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Judgment
,,,
P. K. JAISWAL, J.",,,
This order shall govern the disposal of W.P. No.176/2017, W.P. No.178/2017, W.P. No.180/2017, W.P. No.183/2017, W.P. No.224/2017, W.P.",,,
No.225/2017, W.P. No.229/2017 and W.P. No.231/2017 also. For the sake of convenience, the facts are borrowed from W. P. No.174/2017.",,,
By this writ petition under Article 226 of the Constitution of India, the petitioner is praying for the following reliefs :-",,,
a) To quash the impugned notification No.F-16-11/2014-B-11 dated 01.07.2015 issued by the respondent No.1 in respect of clause 2.3 thereof holding,,,
it to be ultra vires and unconstitutional as being violative of the doctrine of promissory estoppel.,,,
b) To quash the impugned notification No.F-16-4/2015/B-11 dated 31.07.2015 issued by the respondent No.1 holding it to be ultra vires and,,,
unconstitutional as being violative of the doctrine of promissory estoppel.,,,
c) In the alternative to hold that the notifications dated 01.07.2015 and 31.07.2015 will apply only to those units which have commenced production,,,
after 31.07.2015.,,,
d) To hold that the petitioner is entitled to benefits under the Scheme of 2010.,,,
e) Any other relief as this Hon'ble Court deems fit be also be granted to the petitioner.,,,
Brief facts of the case are that the writ petitioner is a Cotton Ginning Industry situated in Sendhwa region of the State of Madhya Pradesh. The,,,
products manufactured by the petitioner are “Lint Cotton†and “Cotton Seedâ€. The State of MP through its Commerce and Industries,,,
Department had formulated an Industrial Policy i.e. “Madhya Pradesh Udyog Nivesh Samvardhan Yojana, 2010 (in short “the Scheme of",,,
2010â€), whereby during the period of 01.11.2010 to 31.10.2015, a unit undertaking investment or modernization was entitled to certain benefits under",,,
the scheme. For availing the benefit of the scheme, the unit became eligible where the investment made by it was in excess of Rs.1.00 crore. Such",,,
units which were eligible were entitled for Entry Tax exemption for 5 years, Capital Investment subsidy upto Rs.15.00 lacs, Interest subsidy on term",,,
loan 5% upto maximum to Rs.20.00 lacs, exemption in the form of subsidy equivalent to the amount of Value Added Tax (VAT) and Central Sales",,,
Tax (CST) deposited by the said unit set up in backward District category “C†in the State of MP. In addition, the units were also entitled to other",,,
benefits.,,,
Under the Scheme of 2010, the cut off date for commencement of production was between 01.11.2010 and 01.11.2015. Subsequently, on",,,
01.10.2014, the Government of MP issued another incentive scheme titled as “Udyog Samvardhan Niti, 2014†(in short “the Scheme of",,,
2014â€), which provides for certain incentives to new units but these incentives were substantially disadvantageous to the incentives contained in the",,,
Scheme of 2010. However, in the Scheme of 2014, an option was provided to the new units which commenced production after 01.10.2014 but before",,,
31.10.2016 to choose the benefits either under the Scheme of 2014 or under the Scheme of 2010 and such benefit once chosen was not to be,,,
changed.,,,
The petitioner/company sought to act upon the incentive Scheme of 2010 and set up an industry in Sendhwa and commenced its production on,,,
08.11.2014, after investing huge sum of more than Rs.3.00 crores.",,,
On 15.05.2014, registration certificate was issued by the Industries Department under the MP MSME Act, 2006. On 27.05.2014, the Commercial",,,
Tax Department issued registration in favour of the petitioner. On 16.06.2014, under the Central Sales Tax Act, 1956, the petitioner was also",,,
registered by the Commercial Tax Department.,,,
On 01.07.2014, the petitioner filed an application under the Madhya Pradesh Udyog Nivesh Samvardhan Sahayata Yojana, 2010. On 16.07.2014,",,,
certificate of registration was issued to the petitioner by the respondent No.2 under the Scheme of 2010. Thereafter, the petitioner also applied for and",,,
was granted permanent electricity connection and credit facilities by the bank. Petitioner, thereafter submitted an application before the District Trade",,,
& Industries Centre (DIC) showing the details, dates and commencement of production activity and in the said application, the date of commencement",,,
of production is mentioned as 08.11.2014. The actual production commenced from 05.12.2014. The petitioner thereafter filed its declaration stating,,,
that it wished to avail the benefit under the Scheme of 2010 on 30.12.2014 (Annexure-P/13). An agreement for availing the subsidy was also entered,,,
into by the petitioner and the respondent No.1 on 12.03.2015 and the said agreement refers to entitlement of the petitioner under the Scheme of 2010,,,
and quantum of investment has already been mentioned in the agreement and the date of commencement of production. As per the agreement, the",,,
date of commencement of production is 08.11.2014. On 16.03.2015, petitioner filed a declaration to avail the benefits under the Scheme of 2010. On",,,
17.04.2015, the District Trade & Industries Centre, Barwani issued an eligibility certificate under the notification No.A-3-25/2010-1-V(96) dated",,,
13.12.2010 for exemption of 5 years from M. P. Entry Tax Act.,,,
