AI Drafter 
TaxTMI 
TaxTMI 
2025 (5) TMI 636
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.... been filed by the petitioners who established their manufacturing units pursuant to the incentives offered in the Industrial Policy of Assam 2008 and the Assam Industries (Tax Exemption) Scheme, 2009. All these petitioners have set up their industrial and manufacturing units for manufacturing their respective items believing that the petitioners would be able to avail the VAT exemption for a period of 7 (seven) years from the date of commencement of commercial production. In WP(C) No. 2068/2021 the petitioner, namely, M/s Lalit Poly Weave LLP is a limited liability partnership firm having its registered office and factory at the Industrial Growth Centre, Phase-III, Jambari Village No.2, Kamrup, Assam 781124. The petitioner is engaged in the manufacture of PP Woven Bags and sacks. The petitioner in WP(C) No. 2068/2021 is represented by Sri Mahabir Prasad Jain, authorized signatory of the petitioner firm. The petitioner made total investment of Rs. 14,33,77,608/- in its industrial unit for land, site development, building, electrical equipments etc. Commercial production in the new industrial unit commenced on 21.09.2013. In order to avail the benefits of VAT remission under the Ind....
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....Gaon, Borbheta), Jorhat. The petitioner is engaged in the business of manufacture of non-woven fabric bag, paper cub, hide fabric bag. The petitioner in WP(C) No. 2500/2021 is represented by Sri Venus Agarwalla. The petitioner made total investment of Rs. 1,47,10,497/- in its industrial unit for land, site development, building and other civil construction work etc. Commercial production in the new industrial unit commenced on 25.02.2013. In order to avail the benefits of VAT remission under the Industrial Policy of Assam, 2008 and the Assam Industries (Tax Exemption) Scheme, 2009 applied for issuance of eligibility certificate bearing no. CI&C(II)(US)EC/223/2013/349/46 dated 11.08.2014. By the said certificate the petitioner was held to be entitled to the benefit of exemption of Tax under the Assam Industries (Tax Exemption) Scheme, 2009 to the tune of Rs. 1,47,10,497/- for a period of 7 seven years with effect from 25.03.2013 to 24.02.2020 or at the rate of 150% of the eligible fixed capital investment of Rs. 98,06,998/- whichever is earlier. The petitioner was thereafter issued the certificate of entitlement dated 09.01.2015 holding the petitioner to be entitled to be exemption ....
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....g exemption partially to such units which manufactures goods in Assam. The said scheme came into force with effect from 01.10.2008. In the said scheme it was mentioned that the benefits given under the scheme shall be available till the Assam VAT Act, 2003 remains in force. It is also stated that the said scheme shall be applicable to the units which manufactures goods in Assam which are considered eligible for partial tax exemption with reference to the Industrial Policy of Assam, 2008. It is submitted that as per the Scheme of 2009, the new industrial units of medium and large section was to be entitled to exemption of tax on sales of finished products for a period of 7 (seven) years subject to maximum of 100% of fixed capital investment. The procedure for grant of eligibility certificate was provided for in Clause 4 of the Scheme and Clause 5 provided for the issue of certificate of entitlement. Accordingly, the writ petitioners made the investment of Rs. 11,83,54,569/- Rs. 59,15,16,915/- and Rs. 1,47,10,497/- respectively for setting up its land, site development, buildings, electoral equipments, commercial production in respect of the writ petitioners commenced with effect fro....
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....e. Accordingly, all eligible units availing tax exemption under the said earlier schemes became liable to pay tax under the Assam Goods & Services Tax Act, 2017 from the date of coming into force of the said Act. 8. It is submitted that the Government of Assam thereafter brought out another scheme, namely, Assam Industries (Tax reimbursement for Eligible Units) Scheme, 2017 for granting reimbursement of tax to eligible units under the Industrial and Investment Policy of Assam, 2008 and/or under the Industrial and Investment Policy of Assam, 2014 or those which were covered by earlier Schemes or special notifications. The scope and operation of the scheme is prescribed under the Clause -3 of the said scheme. It is submitted that the Clause -4 of the Scheme provided for determination of amount reimbursable. The proviso to Clause 4 (1) (i) of the Scheme of 2017 provided for that if any existing eligible unit including a mega unit to which the customized tax incentives have been granted, is unable to utilize or avail of the full amount of monetary ceiling within the specified period of exemption, it may make an application to the Finance (Taxation) Department for extension of period....
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....cation dated 18.08.2020 was addressed to the Finance Secretary, Finance (Taxation) Department requesting for extension of the period of exemption under the Policy of 2008 and the Scheme of 2009. In the said letter the petitioner firm requested for extension of the period of validity of the Certificate of Entitlement as the petitioner firm could only utilize less than half of the entitlement amount. In the said letter, the Petitioner stated that the entire amount for which the Petitioner was entitled to exemption could not be utilized by the industrial unit of the Petitioner inasmuch as the industrial product of the Petitioner Firm attracted low margin and value addition and as a result output tax generation over the input tax credit was also very low. It was further stated that VAT rate was just 5%/ 6% during VAT Regime and Central Sales Tax 2% against C Form and thus output tax generation was also very low. So only very little could be utilized by the petitioner firm and that since GST inception prices became very much competitive and SGST portion payable by the petitioner firm stayed on a lower side. In support of the prayer for extension of the period of eligibility, the Petitio....
