1992 (2) TMI 361 - HC - VAT and Sales Tax

Summary

Issues:
1. Interpretation of government resolutions regarding sales tax deferment for new industries.
2. Application of the doctrine of promissory estoppel in cases of government promises.

Analysis:
1. The petitioner relied on government resolutions from 1977 and 1980 to set up a new industry for manufacturing steel tubes and pipes. The petitioner invested a significant amount and obtained eligibility and deferment certificates for sales tax benefits. However, a subsequent resolution in 1982 listed certain industries, including steel pipes and tubes, as excluded. The sales tax authorities then claimed the petitioner's industry fell under the excluded category, rendering them ineligible for the sales tax deferment scheme. This led to the petitioner filing a petition challenging the denial of benefits based on the new resolution.

2. The main contention raised by the petitioner was that they had established the industry based on the promises made in the earlier government resolutions and had already started commercial production before the exclusion list was issued. The question before the court was whether the doctrine of promissory estoppel applied in this scenario, preventing the government from retracting its promise and denying the sales tax benefits. Citing a previous case where the doctrine was upheld in a similar situation, the court ruled in favor of the petitioner. The court held that despite the subsequent resolution excluding certain industries, the petitioner was entitled to the sales tax deferment benefits specified in the eligibility and deferment certificates.

3. The court partially allowed the petition, declaring that the petitioner remained entitled to the sales tax deferment benefits as per the original certificates, despite the later government resolution excluding their industry from the scheme. The ruling upheld the application of promissory estoppel in safeguarding the legitimate expectations of parties who had relied on government assurances to establish new industries and avail of associated benefits. The judgment concluded by making the rule absolute in favor of the petitioner, without imposing any costs.