The Scheme under the notification is titled as “Madhya Pradesh MSME Protsahan Yojana, 2014â€. Clause 2.3 of the aforesaid provides that all",,,
taxable units after 01.10.2014 will not be eligible for availing the option to chose the Scheme of 2010 and these units will be governed by the Scheme,,,
of 2014 only. However, MP MSME Scheme, 2014 was notified only on 01.07.2015 (Annexure-P/2A). Under the aforesaid notification dated",,,
01.07.2015, which took away the option of choosing the Scheme of 2010 only for textile units. Vide another notification No.F-16-4/2015/B-11 dated",,,
31.07.2015, an amendment was made in the Scheme of 2014, whereby the the benefit of Scheme of 2010 was excluded in respect of textile units",,,
which commenced the production after 01.10.2014. Such textile units were restricted to avail the benefits of Scheme of 2014 only and were ineligible,,,
for the benefits under the Scheme of 2010. On 11.08.2016, a letter was issued by the respondent No.1 stating therein that under the Scheme of 2014,",,,
textile units were not eligible to avail the benefits of Scheme of 2010 and that such units were only eligible for the benefits under the Scheme of 2014.,,,
Clause 3.4 (v),(c) and 9 of the Madhya Pradesh Udyog Nivesh Samvardhan Sahayata Yojana, 2010 deals with the eligibility, which reads as under",,,
:-,,,
3- ifjHkk""kk;sa ,oa Li""Vhdj.k %&Â",,,
 3-4 ¼v½ ^^ubZ vkS|ksfxd bdkbZ** ls vfHkizsr gS] ,slh bdkbZ tks",,,
e/;izns'k jkT; ds fdlh Hkh ftys esa LFkkfir gks ,oa ftlesa fnukad 01-",,,
11-2010 dks vFkok mlds i'pkr~ okf.kfT;d mRiknu izkjaHk gqvk,,,
Ø-
la-",bdkbZ dk izdkj,"**izkFkfedrk
fodkl[k.M** ds
fy;s
ik=rk","vU; lHkh 'ks""k
ftyksa ds
fy, ik=rk
1-,"lw{e ,oa y?kq fofuekZ.k m?
ke
ftuesa de ls de 1 djksM+
:i;s dk LfkkbZ iwath fuos'k
gks
rFkk e/;e Lrj dh vkS/kksfxd
bdkbZ","7 o""kksZ dh vof/k
ds
fy, 50 izfr'kr","5 o""kksZ dh vof/k ds
fy,
50 izfr'kr
2-,"o`gn ,oa esxk Lrj dh
vkS/kksfxd bdkbZ","10 o""kksZ dh vof/k
ds
fy, 75 izfr'kr","7 o""kksZ dh vof/k ds
fy,
75 izfr'kr
,,djksM+ dh lhek rdA,
2-,":- 25 djksM+ ls vf/kd ds LfkkbZ iwath fuos'k
okyh
uohu bdkbZ ds fy,
;k
fo?keku Lora= bdkbZ ftlds }kjk
foLrkj@'koyhdj.k gsrq VsDuksykWth
vixszMs'ku Q.M
Ldhe varxZr vuqeksfnr IykaV ,oa e'khujh esa
fo?keku
LfkkbZ iwath fuos'k dk de ls de 30 izfr'kr
¼tks :-
25 djksM+ ls de ugh gks½ ;k :- 50 djksM+
tks Hkh
de gks uohu fuos'k fd;k gksA","VsDuksykWth
vixszMs'ku Q.M
Ldhe varxZr vuqeksfnr
IykaV
,oa e'khujh gsrq fy, x,
VeZ
yksu ij okf.kfT;d mRiknu
fnukad ls 5 o""kZ ds fy, 5
izfr'kr dh nj ls",
3-,"Uohu dEiksftV bdkbZ ftlds }kjk :- 25
djksM+ ls
vf/kd dk Lfkk;h iwath fuos'k fd;k x;k gks
;k
fo?keku Lora= bdkbZ ds 'koyhdj.k ls fufeZr
dEiksftV bdkbZ","VsDuksykWth
vixszMs'ku Q.M
Ldhe varxZr vuqeksfnr
IykaV
,oa e'khujh gsrq fy, x,
VeZ
yksu ij okf.kfT;d mRiknu
fnukad ls 5 o""kZ ds fy, 7
izfr'kr dh nj ls",
Â,,,
 ijUrq] mDr lgk;rk jkf'k e- iz- 'kklu ds ikl tek dh xbZ 'kq) dj jkf'k ls vf/kd ugh gksxhA,,,
10-11-5 visjy izf'k{k.k laLFkku dh Lfkkiuk ds fy, 25 izfr'kr vuqnku fn;k tk;sx] ftldh vf/kdre lhek :i;s 25 yk[k gksxhA",,,
Clause 2.1 to 2.4 of MP MSME Protsahan Yojana, 2014 reads as under:-",,,
2- ;kstuk ds izHkko'khy gksus dh vof/k ,oa dk;Z{ks= %&",,,
2-1 ;g ;kstuk fnukad 01-10-2014 ls izHkko'khy gksxh vkSj 'kklu }kjk la'kksf/kr ;k vf/kdzfer fd;s tkus rd lEiw.kZ e/;izns'k esa izHkkoh jgsxhA,,,
2-2 ,sls lw{e] y?kq ,oa e/;e Js.kh ds fofuekZ.k m|e ftuds fy, m|ksx lao/kZu uhfr 2010 ;k iw.kZ uhfr;ksa ds rgr izksRlkgu dk dksbZ iSdst igys Lohd`r",,,
fd;k x;k gS] ;k ftldk okf.kfT;d mRiknu fnukad 01-10-2014 ds iwoZ dk gS] mUgsa bl ;kstuk dk ykHk mBkus dh ik=rk ugha gksxh] ysfdu mUgsa m|ksx,,,
lao/kZu uhfr 2010 ;k iwoZ uhfr;ksa ds rgr tSlh Hkh fLFkfr gks] lqfo/kkvksa gsrq ik=rk gksxhA,,,
2-3 fnukad 01-10-2014 dks ;k blds i'pkr fdUrq m|ksx lao/kZu uhfr 2010 dh lekiu frfFk ls ,d o""kZ ds vUnj vFkkZr fnukad 31-10-2016 rd okf.kfT;d",,,
mRiknu izkjEHk djus okyh lw{e] y?kq ,oa e/;e Js.kh dh vkS|ksfxd bdkbZ;ksa dks m|ksx lao/kZu uhfr 2014 ;k m|ksx lao/kZu uhfr 2010 ds rgr",,,
izksRlkguksa dk iSdst pquus dh Lora=rk gksxh rFkkfi ,d ckj fodYi pquus ds ckn bls cnyk ugha tk ldsxkA ijarq fnukad 01-10-2014 dks ;k blds i'pkr",,,
okf.kfT;d mRiknu izkjEHk djus okyh VsDlVkbZy bdkbZ;ksa dks oSV ,oa lh,lVh izfriwfrZ dh lqfo/kk dk ykHk ysus gsrq izksRlkguksa dk iSdst pquus",,,
dh Lora=rk ugha gksxhA mUgsa dsoy m|ksx lao/kZu uhfr 2014 ds rgr lgk;rk@lqfo/kk,a ikus dh ik=rk gksxhA",,,
2-4 iwoZ izpfyr m|ksx lao/kZu uhfr¼;ksa½ ,oa VSDlVkbZy m|ksxksa ds fy, fo'ks""k iSdst varxZr lqfo/kk@lgk;rk dk ykHk izkIr djus gsrq xfBr",,,
fofHkUu lfefr;ksa dks lekIr djrs gq,] iwoZ dh uhfr¼;ksa½ ,oa mDr fo'ks""k iSdst varxZr izkIr@Lohd`r izdj.kksa dk fujkdj.k ^^e/;izns'k ,e,l,ebZ",,,
izksRlkgu ;kstuk] 2014** esa fu/kkZfjr izfdz;kuqlkj fd;k tk,xkA",,,
On 05.11.2016 (Annexure-P/23), a letter was issued by the General Manager, District Trade & Industries Centre, Barwani with a copy to the",,,
petitioner, whereby it was stated that the petitioner had commenced operation in the year 2014 and it was entitled to the benefit of only Scheme of",,,
2014 and not Scheme of 2010. Relevant part of the order reads as under :-,,,
mijksDr lanfHkZr fo""k;karxZr ys[k gS fd esllZ osadVs'k baMLVªht fuokyh jksM+ lsa/kok ftyk&cM+okuh dk okf.kfT;d mRiknu fnukad 08-11-2014",,,