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....been amended and all pending applications on which order for extension of period of eligibility had not been passed shall be deemed to have been rejected and thereby making a discrimination between the eligible industrial units in respect of which the orders of extension have already been passed prior to amendment of the said Scheme of 2017 by the Scheme of 2020 and in respect of eligible industrial units whose applications were left pending. 11. Learned senior counsel for the petitioners highlighted that even before the amendment Scheme of 2020, cases of similarly situated industrial units who could not avail the benefit for the entire period were duly considered and extension was granted for the period of 5 years from the date on which the period of 7 years eligibility had expired. Learned senior counsel for the petitioner submits that The denial of benefit of exemption by not extending the period of eligibility for a further period not exceeding 5 years as provided for in the Scheme of 2017 by the Amendment Scheme of 2020 and making a discrimination between eligible industrial units in respect of which the orders of extension have already been passed prior to amendment of the....
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.... tax payable under CST Act, 1956, and the said benefit was curtailed and made applicable only in respect of the tax accruing in cash to the State Government under the Assam Goods & Service Tax Act, 2017, and further because post GST the petitioner was getting benefit of (IGST) paid on import of goods as input tax credit and getting setoff of the IGST paid against CGST/SGST output liability and thereby the liability to pay tax under SGST gradually reduced. The State was aware that an eligible unit would not be able to avail the said benefit of remission within a period of 7 years under the Policy of 2008 and Scheme of 2009, in view of limiting the benefits only in respect of the tax accruing in cash to the State Government under the Assam Goods & Service Tax Act, 2017, the proviso to clause 4 (1) (i) of the Scheme of 2017 provided for an extension of the period of eligibility by a further period of 5 years which was in tune with promises and assurance made in the Policy of 2008 and Scheme of 2009 and thereby the withdrawal of the said power given in the Scheme of 2017 for extending the period of eligibility to those eligible units which could not utilize or avail the full amount of ....
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....020 is liable to be declared as illegal and is further liable to be struck down. 12. Referring to the judgment of the Apex Court in Motilal Padampat Sugar Mills Co. Ltd. Vs. State of Uttar Pradesh reported in (1979) 2 SCC 409. It is submitted that 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 ex parte appraisement of the circumstances in which the obligation has arisen. It is submitted that the superstructure of the doctrine with its preconditions, strengths and limitations have been outlined by the Apex Court in this landmark judgment of Motilal Padampat (supra). The Apex Court reiterated the well known pre conditions for the operation of the Doctrine of Promissory Estoppel as under: (1) a clear and unequivocal promise knowing and intending that it would be acted upon by the promisee; (2) such acting upon the promise by the promisee so that it would be inequitable to allow the promisor to go back ....
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.... thereupon but the law is not powerless to raise in appropriate cases an equity against him to compel performance of the obligation arising out of his representation. Learned Senior Counsel for the petitioners has referred to the following judgments of the Apex Court: i) Pournami Oil Mills vs. State of Kerala reported in 1986 Supp SCC 728 ii) State of Bihar vs. Usha Martin Industries Ltd. reported in 1987 Supp SCC 710 iii) Shri Bakul Oil Industries vs. State of Gujarat reported in (1987) 1 SCC 31 iv) Pawan Alloys & Casting (P) Ltd. Vs. UP SEB reported in (1997) 7 SCC 251 v) Mahabir Vegetable Oils (P) Ltd. Vs. State of Haryana reported in (2006) 3 SCC 620 vi) State of Punjab vs. Nestle India Ltd. reported in (2004) 6 SCC 465 vii) Kasinka Trading vs. Union of India reported in (1995) 1 SCC 274 viii) MRF Ltd. Vs. Asstt. CST reported in (2006) 8 SCC 702 ix) State of Jharkhand vs. Brahmaputra Metallics Ltd. In Civil Appeal NO. 3860-3862/ 2020. 15. The further submission of the learned Senior Counsel for the petitioners is that the State authorities as well as its limbs covered by the sweep of Article 12 ....
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....riod of eligibility shall deemed to have been validly issued and all pending applications on which order for extension of period of eligibility has not been passed shall be deemed to have been rejected would go against the settled principles of legitimate expectation. It is submitted that the doctrine of legitimate expectation is one of the ways in which the guarantee of non-arbitrariness enshrined under Article 14 finds concrete expression. If denial of legitimate expectation in a given case amounts to denial of a right that is guaranteed or is arbitrary, discriminatory, unfair or biased, gross abuse of power or in violation of principles of natural justice, the same can be questioned on the well-known grounds attracting Article 14 of the Constitution. 17. In support of his contention he presses into service the judgment of the Apex Court rendered in Union of India vs. Lt. Col. P.K. Choudhary reported in (2016) 4 SCC 236 to submit that in the said matter the Apex Court went on to hold that if denial of legitimate expectation in a given case amounts to denial of a right that is guaranteed or is arbitrary, discriminatory, unfair or biased, gross abuse of power or in violation of ....
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....y been issued by the Finance (Taxation) Department for extension of the period of eligibility have been held to be valid and denying the said benefit only in respect of industries whose applications are pending is a clear example of the arbitrary action of the State and such an action of the State cannot be justified on the touchstone of Article 14 of the Constitution. It is further submitted that the action of the State or its instrumentality must be in conformity with some principle which meets the test of reason and relevance. Functioning of a "democratic form of Government demands equality and absence of arbitrariness and discrimination". The rule of law prohibits arbitrary action and commands the authority concerned to act in accordance with law. Every action of the State or its instrumentalities should neither be suggestive of discrimination, nor even apparently give an impression of bias, favouritism and nepotism. If a decision is taken without any principle or without any rule, it is unpredictable and such a decision is antithesis to the decision taken in accordance with the rule of law. It is respectfully submitted that power vested by the State in a public authority shoul....
