TaxTMI 
TaxTMI 
2010 (3) TMI 1146
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.... bars and other related products. The goods manufactured by the petitioner company fall in Chapter 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 lar....
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....sh Notification dated 10.06.2008 bearing No.33/2008 CE. 8. Learned Senior Counsel appearing on behalf of 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No.33 of 2008 stating that the exemption benefit granted to the petitioner under the Original Notification was withdrawn within the period of five years by reducing the quantum in light of the change made in the basis for calculating the amount of exemption that may be available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 chan....
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.... Anr. Vs. State of Haryana & Ors., 2006(3) SCC 620; vi. State of Punjab Vs. Nestle Indua Ltd & Anr., 2004(6) SCC 465; 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 ....
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....ing exemption. That the units in the specified area were paying high percentage of duty in cash when compared to payment of duty on an all India 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....
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..... Vs. Union of India, 2005(188) E.L.T. 129 (S.C.); xviii. State of Punjab Vs. Nestle India Ltd. And Another, AIR 2004(6) SCC @ 465; xix. MRF Ltd. Vs. Assistant Commissioner (Assessment) Sales 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 ....
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....4 the expression set up on or after the date of publication of this Notification in the Official Gazette has been defined to mean that any civil construction work on the factory premises and 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 specifyin....
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....duty paid by utilization of CENVAT credit under the CENVAT Credit Rules, 2001 , the words to the duty payable on value addition undertaken in the manufacture of the said goods by the said unit . Thereafter paragraph 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 th....
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....ntral Excise 71/2003 - Central Excise dated 09.09.2003. 23/2008-Central Excise 20/2007 - Central Excise dated 25.04.2007. 20/2008-Central Excise 2. Revenue implication of the above changes is not quantifiable. 13. Again in Explanatory Memorandum to Notification 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....
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....quate what is inherently not equal. 16. Section 5A of the Act reads as under: [5A. Power to grant exemption from duty of excise.-- (1) If the Central Government is satisfied that it is necessary in the public interest so to do, it may, by notification in the Official Gazette, exempt generally 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....
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....fter such commencement until it is amended, varied, rescinded or superseded under the provisions of this section.] [(5) Every notification issued under sub-section (1) [or sub-section (2A)] shall, -- (a) unless otherwise provided, come into force on the date of its issue by the Central Government for publication 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 ....
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....ted legislation cannot exercise such powers, even by attempting to read intent, in excess of the powers granted by the provisions. 20. In the present case the respondent authority has sought to curtail the exemption in purported exercise of powers under Section 5A of the Act by trying to read an object which did not exist, and which 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 ....
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....01. 22. Section 38A of the Act is in relation to effect of amendments, etc., of Rules, Notifications or Orders. The said provision reads as under: [38A. Effect of amendments, etc., of rules, notifications or orders. -- Where any rule, notification or order made or issued under this Act or any notification or order issued under such 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 a....
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....hich correspondingly obligates both the person who was a beneficiary under the existing Rule, Notification, etc. and the authority under the existing Rule, Notification, etc. to continue to comply with the requirements of the Rule, Notification, etc. as it existed even after amendment once the parties have duly done anything or suffered under the existing 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....
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....s. If the nature of promise is such where in exercise of delegated legislation the State has consciously agreed to forego certain revenue the State cannot resile from the said position only on the ground of loss to the exchequer. Of course, it is equally well settled that no person can be permitted to misuse the concession or benefit and invoke promissory estoppel. 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 ....
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....ayment of subsequent refunds. Thus it is not as if the statement made by a manufacturer is accepted at face value. If any claim for refund is made and approved by the Jurisdictional Commissioner, revenue will have to show by co-relating with the specific transaction and specific order of refund as to where and how a concession/benefit has been availed by a manufacturer 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....
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.... scale misuse of the scheme. 31. One more aspect of the scheme which came by way of amendment dated 06.08.2003 vide Notification No.65 of 2003-CE further makes it more rigorous to ensure that no undue advantage is derived by a manufacturer, when the said Notification provides that a manufacturer is obliged to discharge his liability to pay duty of excise in the first 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 d....
