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TMI Blog2009 (10) TMI 58X X X X Extracts X X X X X X X X Extracts X X X X ..... Special Civil Application No. 5909 of 2008 MR Kamal B. Trivedi, Sr. Advocate with Mr. Hardik P. Modh for Petitioners. Mr. Harin P. Raval for Respondent. Special Civil Application No. 5907 of 2008 Mr. Vikram S. Nankani with Mr Hardik Modh for petitioner. Mr. Harin P. Raval for Respondent. Special Civil Application No. 6334 of 2008 Mr. H. D. Dave for petitioner Mr. Harin P. Raval for Respondent. Special Civil Application No. 6562 of 2008 Mr. P.M. Dave for petitioner. Mr. Harin P. Raval for Respondent. Special Civil Application No. 8468 of 2009 Mr. B.Y. Mankad for the petitioners Mr. Harin P. Raval for Respondent. Special Civil Application No. 6298 of 2008 Mr. Mihir J. Thakore, Sr. Advocate with Mr. Gaurav Mathur, Adv. for the petitioner. Mr. Harin P. Raval for Respondent. Special Civil Application No. 6299 of 2008 Mr. Kamal Trivedi, Sr. Advocate with Mr. Gaurav Mathur, Adv. for the petitioner. Mr. Harin P. Raval for Respondent. Special Civil Application No. 6300 of 2008 Mr. Mihir Joshi, Sr. Advocate with Mr. Gaurav Mathur, Adv. for the petitioner. Mr. Harin P. Raval for Respondent. [Judgment per S.R.Brahmbhatt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment of excise duty came to be substantially withdrawn. Being aggrieved and dissatisfied with these notifications, the petitioners and other similarly situated, have approached this Court under Article 226 of the Constitution of India seeking appropriate writ in the nature of mandamus, prohibition or any other writ, order or direction for quashing and setting aside the notifications dated 27.3.2008 and 10.6.2008 being contrary to establish principles of law, arbitrary and discriminatory and also violative of Article 14 of the Constitution of India. All these petitions were heard together and are being disposed of by common judgment as they involved identical question of law and almost similar facts. 2. The facts in brief deserve to be set out as under. 3. In the year 2001, to be more precise, on 26.1.2001 a calamity of devastating earthquake had befallen the State of Gujarat, particularly the district of Kutch. The entire country was under deep shock on seeing the plight that it brought about of the people of the district and surrounding areas. The Union of India had to take appropriate measures for ameliorating plight of people of Kutch. In order to revive the economy in K ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quired to furnish a declaration as to the original value of investment in plant and machinery installed in the factory, as on the date of commencement of commercial production, in order to show that the requirement of minimum specific investment on or before specified date was fully complied with. The exemption was available for a period not exceeding five years from the date of commencement of Commercial Production. The said Notification came to be amended from time to time vide a series of Notifications, bearing Nos. 42/2001, 45/2002, 60/2002, 5/2003, 16/2003, 65/2003, 9/2004 and 55/2004. Pursuant to said exemption notification, the petitioner and other similarly situated persons have set up their industrial units for availing the benefits of exemption from payment of excise duty. The details of the units have been stated in the memo of petition and need no elaborate dwelling upon at this stage, as by and large there is no dispute with regard to the factum of putting up the industrial units as per the notification and terms and conditions of the Notifications. It is also required to be noted that all the petitioners have mentioned with regard to their action and investment pursua ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oners in Special Civil Application No. 6298 of 2008 in its own wordings. It is the case of the petitioners that the goods manufactured by the members of the petitioner No.1 and the petitioner No. 2 are covered at Sr.No.8 of the said table and the rate specified is 39%. Thus, while the entitlement of a manufacturer was to the tune of 100% of the duty paid by cash, the impugned Notification restricts the said entitlement to 39% of the total duty payable on the goods being cleared. Under Paragraph Nos. 2A, 2B and 2C of the impugned Notification, options are provided, to a unit, of either availing further credit or seeking fixation of a special rate by the concerned Commissioner for the purpose of determining the quantum of refund. All options, exfacie, appear detrimental to the petitioners and are also contrary to the Exemption Notifications. The petitioners further submitted that by introducing the impugned Notification, an anomalous situation has been created, whereby the business of the units set up by the members of the petitioner no.1 and the petitioner no. 2 will be rendered unviable and will face closure. The petitioners apprehend that it would be impossible for the petitioners ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The petitioners submit that not only the basis of value addition unworkable, the same is in direct conflict to the scheme of the Exemption Notifications. Such substantial change to the basis ought not to have been done without according a reasonable opportunity of explaining the situations by the respondent no. 1. 