gSA bdkbZ dks rr~le; izpfyr m|ksx lao/kZu uhfr vuqlkj ykWxr iwath vuqnku o izos'k dj eqfDr dh lqfo/kk iznk; dh xbZ gSA jkT; 'kklu }kjk lw{e] y?kw,,,
,oa e/;e Js.kh dh vkS|ksfxd rFkk fuos'k ifj;kstukvksa dks m|ksx lao/kZu uhfr 2014 varxZr miyC/k lqfo/kkvksa dk ykHk iznku djus gsrq e/;izns'k ,e,l,ebZ",,,
izksRlkgu ;kstuk 2014 tkjh dh xbZ gSA bl ;kstuk ds fu;e 2-3 vuqlkj fnukad 31-10-2016 rd okf.kfT;d mRiknu izkjEHk djus okys lw{e] y?kq ,oa e/;e",,,
Js.kh dh vkS|ksfxd bdkbZ dks m|ksx lao/kZu uhfr 2014 ;k m|ksx lao/kZu uhfr 2010 ds rgr~ izksRlkguksa dk iSdst pwuus dh Lora=rk gksxh rFkkfi ,d",,,
ckj fodYi pwuus ds ckn mls cnyk ugha tk ldsxk] ijUrq fnukad 01-10-2014 dks ;k blds i'pkr~ okf.kfT;d mRiknu izkjEHk djus okys VsDlVkWbZy,,,
bdkbZ;ksa dks osV ,oa lh,lVh izfriwfrZ dh lqfo/kk dk ykHk ysus gsrq izksRlkguksa dk iSdst pwuus dh Lora=rk ugha gksxh] mUgsa dsoy m|ksx",,,
lao/kZu uhfr 2014 ds rgr~ lgk;rk@lqfo/kk,sa ikus dh ik=rk gksxhA",,,
f'kdk;rdrkZ }kjk m|ksx lao/kZu uhfr 2010 ds rgr~ lqfo/kkvksa dh ekax f'kd;r esa dh xbZ gSA bdkbZ dk okf.kfT;d mRiknu fnukad 08-11-2014 gksus ls,,,
bUgs ,e,l,ebZ izksRlkgu ;kstuk 2014 ds fu;e 2-3 vuqlkj lgk;rk@lqfo/kk dh ik=rk gSA",,,
Learned Senior Counsel for the petitioner has submitted that the Scheme of 2010 and the initial (unamended) Scheme of 2014 dated 01.10.2014,,,
providing concessions of VAT/CST refund for a period of 5 years is in the nature of representation/promise, assuring industries, which commence",,,
production between 01.11.2010 to 01.11.2015, to be extended the said concession. The petitioner had acted on the said Scheme of 2010 and set up",,,
industry and commercial production after spending huge amounts and, thus, altered in position. Therefore, the Government of M. P. is bound by the",,,
principle of promissory estoppel, to extend the said benefits under the Scheme of 2010 as assured and as agreed by virtue of agreement dated",,,
12.03.2015 between the petitioner and the State Government. The notifications dated 01.07.2015 and 31.07.2015 withdrawing the concessions partly in,,,
respect of VAT and CST by making the amendment retrospective as the cut off date for commencement of production only for textile units was,,,
made as 01.10.2014 would amount to breach of promise. He further submitted that the amendment dated 01.07.2015 would not apply to the,,,
petitioner's unit since it has been set up prior to 31.07.2015 and had also commenced production prior to 31.07.2015 and the State Government do not,,,
have the power to make retrospective effect to the Scheme of 2014, which was in operation on 01.10.2014 after notification dated 31.07.2015",,,
affecting the rights already accrued to the petitioner.,,,
Learned Senior Counsel has drawn our attention to the decision of the Apex Court in the case of Mahabir Vegetable Oils (P) Ltd. & another vs.,,,
State of Haryana & others reported in 2006 (3) SCC 620 and M/s Motilal Padampat Sugar Mills Co. Ltd. vs. State of Uttar Pradesh & others,,,
reported in 1979 (2) SCC 409 and submitted that the petitioner's unit which had made huge amount of investment of Rs.3.00 crores and started,,,
commercial production on 08.11.2014 would be entitled for the benefit of Scheme of 2010 which was formulated in the year 2010 as per clause 2.3 of,,,
MP MSME Yojana 2014 and the amendment made in the Scheme of 2010 by notifications dated 01.07.2015 and 31.07.2015 would not operate,,,
retrospectively and confined to his relief to the extent that the respondents be directed to grant the incentives in respect of VAT/CST as per Scheme,,,
of 2010 as opted by the petitioner much prior to 01.07.2014 and prayed for quashment of notifications.,,,
Shri Umesh Gajankush, Deputy A.G. appearing on behalf of the respondents, countered these submissions and supported the impugned action of",,,
the respondents.,,,
In the present writ petition and eight other identical writ petitions, Cotton Ginning manufacturers are praying inter-alia for quashing of the",,,
notification dated 01.07.2015 issued by the State Government, whereby right of the writ petitioner and other Cotton Ginning manufacturers to choose",,,
either the 2014 Industrial Policy or 2010 Industrial Policy was taken away.,,,
Alternatively, the writ petitioners have also sought a direction that the notification dated 01.07.2015 be made applicable to those industrial units",,,
which have commenced production on or after 31.07.2015.,,,
The stand of the respondents is that the benefits and exemption are special concessions granted under the Scheme of 2010 and Scheme of 2014 in,,,
the State of MP to any industrial undertaking which has complied with the eligibility conditions mentioned in the said Industrial Policies of the State of,,,
MP. There is no vested legal rights which any industrial unit has for entitlement to the benefits and exemptions under the 2010 and 2014 Industrial,,,
Policies. It is sole prerogative of the State of MP to lay down the eligibility and other terms and conditions which form the basis for any industrial,,,
undertaking to become eligible for the benefits and exemptions under any of the Industrial Policy of 2010 or 2014. Under 2010 Industrial Policy, any",,,
new Industrial Unit or existing undertaking which undertakes expansion with more than Rs.1.00 crore and commences business between 01.11.2010,,,
