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TMI Blog1994 (3) TMI 359X X X X Extracts X X X X X X X X Extracts X X X X ..... the issuance of the rescinded G.O. The impugned G.O. dated March 26, 1993, is sought to be assailed by invoking, mainly, (1) the doctrine of promissory estoppel, (2) the doctrine of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, etc. Now, adverting to the contentions, we shall first take up the question whether the impugned G.O. is hit by the doctrine of promissory estoppel. It is submitted by the learned counsel, Sri E. Manohar, that pursuant to the exemption granted by the rescinded G.O., some of the petitioners have started the industry in wheat and wheat products, while some others expanded the existing industry on the promise made by the Government that the exemption would be for a period of five years. Inasmuch as the exemption so granted is now withdrawn through the impugned G.O., it is contended by the learned counsel that the G.O. is hit by the doctrine of promissory estoppel. To constitute promissory estoppel, it needs to be noticed, the following ingredients should be satisfied ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ales Tax Act. Therefore, it is to be held that passing of the impugned G.O. is a legislative act. When once it is of legislative nature, the doctrine of promissory estoppel is not applicable. In Narinder Chand Hem Raj v. Lt. Governor, Administrator, Union Territory, Himachal Pradesh [1972] 29 STC 169 the Supreme Court held that the power to impose a tax is a legislative power, that that power can be exercised by the Legislature directly or it may delegate that power to some other authority, and that exercise of that power either by the Legislature or by its delegate is also of legislative character. Therefore, it could be held that power to grant exemption by the Government is a legislative nature; if power to grant exemption includes power to rescind the same, the power to rescind the exemption granted is also in the nature of legislative power. In Excise Commissioner, U.P. v. Ram Kumar AIR 1976 SC 2237 the Supreme Court, while dealing with the point, i.e., the validity of the appellants' demand from the respondents in respect of sales tax at the rate of ten paise per rupee on the retail sales of country spirit made by latter, held: "The fact that sales of country liquor had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he challenge on the ground of doctrine of legitimate expectation, it is to be noted that the earlier G.O. presently rescinded spelt out a period of five years being covered in the matter of exemption from payment of sales tax and that was withdrawn, as contended by Sri E. Manohar, without affording any opportunity or notice to the petitioners before issuance of the impugned G.O. and therefore it is invalid being hit by the above doctrine. The learned Government Pleader, on the other hand, submitted that the rescinded G.O. was not issued in relation to any particular individual and therefore the question of issuance of any notice or affording opportunity, as contended, before its withdrawal does not arise. It is to be noticed that the withdrawal of exemption, even during the run of five years period spelt out by the rescinded G.O., is one effected in the public interest, particularly to augment the financial resources of the State in the wake of the policy decision of the Government to impose prohibition of arrack in the State. When it is by virtue of the policy of the Government in order to achieve the aims and objects in the directive principles of the State as envisaged in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the doctrine of legitimate expectation and held: "The doctrine does not give scope to claim relief straightaway from the administrative authorities as no crystallised right as such is involved. The protection of such legitimate expectation does not require the fulfilment of the expectation where an overriding public interest requires otherwise ..... A case of legitimate expectation would arise when a body by representation or by past practice aroused expectation which it would be within its powers to fulfil. The protection is limited to that extent and a judicial review can be within those limits. But as discussed above, person who bases his claim on the doctrine of legitimate expectation, in the first instance, must satisfy that there is a foundation and thus has locus standi to make such a claim. In considering the same, several factors which give rise to such legitimate expectation must be present. The decision taken by the authority must be found to be arbitrary, unreasonable and not taken in public interest..... If a denial of legitimate expectation in a given case amounts to denial of right guaranteed or is arbitrary, discriminatory, unfair or biased, gross abuse of power ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l sales of flowers, vegetables and fruits (other than potatoes, onions, nuts, coconuts, dehydrated vegetables, canned, preserved, dried or dehydrated fruits), from the tax payable and later by a notification dated December 16, 1954 the earlier notification was modified excluding the sales of sweet potatoes, yam and tapioca, garlic, ginger, green chillies and other similar varieties of vegetables from exemption and the latter notification was challenged. The Madras High Court held that the power of granting exemption conferred on the Government was not exhausted when the first notification was issued and that the Government had the power under section 6(1) to modify or amend that notification. In State of Kerala v. Velayudhan [1963] 14 STC 382 (Ker) the State Government issued a notification exempting dealers other than the first and last dealers from the payment of tax in respect of the sale of copra on condition that they took out licence under rule 21 of the Travancore-Cochin General Sales Tax Rules on payment of fees and that exemption was withdrawn by the Government by issuing another notification and the same was challenged. The High Court of Kerala held that if the State Go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xemption through the present impugned G.O. is bad for the reason that there is no empowering provision in the statute for the State Government to rescind the earlier exemption, is not sustainable. In so far as the contention that there is no change in the position of the industry in wheat and wheat products in the few years after granting of exemption through the rescinded G.O. is concerned, it is to be seen that even according to some of the petitioners themselves they have been making good profits subsequent to 1991 and that the State Government has taken it as a policy decision to impose prohibition in the State causing depletion to financial resources and these aspects, in our view, are sufficient to provide basis for the withdrawal of exemption. In so far as the contention that the impugned G.O. was issued without issuing any notice to the petitioners or affording them with the opportunity of being heard is concerned, as submitted by the learned Government Pleader, in matters involving exercise of legislative functions the question of principles of natural justice of the kind complained of, was not to a particular individual or the petitioners as such and therefore the que ..... X X X X Extracts X X X X X X X X Extracts X X X X
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