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....upervening public interest on the basis of perceived revenue loss or misuse of the scheme of exemption. The primary inquiry that is required to be undertaken is as to whether a new industrial unit has been set up in the District of Kutch and whether such a new industrial unit fulfills all other requisite conditions prescribed by the Original Notification. The inquiry cannot 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....
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....uch provision in fact provides. viii. 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 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 ....
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....he powers of the Central Government to issue a notification in exercise of powers under Section 5A of the Act, it would not be possible to uphold the said exercise in so far as impugned Notification No.16/2008-CE dated 27.03.2008 and Notification No.33/2008-CE dated 10.06.2008 are concerned to the extent they are sought to be applied to new industrial units set up in Kutch District of Gujarat in compliance with Original 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....
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....e Additional Duties of Excise (Goods of Special Importance) Act, 1957 (58 of 1957) and sub-section (3) of Section 3 of the Additional Duties of Excise (Textiles and Textile Articles) Act, 1978, issued Notification No. 39/2001-C.E dated 31-7-2001 providing incentives in form of exemption from payment of excise duty for period of five years from the date of commencement of commercial production to newly set up industrial units with 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 dut....
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....he amount of duty paid by manufacturing of goods till then 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 on certain terms and conditions mentioned therein. 44. Under the said Notification, eligible industrial units were entitled to exemption of so much of the duty leviable on the goods cleared, as was actually paid, i.e. in cash, 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 ....
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....taken, which shall be equivalent to the amount calculated as a percentage of total duty payable on the excisable goods at the rate specified in table given in the said impugned Notification. The petitioners have on page-9 produced it in a more articulated manner, which is reproduced hereunder :- S. No. Chapter of the First Schedule Description of goods Rate (1) (2) (3) (4) 1. 29 All goods 29 2. 30 All goods 56 3. 33 All 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 petiti....
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....prejudicial to the members of the petitioners. The manufacturers came forward to make huge investments and incurred huge expenses on the basis that they would be entitled to refund of the entire duty paid by them, in cash. In cases, where the manufacturers were not using dutiable inputs, the refund was of 100% of the duty paid. In fact, in so far as the major activity of manufacturing Sponge Iron, DI Pipes, Bars and Sections are concerned, the prime raw material, namely, Iron Ore is exempt from duty. The impugned Notifications have, without any note of 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 t....
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....therwise, the said area was not a desirable location for setting up commercial activity, especially, after the earthquake in 2001, given the lack of skilled labour, high power costs and scarcity of water. From the beginning, the representation being made was that the exemption would be available for a period, not exceeding 5 years. No clarification worth the name, when investments far exceeding the minimum requirement of Rs. 20 crore were made, was given that the period of 5 years is liable to be reduced and thus the manufacturers may proceed with caution. 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 t....
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....ose of refund under the exemption Notification, is clearly arbitrary. Nonetheless, the said classification is in essence an admission that benefit under the Exemption Notification is sought to be curtailed by impugned New Notification and said New Notification is falling under Sr. No. 8 of the table, stands to lose even if it uses a minimal percentage of inputs other than Iron Ore, without any justification, rationale or basis. Thus, in view of the aforesaid submissions, learned counsel for the petitioners submits that the petitions are required to be allowed 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....
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....acturers who take credit based on such invoices without receipt of goods. To elaborate above modus operandi, the respondents gave following illustration. (1) A Unit in Kutch reports fictitious production of Rs. 100, which has actually not taken place and pays full duty of Rs. 16/- in cash. It is submitted that obviously there is no Cenvat credit available inasmuch as no input or raw material has been purchased by him. Such a purchaser claims full refund from the Government under the Scheme. No doubt one can argue that there is no loss to the Government as the Government has collected 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....
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....espondents has invited this Court's attention in case of Kasinka Trading v. Union of India, reported in 1994 (74) E.L.T. 782 (S.C.), more particularly para 20 of the said judgment, on the plea of promissory estoppel and submitted that when the Central Government had withdrawn a time bound exemption notification No. 66 dated 15-3-1991, withdrawal notification No. 205 dated 16-10-1980 was issued after examining the scope and ambit of the doctrine of promissory estoppel. Learned counsel for the respondent has also invited this Court's attention in case of Excise Commissioner v. Ram Kumar, reported 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 'publ....
