AI Drafter 
TaxTMI 
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TaxTMI 
2026 (5) TMI 1512
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...... 19 F. ANALYSIS ............................................................................ 19 (I). Whether the incentive in the form of concessional rate of electricity charges under Clause 16(a) of the Industrial Policy of 2019, read with Rule 16(i)(a) of the 2019 Rules, was ever intended be provided to the existing industrial enterprises undergoing substantial expansion, and what effect the amendment notification dated 29.04.2022 has on the applicability of the said clauses? ...................................................................................... 19 (II). Whether the doctrine of promissory estoppel applies in favour of the respondent company? ........................................................... 29 G. CONCLUSION ....................................................................... 38 1. Leave Granted. 2. This appeal arises from the judgment and order dated 07.05.2025 passed by the High Court of Himachal Pradesh in Civil Writ Petition No. 1667 of 2021 preferred by the respondent herein by which the High Court directed the appellants herein to issue the enabling notification in terms of the incentives under the ....
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....radesh, along with the said Rules, with an intent to make available the incentives, subsidies, and infrastructure to industrialists and to attract industrial investment in the State. The policy objectives inter alia aimed to create a congenial investment climate, to attract further investment and boost employment in the State. 9. Clause 5 of the Industrial Policy of 2019 provides for eligible enterprises that may avail the incentives under the policy. As per Clause 5(A), all new industrial enterprises (except a few industries as listed in the policy) and all existing industrial enterprises undertaking substantial expansion (except a few industries as listed in the policy) will be eligible for the incentives, concessions, and facilities announced under the Industrial Policy of 2019, subject to the following conditions: (i) Fulfilment of the eligibility criteria and conditions as stated in the 2019 Rules; (ii) Employment of a minimum of 80% bona fide Himachalis out of the additional employment generated due to the substantial expansion 10. As per Clause 5(B), the incentives provided under the Industrial Policy of 2019 will be admissible from the date of commen....
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....w as well as to attract further investment in the State for creating employment opportunities for local youth and to ensure development of Industrial & Service Sector throughout the State. xxx xxx xxx vii) recognize and encourage the role of large investment to enhance the scale of economic development, employment opportunities, ancilliarisation, revenue generation and remunerative prices to local resources. xxx xxx xxx 5. Eligible Enterprises for availing incentives under this Policy:- (A) All "New Industrial Enterprises" except Industrial Enterprises engaged in manufacturing activities specified in the "Negative List" annexed with this policy; AND New Enterprises engaged in "Specified Category of Service Activities" annexed with this policy; AND All Existing Industrial Enterprises undertaking Substantial Expansion except Industrial activities as specified in the Negative List; AND All Existing Service Enterprises engaged in Specified Category of Service Activities undertaking Substantial Expansion: will be eligible for incentives, concessions and facilities announced under ....
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....antial expansion (except a few industries as stated in the policy) will be eligible for incentives, concessions, and facilities under the 2019 Rules, subject inter alia to the following conditions: (i) Fulfilment of such requirements as specified under Clause 4; (ii) The incentive provided under the 2019 Rules would be admissible from the date of undertaking substantial expansion taken on record by the Department of Industries or from the date on which the respective administrative department issued enabling notification under the relevant statute/law to operationalize incentives notified under this policy, whichever was later. In case of an existing enterprise having undertaken subsequent expansions after the first substantial expansion, the same would be taken on record for the purpose of incentives, concessions, and facilities provided under the 2019 Rules for additional investment; (iii) In the case of employment generated due to substantial expansion, it would have to employ 80% bona fide Himachalis; (iv) The incentives, concessions, and facilities under the 2019 Rules were to be provided under the discretionary powers of the appellant no. 1....
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...., delete or revise any or all of the incentives notified under these rules and no claim on account of such a decision will be entertained. xxx xxx xxx 16(i) Concessional rate of electricity charges: (excluding any surcharge, peak load exemption charge, winter charge, fuel adjustment charge, service charge, GST or any other charge under any name in the Tariff Schedule):- a) Eligible enterprises would be charged energy charges 15% lower than the approved energy charges for the respective category for a period of 3 years b) Existing industrial consumers, a rebate of 15% on energy charges shall be applicable for additional power consumption beyond the level of preceding financial year. Incentives of concessional rate of electricity charges would be notified in the Schedule of Tariff for Himachal Pradesh on year to year basis by the H.P. State Electricity Board and it would not be binding upon the State Government during the applicability of Policy. (Emphasis Supplied) 14. Upon the introduction of the Industrial Policy of 2019, the appellant no. 4 - Himachal Pradesh State Electricity Board, passed the tariff order for the FY 2019-....
