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2022 (3) TMI 324 - HC - Central ExciseArea based exemption - principles of primary estoppel - benefit of exemption to the petitioner s existing unit and directing the petitioner to deposit Central Excise duty - seeking to reinstate Khasra Nos. 148D, 176B, 173B 176A in village Chandrabani Khalsa, Mohobewala industrial area, Dehradun in Annexure II to the Notification 50/2003 CE dated 10.06.2003 with retrospective effect - HELD THAT - The present case and earlier decided case of M/S SANT STEEL AND ALLOYS PVT. LTD. VERSUS GOVT. OF INDIA AND OTHERS 2010 (12) TMI 1251 - UTTARAKHAND HIGH COURT are distinguishable in view of the fact that Khasra Nos. 148D, 176B, 173B 176A belonging to the petitioner were included in the exempted list mentioned in Notification No 50 / 2003. It is also apparent from the record that as per communication issued to M/s Titan Industries Ltd., Mohabewala Industrial Area, Dehradun dated 22.12.2004 they are entitled to get concession - thus, it is apparent from the record that case is distinguishable from the earlier case, in view of the fact that three Khasra nos. in respect whereof prayer has been made in this case were in fact included in Annexure No. II to grant of tax benefits. Thereafter, the subsequent notification came, which excluded three Khasra Nos. included in Annexure II 2003 Notification. In the meantime, as per the notification dated 28.06.2004, the Income Tax Department of the Government of India has extended the tax holidays benefit under Section 80IC (2) (a) of the Income Tax Act, 1961 to these particular Khasra Nos. After the publication of 2005 Notification, the Income Tax Department had also published another Notification dated 26.04.2006, though which is not a part of the writ petition but copy whereof is supplied today in the Court, whereby the Income Tax Department had not changed the tax holiday benefit extended to the aforesaid khasra numbers meaning thereby tax holiday benefit remained unaltered and untouched for the aforesaid four Khasra Nos. The Hon ble High Court of Himachal Pradesh has quoted the case of MRF LTD. VERSUS ASSISTANT COMMISSIONER (ASSESSMENT) , SALES TAX AND OTHERS 2006 (9) TMI 278 - SUPREME COURT , wherein it has been held by Hon ble Supreme Court that where a right has already accrued, for instance, the right to exemption of tax for a fixed period and the conditions for that exemptions have been fulfilled then the withdrawal of exemption during that fixed period cannot affect the already accrued right. It was also held that in those cases, the principle of promissory estoppel does not apply if it is shown that there is overriding public interest. In that case the overriding public interest would prevail. In this case, no rationale has been put forth by any of the respondents for including the four Khasras in the exemption list at annexure II and later on, for withdrawing 03 Khasra out of the 04 in another list - Annexure III vide 2005 Notification. There is no pleading of any superior public interest by the respondents. They have not also established the same. In fact, the learned counsel appearing for all the respondents never raised the question of superior public interest. So, this Court is of the opinion that principle of promissory estoppel is applicable to the present case and the State shall be stopped from taking away the benefits that were given to the petitioner by insertion of the four Khasras referred to above by including three of them in another Annexure 3 - 2005 Notification. In this case, an order has been made, under the Central Excise Act, unless a different intention appears, such amendment shall not affect any right, privilege, obligation or liability accrued or incurred under any rule notification or order so amended repealed or superseded or rescinded. Therefore, the subsequent notification, which superseded the earlier notification, in fact, took away the benefit granted to the petitioner by operation of law shall have no effect. By virtue of subsequent notification, the concession granted under Central Excise Act as well as Income Tax holidays scheme, cannot be taken away. In that view of the matter, we are inclined to allow the writ petition. Petition allowed - decided in favor of petitioner.
Issues Involved:
1. Legitimacy of the exclusion of certain Khasra numbers from the exemption list under the Central Excise Notification. 2. Application of the principles of legitimate expectation and promissory estoppel. 3. Impact of subsequent notifications on pre-existing rights and exemptions under the Central Excise Act. Issue-wise Detailed Analysis: 1. Legitimacy of the Exclusion of Certain Khasra Numbers: The petitioner sought a writ of Certiorari to quash the directions denying the benefit of exemption to their unit and directing them to deposit Central Excise duty with interest. The petitioner argued that the exclusion of Khasra Nos. 176B, 173B, and 176A from the exemption list (Annexure II) to the Central Excise Notification No. 50/2003 CE was improper and illegal. Initially, these Khasra numbers were included in the exemption list, which led the petitioner to invest significantly and expand production capacity. The subsequent exclusion of these Khasra numbers in the 2005 Notification created an anomalous situation where part of the unit was entitled to benefits while another part was not. 2. Application of the Principles of Legitimate Expectation and Promissory Estoppel: The petitioner argued that the exclusion was against the principles of legitimate expectation and promissory estoppel. The petitioner had invested funds and increased production capacity based on the incentives provided by the Central Government. The respondents' action of excluding the Khasra numbers after initially including them in the exemption list was seen as a breach of the promise made to the petitioner. The court noted that the principle of promissory estoppel applies to the government unless there is an overriding public interest, which was not demonstrated by the respondents in this case. 3. Impact of Subsequent Notifications on Pre-existing Rights and Exemptions: The court examined Section 38A of the Central Excise Act, 1944, which states that any amendment, repeal, or rescission of a notification should not affect any right, privilege, obligation, or liability acquired under the previous notification unless explicitly stated otherwise. The court found that the subsequent notification, which excluded the Khasra numbers, could not take away the benefits already granted to the petitioner under the earlier notification. The court held that the benefits given to the petitioner as per Annexure II of the Notification No. 50/2003 should continue for past, present, and future transactions. Conclusion: The court allowed the writ petition, emphasizing that the principle of promissory estoppel applied, and the government could not withdraw the benefits initially granted without demonstrating an overriding public interest. The benefits under the original notification were to be maintained for the petitioner, and the subsequent exclusion of the Khasra numbers was deemed invalid. The court directed that the benefits given to the petitioner as per Annexure II of the Notification No. 50/2003 should continue to be provided for all transactions.
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