TaxTMI 
TaxTMI 
2009 (10) TMI 58
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....or Respondent. Special Civil Application No. 6299 of 2008 Mr. Kamal Trivedi, Sr. Advocate with Mr. Gaurav Mathur, Adv. for the petitioner. Mr. Harin P. Raval for Respondent. Special Civil Application No. 6300 of 2008 Mr. Mihir Joshi, Sr. Advocate with Mr. Gaurav Mathur, Adv. for the petitioner. Mr. Harin P. Raval for Respondent. [Judgment per S.R.Brahmbhatt J.] - As I am unable to agree with the views of Hon'ble Justice D. A. Mehta in this group of petitions I have to set out my views, and conclusion separately as under: 1. In these group of petitions, the petitioners Kutch Chamber of Commerce and Industry, a Voluntary Association of Industrial Units, and other Industrial Units operating in the Kutch District of State of Gujarat, have challenged the Notifications issued by respondent No. 1 bearing No. 16/2008-C.E dated 27.3.2008 as well as Notification No. 33/2008-C.E dated 10.6.2008 on the ground that they have effect of depriving the petitioners and other similarly situated industries and industrial units, set up pursuant to the Notification No. 39/2001-C.E dated 31.7.2001, providing for the exemption from payment of excise duty for five years ....
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.... on 26.1.2001 a calamity of devastating earthquake had befallen the State of Gujarat, particularly the district of Kutch. The entire country was under deep shock on seeing the plight that it brought about of the people of the district and surrounding areas. The Union of India had to take appropriate measures for ameliorating plight of people of Kutch. In order to revive the economy in Kutch district, it was essential to encourage the entrepreneurs to put up new industries in the district so as to generate more employments and opportunity of employment which in turn would help Kutch district and its people to be brought back in the main stream with the nation. 4. The respondent no. 1 in exercise of powers conferred by sub-section(1) of Section 5A of the Central Excise Act, 1944 (1 of 1944), read with sub-section (3) of Section 3 of the 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 (Textile and Textile Articles) Act, 1978, issued Notification No. 39/2001 (hereinafter referred to as the 'Exemption Notification') dated 31.7.2001 on being satisfied that it was necessary in the publi....
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....units have been stated in the memo of petition and need no elaborate dwelling upon at this stage, as by and large there is no dispute with regard to the factum of putting up the industrial units as per the notification and terms and conditions of the Notifications. It is also required to be noted that all the petitioners have mentioned with regard to their action and investment pursuant to the exemption notifications. By and large, they have remained undisputed and therefore, the same also need not detain the Court for dealing with the same in more elaboration. Of course the respondent Central Government has not accepted the contention of the petitioners that they have put industries only for and on account of excise exemption. Suffice it say that it was the say of the petitioners in these petitions that all the petitioners set up their units and made investment of huge amount of money for putting up the units in Kutch so as to seek benefit of excise duty exemption as envisaged under the Exemption Notification. 6. As submitted by the petitioner, the respondent no. 1 issued the impugned notifications, which is made effective from 1.4.2008 and altered the entire basis on which the....
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.... the business of the units set up by the members of the petitioner no.1 and the petitioner no. 2 will be rendered unviable and will face closure. The petitioners apprehend that it would be impossible for the petitioners to have a special rate fixed so that the refund is equal to 100% of value addition. Further, those units that were established soon after the issuance of the said Notification have enjoyed the benefits, as promised, for almost 5 years. However, the members of the petitioner Nos.1 and 2, who also acted on the promise contained in the Exemption Notifications, will be left high and dry, after having invested huge sums of money and undertaken irreversible steps in order to avail the benefit promised. The petitioners have further submitted that the entire basis of the benefit available to them has been altered to their detriment without any reason, rationale or justification, more so when the Exemption was available for a period not exceeding 5 years. Thus, the petitioners being aggrieved with the issuance of Notifications dated 27.3.2008 and 10.6.2008, preferred present petitions under Article 226 of the Constitution of India. 8. The counsel for the petitioners has m....