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....cy of 2019, it should have been 15% lower than the approved energy charges. 18. In response to the letter referred to above, the Additional Chief Secretary to the appellant no. 1 addressed a communication dated 11.06.2020 to the respondent inter alia stating that the enabling notification related to the tariff incentive was to be notified by appellant no. 2 and that the same was being processed. 19. On 13.07.2020, the application for expansion submitted by the respondent was approved by the State Single Window Clearance & Monitoring Authority in its 13th Meeting. 20. The appellants thereafter amended the Industrial Policy of 2019 and also the 2019 Rules respectively on 07.10.2020 to insert the provisions relating to the duration of the Industrial Policy of 2019 by inserting inter alia Clause 5(C) therein, which stated that incentives under the Industrial Policy of 2019 will remain in force for existing enterprises undertaking substantial expansion which start commercial production on or before 31.12.2025. Clause 5(C) reads as under: "5(C) Duration:- Incentive provided under this Policy will remain in force for new enterprises which commence commercial production/ ....
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.... the conditions that the existing enterprises which have undergone expansion during 01.04.2018 to 30.06.2019 and/or during 01.06.2020 to 31.05.2021, the energy charges will be 10% lower than the approved energy charges corresponding to the respective category for a period of three years for the quantum of energy consumption corresponding to the proportionate increase in contract demand. Provided that, such expansion, if undertaken during 1.07.2019 to 31.05.2020 and/or shall be undergoing expansion on or after 01.06 2021, the energy charges shall be 15% lower than the approved energy charges for the respective category for a period of 3 years for the quantum of energy consumption corresponding to the proportionate increase in contract demand. 25. During the pendency of the proceedings before the High Court, the appellant State, on 29.04.2022, amended the Industrial Policy of 2019 along with the 2019 Rules. Among various amendments, Clauses 16 of the Industrial Policy of 2019 and 2019 Rules were also amended, wherein the expression "eligible enterprises" was changed to "new enterprises" in Clause 16(a) and Rule 16(i)(a). It is argued by the appellants that this amendment in Clause....
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....ere classified into (i) new industrial enterprises and (ii) existing industrial enterprises. The policy granted several benefits to each of them, one of which is a concessional rate of electricity charges. As per Clause 16 of the unamended Industrial Policy of 2019, in sub-clause (a), the eligible enterprises were to be charged energy charges 15% lower than the approved energy charges for a period of 3 years, and in sub-clause (b), the existing industrial consumers were to be provided a rebate of 15% on energy charges for additional consumption beyond the level of the preceding financial year. It also provided that incentives of concessional rate of electricity charges would be notified in the schedule of tariff for the State of Himachal Pradesh on a year to year basis by the appellant no. 4. In this background, the learned counsel submitted that the word "eligible" in Clause 16(a) was a drafting error. Rather, the same should have been replaced with the word "new". The same error occurred in Rule 16(i)(a) of the 2019 Rules as well. Another error occurred in Rule 16(i)(b) of the 2019 Rules, where the words "substantial expansion" were inadvertently omitted. These errors were correc....
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....prescribed under the Industrial Policy of 2019. He further argued that the respondent, having altered its position based on the representations and assurances made by the appellants in the policy and in communications, became entitled to the incentive under the Industrial Policy of 2019 on 12.02.2021 when the respondent was issued the COP Certificate by the appellant State. He argued that till the date of issuance of the certificate, i.e. 12.02.2021, no amendment in Clause 16 was effectuated. Further, he submitted that the subsequent modification of Clause 16(a) vide amendment notification dated 29.04.2022, wherein the words "eligible enterprise" were substituted with "new enterprises", is inconsequential as Clause 4 of the amendment notification expressly states that the amended provisions shall come into force with "immediate effect" of the notification, thus, providing for prospective operation for the amended Clauses. Thus, the amended Clause 16(a) of the Industrial Policy of 2019 would not affect the entitlement of the respondent, as the respondent's rights stood crystallised on 12.02.2021 when the appellant issued the COP Certificate. 33. The learned counsel further submit....
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....the eligible enterprises were to receive a 15% discount on the approved energy charges for the respective category for a period of 3 years. Whereas, according to Clause 16(b), the existing industrial consumers are given a rebate of 15% on energy charges for additional power consumption in comparison to the consumption of the preceding year. Under Clause 16, the appellant no. 4 was obliged to notify the incentives for concessional rate of electricity by the issuance of a tariff order on a year-to-year basis. 37. Rule 2(XII) of the 2019 Rules defines the term "eligible enterprise" as an enterprise that fulfils the eligibility criteria as per Rule 4 of the 2019 Rules. The extract of the relevant definition is as under: "2(XII) "Eligible Enterprise" means an enterprise fulfilling the eligibility criteria as per the provisions made under para 5 [sic] of these Rules." 38. Further, Rule 2(XIII) of the 2019 Rules defines the term "existing industrial enterprise" as an industrial enterprise engaged in the manufacturing of goods and registered/acknowledged/taken on record by the Department of Industries as such and has commenced the commercial production before the appointed d....