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...., which proposed to stimulate 'Synergetic' development of industries in the region by giving a package of incentives which included exemption from excise duties, it is held that the competence of the Parliament and the State Legislature to repeal, amend or supersede an exemption Notification is unquestionable. It is further held that as far as fiscal legislation is concerned, the limitation is implicit in Article 265 which provides that no tax shall be levied or collected except by authority of law. The Hon'ble Supreme Court in context of the exemption Notification that was issued in the said case 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 ....
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....ecause, the Courts with respect, would lack both expertise familiarity with the local problems so necessary for making considered decisions with respect to raising and disposing public revenue. It is submitted that such action taken by the authorities on the basis of knowledge and information are valid. In view of above submission, learned counsel for the respondent submitted that petitions deserve to be dismissed. 55. This Court has heard learned counsel for the parties and perused the documents on record. 56. The list of authorities on the aspect of promissory estoppel is as under. 57. Let us first 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 o....
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....y estoppel been adopted in its fullness but it has been recognized as affording a cause of action to the person to whom the promise is made. The requirement of consideration has not been allowed to stand in the way of enforcement of such promise. The doctrine of promissory estoppel, has also been applied against the Government and the defense based on executive necessity has been categorically negatived. It is remarkable that as far back as 1880, long before the doctrine of promissory estoppel, was formulated by Denning, J., in England, a Division Bench of two English Judges in the Calcutta High Court applied the doctrine of promissory estoppel, and recognized 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 constructin....
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....: that this belief is referable to an expectation created by the Government that their enjoyment of the land would be in accordance with this belief: and that the Government knew that the Municipality were actioning in this belief so created." an equity was created in favour of the Municipality which entitled it "to appeal to the Court for its aid in assisting them, to resist the Secretary of State's claim that they shall be ejected from the ground". The learned Chief Justice pointed out that the doctrine which he was applying took its origin "from the jurisdiction assumed by Courts of Equity to intervene in the case of or to prevent fraud" and after referring 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 U....
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....be allowed to go back on the representation made by it and stressed the point in the form of an interrogation by asking : "if we do so, would it not amount to our countenancing the perpetration of what can be compendiously described as legal fraud which a court of equity must prevent being committed?" He observed that even if the resolution of the Government amounted merely to "the holding out of a promise that no rent will be charged in the future, the Government must be deemed in the circumstances of this case to have bound themselves to fulfill it. Whether it is the equity recognized in Ramsden's case (supra) or it is some other form of equity, is not of much 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....
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....ract" and this statement of Denning, J., was to be preferred as laying down the correct law on the subject. Shah, J., speaking on behalf of the Court, observed (at p. 723 of AIR SC) :- "We are unable to accede to the contention that the executive necessity releases the Government from honouring its solemn promises relying on which citizens have acted to their detriment. Under our constitutional set-up no person may be deprived of his right or liberty except in due course of and by authority of law : if a member of the executive seeks to deprive a citizen of his right or liberty otherwise than in exercise of power derived from the law - common or statute - the Courts 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 exec....
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....position, the Govt. would be held bound by the promise and the promise would be enforceable against the Govt. at the instance of the promisee, notwithstanding that there is no consideration for the promise and the promise is not recorded in the form of a formal contract as required by Art. 299 of the Constitution. It is elementary that in a republic governed by the rule of law, no one, howsoever high or low, is above the law. Every one is subject to the law as fully and completely as any other and the Government is no exception. It is indeed the pride of constitutional democracy and rule of law that the Government stands on the same footing as a private individual so far as the obligation 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....
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.... the Government carrying out a promise made to a citizen which has induced the citizen to act upon it and alter his position and the public interest likely to suffer if the promise were required to be carried out by the Government and determine which way the equity lies. It would not be enough for the Government just to say that public interest requires that the Government should not be compelled to carry out the promise or that the public interest would suffer if the Government were required to honour it. The Government cannot, as Shah, J., pointed out in the Indo-Afghan Agencies case, claim to be exempt from the liability to carry out the promise "on some indefinite and undisclosed ground 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 Governmen....