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....s came forward, in aid of rehabilitation and redevelopment of the Kutch area of Gujarat, and set up their units. Without the exemption as originally promised, the investment made and units set up would be completely unviable. While the said Notification dated 31.7.2001 came to be amended from to time, and the date for setting up a New Industrial Unit and the date of Commencement of commercial production came to be extended till 31.12.2005, the said promise of availability of 100% exemption of actual duty paid, for 5 years remained constant. The petitioners submit that thus the promise contained in the Exemption Notifications, the intend and conduct of the authorities, including the respondents, was to provide exemption for a period of 5 years, after which only, the manufacturers will join the usual duty regime. The impugned Notifications thus constitutes a breach and contravention of the promise by the respondents, of their promise. Such breach would cause the investment made by the manufacturers useless and unviable and the petitioners as well as the beneficiaries of the said investment, including the Kutch area, will suffer a death-blow. The respondents are thus bound to continue....
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....ll conditions of the Exemption Notifications not be given the same treatment and benefit as others. In fact, by providing the exemption for a full term of 5 years, from the date of the said Notification dated 31.7.2001 and by extending the period for being eligible for exemption the respondent no. 1 has led the manufacturers to believe that they too shall enjoy the benefits as promised for the full term of the Exemption Notifications. In the circumstances, the impugned Notifications is violative of Article 14 of the Constitution of India and also seriously impairs the freedom conferred by Article 19(1)(g) of the Constitution of India and is also hit by the principles of Legitimate expectation and is required to be struck down. The counsel for the petitioners further submits that the impugned Notifications are unfair, unscientific, unworkable and treats all divergent situation with a common yardstick, making its application extremely harsh to a few and beneficial to others. The impugned Notifications clubs all types of factories in one category. The impugned Notifications also does not distinguish between efficient units employing state of the art technology as opposed to units empl....
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....ragraph No.7 of the affidavit-in-reply and contended that the provision of granting refund of cash paid portion of duty and eligibility of credit of entire amount of duty to the buyers of such excisable goods had prompted certain unscrupulous manufacturers to indulge in different types of tax evasion tactics. An analysis of cases booked by the Excise department and the representations received from the Industry Associations has revealed that the following modus operandi is broadly being followed:- (i) The incorrect and false reporting of production by mere issuance of sale invoices without actual production of goods and supply/clearance of excisable goods, would result in availment of cenvat credit by buyers of such excisable goods in other parts of the country without actual production being carried out and in absence of actual receipt of goods. (ii) The incorrect and bogus reporting of production by such units in these areas where as the actual production takes place elsewhere in the country. (iii) Over valuation of goods resulting in availment of excess of credit by buyer. (iv) Goods are supplied by manufacturers, importers to these units without issuance of sales in....
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....n actual value addition made by such manufacturers who have industries in these specified areas. (iii) The excise duty exemption would be available only to the extent of actual value addition made in these areas and not for the value of raw material manufactured in other part of the country, which are received by the units in these areas without cover of duty paying invoices. The counsel for the respondent has justified the methodology of Value Addition and submitted that in order to keep the scheme simple and litigation free, the modified scheme has prescribed value addition percentages for broad industry groups based on all India average of percentage of duty paid in cash and through Cenvat credit. In other words, all India percentage of PLA payment by excise paying units in the country has been considered as value addition for an industry. However, in case of few units the said percentage may be at variance with actual value addition carried out by the unit. Keeping this eventuality in mind, option is also made available to a manufacturer in specified areas to have the actual value addition calculated in his case from his financial records. These facts evidently show that the....
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.... on the decision in case of D.P.F. Textiles Ltd. Vs. Union of India, reported in Civil Appeal No. 1742 of 1984 decided on 12.09.1996, wherein, the Supreme Court while reiterating the decision referred to in Kasinka Trading and Another Vs. Union of India & Another, has further held that though the judgment do not expressly refer to the public interest which moved the respondents to curtail the period of an Exemption Notification but, in the circumstances, it must be assumed that such public interest exists. That in yet another judgment rendered in the case of DAI-ICHI Karkaria Ltd. Vs. Union of India, reported in 2000 (119) ELT 516 (SC) it is held that doctrine of promissory estoppel. is not applicable. That in respect of exemption for modification made by the Government, the doctrine of promissory estoppel. will not be applicable if the change in stand of the Government is made on account of public policy. The said judgment also reiterates the settled legal position as enunciated by the Hon'ble Supreme Court in Kasinka Trading Vs. Union of India. 12. Learned counsel for the respondent has also relied upon the decision in case of R.C. Tobacco Private Ltd. Vs. Union of India, repo....