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....industrial similarly situated by limiting the benefits of extension of the period of eligibility only in respect of industrial units in respect of which orders for extension of the period of eligibility have already been passed and such a discrimination is a hostile discrimination inasmuch as equals have been treated unequally and thereby such discrimination which is a hostile classification made under the Scheme of 2020 cannot withstand the scrutiny of Article 14 of the Constitution of India and thereby the said classification and/or discrimination is clearly in violation of Article 14 of the Constitution of India and thereby the Amendment Scheme of 2020 is liable to be declared illegal and consequently ultra vires and the respondent authorities are liable to be directed to also consider the case of the petitioner for extending the period of eligibility as promised by the Scheme of 2017. 20. Referring to the judgment of the Apex Court in Budhan Choudhury vs. State of Bihar AIR 1955 SC 191 it is submitted that while Article 14 forbids class legislation, it does not forbid reasonable classification for the purposes of legislation. In order, however, to pass the test of permissibl....
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....te of UP vs Deepak Fertilizers & Petrochemical Corp. Ltd., (2007) 10 SCC 342. 23. Referring to the various judgments of the Apex Court learned Senior Counsel for the petitioners submits that every differentiation is not discrimination but at the same time, differentiation must be founded on pertinent and real differences as distinguished from irrelevant and artificial ones. A simple physical grouping which separates one category from the other without any rational basis is not a sound or intelligible differentia. The separation or segregation must have a systematic relation and rational basis and the object of such segregation must not be discriminatory. 24. Learned Senior Counsel for the petitioners has also referred to the judgment rendered in Ayurveda Pharmacy vs. State of Tamil Nadu reported in (1989) 2 SCC 285, Amarendra Kumar Mohapatra vs. State of Orissa reported in (2014) 4 SCC 583, (1979) 1 SCC 380, Subramanian Swamy vs. Director, CBI, (2014) 8 SCC 682, Union of India vs. NS Rathnam and Son (2015) 10 SCC 681, State of UP vs. Deepak Fertilizers & Petro Chemicals Corp. Ltd. reported in (2007) 10 SCC 342 as well as Makum Tea Co. India Ltd. Vs. State of Assam reported in....
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.... established in pursuance to the Policy of 2014 and the Scheme of 2015 framed in pursuance thereof have been granted a period a 15 years for availing the benefit of exemption and even under the Scheme of 2017, they will continue to enjoy the benefits till expiry of 15 years. The said period of 15 years was prescribed in the Policy of 2014 and the Scheme of 2015 keeping in view the fact that goods and service tax was supposed to be introduced and after the said introduction of the goods and service tax, the industrial units would not be able to enjoy the benefits of exemption on the goods sold in the course of inter-state trade and commerce as well as goods in respect of which tax is to be levied by the State, the same shall be restricted to a large extent. However, the industrial units which were established on the promises and assurances made in the Policy of 2008 and Scheme of 2009 were granted the benefit of exemption for a period of 7 years only and under the Scheme of 2017, powers were conferred on the Finance (Taxation) Department to increase the period of eligibility by a further period of 5 years to compensate such industrial units from the curtailment of the benefits of ex....
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....mercial production on 21.09.2013, therefore it is covered under the Industrial Policy 2008 and the scheme of 2009. 28. Eligibility Certificate was issued by the Industries department for a period of 7 years w.e.f. 21.09.2013 to 20.09.2020 subject to the monetary limit of Rs 11,83,54,569.00/-. Subsequently Entitlement Certificate granting VAT exemption was issued for the said period. 29. There are two limits under the Industrial Policy 2008, monetary ceiling and time limit. Scheme 2009 had a clear condition that if the unit is unable to use its monetary tax incentive within the specified period of 7 years, the balanced unutilized amount would lapse. Against the available limit of tax exemption of Rs 1183.54 lacs, the petitioner availed Rs 456.20 lakhs during VAT i.e. upto 30.06.17 and Rs 52.88 lakhs during GST i.e. till September 2020. In total it availed Rs 509.09 lakhs out of the total Rs 1183.54 lakhs i.e. 38 % of the total amount of tax exemption during 4 years, under VAT regime. It is submitted that with the introduction of GST w.e.f. 01.07.2017, the tax exemption of VAT being not compatible with GST, the State Govt. as a mark of goodwill gesture and to honor its past com....
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....f amendment were deemed to be rejected, is strongly denied and contended. It is a fact that extension of eligibility has been granted to a few industrial units by the Government during the time when the clause was in force. It is contended that Article 14, does not forbid classification for legislative purposes, provided that such classification is based on some differentia having a reasonable relation to the object and purposes of the law in question. There is a strong presumption in favour of the validity of legislative classification and it is for those who challenge it as unconstitutional to prove beyond all doubt that the legislation arbitrarily discriminates between different persons similarly circumstanced. It is now well-settled that though taxing laws are not outside Article 14, however, having regard to the wide variety of diverse economic criteria that go into the formulation of a fiscal policy, the legislature enjoys a wide latitude in the matter of selection of persons, subject-matter, events, etc., for taxation. The tests of the vice of discrimination in a taxing law are, accordingly, less rigorous. 32. Learned Advocate General, Assam, submits that no discriminatio....
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....oresaid policy and scheme. The petitioner has altered his position only on the basis of aforesaid Policy, 2008 and scheme, 2009, whereas on the other hand when Scheme 2017 was brought into force, proviso to Clause 4 was inserted which empowered the Finance(Taxation) Department to extend the period of eligibility by another 5(five) years, on an application, if it is satisfied that the eligible unit could not achieve the full quantum of monetary ceiling for a genuine reason and to sustain the Industrial Unit, it is necessary. Thus under Scheme 2017, the petitioner has not altered his position, rather he continued to enjoy the earlier incentives. From the pleading and submissions, it is abundantly clear that the petitioner has not altered his position pursuant to Scheme, 2017, as he was already reaping the benefit under the Industrial Policy, 2008 and Tax exemption Scheme, 2009 in terms of the Eligibility Certificate and Entitlement certificate issued there under. In that view of the matter the State has not resile from its promise on the basis of which the petitioner changed his position and invested for expansion. 36. It is submitted that there has been no discrimination in fa....