9. The counsel for the petitioners has further contended that the action of respondent no. 1 of issuing the impugned Notifications is in breach of the principles of Promissory Estoppel. The exemption Notifications persuaded the manufacturers to make investment in the Kutch areas in view of the promise of a complete exemption from duty of excise, actually paid by them. The Exemption Notifications contained various eligibility conditions in respect of quantum of investment, period of setting up a New Industrial Unit, period for commencing commercial production etc and the procedure to be complied with in order to avail the exemption. The manufacturers thus came forward, in aid of rehabilitation and redevelopment of the Kutch area of Gujarat, and set up their units. Without the exemption as originally promised, the investment made and units set up would be completely u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... representation, even when the respondent no. 1 completely negates its promise and render the investment made by the manufacturers useless, it was obligatory on the part of the respondent no. 1 to give suitable opportunity to the manufacturers and take measures to protect them from the impending losses and closure before issuance of the impugned Notification and thus, the impugned notifications are unfair, prejudicial and unilaterally issued without consultation or consent and therefore, the same are required to be quashed and set aside. The counsel for the petitioners further submits that the impugned Notification is ex-facie an action to discriminate between those units that were set up early after the issuance of the said Notification dated 31.7.2001, than, those like the petitioners, who have set up their unit later. The units set up early would have completed the entire benefit period of 5 years and there is no reason why the manufacturers who have complied with all conditions of the Exemption Notifications not be given the same treatment and benefit as others. In fact, by providing the exemption for a full term of 5 years, from the date of the said Notification dated 31.7.200 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment) Sales Tax. iv. 2006(3) SCC 620, Mahabir Vegetable Oil(P) Ltd. and Anr. Vs. State of Haryana Ors. v. 2004(6) SCC 465, State of Punjab Vs. Nestle India Ltd. Anr. vi. 2000(4) SCC 57:2000(119) ELT 516, Dai Ichi Karkaria Ltd. Vs. UOI and ors . vii. 1997(7) SCC 251, Pawan Allows Castings Pvt. Ltd. Vs. U.P. State Electricity Board Ors. viii. 1986 (supp) SCC 728, Pournami Oil Mills Ors. Vs. State of Kerala Anr. ix. 2007(218) ELT 175, Unicorn Industries Vs. Union of India 10. The respondents have mainly contended that the impugned Notifications are well within the powers and purview of respondent no. 1 and therefore, they are just and proper. The Public Interest required the issuance of Notification dated 27.3.2008 and 10.6.2008. The respondents have in their affidavit-in-reply contended the there was enough justification for issuance of Notifications impugned in these petitions. Counsel for the respondent has invited this Court's attention to paragraph No.7 of the affidavit-in-reply and contended that the provision of granting refund of cash paid portion of duty and eligibility of credit of entire amount of duty to the buyers of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s a clear loss to the Government of Rs.16/- and the manufacturer in Kutch illegally gains that amount as he is recovering this amount from his customers. Learned counsel for the respondent has also submitted that as a result of such modification which has been considered by the Central Government to be expedient in public interest and in the interest of the Revenue, such a modification has been brought out. The effect of such modification is as follows: (i) It is submitted that genuine manufacturers are not likely to be affected in as much as they would be getting the refund of same amount under the scheme before and after the modification, because if the inputs are duty paid then the refund under the earlier scheme and modified scheme should be of the same amount. (ii) Unscrupulous manufacturers reporting bogus production and who are resorting to fictitious purchase of inputs on the strength of invoices which are non duty paid invoices would be getting excise duty refund of duty paid on actual value addition made by such manufacturers who have industries in these specified areas. (iii) The excise duty exemption would be available only to the extent of actual value addition m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t . It is further held in the said judgment that the courts, do not interfere with the fiscal policy where the Government acts in public interest and neither any fraud of lack of bonafides is alleged much less established. It is also held that the Government has to be left free to determine the priorities in the matter of utilization of finances and to act in the public interest while issuing or modifying or withdrawing an exemption Notification. It is also held in the said judgment that the power of exemption is with a view to enable the Government to regulate, control and promote the industries and industrial productions in the country. Where the Government on the basis of the material available before it, bonafide, is satisfied that the public interest would be served by either granting exemption or by withdrawing, modifying or rescinding