9911796707
TMI Blog1990 (1) TMI 304X X X X Extracts X X X X X X X X Extracts X X X X ..... e petitioner's plant was completed and ready for production in October, 1974, the total investment of the company went up to even over Rs. 30 crores. It is averred that during the time the petitioner was setting up its project, it explained the difficulties of new units to the Government of India for considering fiscal measures to be adopted for the tyre industry to enable new units to achieve a reasonable return on their investments and to be able to compete with the existing old established tyre companies. 2.. It is claimed that the Government of India, after fully investigating the relevant facts pertaining to the tyre industry found that the cost of investment in putting up a new tyre industry had gone up by four times to that of the o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ide letter No. F. No. 2221/19/75 TRU. On the basis of this letter, various Collectorates in India issued trade notices highlighting the said incentive scheme. One such notice issued by the Nagpur Collectorate has been annexed as annexure "C" to the petition. The opening para of that document shows that the scheme of excise duty relief had been announced to encourage higher production. The salient features of the scheme, which, as we have noticed above, was to remain in force up to March 31, 1979, were detailed in the said trade notice of June 25, 1976. 7.. The petitioner has averred in paragraphs 19 to 27 of the petition that acting on the basis of the aforesaid scheme and with a view to achieving the maximum benefit, it made large investm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... functions, it was held that: "It is true that taxation is a sovereign or governmental function, but, for reasons which we have already discussed, no distinction can be made between the exercise of a sovereign or governmental function and a trading or business activity of the Government, so far as the doctrine of promissory estoppel is concerned. Whatever be the nature of the function which the Government is discharging, the Government is subject to the rule of promissory estoppel and if the essential ingredients of this rule are satisfied, the Government can be compelled to carry out the promise made by it. We are, therefore, of the view that in the present case the Government was bound to exempt the appellant from payment of sales tax in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ereafter been followed in a number of decisions by the Supreme Court. 14.. We are of the opinion that in the facts of the present case the doctrine of promissory estoppel against the Government can be pleaded by the petitioner. In Ceat Tyres of India Limited v. Union of India reported in [1987] 31 ELT 332 (Bom), the very question which has fallen for our consideration, viz., withdrawal of rebate on excise duty on excess production of tyres and tubes, fell for decision by the Bombay High Court. After surveying the case law, that court was of the view that the exercise of power of exemption under rule 8 of the Central Excise Rules cannot be held to be a legislative function and the promise held by the Government can be enforced. In paragrap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cause of the notification of 1976 has to be accepted. The said doctrine, we hold, is applicable. 15.. The other argument urged by Mr. Rajinder Dutt, learned counsel for the respondents was that it would be inequitable to hold the Government to its promise made in the notification of 1976. He reiterated the plea taken up in the counter-affidavit that the working of the scheme was reviewed at the end of the second financial year, i.e., 1977-78 and it was found that in respect of tyre industry certain anomalies and distortions had crept in. Therefore, the relief granted earlier was required to be withdrawn and thus in public interest the scheme was modified vide the impugned notification. It is to be noticed that apart from a bare assertion, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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