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TMI Blog2020 (5) TMI 391X X X X Extracts X X X X X X X X Extracts X X X X ..... 009) was formulated and notified inviting entrepreneurs to set up industries in the State to achieve rapid economic growth offering to make use of the advantages available in the State and the concessions assured. This offer was acted upon by the Petitioners to set up the industries, making huge investments under the firm belief that they were entitled to have the benefit of investment subsidy to an extent of 25% of the infrastructure cost, subject to maximum of the Sales Tax / CST paid in the State during the first 'five' years. Obviously, there is a cap / ceiling fixed already with regard to the extent of benefit payable as per the Industrial Policy notified at the first instance, as incorporated in the Rules notified subsequently, to the effect that it would be 25% of the infrastructure cost made by the entrepreneurs subject to maximum of the Sales Tax / CST paid in the State for the first 'five' years. The commodity thus manufactured fixing the 'sale price' (based on the above factors, also reckoning the element of 'investment subsidy' surely to get as offered / assured as per the notified Industrial Policy / Rules) has already been markete ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to the Petitioners, against the tax liability to be cleared by the Petitioners in respect of any past, present or future transactions - Petition allowed. - Writ Petition (T) Nos. 92 of 2012 and 36 of 2013. - - - Dated:- 4-10-2019 - Shri P. R. Ramachandra Menon, Chief Justice And Hon'ble Shri Parth Prateem Sahu, Judge For the Petitioners : Shri Neelabh Dubey and Mrs. Smiti Sharma, Advocates For the Respondents : Shri S.C. Verma, Advocate General and Shri Vikram Sharma, Deputy Government Advocate CAV JUDGMENT PER P. R. RAMACHANDRA MENON, CHIEF JUSTICE 1. Following are the important questions to be considered and answered in these writ petitions : (a) Can the State turn its back on the entrepreneurs (who set up the industries based on the promise as to the concessions to be extended in terms the Industrial Policy for the year 2004-2009) withdrawing the benefits after the expiry of the Policy period and after giving shape to and commencement of a new Industrial Policy for the period 2009-2014; unilaterally re-writing the terms of the expired Policy and the relevant Rules, to deny/curtail the benefits under the former Policy and retract from the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oncessions / incentives were provided. In the cases of 'Mega Projects' (where investment in the fixed assets is in excess of ₹ 100 crores) the concession / assistance provided was to the extent of 25% of the infrastructure cost, subject to a maximum of 5 years' sales tax payment. In addition to that, various other concessions, like Electricity duty exemption, exemption from Entry tax, exemption from payment of Stamp duty and such other benefits were also provided to attract the investors. 6. In consideration of the said offer/promise, the Petitioner-Company in WPT No.36/2013 engaged in the manufacturing / processing of minerals to produce sponge iron, steel billets / blooms, ferro alloys and captive generation of power etc. set up a manufacturing unit at a rural village Borjhara Industrial State, Urla and Guma, Raipur. Though the said Industrial Policy was for a period of 5 years, the State, for some reasons, terminated it prematurely and brought out a new Industrial Policy for the period '2004-2009', to be effective from 01.11.2004. According to the Petitioner, there was no much difference between the two policies in terms of concessions and an optio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te. 2.7 To create an enabling environment for increasing industrial production, productivity and quality upgradation to face the challenge of competition emerging from economic liberalisation. On the basis of the extent of investment, the industries were also classified into 'four' different categories, as provided under Clause 4.4.4 in the following manner. (i) Small scale industries - As defined by the Government of India from time to time; (ii) Medium-Large industries - Industries with total capital investment up to ₹ 100 crore except the small scale industries; (iii) Mega projects - Large industries with total capital investment between ₹ 100 crore and ₹ 1000 crore; and (iv) Very large industries with total capital investment of over ₹ 1000 crores. 10. Based on the Industrial Policy as above, the State Government issued a notification dated 18.08.2005, whereby the Chhattisgarh State Infrastructure Cost Fixed Capital Investment Subsidy Rules, 2004 (for short, 'the Rules, 2004') (Annexure-P/2) were framed and published with retrospective effect from 01.11.2004. As per the above Investment Subsidy Notificati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r, the Respondents/State amended the Investment Subsidy Rules, which were brought into force w.e.f. 18.08.2005, as per Annexure-P/11 Notification dated 20.03.2012; which made the Petitioner to submit another detailed representation (Annexure-P/12) seeking to extend the benefit as originally promised. This however did not give any positive results and hence the writ petition, seeking to set aside Annexure-P/9 and Annexure-P/11, besides seeking for a direction to the Respondents to grant subsidy as per the Industrial Policy of 2004-2009, the Fixed Capital Investment Subsidy Scheme and the Rules, 2004, i.e., to an extent of 25% of the total investment of the infrastructure investment made by the Petitioner, subject to a maximum of the Sales Tax paid in the State for 5 years. 