to 31.10.2015 would be entitled to the following exemption and benefits :-,,,
i) Entry Tax exemption for 5 years.,,,
ii) Capital investment subsidy 15% upto 15 lac.,,,
iii) Interest subsidy in term loan 5% upto maximum to Rs.20 lacs.,,,
iv) VAT/Central Sales Tax exemption upto 50% refund on the tax paid upto 5 years where the capital expenditure is upto to Rs.10 crores, if the",,,
capital investment is more than 10 crores, then refund of CST would be 75% upto maximum period of 10 years. The VAT and CST exemption stated",,,
hereinabove are with regard to the Industrial Unit set up in backward District category “C†in the State of M.P.,,,
In the draft 2014 Policy, it was further stated that any industrial undertaking claiming benefits and exemption under the Industrial Policies of 2010",,,
and 2014 can exercise an option to choose whether it seeks to claim benefits under 2010 or 2014 Industrial Policy. Once such option was exercised to,,,
choose either 2010 or 2014 policy, then any Industrial undertaking would no longer have a right to choose the other Industrial",,,
Policy. The draft 2014 Policy was applicable to only such industrial undertaking that commenced production between 01.10.2014 to 31.10.2016.,,,
The Commercial Tax Department after reviewing the implementation of the draft Industrial Policy of 2014 recommended that Textile units should,,,
no longer be granted an option of choosing benefits and exemption under 2010 Policy on the ground that availing of exemptions by the Textile,,,
Industrial Unit under 2010 Policy had resulted in huge losses to the State exchequer. The availing of benefits and exemption by Textile units under,,,
2010 Policy had resulted in a situation where such units had got higher amounts in exemptions than the actual payment of tax made by the Industrial,,,
Unit such as Cotton Ginning factory and Yarn manufacturing units.,,,
The stand of the respondents that any Industrial undertaking claiming benefits and exemptions under special policy of the State Government,",,,
cannot assert as a matter of legal right, continuation of policy where exemption exceed the actual amount of tax paid by it. For example, where",,,
Industrial undertaking hypothetically pays tax of Rs.100 but implementation of the earlier 2010 Policy infact resulted in availing of exemption and,,,
refund amount of Rs.200 which cannot be permitted to be continued. In other words, no industrial undertaking by referring to the principle of",,,
promissory estoppel and legitimate expectation can seek continuation of a policy which in implementation has resulted in availing of benefit of,,,
exemption and refund of tax which are more than the actual payment of tax paid by such undertaking to the State of MP. The State of MP by,,,
introducing 2014 Industrial Policy has continued all other benefits such as Entry Tax, Capital Investment Subsidy, Interest Subsidy etc. and",,,
modification of the clauses pertaining to exemption with regard to VAT and CST for textile units was necessary in order to protect the tax revenue of,,,
the State Government. The said opinion of the Commercial Tax Department was approved by the Cabinet by impugned notification, the Commerce,",,,
Industries and Employment Department, State of MP brought out a notification to amend the draft Industrial Policy 2014 and it was directed that",,,
option to an industrial undertaking to choose the exemption and benefit under 2010 or 2014 Industrial Policies would not be available to Textile,,,
undertaking units and the benefit to Textile units under the policy of 2014 would be available from 01.10.2014 till 31.10.2016.,,,
After examining the exemption of 2010 Industrial Policy as well as the draft 2014 Industrial Policy, the respondents authority realized that if the",,,
concessions as envisaged with respect of payment of VAT and CST under the said two Industrial Policies of 2010 and 2014 draft policy would be,,,
allowed to continue then, the actual result of it was that an industrial undertaking which is in the nature of Cotton Ginning manufacturing unit would be",,,
availing exemption in excess of the actual tax liability which was being levied on them. It is settled law that grant or continuation of any exemption by,,,
the State Government are opened to be reviewed and if there arises a situation similar to that in the present case where higher exemptions were being,,,
availed than the actual payment of tax, then the Government has sole and exclusive power to either completely withdraw the concession and",,,
exemption or alter them in a manner which is considered appropriate by the concerning State authority.,,,
In the present case, it is evident from the perusal of the terms and provision of the draft 2014 Policy that express and clear powers have been",,,
conferred upon the State Government to amend, alter or withdraw any term of the 2014 Policy at any point of time. It is abundantly clear that the",,,
State Government in both the aforesaid polices have continued nearly all of the concessions and exemptions to new or existing undertakings subject to,,,
fulfillment of terms of 2010 and 2014 Policy. The State Government and the concerned departments have not made any material changes with respect,,,
to exemption and concession pertaining to the payment of entry tax, capital investment, interest subsidy etc. The change with respect to choice or",,,