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....to submit that three of Promissory Estoppels would not be available against the exercise of legislative functions of the State. Reference is also made in judgment of Apex reported in Seema Silk & Sarees vs. Directorate of Enforcement reported in (2008) 5 SCC 580 to submit that the discrimination on the ground of valid classification which answers the test of intelligible differentia does not attract the wrath of the Article 14. 38. Learned Advocate General, Assam, sums up his argument to submit that there is no violation of Doctrine of Promissory Estoppels, no infringement of Article 14 of the Constitution of India, no discrimination or classification without reasonable or cogent ground. Thus, all the writ petitions are liable to be dismissed. 39. Learned Senior Counsel for the petitioners reiterating his arguments submits that if fund crunch was the ground for non-consideration of the petitioners' application for extension then the same criteria ought to have been made applicable to all other similarly situated units/industries. Referring to one such instance of an application preferred by Varun Beverages Limited (Unit-II) it is submitted that the said unit also filed an app....
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....ts advanced at the Bar, the grievance of the petitioners are three folds namely: a) The petitioners having altered their position in response to the promises made by the Government under the Industrial Policy of 2008 and the Assam Tax Exemption Scheme of 2009, and the petitioners having made the required investments and have been granted the eligibility and the entitlement certificates clearly indicating the period till which their the benefits of VAT exemptions are to be granted, the subsequent curtailment of this benefit after the GST regime is violative of the doctrine of promissory estoppel. b) The extension of benefits granted to other similarly situated persons while denying the similar benefits to the writ petitioners are discriminatory without any reasonable basis and the same being arbitrary and the same are violative of Article 14 of the Constitution of India. c) The application of the writ petitioners having been filed before the authorities seeking extension of the benefit prior to the date of the Tax Exemption (Amendment) Scheme 2000, their applications ought not to have been kept pending and thereby rendering it nugatory after the notificati....
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....icy will cease to operate unless otherwise provided for. Units which commenced commercial production prior to 01.10.2008 and are eligible under 2003 policy shall continue to be governed by the Industrial Policy 2003. However no application for Eligibility Certificate claims under the 200 Policy will be entertained after 31.03.2009. 45. The various definitions of existing unit, new unit, substantial expansion etc has also been provided under Clause 4.5 which reads as under: 4.5 DEFINITIONS 1) EXISTING UNIT means a unit, which is or was in commercial production in the State of Assam prior to 1/10 /2008. 2) NEW UNIT means a unit, which has commenced commercial production in the State of Assam during the validity period of Industrial Policy 2008. 3) SUBSTANTIAL EXPANSION means increase in value of fixed capital investment in plant and machinery of an existing unit by at least 25% as well as increase of employment by at least 10% and at least 25% increase in production compared to average annual production of previous three years. Prior to going for expansion, the unit should be operating at least at a minimum of 80% capacity during the period of t....
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....ncies shall not be eligible for similar type of incentives under this policy. e) Incentives/ subsidies/ concessions/ financial support under this policy shall be applicable to units in the private sector, joint sector, co-operatives as well as units set up by State Government only. f) The non-eligible industries mentioned in annexure one will not be eligible for any incentives under this Industrial Policy. g) In case a new unit is promoted in the premises of an existing unit; it should be distinctly identifiable and be located in the open spaces available in the premises. The earlier unit in the premise should not be closed nor any plant & machinery be dislodged from the earlier unit. 47. Amongst the various fiscal incentives prescribed under the policy, the tax incentive includes VAT exemption. Under Clause 7.1 delineates the VAT exemption as under: 7.1 VAT EXEMPTION All eligible units, which manufacture goods in Assam, will be entitled to exemption of 99% of the tax payable under the Assam Value Added Tax Act, 2003 and the Central Sales Tax Act, 1956 subject to the limit mentioned below. Category Micro Small Medium & Lar....
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....l Expansion" means increase in value of fixed capital investment in plant and machinery of an existing unit by at least 25% as well as increase of employment by at least 10% and at least 25% increase in production compared to average annual production of previous 3 years. Prior to going for expansion, the unit should be operating at least at a minimum of 80% capacity during the period of 3 previous years and prior intimation to the concerned implementing agency. Category "C":- An existing unit, which manufactures goods in Assam and has been declared sick by BIFR or as Assam Government Relief Undertaking and has recommended commercial production on or after 1st October, 2008 but upto 30th September, 2013 and is in compliance with the eligibility criteria under this Scheme shall be treated as an eligible unit under category "C". Provided that there should be increase by not less than 25% in the value of fixed capital assets in plant and machinery for revival of a unit under category "C". 49. That apart all these three categories were also required to fulfill the criteria specified therein namely: (a) A unit shall have employment of 80% from amongst peopl....