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....ersons have been so far employed, out of which 275 are bona fide Himachalis. Thus, on conjoint reading of unamended Clause 5(A) along with Rule 2(XIII) and 2(XXXIX) respectively, there is no doubt that the respondent, for purposes of the Industrial Policy of 2019, would be an "eligible enterprise" having undertaken a substantial expansion. 40. In the present case, a considerable part of the controversy centres around the true scope, scheme, and interplay of Clauses 16(a) and 16(b) of the Industrial Policy of 2019, read with Rule 16(i) of the 2019 Rules. The principal question that arises for our consideration is whether Clause 16(a), as it originally stood prior to the amendment dated 29.04.2022, was intended to extend the benefit of concessional energy charges to all eligible enterprises, including existing industrial enterprises undertaking substantial expansion, or whether the said clause was always intended to operate exclusively in respect of new industrial enterprises, with enterprises undergoing substantial expansion being confined to the distinct rebate benefit contemplated under Clause 16(b). Since the respondent admittedly falls within the category of an existing indus....
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.... 43. Following the above, the Industrial Policy of 2019 was introduced on 16.08.2019 (i.e. after the issuance of the above-mentioned tariff orders), wherein Clause 16 was inserted carrying the verbatim language of the benefits as was provided in the tariff order for FY 2018-19 and FY 2019-20, but with an inadvertent error of stating a benefit that was meant for new industries in the tariff order now inadvertently employed for both new industrial enterprises as well as existing industrial enterprises in Clause 16(a) and Rule 16(i)(a). Thereafter, the appellant no. 4 issued the tariff order for FY 2020-21, consisting of (i) For existing industries which have undergone expansion in the FY 2018-19 and FY 2020-21, energy charges shall be 10% lower for 3 years on the increased contract demand from the previous year; (ii) For existing industries which have undergone expansion in the FY 2019-20 i.e., between 01.07.2019 to 31.05.2020, energy charges shall be 15% lower for 3 years on the increased contract demand from the previous year; (iii) For new industries coming into production after 01.06.2020, energy charges shall be 10% lower for 3 years; and (iv)....
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.... 47. Such an interpretation would also lead to an anomalous consequence whereby a benefit specifically intended for new industrial enterprises, i.e., concessional lower energy charges for a period of 3 years aimed at encouraging the establishment of fresh industrial units within the State, would stand extended even to existing industrial enterprises merely because they had undertaken expansion. The very object underlying the distinction between new industrial enterprises and existing industrial enterprises undergoing substantial expansion would thereby stand obliterated. The Policy consciously contemplated separate categories of incentives for distinct classes of industries depending upon their nature and stage of industrial activity. While new industrial enterprises were sought to be incentivised by concessional energy charges so as to attract fresh industrial investment into the State, existing industrial enterprises undertaking substantial expansion were separately incentivised through a rebate on incremental consumption so as to encourage improvement of existing industrial capacity. 48. Accepting the interpretation canvassed by the respondent would therefore not only distur....
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....lasses of industries i.e., new industrial enterprise and existing industrial enterprise undergoing expansion, respectively. At this juncture, it becomes equally important to notice that one amendment, which was in fact introduced substantively for the first time, namely, the stipulation limiting the duration of the benefit under Clause 16(b) and Rule 16(i)(b) to a period of three years, was specifically italicised and underlined in the amendment notification. 51. Therefore, there can be no manner of doubt that although several amended provisions introduced by the amendment notification dated 29.04.2022 may have prospective application by virtue of Clause 4 thereof, which stipulated that the amended provisions shall come into force with "immediate effect", the amendments carried out in Clause 16 and Rule 16, except to the limited extent whereby the duration of the benefit under Clause 16(b) and Rule 16(i)(b) was prescribed for the first time, were merely clarificatory in nature. The substitution of the word "eligible" with the word "new" in Clause 16(a) and Rule 16(i)(a), and the insertion of the expression "substantial expansion" in Clause 16(b) and Rule 16(i)(b), did not introd....