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....a period of seven years, expanded its activities, but when the Municipal Council came into being and took over the administration of the former Municipality, it sought to levy octroi duty on the appellant-company. The appellant-company thereupon filed a writ petition under Art. 226 of the Constitution in the High Court of Bombay to restrain the Municipal Council from enforcing the levy of octroi duty in breach of the promise made by the predecessor Municipality. The High Court dismissed the petition in limine but, on appeal, this Court took the view that this was a case which required consideration and should have been admitted by the High Court. Shah J., speaking on behalf of the Court, 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 cont....
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.... SC 2641) because that was a decision strongly relied upon on behalf of the State for negativing the applicability of the doctrine of estoppel, against the Government. This was a case where the appellant was appointed to a temporary post and on the post being abolished, the service of the appellant was terminated. The appellant challenged the validity of termination of service, inter alia, on the ground that the Government was precluded from abolishing the post and terminating the service, on the principle of promissory estoppel. This ground based on the doctrine of promissory estoppel, was negatived and it was pointed out by the Court that the appellant knew that the post was temporary, suggesting clearly 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 ....
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....ent. Lastly, a proper reading of the observation of the Court clearly shows that what the Court intended to say was that where the Government owes a duty to the public to act differently, promissory estoppel, cannot be invoked to prevent the Government from doing so. This proposition is unexceptionable, because where the Government owes a duty to the public to act in a particular manner, and here obviously duty means a course of conduct enjoined by law, the doctrine of promissory estoppel, cannot be invoked for preventing the Government from actiong in discharge of its duty under the law. The doctrine of promissory estoppel, cannot be applied in teeth of an obligation or liability imposed by law. 28. &..It may also 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 supplie....
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....nment. It would be open to the authority to plead and prove that there were special considerations which necessitated his not being able to comply with his obligations in public interest." (Emphasis supplied) It is important to note at this stage that in subsequent ruling in case of Union of India v. Godfrey Phillips, reported in AIR 1986 SC 806 = 1985 (22) E.L.T. 306 (S.C.), three judges Bench rendered its judgment on 3-9-1985, overruled many of the observations in the decision in case of Jit Ram (supra) however some observations in case of Union of India v. Godfrey Phillips (Supra) read as under :- "14. Of course we must make it clear, and that is also laid down in Motilal Sugar Mills case (AIR 1978 SC 621) (supra), that there can 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....
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....d depriving an industry entitled to claim exemption from payment of tax under the said rule. If the Government grants exemption to a new industry and if on the basis of the representation made by the Government an industry is established in order to avail the benefit of exemption, it may then follow that the new industry can legitimately raise a grievance that the exemption could not be withdrawn except by means of legislation having regard to the fact that Promissory Estoppel cannot be claimed against a statute. In the present case the appellants had not raised the plea of Promissory Estoppel before the High Court. This is understandable because the principle of Promissory Estoppel had not found crystallized acceptance by courts of law when the Special 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 m....
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....yed by the appellant came to an automatic end. The period of five years mentioned in the second Notification will have no reference to the appellants' oil mill commissioned much earlier because the Notification had only prospective effect. We have, therefore, to affirm the view of the High Court that the appellants will be entitled to the benefit of tax exemption only for the limited period during which the concession was offered by the Government." (emphasis supplied) 62. The Apex Court in case of Amrit Banaspati Co. Ltd. v. State of Punjab reported in AIR 1992 Supreme Court 1075 observed that the promise to refund 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 ....
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....o the nature of the advance licence - import first and export later - there is no room for this argument. The discretion inhering in the authority to take into consideration the exports effected after the date of filing of the application for advance licence does not detract from its essential character, as explained hereinabove. We may also mention that no precise data has been furnished by the appellant in support of the said plea. In the absence of such data, the plea of promissory estoppel, is misconceived. The appellant has to establish the various ingredients of this rule, as enumerated by this Court in Motilal Padampat Sugar Mills Co. Ltd. v. State of Uttar Pradesh, (1979) 2 SCR 641 : (AIR 1979 SC 621), and other subsequent decisions. It is not a pure question 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....
