2003 (10) TMI 622 - HC - VAT and Sales Tax

Issues Involved:
1. Doctrine of Promissory Estoppel
2. Doctrine of Legitimate Expectation
3. Principles of Natural Justice
4. Want of Enabling Provision in the Statute to Withdraw the Exemption Granted
5. Implicit Waiver of Right to Rescind the Beneficial Exemption Before the Lapse of Fixed Period

Detailed Analysis:

1. Doctrine of Promissory Estoppel:
The petitioners argued that the withdrawal of the exemption granted by the Government Order (G.O.) violated the doctrine of promissory estoppel. They contended that they had started or expanded their industries based on the promise of a five-year exemption from sales tax. However, the court found that the petitioners did not establish the necessary ingredients for promissory estoppel, such as a clear promise made to them individually. The court also noted that the exemption was obtained through misrepresentation by the Roller Flour Mills Association. Furthermore, the court held that the impugned G.O. was a legislative act, and as per established legal precedents, the doctrine of promissory estoppel does not apply to legislative actions.

2. Doctrine of Legitimate Expectation:
The petitioners claimed that the withdrawal of the exemption without notice violated their legitimate expectation. The court, however, noted that the withdrawal was in public interest to augment the state's financial resources due to the prohibition of arrack. The court cited several rulings, including Excise Commissioner, U.P. v. Ramkumar and Union of India v. Hindustan Development Corpn., to emphasize that legitimate expectation cannot override public interest. The court concluded that the doctrine of legitimate expectation was not applicable in this case.

3. Principles of Natural Justice:
The petitioners argued that the impugned G.O. was issued without notice or an opportunity to be heard, violating principles of natural justice. The court held that in matters involving legislative functions, such as the issuance of the impugned G.O., the principles of natural justice do not require individual notice or hearing.

4. Want of Enabling Provision in the Statute to Withdraw the Exemption Granted:
The petitioners contended that there was no statutory provision empowering the government to withdraw the exemption. The court referred to Section 9 of the General Sales Tax Act and Section 15 of the General Clauses Act, which together provide the power to grant and rescind exemptions. The court cited several precedents, including A. Subramania Iyer v. Travancore-Cochin State and K. Parthasarathy Mudaliar v. State of Madras, confirming that the power to grant exemption includes the power to rescind it.

5. Implicit Waiver of Right to Rescind the Beneficial Exemption Before the Lapse of Fixed Period:
The petitioners argued that specifying a five-year period in the rescinded G.O. implied a waiver of the right to withdraw the exemption before the period's lapse. The court found no foundation for this contention in the pleadings and noted that waiver must be properly pleaded and proved, as established in Motilal Padampat Sugar Mills Co. Ltd. v. State of Uttar Pradesh. The court also emphasized that the withdrawal was in public interest.

Conclusion:
The court dismissed the writ petitions, finding no merit in the contentions raised by the petitioners. The impugned G.O. was upheld as a valid exercise of legislative power, and the doctrines of promissory estoppel and legitimate expectation were deemed inapplicable. The court also confirmed the government's authority to rescind exemptions and rejected the arguments related to natural justice and implicit waiver.

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