2023 (9) TMI 1366 - HC - VAT and Sales Tax

Industrial Promotional Assistance (IPA) scheme - principle of promissory estoppel - whether the respondent authorities can claim to have changed their policy midway vis- -vis the petitioners and the entities covered by the special package only? - HELD THAT - Nothing in the materials on record or from the arguments of the respondent authorities indicate that there was a declared change of policy or withdrawal of the special package given to the petitioners at any point of time. In the present case, not only was a special package specifically granted to the petitioners on March 2, 2006, but the respondent authorities went on continuously acting on the same for more two years by duly disbursing the subsidies in favour of the petitioners - The present case is not a case where the State made a promise of giving a subsidy, but subsequently changed the policy decision, thereby depriving prospective applicants for such subsidy from getting the subsidy. The attempt of the respondent authorities to invoke the principles of the 2004 scheme and the caps stipulated therein as well as the principles embodied in the 2000 scheme, per se, is entirely mala fide and arbitrary and designed to defeat the petitioners legitimate claim for the balance amount under the special package - there is no scope of giving a premium to such arbitrary endeavour of the State. The respondent authorities to ensure that the balance amount due to the petitioners, to the tune of Rs. 1,18,22,02,436/-, in terms of the break-up given in the supplementary affidavit filed by the petitioners today, to which the petitioners are entitled to under the special package-in-question, be disbursed to the petitioners at the earliest, positively within three months from date - Application allowed.

Summary

Issues Involved:
1. Entitlement to Industrial Promotional Assistance (IPA) under a special package.
2. Applicability of 2000 and 2004 Schemes to the special package.
3. Principle of estoppel in relation to the special package.

Summary:

1. Entitlement to Industrial Promotional Assistance (IPA) under a special package:
The petitioners claimed under an Industrial Promotional Assistance (IPA), a special package of financial incentive provided by the respondent authorities. The incentives were disbursed for a little more than two years, although the scheme's tenure was five years and two months. When the petitioners sought the balance disbursal, the Additional Chief Secretary, Department of Industry, Commerce, and Enterprises, decided against further disbursal, citing provisions of a 2004 scheme unrelated to the special package granted to the petitioners. The petitioners argued that the special package explicitly stated IPA at 75% of VAT and CST paid in the previous year without any financial cap, and they had obtained eligibility certificates approved by the Sales Tax Authorities.

2. Applicability of 2000 and 2004 Schemes to the special package:
The respondents contended that the special package should be read in conjunction with the 2004 Scheme. However, the court found that the special package did not refer to the 2004 Scheme, and the 2000 Scheme was only mentioned to specify subsidies, excluding interest subsidy. The court concluded that neither the 2000 nor the 2004 Schemes applied to the special package, and the respondents' reliance on these schemes was erroneous and arbitrary.

3. Principle of estoppel in relation to the special package:
The court held that the principle of promissory estoppel was not applicable, but the doctrine of substantial estoppel was relevant. The respondents had acted on the special package for more than two years, and the petitioners had taken actions and spent resources based on this. The court found that the respondents were bound by the doctrine of estoppel and could not change their stance midway. The respondents' attempt to invoke principles from the 2004 Scheme was deemed mala fide and arbitrary.

Conclusion:
The court allowed WPA 9546 of 2019, directing the respondents to disburse the balance amount of Rs. 1,18,22,02,436/- to the petitioners within three months and set aside the order dated September 14, 2019. There was no order as to costs, and urgent photostat copies of the order were to be provided upon compliance with requisite formalities.