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....of Agriculture Vs. Central Reig Refining Company, be converted into tribunals for relief from such crudities and inequities. There may even be possibilities of abuse, but that too cannot of itself be a ground for invalidating the legislation, because it is not possible for any legislature to anticipate as if by some divine prescience, distortions and abuses of its legislation which may be made by those subject to its provisions and to provide against such distortions and abuses. Indeed, howsoever great maybe the care bestowed on its framing, it is difficult to conceive of a legislation which is not capable of being abused by perverted human ingenuity. The Court must thereafter adjudge the constitutionality of such legislation by the generality of its provisions and not by its crudities or inequities or by the possibilities of abuse of any of its provisions. If any crudities, inequities or possibilities of abuse of any of its provisions come to light, the legislature can 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. 14. Learned counsel for th....
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....ax Officer Vs. Shree Durga Oil; xix. 1999 (107) ELT 582, in case of Union of India Vs. Bharat Commerce & Industries; xx. 1999 (110) ELT 3 SC, in case of India Express Newpapers; xxi. 2000 (4) SSC 57=AIR 2000 SC 1741= 2000 (119) ELT 516 SC ; in case of Dai-ichi Karkaria Ltd.; 19. The Apex court has in case of Motilal Padampat Sugar Mills Vs. State of UP, reported in AIR 1979 SC 621, observed as under:( The most relevant paras are extracted from the judgment so as to avoid any possibility of missing out real ratio of the decision though it has effect of lengthening the judgment.) Para-19: When we turn to the Indian law on the subject it is heartening to find that in India not only has the doctrine of promissory 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....
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.... Rs. 12,000 per month. The suit was resisted by the Municipal Corporation on the ground that the events which had transpired had created an equity in favour of the Municipality which afforded an answer to the claim of the Government to eject the Municipality. This defence was upheld by a Division Bench of the High Court and Jenkins, C. J., speaking on behalf of the Division Bench, pointed out that, in view of the following facts, namely, ".... the Municipality gave up the old stables, levelled the ground, and erected the moveable stables in 1866 in the belief that they had against the Government an absolute right not be turned out until not only the expiration of six months notice, but also other suitable ground was furnished: 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....
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....Act. On appeal by the Collector to this Court, the majority Judges held that the Government was not, under the circumstances of the case, entitled to assess land revenue on the land in question, because the Municipal Corporation had taken possession of the land in terms of the Government resolution and had continued in such possession openly, uninterruptedly and of right for over seventy years and thereby acquired the limited title it had been prescribing for during the period, that is to say, the right to hold the land in perpetuity free of rent. Chandrasekhara Aiyer, J., agreed with the conclusion reached by the majority but rested his decision on the doctrine of promissory estoppel. He pointed out that the Government could not 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, ....
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.... this argument. We have already referred to these observations earlier and we need not reproduce them over again. These observations undoubtedly supported the contention of the Government but it was pointed out by this Court that these observations were disapproved by Denning, J., in Robertson v. Minister of Pensions (1949) 1 KB 227 (supra) where the learned Judge said that "the Crown cannot escape by praying in aid of the doctrine of executive necessity, that is, the doctrine that the Crown cannot bind itself so as to fetter its future executive action..... the defence of the executive necessity is of limited scope. It only avails the Crown where there is an implied term to that effect or that is the true meaning of the contract" 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 e....
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....AIR 1951 SC 469 (supra), summed up the position as follows : "Under our jurisprudence the Government is not exempt from liability to carry out the representation made by it as to its future conduct and it cannot on some undefined and undisclosed ground of necessity or expediency fail to carry out the promise solemnly made by it, nor claim to be the judge of its own obligation to the citizen on an exparte appraisement of the circumstances in which the obligation has arisen." The law may, therefore, now be taken to be settled as a result of this decision, that where the Government makes a promise knowing or intending that it would be acted on by the promisee and, in fact, the promisee, actiong in reliance on it, alters his 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 a....