option which was conferred to all industrial undertakings in the draft 2014 Policy notified on 01.10.2014 was taken away to ensure that in the garb of a,,,
concession or exemption an undertaking in the Textile business such as cotton manufacturing undertaking may not unjustly enrich itself at the cost of,,,
State exchequer. The State Government and the concerned department inserted an amendment in clause 3.4 of the draft 2014 Policy and took away,,,
the option of Textile undertaking to choose the 2010 Policy only with a view to ensure that the exemption and concessions are not taken advantage by,,,
undertakings in Textile business to enrich themselves unjustly at the cost of the State exchequer.,,,
The action of the State Government to amend one specific clause in the policy retrospectively to protect the State exchequer and prevent unjust,,,
enrichment cannot be deemed to either unjust or unreasonable. Such an action of the State was necessary and in view of the advice of the concerned,,,
Tax Department after scrutiny of the manner in which draft 2014 was being implemented, and had caused huge losses to the State exchequer.",,,
The amendment in the draft 2014 Policy by notification dated 31.07.2015 was clearly in the interest of public. The Hon'ble Supreme Court in,,,
catena of decisions held that preservation and protection of State Revenue and public interest cannot be subservient to the commercial interest of,,,
certain industrial undertaking. Pleas of promissory estoppel and legitimate expectation are not available or entertained in writ petition against the,,,
exercise of legislative and statutory function by the State, acting in the public interest.",,,
Furthermore, introduction of an exemption by the draft 2014 Policy does not preclude the State Government from withdrawing the benefit in the",,,
final policy published on 31.07.2015 where the same was necessitated in the public interest by the State Government. Moreover, grant or continuation",,,
of any exemption or concessions are the sole prerogative of the State Government. An industrial undertaking who is a recipient of concession and,,,
exemption does not get conferred with vested legal right against the State Government for continuation of the said exemption even if its application for,,,
the last two years has been found to be detrimental to the public interest. The amendment notification dated 31.07.2015 was clearly in order to protect,,,
public interest and safeguard the State exchequer.,,,
In the case of Shri Bakul Oil Industries vs. State of Gujarat, AIR 1987 SC 142 the Apex Court has observed thus :-",,,
“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 legislationâ€.,,,
In the case of State of Rajasthan & another vs. M/s Mahaveer Oil Industries & Ors., 1996 SCC 39, the Apex Court has observed thus :-",,,
“14. Are the respondents justified in holding the State to the promise made by it in the form of an incentive scheme which is made available for a,,,
specified period of time, when new industries are set up on the basis of that scheme relying on the promise of benefits held out by it? Public interest",,,
requires that the State be held bound by the promise held out by it in such a situation. But this does not preclude the State from withdrawing the,,,
benefit prospectively even during the period of the scheme, if public interest so requires. Even in a case where a party has acted on the promise, if",,,
there is any supervening public interest which requires that the benefit be withdrawn or the scheme be modified, that supervening public interest would",,,
prevail over any promissory estoppel. 15. After examining a large number of authorities, this Court in the case of Kasinka Trading and Anr. v. Union",,,
of India and Anr. (1995 (1) SCC 274) held that when there was a supervening public interest in withdrawing the promise held out, the Government",,,
cannot be estopped from withdrawing the benefit held out under an existing scheme. In the case of Shrijee Sales Corporation and Anr. v. Union of,,,
India (1997(3) SCC 398), once again this Court after examining a number of authorities has held that if any supervening public interest so demands,",,,
the benefit under any incentive scheme can be withdrawn. The same view has been again reiterated in Union of India and Ors. v. Godhawani,,,
Brothers and Anr. (1997 (11) SCC 173).,,,
In the case of State of Rajasthan & another vs. J.K. Udaipur Udyog Ltd & another, AIR 1987 SC 142, the Apex Court has observed thus in para",,,
25 :-,,,
“An exemption is by definition a freedom from an obligation which the exemptee is otherwise liable to discharge. It is a privilege granting an,,,
advantage not available to others. An exemption granted under a statutory provision in a fiscal statute has been held to be a concession granted by the,,,
State Government so that the beneficiaries of such concession are not required to pay the tax or duty they are otherwise liable to pay under such,,,
statute. The recipient of a concession has no legally enforceable right against the Government to grant a concession except to enjoy the benefits of the,,,
concession during the period of its grant. This right to enjoy is a defeasible one in the sense that it may be taken away in exercise of the very power,,,
