1999 (1) TMI 503 - HC - VAT and Sales Tax

Summary

Issues:
1. Interpretation of Sales Tax Incentive Schemes for Industries, 1987 and 1989.
2. Application of the principle of promissory estoppel in government schemes.

Analysis:

Issue 1: Interpretation of Sales Tax Incentive Schemes for Industries, 1987 and 1989
The petitioner, a partnership firm engaged in oil extraction, relied on the Sales Tax Incentive Schemes for Industries, 1987 and 1989, issued by the State of Rajasthan. The schemes aimed to provide tax concessions to industrial units for sales made in the course of inter-State trade or commerce. The petitioner invested significantly in establishing an oil industry based on the promises made by the government under these schemes. However, a subsequent amendment excluded oil extraction industries from the scheme, leading to a legal challenge by the petitioner. The Court examined the timeline of events, the language of the schemes, and the public interest aspect of amending the schemes. The Court noted that exemption under the schemes was not an absolute right and could be altered or withdrawn in public interest.

Issue 2: Application of the principle of promissory estoppel in government schemes
The petitioner argued that the respondents were bound by the principle of promissory estoppel, citing various legal precedents. The petitioner contended that the government's amendment to exclude oil extraction industries after the petitioner had already made substantial investments was unfair and against the principles of estoppel. The Court considered the petitioner's reliance on the promises made by the government while investing in the industry. The Court, in line with previous judgments and the principle of promissory estoppel, held that the respondents were estopped from changing the incentive scheme to the detriment of the petitioner. The Court emphasized that the petitioner had acted based on the assurances given by the government and was entitled to the benefits under the Sales Tax Incentive Schemes for Industries, 1987 and 1989. Consequently, the Court allowed the writ petition, quashed the amendment excluding oil extraction industries, and ruled in favor of the petitioner, granting them the benefits under the said schemes.

In conclusion, the judgment delves into the interpretation of government schemes, the application of promissory estoppel in such contexts, and the rights of parties in reliance on government promises. The Court's decision highlights the importance of honoring commitments made by the government to encourage investment and industrial growth.