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....ine is that where any party has by his word or conduct made to the other party an unequivocal promise or representation by word or conduct, which is intended to create legal relations or effect a legal relationship to arise in the future, knowing as well as intending that the representation, assurance or the promise would be acted upon by the other party to whom it has been made and has in fact been so acted upon by the other party, the promise, assurance or representation should be binding on the party making it and that party should not be permitted to go back upon it, if it would be inequitable to allow him to do so, having regard to the dealings, which have taken place or are intended to take place between the parties. It has been settled by this Court that the doctrine 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 t....
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.... the public interest might have required issuance of such a notification granting cent per cent exemption from customs duty on import of PVC resin. Under changed circumstances public interest itself required reduction of such an exemption and as no promise was held out that this could not be done at any time the Court on the facts of that case justifiably rejected the plea of promissory estoppel. It is also to be observed that the said notification was issued in exercise of sovereign taxing power and had created no legal relationship between the authority issuing the notification on the one hand and the prospective importers of PVC resin on the other. The said decision is not an authority for the proposition that even if a claim of exemption from import duty was resorted to in public 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 req....
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..... However, the Court must satisfy itself that such a public interest exists. The law on this aspect has been emphatically laid down in the case of Motilal Padampat Sugar Mills Co. Ltd. v. State of U.P., (1979) 2 SCC 409 : (AIR 1979 SC 621). The portion relevant for our purpose is extracted below : '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 Government, for it is the Court which has to decide and not the Government whether the Government should be held exempt from 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 t....
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....rse situation which cannot be rectified. To adopt the line of reasoning in Emmanuel Ayodeji Ajayi 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 promisee a reasonable opportunity of resuming his position, provided, of course, it is possible for the promisee to restore the status quo ante. If, however, the promisee cannot resume his position, the promise would become final and irrevocable. (emphasis supplied) 66. The Apex Court in case of Sales Tax Officer v. Shree Durga Oil reported in AIR 1998 SC 591 observed as under : 13. There are several reasons why we are unable 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 indus....
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....r 1-4-1977. The State Government was fully competent to do so under the provisions of S. 6 of the Act. The respondent must have been aware of this when its industry was set up. Everybody is presumed to know the law. Section 6 of the Orissa Sales Tax Act which empowers the State Government to issue a notification granting exemption from sales tax, also empowers the State Government to withdraw, amend or modify any such notification as and when it thinks necessary to do so. Section 6 of the Orissa Sales Tax Act is as under : "6. Tax-free Goods. - The State Government may, by notification, subject to such conditions and exceptions, if any, exempt from tax the sale or purchase of any goods, or class of goods and likewise withdraw any such exemption." 16. When the respondent set up its 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 th....
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....te legislation does not carry the same degree of immunity which is enjoyed by a statute passed by a competent legislature. Subordinate legislation may be questioned on any of grounds on which plenary legislation can be challenged; (i) that it does not conform to the statute under which it is made; (ii) that it is contrary to some other statute inasmuch as subordinate legislation must yield to plenary legislation, (iii) that it is unreasonable in the sense that it is manifestly arbitrary. The embargo of arbitrariness is embodied in Article 14 of the Constitution. An enquiry into the vires of delegated legislation must be confined to the ground on which the plenary legislation may be questioned, except that subordinate legislation cannot be questioned on the ground of violation of the principle of natural justice on which 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 o....
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....alters his position pursuant to or in furtherance of the promise made by a State to grant inter alia exemption from payment of taxes of charges on the basis of the current tariff. The doctrine of promissory estoppels would also apply to Statutory Notification (Paras 121 and 128). 70. The Apex Court in case MRF Ltd., Kottayam v. Asstt. Commissioner (Assessment) Sales Tax and Others reported in (2006) 8 SCC 702, the Supreme Court has held that the findings of the High Court that the Notification being statutorily no plea of estoppel would be applicable to the statutory notification was fond to be erroneous and the plea of promissory estoppel, is required to be determined in case of each and every case. (Paras 30 and 35). 71. The Apex Court in case of Mahabir Vegetable Oils (P) Ltd. v. State of Haryana & others reported in (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 afores....