under which the exemption was granted.â€,,,
From the aforesaid, it is clear that the State Government has continued all major initiatives and concession granted to eligible industrial undertaking",,,
in 2010 policy and 2014 policy such as Entry Tax, Capital investment subsidy, subsidy interest etc. and the amendment inserted to take away the right",,,
of textile unit to choose 2010 policy was done only with an intention to protect the State revenue and ensure that such textile undertaking do not enrich,,,
unjustly at the cost of State exchequer. It has also come on record that the textile units were claiming higher amount of refund than actual tax, which",,,
was paid by them. Due to the aforesaid reason the amendment in 2014 policy was made and has taken away the choice initially given to the textile,,,
unit to chose 2010 policy. The main reason for amendment is that the ginning cotton factory and other textile undertaking were claiming higher amount,,,
of refund than actual tax paid by them.,,,
By notification dated 01.07.2015, the amendment was made in an earlier exemption Scheme 2014, whereby the benefit of policy 2010 was",,,
excluded in respect of textile units which had commenced the production after 01.10.2014. Such textile units were restricted to avail the benefit of,,,
State Government's 2014 scheme only and were ineligible for the benefits under the 2010 scheme.,,,
It has also been held by the Hon'ble Supreme Court that the doctrine of promissory estoppel cannot be invoked to prevent the legislative and,,,
executive organs of the Government from performing their duties, this view has been maintained by the Supreme court in the case of Jit Ram Shiv",,,
Kumar V/s. State of Haryana, AIR 1980 Supreme Court 1285, where a municipality was granted exemption from octori for developing a mandi.",,,
Subsequently, the State revoked the exemption. Later, it again granted the exemption in keeping with the terms of the original sale of plots, but levied",,,
taxes again. Even so, a claim of estoppel against its legislative power was not allowed by the court. So is the case with tax laws. If the law requires",,,
that a certain tax be collected, it cannot be given up, and any assurances by the Government that the taxes would not be collected would not bind the",,,
Government, when it chooses to collect the taxes. Thus it was held that when there was a clear and unambiguous provision of law that provides for a",,,
certain level of taxation, (even though lowered to a reasonable level by the device of subordinate legislation through the notification), no question of",,,
estoppel arises. The sovereign authority of the State to levy taxes cannot be abridged on the principle of promissory estoppel since the levy of tax is,,,
for the purposes of the governance and the development of the State, which is greater than the rights of any individual person or entity.",,,
In view of the judgment of the Apex Court in the case of Union of India V/s. Godfrey Philips India Ltd, reported as AIR 1986 SC 806 it is not",,,
necessary to make any reference to the earlier decisions in the field. After making a detailed reference to the earlier decisions, this is what the",,,
Supreme Court has observed in para 14 of the judgment :-,,,
“Of course we must make it clear and that is also laid down in Motilal Sugar Mills case (supra), that there can be no promissory estoppel against",,,
the legislature in the exercise of its legislative functions nor can the Government or public authority be debarred by promissory estoppel from enforcing,,,
a statutory prohibition. It is equally true that promissory estoppel cannot be used to compel the Government or a public authority to carry out a,,,
representation or promise which is contrary to law or which was outside the authority or power of the officer of the Government or of the public,,,
authority to make. We may also point out that the doctrine of promissory estoppel being an equitable doctrine it must yield when the equity so requires,",,,
if it can be shown by the Government or public authority that having regard to the facts as they have transpired, it would be inequitable to hold the",,,
Government or public authority to the promise or representation made by it, the Court would not raise an equity in favour of the person to whom the",,,
promise or representation is made and enforce the promise or representation against the Government or public authority. The doctrine of promissory,,,
estoppel would be displaced in such a case, because on the facts, equity would not require that the Government or public authority should be held",,,
bound by the promise or representation made by it. This aspect has been dealt with fully in Motilal Sugar Mills case (supra) and we find ourselves,,,
wholly in agreement with what has been said in that decision on this point.â€,,,
It is not disputed nor it could be disputed that there can be no promissory estoppel against the legislature in the exercise of its legislature functions.,,,
Considering the catena of decisions earlier rendered by the Apex Court in the case of M/s. Manuelsons Hotels Pvt. Ltd. V/s. State of Kerala,,,
reported as AIR 2016 SC 2322, it has been held in para 30 to 39, which reads as under :-",,,