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....ximum of 100% of additional investment made for rehabilitation Three years subject to maximum of 100 of additional investment made for rehabilitation Three years subject to maximum of 100 of additional investment made for rehabilitation 51. Separate formats for grant of eligibility certificates for each of the categories namely category A, B and C are also appended to the said scheme. The format for grant of eligibility certificate for each of the categories are also appended to the said scheme. 52. In so far as M/S Lalit Poly Weave LLP [W.P(C) No. 2068/2021] is concerned the eligibility certificate was issued on 04.11.2015. In the said certificate, VAT exemption was shown to have been approved with effect from 21.09.2013 to 20.09.2020 (07 years) subject to a maximum of 100% of the eligible fixed capital investment of the unit i.e Rs. 11,83,54,569/-. Pursuant to the issuance of the eligibility certificate, the certificate of entitlement for exemption of tax to the extent of Rs. 11,83,54,569/- was also issued by the Commissioner of Taxes, Department of Finance and Taxation, Government of Assam. The certificate was shown to be valid from 21.09.2013 to 20.09.2020 and the c....
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....le, and (b) to the eligible new units or expansion units which commences their commercial production/operation during the period commencing from 1st July, 2017 to 31st December, 2022 in terms of the eligibility criteria of Industrial and Investment Policy of Assam, 2014. 55.1. Under the said scheme, the definitions prescribed would be relevant and the same are therefore extracted below: "2. Definitions- (a) 'eligible unit' means- (i) 'existing unit' which, commenced its commercial production or operation before 1st day of July, 2017 and was eligible to avail the benefit of partial or full exemption from payment of VAT and/or central sales tax under the Industrial and Investment Policy of Assam, 2008 or under the Industrial and Investment Policy of Assam, 2014, as the case may be, and covered by the corresponding earlier schemes i.e. the earlier Assam Industries (Tax Exemption) Scheme, 2009 or the Assam Industries (Tax Exemption) Scheme, 2015 or any special notification issued pursuant to such Policy of 2008 or Policy of 2014; (ii) 'expansion unit' which undertakes substantial expansion and commences its commercial production during th....
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.... unit eligible under the Industrial and Investment Policy of Assam, 2014;- where an existing eligible unit is holder or will be holder of Certificate of Entitlement in due course as per the terms of the Assam Industries (Tax Exemption) Scheme, 2015 framed pursuant to the Industrial and Investment Policy of Assam, 2014 or an existing eligible mega unit to which the customized tax incentives have been granted by special notification issued by the Finance (Taxation) Department, pursuant to the Industrial and Investment Policy of Assam, 2014, shall, in respect of intra-State supplies made within the State, be entitled to reimbursement of 100% of the State tax (SGST) paid through debit in the electronic cash ledger account maintained by the unit in terms of sub-section (1) of section 49 the Assam Goods and Services Act, 2017 after utilization of the input tax credit of the State tax (SGST) and Integrated tax (IGST) available until the amount of such tax reimbursement exceeds the un-availed quantum of monetary ceiling or till the expiry of residual period of eligibility, whichever is earlier, irrespective of condition of capacity utilization: Provided that if an existing eligibl....
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.... for Eligible Units) (Amendment) Scheme, 2020. (2) This Scheme shall come into force with effect from the date of publication of this notification in the Official Gazette. 2. Amendment of clause 4. In the principal scheme, in clause 4, in sub-clause (1).- (a) in para (i), for the punctuation mark ":", the punctuation mark "." shall be substituted and thereafter the existing proviso shall be omitted; (b) in para (ii), for the punctuation mark ":", the punctuation mark "." shall be substituted and thereafter the existing proviso shall be omitted; (c) in para (iii), sub-para (c) shall be omitted. 3. Savings.- Notwithstanding the omission of the provisions in the said Scheme as mentioned in clause 2 above, all orders issued thereunder by the Finance (Taxation Department for extension of period of eligibility shall be deemed to have been validly issued, as if this Scheme has not been amended. Further, all pending applications on which order for extension of period of eligibility has not been passed, shall be deemed to have been rejected. SHYAM JAGANNATHAN, Commissioner & Secretary to the Government of Assam....
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.... the promise and the promise would be enforceable against the Government 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 Article 299 of the Constitution. The Apex Court further in the said judgment in para 33 observed as under: "Whatever be the nature of the function which the Government is discharging, the Government is subject to the rule of promissory estoppel and if the essential ingredients of this rule are satisfied, the Government can be compelled to carry out the promise made by it." So far as the limitation of the Doctrine of Promissory Estoppel is concerned the Apex Court in the said judgment, Motilal Padampat (Supra), held as under: "1) Since the doctrine of promissory estoppel is an equitable doctrine, it must yield when the equity so requires. But 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 enfor....
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....o plead the rule of estoppel in their favour when the State of Kerala purports to act differently. Several decisions of this Court were cited in support of the stand of the appellants that in similar circumstances the plea of estoppel can be and has been applied and the leading authority on this point is the case of M.P. Sugar Mills [Motilal Padampat Sugar Mills Co. Ltd. v. State of U.P., (1979) 2 SCC 409 : 1979 SCC (Tax) 144]. On the other hand, reliance has been placed on behalf of the State on a judgment of this Court in Bakul Cashew Co. v. STO [(1986) 2 SCC 365 : 1986 SCC (Tax) 385]. In Bakul Cashew Co. case [(1986) 2 SCC 365 : 1986 SCC (Tax) 385] this Court found that there was no clear material to show any definite or certain promise which had been made by the Minister to the persons concerned and there was no clear material also in support of the stand that the parties had altered their position by acting upon the representations and suffered any prejudice. On facts, therefore, no case for raising the plea of estoppel was held to have been made out. This Court proceeded on the footing that the notification granting exemption retrospectively was not in accordance with Section....
