1990 (1) TMI 304 - HC - VAT and Sales Tax

Summary

Issues:
- Challenge to withdrawal of excise duty relief on excess production of tyres and tubes
- Application of doctrine of promissory estoppel against the Central Government

Analysis:
The petitioner, a tyre manufacturing company, availed excise duty relief under a notification issued by the Government of India in 1976 to encourage higher production. The relief granted a rebate of 25% excise duty on excess clearance. The petitioner made substantial investments based on this scheme. However, in 1978, the Government issued a notification withdrawing the benefit, leading to the petitioner challenging the withdrawal. The main contention was that the original notification was time-bound until March 31, 1979, and could not be revoked due to promissory estoppel. The petitioner argued that the Government was estopped from withdrawing the benefit and lacked the power to do so until the specified date.

The doctrine of promissory estoppel against the Government was a crucial aspect of the case. The petitioner relied on legal precedents, including the Motilal Padampat Sugar Mills case, to support their claim. The court analyzed the application of promissory estoppel in governmental actions, emphasizing that the Government could be compelled to honor its promises under certain conditions. The court also discussed the limitations of promissory estoppel, stating that it could not be used to enforce promises contrary to law or outside the authority of the Government.

In a significant reference to Ceat Tyres of India Limited v. Union of India, the court highlighted the enforceability of promises made by the Government under excise duty exemption schemes. The court rejected the Government's argument of withdrawing the relief in public interest without substantial evidence to support the claim. The court emphasized that mere assertions of policy changes or scheme reviews were insufficient to justify revoking the benefit promised to the petitioner. Ultimately, the court quashed the impugned notification and ruled in favor of the petitioner, applying the doctrine of promissory estoppel against the Government.

In conclusion, the judgment upheld the petitioner's challenge to the withdrawal of excise duty relief, emphasizing the application of promissory estoppel against the Government in honoring its promises. The court's decision was based on legal principles and precedents supporting the enforceability of governmental commitments, particularly in the context of excise duty exemption schemes.