“30. However, when it came to the applicability of thedoctrine of promissory estoppel, this Court relied upon the observations made in State of",,,
Rajasthan and another v. J.K. Udaipur Udyog Ltd. and another, (2004) 7 SCC 673, and Arvind Industries and others v. State of Gujarat and others,",,,
(1995) 6 SCC 53.,,,
From the State of Rajasthan case, para 25 was quoted by this Court in order to arrive at a conclusion that the recipient of an exemption granted by",,,
a fiscal statute would have no legally enforceable right against the Government inasmuch as such right is a defeasible one in the sense that it may be,,,
taken away in exercise of the very power under which the exemption was granted. What was missed from that case was the very next paragraph,,,
which states as follows:-,,,
“In this case the Scheme being notified under the power in the State Government to grant exemptions both under Section 15 of the RST Act and,,,
Section 8(5) of the CST Act in the public interest, the State Government was competent to modify or revoke the grant for the same reason. Thus",,,
what is granted can be withdrawn unless the Government is precluded from doing so on the ground of promissory estoppel, which principle is itself",,,
subject to considerations of equity and public interest. (See STO v. Shree Durga Oil Mills). The vesting of a defeasible right is therefore, a",,,
contradiction in terms. There being no indefeasible right to the continued grant of an exemption (absent the exception of promissory estoppel), the",,,
question of the respondent Companies having an indefeasible right to any facet of such exemption such as the rate, period, etc. does not arise.†(at",,,
Para 26),,,
The aforesaid paragraph 26 has been noticed by this Court in Mahabir Vegetable Oils (P) Ltd. and another v. State of Haryana and others, (2006)",,,
3 SCC 620, (see paragraphs 34 and 35). It is clear, therefore, that the reliance by this Court in the Shree Sidhbali Steels Ltd. case upon the aforesaid",,,
judgment when it comes to non application of the principle of promissory estoppel to exemptions granted under statute would be wholly inappropriate.,,,
Similarly, the Arvind Industries case is again a judgment in which it is clear that the doctrine of promissory estoppel could have no application",,,
because the appellant in that case was not able to show that any definite promise was made by or on behalf of the Government and that the appellant,,,
had acted upon such promise. (see paragraph 9).,,,
It is clear, therefore, that Shree Sidhbali Steels Limited was a case which was concerned only with whether a benefit given by a statutory",,,
notification can be withdrawn by the Government by another statutory notification in the public interest if circumstances change - (see paragraphs 30,,,
and 42). Such is not the case before us. On the facts before us, a notification which ought to have been issued under Section 3A after it was",,,
introduced pursuant to a promise made was not issued at all. And change in circumstances leading to overriding public interest displacing the doctrine,,,
of promissory estoppel is absent in the facts of the present case. We are, thus, satisfied that the aforesaid judgment can have no application",,,
whatsoever to the facts of the present case.,,,
Shri Radhakrishnan then referred us to Excise Commissioner, U.P. v. Ram Kumar, (1976) 3 SCC 540 at para 19, for the proposition that it is now",,,
well settled by a catena of decisions that there can be no question of estoppel against the Government in the exercise of its legislative, sovereign, or",,,
executive powers.,,,
This very passage was referred to in M/S Motilal Padampat Sugar Mills and was explained thus: -,,,
“The next decision to which we must refer is that in Excise Commissioner U.P. Allahabad v. Ram Kumar [(1976) 3 SCC 540 : 1976 SCC (Tax),,,
360 : 1976 Supp SCR 532] . This was also a decision on which strong reliance was placed on behalf of the State. It is true that, in this case, the Court",,,
observed that “it is now well settled by a catena of decisions that there can be no question of estoppel against the Government in the exercise of its,,,
legislative, sovereign or executive powers,†but for reasons which we shall presently state, we do not think this observation can persuade us to take a",,,
different view of the law than that enunciated in the Indo- Afghan Agencies case.… It will thus beseen from the decisions relied upon in the judgment,,,
that the Court could not possibly have intended to lay down an absolute proposition that there can be no promissory estoppel against the Government in,,,
the exercise of its governmental, public or executive powers. That would have been in complete contradiction of the decisions of this Court in the",,,
Indo-Afghan Agencies case, Century Spinning and Manufacturing Co. case and Turner Morrison case and we find it difficult to believe that the Court",,,
could have ever intended to lay down any such proposition without expressly referring to these earlier decisions and overruling them. We are,",,,
therefore, of the opinion that the observation made by the Court in Ram Kumar case does not militate against the view we are taking on the basis of",,,
the decisions in the Indo-Afghan Agencies case, Century Spinning & Manufacturing Co. case and Turner Morrison case in regard to the applicability",,,