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.... a shield. Thus, the old principle that promissory estoppel is a shield and not a sword has undergone sea change in its application. iii. As it is observed by the Apex Court in case of Motilal Padampat Sugar Mills (supra), since the doctrine of promissory estoppel is an equitable doctrine it must yield to the requirement of equity. iv. When the State based on subsequent events show that it would be inequitable to keep its promise then the Court would not raise an equity in favour of the promissee, the doctrine of promissory estoppel would be displaced in such a case and the State would not be bound by such promise. v. It would be open to the State, and the Government against whom the doctrine of promissory estoppel is invoked, to convince the Court that the public interest 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 prohi....
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....ng as the Apex Court in case of U.P. Power Corporation Ltd. v. Sant Steel (supra) held that the delegated legislation is not an Act framed by the State Legislature and the principle of doctrine of promissory estoppel would not get whittled down in case of delegated legislation. xiii. The Apex Court in case of MRF Ltd. (supra) has held that the findings of the High Court that the Notification being statutory no plea of estoppel could be applicable, was erroneous. The Apex Court held that the plea of estoppel is required to be determined in facts and circumstances of each case. xiv. At this stage, it is required to be noted that the Apex Court in case of Kamlaprasad v. Union of India reported in AIR 1957 SC 676 observed that a statutory order can be amended and revoked under the same authority which had issued the same meaning thereby, the authority 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 makin....
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....goods which are produced or manufactured - (i) in a free trade zone or a special economic zone and brought to an other place in India; or (ii) by a hundred per cent. export-oriented undertaking and brought to any other place in India. Thus, Section 5A of the Act provides for various exigencies and the power vested in the Central Government to deal with the same. In a way, therefore, it can be said that Section 5A is a code within itself to be operative in the arena of exemption. 79. Thus it is required to be noted that petitioners have prayed for judicial review of the impugned Statutory Notifications under Article 226 of the Constitution. The Scope of Judicial Review of Legislative action needs no elaborate discussion. The court has to examine the impugned notification within its limited jurisdiction of judicial review of legislative action of the State. The Court also need 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 spe....
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....regions. The Court hastened to add here that it is always open to the Central Government to make appropriate modification in the scheme on account of peculiarity of the region but by and large the object of granting exemption would remain same and from that angle the impugned notifications are required to be viewed. When such duty exemption only on the basis of actual value addition made on the article or goods in the beneficiary region is made applicable to all the industrial units in other regions also the Industrial Units of Kutch District cannot be permitted to contend that it amount to giving similar treatment to two differently situated parties. In fact as it is stated herein above there could be different reasons for promulgation of duty exemption schemes in different regions namely backwardness of region needing more incentives and regions like Kutch affected on account of natural 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 ....
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....everely affect the industries in question. The answer is emphatic "NO". The Section 5A of the Central Excise Act, 1944 provides that the Central Government has requisite power to implement change or revoke the scheme of exemption of payment of excise duty. The petitioners themselves have taken a plea of discrimination qua the industries which were established in an initially period as provided under a notification dated 31-7-2001 that those industrial units initially set up, enjoyed wider benefits than the industries like present petitioners' which came to be set up subsequently during the extended period of eligibility namely around the end of November, December, 2005, as the impugned notifications came to be issued only on 27-3-2008 and 10-6-2008. Thus, it can be culled out from the submission of the petitioner themselves that by and large the industries which were set up earlier by now must 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....
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....griculture v. Central Reig Refining Company be converted into Tribunal for relief from such crudities and such inequities. There may be even possibilities of abuse but that itself cannot be the ground for invalidating a legislation because it is not possible for any Legislature to anticipate as if by some divine prescience distortion and abuses of its legislation which may be made by those subject to its provisions and to provide against such distortion and abuses. The Court must therefore, adjudge the constitutionality of such legislation by the generality of its provisions and not by its crudity or inequity or by the possible hardships that may cause to a section. The Apex Court in the very same judgment further observed that if any crudities, inequities or possible abuse of any of its provisions come to a light, the Legislature always step in and enact suitable amendatory legislation. That is the 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 ....
