1989 (9) TMI 119 - HC - Central Excise

Issues Involved:
1. Applicability of the doctrine of promissory estoppel against the government.
2. Whether the Central Government could issue Notification No. 159/85-CE withdrawing the concession granted to the company.
3. Whether Notification No. 88/84-CE was applicable to the petitioner company after 11-1-1985 due to the expiration of the seven-year period.

Detailed Analysis:

1. Applicability of the Doctrine of Promissory Estoppel Against the Government:

The court analyzed whether the principle of promissory estoppel could be applied against the government when it exercises its legislative functions. The appellant argued that the government's legislative actions, including issuing and rescinding notifications under Rule 8(1) of the Central Excise Rules, 1944, were legislative in character and thus not subject to promissory estoppel. The court referred to several Supreme Court decisions, including M/s Jitram Shiv Kumar v. State of Haryana and Union of India v. Godfrey Philips India Ltd., which held that promissory estoppel cannot be invoked against the government in the exercise of its legislative powers. However, the court distinguished between legislative actions and subordinate legislation, concluding that promissory estoppel could apply to the latter. The court cited Motilal Sugar Mills v. State of U.P. and Pournami Oil Mills v. State of Kerala, emphasizing that the government could be held to its promises if the promisee had altered their position based on the promise. The court concluded that the government was bound by the doctrine of promissory estoppel in this case.

2. Whether the Central Government Could Issue Notification No. 159/85-CE Withdrawing the Concession:

The court examined whether the government could unilaterally withdraw the excise duty concessions granted under Notification No. 88/84-CE by issuing Notification No. 159/85-CE. The petitioner argued that the government was estopped from rescinding the notification due to the principle of promissory estoppel. The court noted that the petitioner had taken significant steps, including obtaining financial assistance and setting up a new factory, based on the government's assurances and notifications. The court emphasized that the petitioner had altered its position in reliance on the government's promise, which invoked the doctrine of promissory estoppel. The court rejected the appellant's argument that no detrimental action had been taken by the petitioner after the issuance of Notification No. 88/84-CE, stating that the petitioner had indeed altered its position in reliance on the government's assurances. The court also dismissed the appellant's contention that the principle of estoppel does not operate at the level of government policy, citing the Supreme Court's decision in M.P. Sugar Mills case, which required the government to provide compelling reasons for policy changes that would override public interest.

3. Whether Notification No. 88/84-CE Was Applicable to the Petitioner Company After 11-1-1985:

The court noted that the question of whether Notification No. 88/84-CE was still applicable to the petitioner company after 11-1-1985, due to the expiration of the seven-year period, was left open by the learned single judge and was to be decided by the Delhi High Court in a pending writ petition. During the appeal, the parties agreed that this question would be decided by the Delhi High Court, and the court did not address this issue in its judgment.

Conclusion:

The court upheld the learned single judge's decision, concluding that the government was bound by the doctrine of promissory estoppel and could not unilaterally revoke the benefits granted under Notification No. 88/84-CE through Notification No. 159/85-CE. The court dismissed the special appeal and left the question of the continued applicability of Notification No. 88/84-CE to the petitioner company open for determination by the Delhi High Court.

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