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....be withdrawn except by means of legislation having regard to the fact that promissory estoppel cannot be claimed against a statute." 63. In Pawan Alloys & Casting (P) Ltd. v. U.P. SEB, reported in (1997) 7 SCC 251 answering the question as to whether the Board can be restrained from withdrawing a rebate prematurely before completion of three/five years period by virtue of promissory estoppel, the Apex Court held as under: "10. It is now well settled by a series of decisions of this Court that the State authorities as well as its limbs like the Board covered by the sweep of Article 12 of the Constitution of India being treated as 'State' within the meaning of the said article, can be made subject to the equitable doctrine of promissory estoppel in cases where because of their representation the party claiming estoppel has changed its position and if such an estoppel does not fly in the face of any statutory prohibition, absence of power and authority of the promisor and is otherwise not opposed to public interest, and also when equity in favour of the promisee does not outweigh equity in favour of the promisor entitling the latter to legally get out of the promise. ....
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.... to create legal relations or affect a legal relationship which would arise in future. The Government was held to be equally susceptible to the operation of the doctrine in whatever area or field the promise is made - contractual, administrative or statutory. To put it in the words of the Court: '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, acting in reliance on it, alters his position, the Government would be held bound by the promise and the promise would be enforceable against the Government 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 Article 299 of the Constitution. *** [E]quity will, in a given case where justice and fairness demand, prevent a person from insisting on strict legal rights, even where they arise, not under any contract, but on his own title deeds or under statute. *** Whatever be the nature of the function which the Govern....
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....mise. 68. However, the law relating to promissory estoppels came up for examination before the Apex Court on several occasions. The law which was enunciated by the Judgment of Motilal Padampat (Supra). The law enunciated by the Apex Court since Bakul Cashew Co. v. STO [(1986) 2 SCC 365 : 1986 SCC (Tax) 385] and Motilal Padampat (Supra) has reiterated the position clearly that for promissory estoppels to be made applicable against the Government, there are three pre-conditions namely: (1) there was a definitive representation by the Government; (2) that the persons to whom the representation of promise was made in fact altered their position by acting of upon such representation of promise and (3) that they suffered some prejudiced sufficient to constitute an estoppels. 69. Although these essential pre-conditions are still considered to be a good law. There have been certain other Judgments rendered by the Apex Court where notwithstanding these three conditions cited if the Government withdraws its earlier promise on public policy of the public good then depending on the facts and circumstances of such cases promissory estoppels may not apply to such....
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....cies in public interest and further the doctrine of promissory estoppels cannot be invoked for enforcement of a promise made contrary to law because none can be compelled to act against the notifications which are in the nature of legislation. The Apex Court held as under: "32. The doctrine of promissory estoppel is by now well recognised and well defined by a catena of decisions of this Court. Where the Government makes a promise knowing or intending that it would be acted on by the promisee and, in fact, the promisee, acting in reliance on it, alters his position, the Government would be held bound by the promise and the promise would be enforceable against the Government 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 Article 229 of the Constitution. The rule of promissory estoppel being an equitable doctrine has to be moulded to suit the particular situation. It is not a hard-and-fast rule but an elastic one, the objective of which is to do justice between the parties and to extend an equitable treatment to them. This doctrine is a principle ev....
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....ere treated as contrary to Section 49 of the Act of 1948. On review of the law on the subject and the relevant statutory provisions, this Court finds that, for the reasons mentioned hereinafter, the above statement of law is not an accurate proposition of law. 43. This Court finds that the proposition of law laid down by the two-Judge Bench in the decision in Sant Steels case [(2008) 2 SCC 777] mentioned above is too wide and has tendency to make Section 21 of the General Clauses Act, 1897, inoperative. The concept of the larger public interest introduced, before invocation of Section 21 of the General Clauses Act, in fact, amounts to amendment of the said provision, as Notifications dated 18-6-1998 and 25-1-1999, issued under Section 49 of the Act of 1948, as well as Notification dated 7-8-2000, issued under Section 24 of the Uttar Pradesh Electricity Reforms Act, 1999, are in the nature of legislations and, therefore, the principle of promissory estoppel would not apply to them." 72. In Dai Ichi Karkaria Ltd Vs. Union of India & Ors, reported in (2000) 4 SCC 57 referring to the earlier precedents in Kasinka Trading (Supra) and Shrijee Sales Corporation (Supra), the Ap....
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....not analogous to the facts in Anglo Afghan Agencie [Union of India v. Anglo Afghan Agencies, (1968) 2 SCR 366 : AIR 1968 SC 718] or M.P. Sugar Mills [Motilal Padampat Sugar Mills Co. Ltd. v. State of U.P., (1979) 2 SCC 409 : 1979 SCC (Tax) 144]. In the first case the petitioner therein had acted upon the unequivocal promises held out to it and exported goods on the specific assurance given to it and it was in that fact situation that it was held that Textile Commissioner who had enunciated the scheme was bound by the assurance thereof and obliged to carry out the promise made thereunder. As already noticed, in the present batch of cases neither the notification is of an executive character nor does it represent a scheme designed to achieve a particular purpose. It was a notification issued in public interest and again withdrawn in public interest. So far as the second case (M.P. Sugar Mills case [Motilal Padampat Sugar Mills Co. Ltd. v. State of U.P., (1979) 2 SCC 409 : 1979 SCC (Tax) 144]) is concerned the facts were totally different. In the correspondence exchanged between the State and the petitioners therein it was held out to the petitioners that the industry would be exempte....
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.... conditions as may be laid down in the notification by the Government in "public interest". Such an exemption by its very nature is susceptible of being revoked or modified or subjected to other conditions. The supersession or revocation of an exemption notification in "public interest" is an exercise of the statutory power of the State under the law itself. It has been further held that under the General Clauses Act an authority which has the power to issue a notification has the undoubted power to rescind or modify the notification in a like manner. It has been observed that the withdrawal of exemption "in public interest" 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 "public interest". It has been held that where the Government acts in "public interest" and neither any fraud or lack of bona fides is alleged, much less established, it would not be appropriate for the court to interfere with the same. 21.2. In Shrijee Sales Corpn. [Shrijee Sales Corpn. v. Union of India, (1997) 3 SCC 398], it is observed and he....