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....de so as to give any reason for grievances to the petitioners. At this stage, it is essential to note that the possibility of creating anomaly voiced by the petitioner in the representation to the Central Government has been taken care of, as could be seen from the amendments. The economic legislation therefore as stated by the Apex court has to be viewed from its proper prospective. 90. The Court while taking judicial review of fiscal statutory Notification would certainly not examine the adequacy of reasons warranting any amendment in the fiscal scheme promulgated by the respondent no. 1. The scope of judicial review of such fiscal policy and measures under Article 226 would not permit the Court to substitute its own reasoning with regard to the requirement of amendment and adequacy of reasons warranting such amendments. 91. This Court is of the view that the principles of promissory estoppel stricto-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 ....
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....firmity so as to call any interference under Article 226 of the Constitution of India. 94. Section 38A of the Act also would be of no avail to the petitioners as in fact a plain reading of Section 38A would go to show that it is meant for not undoing the benefits which have been so far received under the existing and/or repealed notification amendments etc. Section 38A of the Act reads as under :- Section 38A.: Effect of amendments, etc. of rules, notifications or orders. - where any rule, notification or order made or issued under this Act or any notification or order issued under such 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, accrued or incurred under any rule, notification or order so amended....
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..... Registry to place a copy of this order in connected matters. Sd/- D. A. Mehta, J Sd/- S.R. Brahmbhatt, J. 100. [Judgment per : Jayant Patel, J. (Oral)]. - I have heard Mr. Mihir Joshi, learned Senior Advocate with Mr. Mathur, Mr. Paresh Dave, Mr. Modh, Mr. B.Y. Mankad and Mr. H.D. Dave for the concerned petitioners, and Mr. Harin Raval, Additional Solicitor General with Mr. Chayya, learned Standing Counsel to the Central Government. 101. I had the benefit of going through the reasons and conclusions recorded by brother D.A. Mehta, J. as well as by brother S.R. Brahmbhatt, J. 102. On the factual aspects, both my brother Judges have elaborately dealt with. However, I find that the factual aspects may be required to be recorded, in order to consider the controversy and the issues arise for consideration, therefore, to that extent, the same shall be narrated at appropriate places. 103. Following aspects arise for considering the controversy 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 o....
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....after the date of publication of this notification in the Official Gazette. 106. Notification No. 42/2001 dated 21-9-2001, provided for the original value of investment in plant and machinery, which has no relevance to the controversy to be considered in the present petitions. Thereafter on 2-9-2002, the aforesaid period of 31-7-2003 was substituted by 31-7-2004. On 13-2-2003, the amendment was made in the notification by adding the proviso that such refund would not exceed the amount of duty paid less the amount of CENVAT credit availed of in respect of the duty paid on inputs used or in relation to the manufacture of goods cleared under this notification. Thereafter, there were changes in the modalities, but until the impugned notification dated 27-3-2008, it is undisputed position that the policy was continued for granting exemption to the duty paid less the CENVAT credit availed of. To say in other words, the duty was to be refunded, if paid in actual, either in cash or 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 amou....
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....l Gazette, but not later than 31-7-2003 which was subsequent to 31-7-2004. It was not by way of an exemption to be made available productwise for the whole or part of the country, but was an exemption making the full refund made available to the actual duty paid to the new industry to be established in the Kutch District. The whole tenor of the notification if considered as it is with the language used in the notification, is for the incentive to be given for establishment of the industrial unit in Kutch district of Gujarat for a period of 5 years from the date of the commencement of the commercial production of the unit. Therefore, it was a specific incentive given to only new industrial units to be established in the Kutch district. Hence, the first aspect remains answered accordingly. 110. On the second aspect for establishment of the new units by the petitioners in Kutch District, it appears that there is no change nor withdrawal or the alteration in the policy on account of non-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 K....
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....investment by way of industrial development of the backward areas or the hill areas, and thereafter the entrepreneurs on the representations so made bona fide make investment and thereafter if the State Government resile from such benefits, then it certainly is an act of unfairness and arbitrariness. Consideration of public interest and the fact that there cannot any estoppel against a Statute are exceptions. 28. Learned senior counsel for the appellant has cited nine instances which can be loosely categorised into two i.e. (i) that there cannot be any estoppel against the statute and (ii) overriding public interest. So far as the first part is concerned i.e. the revocation has the statute flavour i.e. the benefit which was extended under Section 49 of the Act of 1948 and the notification had been issued revoking the same benefit under Section 49 of the Act of 1948 by invoking the provisions of the General Clauses Act that an authority granting exemption has a right to revoke the same also. 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....
