1993 (3) TMI 340 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Doctrine of "promissory estoppel" against the Government.
2. Applicability of "promissory estoppel" on the facts and circumstances of the case.

Detailed Analysis:

Point No. 1: Doctrine of "promissory estoppel" against the Government

The court examined whether the doctrine of "promissory estoppel" can compel the Government to act contrary to the statutory obligations imposed by Act 20 of 1987. The court referred to a long line of precedents to determine the parameters of the doctrine.

Relevant Precedents:

1. Union of India v. Anglo Afghan Agencies: The Supreme Court held that the government is bound by its representations in executive schemes if acted upon by the other party. However, this was based on the assumption that the scheme was executive and not legislative in character.

2. Century Spinning & Manufacturing Co. Ltd. v. Ulhasnagar Municipal Council: The Supreme Court stated that promissory estoppel cannot compel a public authority to act contrary to a statute.

3. State of Kerala v. Gwalior Rayon Silk Mfg. (Wvg.) Co. Ltd.: The court held that an agreement of the Government cannot preclude legislation on the subject.

4. Motilal Padampat Sugar Mills Co. Ltd. v. State of Uttar Pradesh: The court elaborated that promissory estoppel cannot be applied against the Government if it conflicts with statutory obligations.

5. Jit Ram Shiv Kumar v. State of Haryana: The court held that promissory estoppel is not available against the State in the exercise of its legislative or statutory functions.

6. Union of India v. Godfrey Philips India Ltd.: The court reaffirmed that promissory estoppel cannot be invoked against legislative functions or to enforce a statutory provision.

7. Pournami Oil Mills v. State of Kerala: The court applied promissory estoppel against the State for withdrawing tax exemptions promised to new small-scale units.

8. Assistant Commissioner of Commercial Taxes v. Dharmendra Trading Company: The court applied promissory estoppel where the Government withdrew granted concessions.

9. Vasantkumar Radhakisan Vora v. Board of Trustees of the Port of Bombay: The court held that promissory estoppel cannot enforce ultra vires representations.

10. Vij Resins Pvt. Ltd. v. State of Jammu and Kashmir: The court noted that while estoppel does not apply against legislation, it does apply against the State Government.

Court's Conclusion:

Based on these precedents, the court concluded that the principles of promissory estoppel cannot be invoked against the Government to compel it to act contrary to statutory obligations imposed by Act 20 of 1987. The court reiterated that the doctrine of promissory estoppel is an equitable relief and cannot override statutory duties.

Point No. 2: Applicability of "promissory estoppel" on the facts and circumstances of the case

The court examined whether the petitioner could invoke the doctrine of "promissory estoppel" based on the facts.

Facts Considered:

1. The petitioner obtained an industrial license in August 1980, and civil works commenced in 1982.
2. The petitioner did not apply for registration under G.O. Ms. No. 224 dated March 9, 1976, before the cutoff dates.
3. The scheme in G.O. Ms. No. 224 was superseded by G.O. Ms. No. 375 in 1985, which did not include Kurnool district.
4. The petitioner went into production on December 1, 1987, and applied for incentives on January 14, 1988, after Act 20 of 1987 came into force.

Court's Analysis:

The court found that the petitioner did not act on the representation made by the Government in G.O. Ms. No. 224 dated March 9, 1976, as it did not apply for registration within the permitted period and did not establish the industry solely based on the incentives offered. The court also noted that the petitioner's application for incentives was made after the statutory provisions of Act 20 of 1987 were in effect, which imposed a ceiling on the interest-free sales tax loan.

Court's Conclusion:

The court concluded that the petitioner is not entitled to invoke the doctrine of "promissory estoppel" as the factual circumstances do not support the claim that the petitioner acted on the Government's representation. Additionally, the statutory provisions of Act 20 of 1987, which have retrospective effect, bar the application of promissory estoppel in this case.

Final Judgment:

The writ petition was dismissed, and the court held that the petitioner is not entitled to the relief sought based on the doctrine of "promissory estoppel."