13. Coming to WPT No. 92/2012 , the Petitioner-Company is engaged in the manufacturing/processing of minerals and selling Ferro Alloys products. Based on the Industrial Policy as aforesaid (2004-2009), the Petitioner-Company got attracted to the offer and accordingly, a manufacturing unit was set up at rural village Manuwapali in District of Raigarh (Chhattisgarh). The investment was below 100 crores and he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -clauses B and C of Clause 2 in Annexure 4 of the Industrial Policy 2004-2009 were amended by fixing an 'additional cap/ceiling' to the amount of subsidy payable under the Policy to various categories of industries, with retrospective effect from 01.11.2004. By virtue of the said modification, the maximum subsidy payable in the case of 'Medium - Large Scale' industries (as of the Petitioner) was capped at ₹ 90 lakhs, mentioning in the Notification, that it was inadvertently not inserted earlier . This was sought to be objected by the Petitioner-Company who attended the 18th State Level Committee Meeting of the Government of Chhattisgarh held on 01.02.2012 and pointed out the arbitrariness in the change brought about after expiry of the Policy period 2004-2009; simultaneously insisting for payment of subsidy/benefit as assured under the original scheme. Annexure-P/10 representation was also submitted on 08.02.2012 in this regard, but, without any application of mind, the Respondents issued two letters dated 11.05.2012 (Annexure-P/11), intimating the Petitioner that, in view of Annexure-P/1 Notification dated 10.08.2011, the Infrastructure Subsidy claim of & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r consideration in the Cabinet, who granted the approval to make necessary corrections and it was accordingly, that the mistake was rectified. It is pointed out that the rectification of mistake has been effected in 'public interest' and to protect the revenue of the State, which inadvertently was to be passed on to the hands of the entrepreneurs. 16. Shri Neelabh Dubey and Mrs. Smiti Sharma, learned counsel, who addressed the Court on behalf of the Petitioners made submission with reference to the facts and figures brought on record and the relevant provisions of law. They also placed reliance on the principles of 'Legitimate Expectation' and Promissory Estoppel'. Reliance was sought to be placed on various rulings of the Apex Court in this regard, as reported in (2016) 6 SCC 766 (Manuelsons Hostels Private Limited vs. State of Kerala and Others); [2006] 148 STC 225 (SC) (MRF Ltd.vs. Assistant Commissioner (Assessment), Sales Tax and Others); (2004) 1 SCC 139; (State of Orissa and Others vs. Mangalam Timer Products Ltd.); (2008) 13 SCC 213 (Kusumam Hostels Pvt. Ltd. vs. Kerala State Electricity Board and Others) and that of the Division Bench Judgment of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e equity so require. If it can be shown by the Government or public authority that having regard to the facts as they have transpired, it would be unequitable to hold the Government or public authority to the promise or representation made by it, the court would not raise an equity in favour of the person to whom the promise or representation is made and enforce the promise or representation against the Government or public authority. The doctrine of promissory estoppel would be displaced in such a case because on the facts, equity would not require that the Government or public authority should be held bound by the promise or representation made by it (vide Union of India v. Godfrey Philips India Ltd., 1985 4 SCC 369 ). 7. In this case we have found that the Government before refusing the incentive scheme of the year 1975 have taken into account various factors including the decontrol of sale of sugar for the period from 16-8-1978 to 17-12-1979. Further if the prayer of the appellants were to be allowed, several lakhs of quintals of sugar will have to be released as incentive levy-free sugar which otherwise meant for public distribution system. We agree with the learned Judges ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by legislation includes power to withdraw the same unless in the former case, it is by malafide exercise of power or the decision or action taken is in abuse of power. The doctrine of legitimate expectation plays no role when the appropriate authority is empowered to take a decision by an executive policy or under law. The Court leaves the authority to decide its full range of choice within the executive or legislative power. In matters of economic policy, it is a settled law that the Court gives the large leeway to the executive and the legislature. Granting licences for import or export is by executive or legislative policy. Government would take diverse factors for formulating the policy for import or export of the goods granting relatively greater priorities to various items in the overall larger interest of the economy of the country. It is, therefore, by exercise of the power given to the executive or as the case may be, the legislature is at liberty to evolve such policies. 5. It would, therefore, be clear that grant of licence depends upon the policy prevailing as on the date of the grant of the licence. The Court, therefore, would not bind the Government with a policy w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave earlier stated, not issued under any rules or regulations or statute. The executive power of the Union of India, when it is not trammelled by any statute or rule, is wide and pursuant to its power it can make executive policy. Indeed, in the strategic and sensitive area of Defence, courts should be cautious although courts are not powerless. The Union of India having framed a policy relieved itself of the charge of acting capriciously or arbitrarily or in response to any ulterior considerations so long as it pursued a consistent policy. Probably, the principle of equality which interdicts arbitrariness prompted the Central Government to formulate its policy in 1964. A policy once formulated is not good for ever; it is perfectly within the competence of the Union of India to change it, rechange it, adjust it and readjust it according to the compulsions of circumstances and the imperatives of national considerations. We cannot, as court, give directives as to how the Defence Minister should function except to state that the obligation not to act arbitrarily and to treat employees equally is binding on the Union of India because it functions