of the doctrine of promissory estoppels against the Government.†[SCR at pp. 689, 691]",,,
Shri Radhakrishnan then referred us to the judgment in Sharma Transport v. Govt. of A.P., (2002) 2 SCC 188 at paragraph 24, and Bannari",,,
Amman Sugars Ltd. v. CTO, (2005) 1 SCC 625, at paragraph 20, for the proposition that promissory estoppel must yield to overriding public interest.",,,
There can be no quarrel with this proposition except that, as has been pointed out above, this case does not contain any such overriding public interest.",,,
Shri Radhakrishnan also referred us to Avinder Singh v. State of Punjab, (1979) 1 SCC 137, at paragraphs 11 and 17, for the proposition that the",,,
legislature cannot delegate its essential legislative functions. We are at a loss to understand how this authority would at all apply to the facts of the,,,
present case as it is not the State’s stand that there is any excessive delegation of legislative power in the present case.,,,
In the present case, it is clear that no Writ of Mandamus is being issued to the executive to frame a body of rules or regulations which would be",,,
subordinate legislation in the nature of primary legislation (being general rules of conduct which would apply to those bound by them). On the facts of,,,
the present case, a discretionary power has to be exercised on facts under Section 3A of the Kerala Buildings Tax Act, 1975. The non- exercise of",,,
such discretionary power is clearly vitiated on account of the application of the doctrine of promissory estoppel in terms of this Court’s judgments,,,
in Motilal Padampat and Nestle (supra). This is for the reason that non-exercise of such power is itself an arbitrary act which is vitiated by non-,,,
application of mind to relevant facts, namely, the fact that a G.O. dated 11.7.1986 specifically provided for exemption from building tax if hotels were",,,
to be set up in the State of Kerala pursuant to the representation made in the said G.O. True, no mandamus could issue to the legislature to amend the",,,
Kerala Buildings Tax Act, 1975, for that would necessarily involve the judiciary in transgressing into a forbidden field under the constitutional scheme",,,
of separation of powers. However, on facts, we find that Section 3A was, in fact, enacted by the Kerala legislature by suitably amending the Kerala",,,
Buildings Tax Act, 1975 on 6.9.1990 in order to give effect to the representation made by the G.O. dated 11.7.1986. We find that the said provision",,,
continued on the statute book and was deleted only with effect from 1.3.1993. This would make it clear that from 6.9.1990 to 1.3.1993, the power to",,,
grant exemption from building tax was statutorily conferred by Section 3A on the Government. And we have seen that the statement of objects and,,,
reasons for introducing Section 3A expressly states that the said Section was introduced in order to fulfill one of the promises contained in the G.O.,,,
dated 11.7.1986. We find that, the appellants, having relied on the said G.O. dated 11.7.1986, had, in fact, constructed a hotel building by 1991. It is",,,
clear, therefore, that the non-issuance of a notification under Section 3A was an arbitrary act of the Government which must be remedied by",,,
application of the doctrine of promissory estoppel, as has been held by us hereinabove.",,,
The ministerial act of non issue of the notification cannot possibly stand in the way of the appellants getting relief under the said doctrine for it would,,,
be unconscionable on the part of Government to get away without fulfilling its promise. It is also an admitted fact that no other consideration of,,,
overwhelming public interest exists in order that the Government be justified in resiling from its promise. The relief that must therefore be moulded on,,,
the facts of the present case is that for the period that Section 3A was in force, no building tax is payable by the appellants.",,,
However, for the period post 1.3.1993, no statutory provision for the grant of exemption being available, it is clear that no relief can be given to the",,,
appellants as the doctrine of promissory estoppel must yield when it is found that it would be contrary to statute to grant such relief. To the extent,,,
indicated above, therefore, we are of the view that no building tax can be levied or collected from the appellants in the facts of the present case.",,,
Consequently, we allow the appeal to the extent indicated above and set aside the judgment of the High Court.",,,
There is no iota of doubt that in the event of public interest the State Government has every power to make necessary amendments to withdraw,,,
the benefits / exemptions partly ie., exemption in the form of subsidy equivalent to the amount of Value Added Tax (VAT) and Central Sales Tax",,,
(CST). Thus, the power exercised by the State Government making the aforesaid amendment cannot be said to be arbitrary, unreasonable or in",,,
violation of the principles of promissory estoppel.,,,
For the above mentioned reasons, the Writ Petition No.174/2017, W.P.No.176/2017, W.P.No.178/2017, W.P.No.180/2017, W.P.No.183/2017,",,,
W.P.No.224/2017, W.P.No.225/2017, W.P.No.229/2017 and W.P.No.231/2017, have no merit and are, accordingly, dismissed.",,,
No orders as to costs.,,,