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....nge in policy even in such cases the doctrine of promissory estoppel could not be invoked. It has been consistently held that where the change of policy is in larger public interest, the State cannot be prevented from withdrawing an incentive which it had granted to an earlier notification. It was held that even in cases where the exemption was upto a particular period, the same can also be withdrawn by the State if it is found that such withdrawal is in public interest. Where larger public interest outweigh the individual interest, the doctrine of promissory estoppel cannot be invoked to compel the State not to resile from its promise if the action of the State is found to be in public interest. It was further held that even on the ground of change of policy which is in public interest or in view of the change of the statutory regime itself on account of GST Act being introduced in the instant case, it will not be correct to hold the Union bound by representation made by Notification as the same is found to be contrary to the statutory provisions as enacted under Section 174 (2) (c) of the CGST Act. 75. Coming to the facts of the present proceedings, there is no doubt that the ....
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....n made under the Industrial Policy of 2008 read with the erstwhile Tax Remission Scheme of 2009 and failure to do so as hit by the doctrine of promissory estoppels. Such contention of the writ petitioners cannot be accepted and are therefore rejected. After the change in the ex Regime and enactment of the GST Statute, there can be no mandamus issued to the State Government to reimburse the Central share of GST collected merely because 100% VAT exemption was assured under the Industrial Policy of 2008 read with the Tax Reimbursement Scheme of 2009. 76. The Change of Tax regime by incorporation of the GST by the Central and the State Government is by way of the proper legislation and therefore has to be accepted to be in public policy. Under such circumstances, the claim of the petitioner for invocation of doctrine of promissory estoppel for reimbursement of the entire amount of GST paid by the petitioner including the Central share for being refunded by the State cannot be accepted as the same would be contrary to the statute itself and such contention therefore rejected. 77. There is another reason why such contention cannot be accepted and no mandamus can be issued inasmuch ....
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.... not in respect of the property but the same expression was used to refer to 'legitimate' or 'settle expectation' to which the petitioners' claimed that they were entitled to by virtue of the representation of the promise handed out by the Government. According to the petitioners it was their legitimate expectation to be extended the benefit of tax exemption which they claimed to have been entitled to by virtue of the industrial and Investment Policy 2008 read with Assam Industries (Tax Exemption) Scheme, 2009. The claim of the petitioners are that notwithstanding the introduction of the GST regime once a promises made by the Government and based on that representation, the petitioners have changed their stand to their detriment by setting up the industry and making huge investment, notwithstanding the introduction of GST regime, the promise handed out by the Government for tax exemption will have to be accepted to a right accrued or vested against the Government for grant of the said benefit of tax exemption. However, such contention raised by the petitioners cannot be accepted on two counts. First, as have been discussed elaborately above, there can be no promissory estoppels aga....
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.... However, there is still one aspect which need to be examined which is whether the case of the petitioners not being considered by the respondent authorities for extension of the period of entitlement of tax exemption was violative of Article 14 when similar situated industries/units were shown to have been given benefit prior to the impugned Notification dated 30.12.2020. The respondents have sought to defend their actions by projecting that the benefits given to such other similarly situated industries or units by excluding the petitioners was done on a valid classification. In Budhan Choudhury Vs. State of Bihar, reported in AIR 1955 SC 191, the question came up before the Apex Court regarding the ambit of Article 14. The Apex Court held that it is now well established that while Article 14 forbids class legislation, it does not forbid reasonable classification for the purposes of legislation. In order, however, to pass the test of permissible classification two conditions must be fulfilled, namely, (i) that the classification must be founded on an intelligible differentia which distinguishes persons or things that are grouped together from others left out of the group, and (ii)....
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....minating legislation." 81. In Nagpur Improvement Trust vs. Vithal Rao, (1973) 1 SCC 500, another Constitution Bench of the Apex Court had the occasion to consider the test of reasonableness under Article 14 of the Constitution of India. It was held by the Apex Court that the State can make a reasonable classification for the purpose of legislation [and] that the classification in order to be reasonable must satisfy two tests: (i) the classification must be founded on intelligible differentia, and (ii) the differentia must have a rational relation with the object sought to be achieved by the legislation in question. The Court emphasised that in this regard object itself should be lawful and it cannot be discriminatory. If the object is to discriminate against one section of the minority, the discrimination cannot be justified on the ground that there is a reasonable classification because it has rational relation to the object sought to be achieved. It was held by the Apex Court that the principle underlying the guarantee of Article 14 is not that the same rules of law should be applicable to all persons within the Indian territory or that the same remedies s....
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....onsidering the scope, content and meaning of Article 14 held that thus the fundamental principle is that Article 14 forbids class legislation but permits reasonable classification for the purpose of legislation which classification must satisfy the twin tests of classification being founded on an intelligible differentia which distinguishes persons or things that are grouped together from those that are left out of the group and that differentia must have a rational nexus to the object sought to be achieved by the statute in question. 85. In Ayurveda Pharmacy Vs. State of Tamil Nadu, reported in (1989) 2 SCC 285, the Apex Court held that two items of the same category cannot be discriminated and where such a distinction is made between items falling in the same category it should be done on a reasonable basis, in order to save such a classification being in contravention of Article 14 of the Constitution of India. 86. The principles of examining the validity of a legislation under Article 14 of the Constitution was yet again considered by the Apex Court in Amarendra Kumar Mohapatra Vs. State of Orissa, reported in (2014) 4 SCC 583, the Apex Court held that the approach to be ....