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....can be shown by the Government that having regard to the facts as they have subsequently transpired, it would be inequitable to hold the Government to the promise made by it, the Court would not raise an equity in favour of the promissee and enforce the promise against the Government. The doctrine of promissory estoppel. would be displaced in such a case because, on the facts, equity would not required that the Government should be held bound by the promise made by it. When the Government is able to show that in view of the facts which have transpired since the making of the promise, public interest would be prejudiced if the Government were required to carry out the promise, the Court would have to balance the public interest in 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 su....
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....Ajayi v. Birscoe (1964) 3 All ER 556. 25. The doctrine of promissory estoppel. was also held applicable against a public authority like a Municipal Council in Century Spg. and Mfg. Co. Ltd. V. Ulhasanagar Municipal Council (1970) 3 SCR 854 : (AIR 1971 SC 1021). The question which arose in this case was whether the Ulhas Nagar Municipal Council could be compelled to carry out a promise made by its predecessor Municipality that the factories in the industrial area within its jurisdiction would be exempt from payment of octroi for seven years from the date of the levy. The appellant company, in the belief induced by the assurance and undertaking given by the predecessor Municipality that its factory would be exempt from octroi for 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 Munici....
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.... That rule has gained new dimensions in recent years. A new class of estoppel. i.e. promissory estoppel. has come to be recognised by the courts in this country as well as in England. The full implication of 'promissory estoppel.' is yet to be spelled out." The learned Judge, after referring to the decisions in High Trees case, (1956-1 All ER 256) Robertson v. Minister of Pensions (1949) 1 KB 227 (supra) and the Indo-Afghan Agencies case (AIR 1968 SC 718) pointed out that "the rule laid down in these decisions undoubtedly advances the cause of justice and hence we have no hesitation in accepting it." 27. We must also refer to the decision of this Court in M. Ramanatha Pillai v. State of Kerala (1974) 1 SCR 515 : (AIR 1973 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....
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....entence that though, as a general rule, the doctrine of promissory estoppel. would not be applied against the State in its governmental, public or sovereign capacity, the Court would unhesitatingly allow the doctrine to be invoked in cases where it is necessary in order "to prevent fraud or manifest injustice." This passage leaves no doubt that the doctrine of promissory estoppel. may be applied against the State even in its governmental, public or sovereign capacity where it is necessary to prevent fraud or manifest injustice. It is difficult to imagine that the Court citing this passage with approval could have possibly intended to lay down that in no case can the doctrine of promissory estoppel. be invoked against the Government. 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 ....
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....tatutory function of the 'State' are concerned. On a consideration of the decisions of this Court it is clear that there can be no promissory estoppel. against the exercise of legislative power of the State. So also the doctrine cannot be invoked for preventing the Government from acting in discharge of its duty under the law. The Government would not be bound by the act of its officers and agents who act beyond the scope of their authority and a person dealing with the agent of the Government must be held to have notice of the limitations of his authority. The Court can enforce compliance by a public authority of the obligation laid on him if he arbitrarily or on his mere whim ignores the promises made by him on behalf of the Government. 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 VS.GODFREY PHILLIPS, reported in AIR 1986 SC 806, three judges Bench rendered its judgment on 3.9.1985, over ruled many of the observations in the deci....
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.... be made to determine whether the Notification had created vested rights or only existing rights. The exemption granted by the Government as already stated, was only by way of concession for encouraging entrepreneurs to start industries in rural and undeveloped areas and as such it was always open to the State Government to withdraw or revoke the concession. We must, however, observe that the power of revocation or withdrawal would be subject to one limitation viz. the power cannot be exercised in violation of the rule of Promissory Estoppel. In other words, the Government can withdraw an exemption granted by it earlier if such withdrawal could be done without offending the rule of Promissory Estoppel and 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 canno....
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....ustry as the present one, the issuance of a Notification granting tax exemption would only constitute a fortuitous circumstance and by no stretch of imagination can it ever be said that the commissioning of the industry was directly the outcome of the Government's Notification granting tax exemption. The concession offered by the Government under the first Notification dated 29-4-70 did not prescribe any period or time limit, and hence the appellant cannot claim anything more than the benefit of the Notification for such period the exemption was in force. Once the Government decided, in exercise of the powers vested in it, to revoke the original Notification, the benefit of exemption from sales tax enjoyed by the appellantame 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) 23. T....