under the Constitution and not over ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with which the notification had been issued. The withdrawal of exemption in public interest is a matter of policy and the courts would not bind the Government to its policy decisions for all times to come, irrespective of the satisfaction of the Government that a change in the policy was necessary in the public interest . The courts, do not interfere with the fiscal policy where the Government acts in public interest and neither any fraud or lack of bona fides is alleged much less established. The Government has to be left free to determine the priorities in the matter of utilisation of finances and to act in the public interest while issuing or modifying or withdrawing an exemption notification under Section 25(1) of the Act. In the light of the above declarations, the learned Advocate General asserts that the Petitioner cannot have any vested right with reference to the plea of 'Promissory Estoppel' or 'Legitimate Expectation' and that the Policy can be changed any time, adding further that, change of Policy in public interest is to be upheld. 25. The doctrine of promissory estoppel was explained further by the Apex Court in Kasinka Trading (supra) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wrong and misconceived. The said clause is having no application to the case in hand, which has to be read and understood in the light of 'Clause 8' of the very same agreement. The learned counsel also points out that the extent of benefit payable has been clearly mentioned as ₹ 6,08,39,669/- in the said Agreement and the Agreement is binding between the parties, which cannot be unilaterally sought to be resiled by the Government. The learned counsel also submits that the decisions of the Apex Court sought to be relied on by the State to deny the benefit of 'Legitimate Expectation' / 'Promissory Estoppel' do not support the State action as clear from paragraph 27 of Kusumam Hostels Private Limited (supra) which clearly holds that the only exception is, when it is in public interest and also in a situation where the legal position is something else. Both the circumstances are not existing in the instant cases and hence the course of action pursued by State is to be deprecated and the benefits flowing from the 2004-2009 Policy / Rules as it existed earlier should be restored and released in the cases of the Petitioners. 28. With regard to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndred and sixtynine rupees only) as the subsidy in the incorrect or false. b- xxx xxx xxx c- xxx xxx xxx d- xxx xxx xxx e- xxx xxx xxx f- xxx xxx xxx g- xxx xxx xxx The said extent of benefit is segregated to be paid under 'five' different years, to the extent as mentioned in the table given in the Annexure-P/3 Notification issued on 18.08.2005. To make it more clear, when the payment of aid is being continued, if the Governor is of the opinion that it is necessary or expedient to safeguard the interest of the Government in continuing the said aid, it is possible for imposing 'such condition as may be necessary' to continue the aid. This does not mean that the Government is at liberty to re-write the terms of the contract or totally vary / withdraw / curtail the benefits already agreed to be paid, as now sought to be effected. 29. From the above discussion, it is clear that there is no dispute with regard to the sequence of events. It was based on the specific need felt of the newly formed State that the 'Industrial Policy (2001-2006', later substituted by 2004-2009) was formulated and notified inviting entrepreneurs to set up industr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d not be static. Change of Policy in 'public interest' has necessarily to be upheld, by virture of the rulings rendered by the Apex Court in Col. A.S. Sangwan (supra) (paragraphs 4) and Kasinka Trading (supra) (paragraphs 23). There also cannot be any dispute with regard to the circumstances as to the applicability of the principle of 'Promissory Estoppel' as made clear by the Apex Court in D.C.M. Ltd. (supra) and as to the extent of 'Legitimate Expectation' discussed in P.T.R. Exports (Madras) pvt. Ltd. (supra). But, the question is something else. The very word 'Policy' contemplates something which either deals with the 'present' or the 'future'. There cannot be any Policy in respect of a transaction which had already occurred in the past, as the change sought to be made in the Policy cannot convert the event already occurred. In other words, a Policy evolved later, after expiry of the 'Policy period', can't guide or navigate a course of action already implemented based on the terms of the 'Policy' existed at that time. The benefit provided under the Policy '2004-2009', as it exis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dity thus manufactured fixing the 'sale price' (based on the above factors, also reckoning the element of 'investment subsidy' surely to get as offered / assured as per the notified Industrial Policy / Rules) has already been marketed and as such, if the amount payable towards the Investment Subsidy as per the original terms of the Policy / Rules is sought to be denied after expiry of the Policy period, it will simply result in rupturing the financial base of the Petitioners, as the unconscionable financial burden cannot be recovered by them 'by resetting the sale price' of the commodity which they had already sold out. To put it more clear, the clock cannot be reset to have a level playing field. The belated wisdom or the eagerness to have more profit for the State by fixing an additional cap in respect of the quantum of Investment Subsidy is not liable to be considered as mistake to be rectified in public interest, but for re-writing the terms of contract. The State, in its attempt to generate revenue, can tap any source, but care has to be taken, to see that the source itself is not let to be dried up. 33. We are of the view that the Petitioners have ..... X X X X Extracts X X X X X X X X Extracts X X X X
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