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....concerned, was merely clarificatory in nature, we nevertheless deem it appropriate to examine the law relating to the doctrine of promissory estoppel, particularly with a view to doing complete justice between the parties and for the definitive settlement of all questions arising in the present lis. 54. It is a well-established principle that the Government has the power to grant, modify, alter, or withdraw fiscal benefits in the public interest. In the case of Shree Sidhbali Steels Ltd. v. State of U.P., reported in (2011) 3 SCC 193, the State Government, under its industrial policy dated 30.04.1990, had assured to new entrepreneurs a hill development rebate to the extent of 33.33% on the total electricity charges for a period of five years. The said benefit was thereafter extended for a further period of five years in respect of new industrial units established up to 31.03.1997. Subsequently, by notifications dated 18.06.1998 and 25.01.1999, a uniform electricity tariff was introduced, resulting in the rebate being curtailed to 17%. Thereafter, by a further notification dated 07.08.2000, the hill development rebate came to be withdrawn altogether. A challenge to the aforesaid ....
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....his power, however, is not unqualified. Where a clear and unequivocal representation has been made, intended to induce action, and the promisee has, acting upon such representation, altered his position, then the Government may be precluded from resiling therefrom. In such a case, the doctrine of promissory estoppel would step in, and the statutory power to withdraw or modify must yield, unless the State is able to establish an overriding public interest or other equitable considerations warranting a departure from its earlier promise. 58. Furthermore, in a recent decision of this Court in IFGL Refractories Ltd. v. Orissa State Financial Corporation, reported in 2026 SCC OnLine SC 28, wherein one of us, J.B. Pardiwala, J., was a part of the Bench, had occasion to consider the doctrine of promissory estoppel at considerable length. This Court in IFGL Refractories Ltd. (supra) considered the following authorities: (a) Motilal Padampat Sugar Mills Co. Ltd. v. State of U.P., reported in (1979) 2 SCC 409; (b) Pawan Alloys & Casting (P) Ltd. v. U.P. State Electricity Board, reported in (1997) 7 SCC 251; (c) Gujarat State Financial Corpn. v. Lotus Hotels (P) ....
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....tion; (vii) The doctrine applies with full force against the State, its departments, statutory corporations and instrumentalities, including authorities falling within Article 12 of the Constitution, which cannot arbitrarily resile from a solemn representation upon which another has acted; (viii) Where the State or its instrumentalities frame industrial or fiscal incentive schemes with the avowed object of attracting investment and establishing industries, the representations contained therein are intended to induce entrepreneurs to act upon them, and such representations are enforceable. Once an entrepreneur, relying upon such representation, establishes an industrial unit, commences commercial production, or otherwise satisfies the eligibility conditions during the currency of the scheme, and the State agencies recognise them as being eligible, the promise crystallises, and an enforceable equity arises in its favour. Whether a benefit has accrued or not in such cases depends on the facts and circumstances of each case; (ix) The grant of an exemption, concession or incentive under a statutory scheme is ordinarily defeasible, and the Government is compete....
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....ssuance of the COP Certificate. 61. At best, the issuance of the COP Certificate could have only constituted a recognition by the appellants that the respondent belonged to the category of existing industrial enterprises undergoing substantial expansion and was consequently entitled to such incentives as were otherwise lawfully available to that class of industries under the Policy and the Rules. As discussed by us hereinabove, the benefit intended for such a class of enterprises was the rebate mechanism contemplated under Clause 16(b) read with Rule 16(i)(b), and not the concessional tariff benefit under Clause 16(a), which was always intended exclusively for new industrial enterprises. We have also been apprised by the learned counsels for both parties that the respondent has already been extended the benefit contemplated under Clause 16(b) on account of its having undertaken substantial expansion. 62. Viewed thus, even assuming that the respondent was entitled to invoke the doctrine of promissory estoppel, the same could not be stretched so as to create or found an entitlement contrary to the true scope and intent of the Industrial Policy of 2019. The doctrine of promissor....
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....r as Clause 16 and Rule 16 respectively are concerned, was merely clarificatory in nature and, therefore, retrospective in operation. The substitution of the word "eligible" with "new" in Clause 16(a) and Rule 16(i)(a) respectively, as also the insertion of the expression "substantial expansion" in Clause 16(b) and Rule 16(i)(b) respectively, did not alter the substance of the Policy but merely clarified the true intent and scope of the provisions as they always stood. However, the amendment introducing, for the first time, the limitation of duration of benefit under Clause 16(b) and Rule 16(i)(b) respectively for a period of three years was substantive in nature and therefore prospective in operation. (iii) The respondent, being an existing industrial enterprise having undergone substantial expansion, was entitled only to the rebate benefit contemplated under Clause 16(b) read with Rule 16(i)(b) respectively, which benefit has already been indisputably extended to it by the appellants. Mere issuance of the COP Certificate dated 12.02.2021 did not confer any vested or accrued right upon the respondent to claim the concessional tariff benefit under Clause 16(a), particularl....