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....(Emphasis supplied) 25. The Apex Court in the case of S.B. International versus Asst. Director General of Foreign Trade {(1996) 2 SCC 439} also reported in AIR 1996 SC 2921 has observed as under: 10. So far as the argument of promissory estoppel. is concerned, it is equally unsustainable in the facts and circumstances of the case. Having regard to 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) 26. The Apex Court in case of M/s. Pa....
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....ertinent observations are found in paragraphs 11 and 12 (of SCC) : (Paras 12 and 13 of AIR) of the Report : "The doctrine of promissory estoppel. or equitable estoppel. is well established in the administrative law of the country. To put it simply, the doctrine represents a principle evolved by equity to avoid injustice. The basis of the doctrine 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 als....
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....no promise was held out to any of the importers that the notification's life will not be curtailed earlier. Nor was the issuance of the notification based on any claim of incentives to be offered to anyone. It was issued in exercise of statutory powers vested in the Government which could be exercised from time to time in public interest. Earlier 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 ....
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....estoppel. is applicable against the Government but in case there is a supervening public equity, the Government would be allowed to change its stand; it would then be able to withdraw from representation made by it which induced persons to take certain steps which may have gone adverse to the interest of such persons on account of such withdrawal. 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....
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....interest is accepted as the superior equity which can override individual equity, the principle should be applicable even in cases where a period has been indicated. It was further observed that the Government is competent to resile from a promise even if there is no manifest public interest involved, provided, of course, no one is put in any adverse situation which cannot be rectified. To adopt the line of reasoning in Emmanuel Ayodeji 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) 27. The Apex Court in case of Sales Tax Officer Vs. 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 e....
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....t at any point of time. The State Government in the instant case, initially issued the exemption notifications under S. 6. The State Government subsequently decided to withdraw the exemption notification in respect of some of the industries which had commenced production after 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 unde....
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....Government thereunder amounts to a piece of subordinate legislation, even then the notification is liable to be questioned on the ground that it is an unreasonable one inasmuch as a piece of subordinate 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 pres....
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....ed right to the recipient. Right of exemption with a valid notification issued gives rise to an accrual right. The doctrine of promissory estoppel. would undoubtedly be applicable where an entrepreneur 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 (Para121 and 128). 31. The Apex court in case MRF Ltd., Kottayam Vs. 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. (Para 30 and 35). 32. The Apex Court in case of Mahabir Vegetable Oils (P) Ltd. Vs. State of Haryana & others, reported in (2006) 3 SCC p620 held that subordinate legislature cannot take away accrued right. 31. The Apex Court in case of State of Punjab Vs. Nestle India Ltd., rep....
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....egal system, the doctrine of promissory estopple has been recognized as such and is being now permitted to be wielded as sward rather than merely a shield. Thus, the old principle that promissory estopple is a shield and not a sward 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 estopple 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 estopple 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 estopple 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 estopple cannot be invoked to compel the Government,....
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....struction Ltd. Vs. Sant Still (supra) held that the delegated legislation is not an Act framed by the State Legislature and the principle of doctrine of promissory estopple 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 estopple could be applicable, was erroneous. The Apex Court held that the plea of estopple is required to be determine 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 Vs. 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 Express New Paper Vs. 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 s....
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....n 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 . 40. 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. 41. It is also required to be borne in mind that Original Notification dated 31.07.2001 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 exe....
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....fication 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 the 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 reg....
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....e 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. 46. 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 ar....
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....uch 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 pre-science 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 of Notification No. 16 and 33 respective dated 27.3.2008 and 16.6.2008 cannot be said to be unjustified in....
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....he 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. 51. 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. 52. This Court is of the view that the principles of promissory estopple 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 duty to establish manifest injustice in promulgating of said notifications. The respondent Central Government....
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....he 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, repealed, superseded or rescinded; or (d) affect any penalty forfeiture or punishment incurred in respect of ....