the new industrial unit in Kutch District within the specific time period. The second aspect shall remain answered accordingly. 11....
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.... It is true that it has a right to revoke the same but if the other party has suffered on that account then such representation will be against the public policy and the morality. Notification issued under Section 49 of the Act of 1948 for giving the benefit of exemption for the hill areas was in the nature of delegated legislation and not an Act framed by the State Legislature. The pertinent aspect is that in the very decision, the Apex Court while exercising the question as to whether the State could withdraw the exemption on the alleged ground of misuse of the policy by certain entrepreneurs, observed at paras 30, 31, 32 and 33 as under : 30. Therefore, if such benefit has not been extended then a different stand will follow but so far as the delegated legislation is concerned, this kind of revocation cannot be sustained. It is highly against the public morality that the incumbent who have felt persuaded on account of the representation made by the State Government that they will be given certain benefits and they acted on that representation, it does not behave on the part of the appellant-Corporation to withdraw the said benefit before expiry of the stipulated period by issu....
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....hen in that case it cannot be taken that there was really public interest involved which persuaded the Corporation to revoke the same. 32. No person can be permitted to misuse the concession or benefit and invoke promissory estoppel. Promissory estoppel is not one sided affair, it is rather two sided affair. If one party abuses the concession then it is always open to the other party to revoke such concession but if one party avails the benefit and is acting on the same representation made by the other party then the other party who has granted the said benefit cannot revoke the same under the garb of public interest. Therefore the grounds that the revocation notification was issued in public interest and that same has the flavour of the statute, cannot persuade us to uphold it sustained. 33. There is no gain saying that the public interest is paramount and the private interest has to be sacrificed for the larger interest. But, after survey of all these cases on the subject, the judicial consensus that emerges is that whenever the State has made a representation to the public and the public has acted on that representation and suffered economically or otherwise, then in that case....
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....ional Solicitor General, such rationalisation is not having retrospective character, but is having retroactive character. He further submitted that the powers for fixation of rates are expressly provided to enable the concerned authority to alter the same if sufficient material is produced, therefore, he submitted that such could be said to be made permissible in fiscal policy to the Government in exercise of the power under Section 5A of the Act. He therefore contended that in the facts of the present case, the bar of promissory estoppel would not operate and the change in policy deserves to be maintained. He also contended that the approach of the Court would be with the presumption of validity of such policy since whether there is public interest or not is to be left to the Government on the basis of the material available before it and the Court would not undertake judicial scrutiny in a microscopic manner by weighing the sufficiency of the material. He contended that the doctrine of promissory estoppel cannot be permitted to be invoked in the facts of the present case nor such doctrine of promissory estoppel would operate as bar in the impugned notification. 114. Whereas, lea....
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.... by enacting any law. 116. If the facts of the present case are examined in light of the aforesaid, it is apparent that by the notification dated 31-7-2001 and others, special incentive was given to the entrepreneur for establishment of new industrial units in Kutch district granting full refund of the actual duty paid as observed in the earlier paragraph and further, as observed earlier, for establishment of new industrial undertaking, the petitioners have altered their position and right has accrued based on the doctrine of promissory estoppel. It does appear that it is not the case of the respondent Central Government that such representation or the promise given for granting exemption was unauthorisedly given or was given in contravention to any statutory provision. The contention that the power to grant exemption would include power to withdraw the exemption as per the General Clauses Act, even if accepted, the same has to be in public interest. Such public interest for withdrawal of the exemption if considered for prejudicing the rights of the party who has altered its position, must be having direct nexus to the object as was to be achieved by formulation of the policy or i....
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....ich was at the time of formulation of the policy or achievement of the said object. On the aspects of public interest, the ground as sought to be canvassed is that the duty paid in such area where incentive provided was higher in comparison to the other places and it was orally contended by the learned Additional Solicitor General that such would show that the exemption policy was being misused or there were manipulations for getting the refund. The contention considered in either way may at the most attract for initiation of the action in accordance with law against the industry concerned, if there is manipulation or abuse of the policy. Even if it is considered that some units had misused or had abused the policy, the same can hardly be said to be a valid ground for withdrawing the benefit conferred upon the bona fide industrial units. Further, there is no satisfactory material demonstrated for such purpose. Even if such contention is considered for the sake of examination, it can hardly be termed as overwhelming public interest on the part of the Central Government to prejudice the rights of the new entrepreneurs who have altered their position by establishing industries based o....
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.... be permitted to be exercised with the retrospective effect de hors the doctrine of promissory estoppel, if it is established that a specific representation by way of a special incentive was made to attract new entrepreneur have established the industry in a particular area or region. 120. It is not the case of the respondent Central Government that the Parliament has passed any Act to alter the rights accrued with retrospective effect. Therefore, the question as to whether such Act of Parliament or the Legislature would meet with the test of Article 14 of the Constitution being reasonable or not is not required to be examined in the present petitions. 121. If the observations made hereinabove are taken into consideration, it can be said that the impugned policy of withdrawal of the benefit/incentive to the petitioners is retrospective and not retroactive. Consequently, the bar of promissory estoppel would operate against the respondent Central Government in withdrawal of the exemption benefit by way of full refund of actual duty paid to the new industrial undertaking as per the conditions specified in the notification dated 31-7-2001. As a result thereof, the impugned notificati....