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....n the same situation, and there should be no discrimination between one person and another if as regards the subject-matter of the legislation their position is substantially the same. (5) By the process of classification, the State has the power of determining who should be regarded as a class for purposes of legislation and in relation to a law enacted on a particular subject. This power, no doubt, in some degree is likely to produce some inequality; but if a law deals with the liberties of a number of well-defined classes, it is not open to the charge of denial of equal protection on the ground that it has no application to other persons. Classification thus means segregation in classes which have a systematic relation, usually found in common properties and characteristics. It postulates a rational basis and does not mean herding together of certain persons and classes arbitrarily. (6) The law can make and set apart the classes according to the needs and exigencies of the society and as suggested by experience. It can recognise even degree of evil, but the classification should never be arbitrary, artificial or evasive. (7) The classification must not....
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....he legislative process. Where the legislation is sought to be challenged as being unconstitutional and violative of Article 14 of the Constitution, the Court must remind itself to the principles relating to the applicability of Article 14 in relation to invalidation of legislation. The two dimensions of Article 14 in its application to legislation and rendering legislation invalid are now well recognised and these are: (i) discrimination, based on an impermissible or invalid classification, and (ii) excessive delegation of powers; conferment of uncanalised and unguided powers on the executive, whether in the form of delegated legislation or by way of conferment of authority to pass administrative orders-if such conferment is without any guidance, control or checks, it is violative of Article 14 of the Constitution. The Court also needs to be mindful that a legislation does not become unconstitutional merely because there is another view or because another method may be considered to be as good or even more effective, like any issue of social, or even economic policy. It is well settled that the courts do not substitute their views on what the policy is. The Ape....
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....ts the purpose for which the classifications have been sought to be made. 90. In Navtej Singh Johar & Ors. Vs. Union of India, reported in (2018) 10 SCC 1 where the constitutionality of a law is assailed on the ground of violation of fundamental rights, the tests is to see whether the effect or the operation of law infringes on the fundamental rights. The intention of the legislature is not determinative to decide on the said issue. The Apex Court while deciding the matter held that the Court has to see is whether constitutional provisions have been transgressed and if so, as a natural corollary, the death knell of the challenged provision must follow. It was further held that when the constitutionality of a law is challenged on the ground that it violates the guarantees in Part III of the Constitution, what is determinative is its effect on the infringement of fundamental rights. [Kerala Education Bill, 1957, In re, AIR 1958 SC 956 at para 26; Sakal Papers (P) Ltd. v. Union of India, AIR 1962 SC 305 at para 42; Rustom Cavasjee Cooper v. Union of India, (1970) 1 SCC 248 at paras 43, 49; Bennett Coleman and Co. v. Union of India, (1972) 2 SCC 788 at para 39; Maneka Gandhi v. Unio....
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....d Vs Delhi Administration Ltd, reported in (2013) SCC 635. 93. Ordinarily there is always a presumption for constitutionality of a law enacted by the legislature. When there is a challenge to the constitutionality of the law by the legislation or any Rule by the Executive, there must be a clear projection brought out before the court that there is a transgression of the constitutional principles. When the legislation is sought to be challenged as being unconstitutional and violative of Article 14 of the Constitution, the principles relating to applicability of Article 14 in relation to invalidation of a legislation has to be borne in mind. For a legislation to be struck down as invalid and being in violation of Article 14 it can be done on two grounds, namely (i) discrimination based on an impermissible or invalid classification and (ii) excessive delegation of powers conferment of uncannalized and unguided powers on the Executive, whether in the form of delegated legislation or by way of conferment authority to pass administrative orders. If such conferment is without any guidance, control or check, it is violative of Article 14 of the Constitution. It must also be borne in min....
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....at the Amendment to the reimbursement scheme of 2020 by which the powers conferred on the finance department to grant extension of benefits has been taken away is premised on the ground of violation of the doctrine of promissory estoppel and legitimate expectation. In the discussions above, it has been explained that this departure of the government from its earlier promise handed out, is by virtue of a change in the taxation regime brought in by way of the GST statute with effect from 01.07.2017. The earlier taxation laws including the manner and procedure for imposition and collection of taxation was completely overhauled under the GST and these taxes be it the state sales tax or the central sales tax or the Value Added Tax or the Service Tax etc, all came to be subsumed into the GST. Therefore, such alteration on the basis of the earlier promise handed out by the government under the Industrial Policy of 2008 came to be effected because of the change in the law. It is well settled that change in law is in furtherance of public policy. The challenge to the amendments brought in by the impugned Notification dated 30.12.2019 to the Assam Industries (Tax Reimbursement for Eligible U....
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....n the parameters specified under Article 14. No materials have been placed before the Court to show that the said "Varun Beverages" was differently placed then the present writ petitioners and therefore any classification was called for. The Judgment of Seema Silk and Sarees (Supra) relied upon by the writ petitioner in support of their contention, therefore does not come to their aid. The respondents are duty bound to apply the same yardstick to the petitioners as has been done in cases of other similarly situated industries or units. The respondents must therefore yield to the parameters set forth under Article 14 of the Constitution of India. Such non-consideration of the representations preferred by the writ petitioners without justified reasons will have to be held to be arbitrary and contrary to the scheme of Article 14 of the Constitution of India. 99. This Court therefore holds that the projection of the respondents that in extending the benefit to Varun Beverages while the application of the petitioners remained unconsidered was based upon reasonable classification cannot be accepted in the absence of any materials placed before this Court as to how this reasonable clas....