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....us public repercussion was involved. These are not the factors which put together can constitute a public interest. Theft of the energy if it was proved by cogent datas that as a result of giving this benefit to the entrepreneurs in the hill areas, they were misusing it or there was theft of the energy at a large scale by these persons to whom the concession had been given then of course such factors, if all the datas were brought on record of course could have persuaded the Court to take a different view of the matter. But simply because there was theft of energy allow the State cannot persuade us to hold that the revocation of such concession can be said to be in public interest. Since the benefit was given to these units in the hill areas, there should have been overwhelming evidence to show some mala fide on the part of these consumers which have persuaded the Corporation to revoke it. If there was no misuse of the energy by these units in the hill areas to whom the concession had been granted then 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 con....
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....re are limitations while invoking the doctrine of promissory estoppel. One is that such cannot be operated against the statute and if the statute has permitted the power on withdrawal to the same authority, it may result into allowing the doctrine to operate in contravention to the statute. He also contended that even if it is read that such power is to be exercised in public interest, then also, in the affidavit in reply, there is enough material shown with the facts and figures that the duty paid in such exempted area is much more in comparison to other area where exemption is not granted on the same product. Such prima facie shows that since the refund is made available by way of exemption, such policy is misused by the industrial units. He submitted that if it came on record before the Government that the policy is being misused, it has tried to rationalise the same by fixing a particular rate prescribed for the duty and the refund as per the impugned notification. In the submission of the learned Additional Solicitor General, such rationalisation is not having retrospective character, but is having retroactive character. He further submitted that the powers for fixation of rat....
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....some other industries, the same would not be sufficient ground for retrospectively changing the policy to the industries which are already established and therefore, the impugned notification cannot be sustained. 115. It appears that the doctrine of promissory estoppel and its scope and ambit is by now well settled and the same can be summarised as under : (1) The doctrine of promissory estoppel is to be treated as a preserved right, but such right is subject to the limitation that - (2) Such promise or the representation made must be given under the authority of law and in consonance with the statute and not unauthorisedly or in contravention to any statutory provision on the principle that there cannot be any estoppel against the statute. (3) Such cannot be permitted to be invoked against the overwhelming public interest. (4) The Legislature or the Parliament has power for diluting its effect retrospectively 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 oth....
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....nexus to the object as was to be achieved and is not achieved or an overwhelming public interest, the burden would heavily lie upon the Government to establish by authenticated reliable material in the event such an action is made subject to the judicial scrutiny. Sufficiency of the material or whether such material has been rightly relied upon while withdrawing the benefit or not may vary from facts to facts. But it will be for the State to satisfactorily demonstrate before the Court of such direct public interest to the object was to be achieved and is not achieved or the overwhelming public interest attracting the power of withdrawal. Unless such exceptions are satisfactorily demonstrated before the Court, it is not possible to hold that merely because there is power to withdraw the exemption granted by way of a special incentive can be permitted to be withdrawn with retrospective effect. 117. If the record produced on behalf of the Central Government is considered, it appears that none is concerning to the object which 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 tha....
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....r position by establishing new industries in Kutch District would not be eligible for the benefit of full refund of the actual duty paid as was declared by the Central Government vide notification dated 31-7-2001. 119. If the impugned notification is treated as that of having retrospective to the new industrial undertaking already established, it can be said that by the impugned notification which is a delegated legislation, the retrospective effect is given. It is by now well settled that the subordinate legislation or a delegated legislation can be made with prospective effect and cannot be made with retrospective effect. The reason being that once a retrospective effect is given, the accrued right of a person is altered or may be prejudiced, which can only be taken away by any express provision of the statute and not by way of any delegated or subordinate legislation. Under these circumstances, even if it is considered that in fiscal matter, the Government has power to alter or withdraw the exemption benefit, such cannot be permitted to be exercised with the retrospective effect de hors the doctrine of promissory estoppel, if it is established that a specific representation b....