an exemption already granted, it should be allowed a free hand to do so. 11. Learned counsel for the respondent has relied on the decision in case of D.P.F. Textiles Ltd. Vs. Union of India , reported in Civil Appeal No. 1742 of 1984 decided on 12.09.1996, wherein, the Supreme Court while reiterating the decision referred to in Kasin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... para-8 : The Court must always remember that legislation is directed to practical problems, that the economic mechanism is highly sensitive and complex, that many problems are singular and contingent, that laws are not abstract propositions and do not relate to abstract units and are not to be measured by abstract symmetry , that exact wisdom and nice adaptation of remedy are not always possible and that judgment is largely a prophecy based on meager and uninterrupted experience. Every legislation particularly in economic matters is essentially empiric and it is based on experimentation or what one may call trial and error method and therefore, it cannot provide for all possible situations or anticipate all possible abuses. There may be crudities and inequities in complicated experimental economic legislation but on that account alone it cannot be struck down as invalid. The courts cannot, as pointed out by the United States Supreme Court in Secretary of Agriculture Vs. Central Reig Refining Company, be converted into tribunals for relief from such crudities and inequities. There may even be possibilities of abuse, but that too cannot of itself be a ground for invalidating th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or, Central Excise Vs. Dunlop India ; viii. AIR 1986 SC 806, in case of Union of India Vs. Godfrey Philips (I) Ltd.; ix. 1987 (1) SCC 31 = AIR 1987 SC 142, in case of Shri Bakul Oil India Vs. State of Gujarat and another x. 1990(3) SCC 609, in case of R. Vora Vs. Board of Trustees; xi. AIR 1992 SC 1075 = AIR 1992 (2) SCC 411, in case of Amreet Banaspati; xii. 1993(68) ELT 9 SC, in case of Union of India Vs. Jalyan Udhyog; xiii.1994(74) ELT 782 SC = 1995 (1) SCC 274 = AIR 1995 SC 874, in case of Kasinka Trading; xiv. 1996(2) SCC 439 = AIR 1996 2921, in case of S.B. International and others Vs. Asst. Director General of Foreign Trade and others. xv. (1997) 6 SCC 283 Post Graduate Institute of Medical Education Research versuas K.L.Narsimhan and another xvi. AIR 2008 SC 2838= (2008) 7 SCC 353 in case of T.N. Electricity Board; xvii. 1997 (7) SCC 251 = AIR 1997 SC 3510, in case of Pawan Alloys Casting Vs. xviii. AIR 1998 SC 591, in case of Sales Tax Officer Vs. Shree Durga Oil; xix. 1999 (107) ELT 582, in case of Union of India Vs. Bharat Commerce Indust ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to erect on such land "stables of wood and iron with rubble foundation to be removed at six months' notice on other suitable ground being provided by Govt." The Govt. accepted the suggestion of the Municipal Commissioner and sanctioned the application of the Municipal Commissioner for a site for stabling on the terms set out above and the Municipal Commissioner thereafter entered into possession of the land and constructed stables, workshops and chawls on the same at considerable expense. Twenty-four years later the Government served a notice on the Municipal Commissioner determining the tenancy and requesting the Municipal Commissioner to deliver possession of the land within six months and in the meantime to pay rent at the rate of Rs. 12,000 per month. The Municipal Corporation declined to hand over possession of the land or to pay the higher rent and the Secretary of State for India thereupon filed a suit against the Municipal Corporation for a declaration that the tenancy of the Municipality stood determined and for an order directing the municipality to pay rent at the rate of Rs. 12,000 per month. The suit was resisted by the Municipal Corporation on the ground that the eve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation of the Municipal Commissioner, the Government passed a resolution approving and authorizing the grant of another site to the Municipality. The resolution stated further that "the Government do not consider that any rent should be charged to the Municipality as the markets will be like other public buildings, for the benefit of the whole community." The Municipal Corporation gave up the site on which the old markets were situated and spent a sum of Rs. 17 lakhs in erecting and maintaining markets on the new site. In 1940 the Collector of Bombay assessed the new site to land revenue and the Municipal Corporation thereupon filed a suit for a declaration that the order of assessment was ultra vires and it was entitled to hold the land for ever without payment of any assessment. The High Court of Bombay held that the Government had lost its right to assess the land in question by reason of the equity arising on the facts of the case in favour of the Municipal Corporation and there was thus a limitation on the right of the Government to assess under Section 8 of the Bombay City Land Revenue Act. On appeal by the Collector to this Court, the majority Judges held that the Governmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n goods would be entitled to import raw-material of the total amount equal to 100% of the f.o.b. value of his exports. The respondents contended that, relying on the promise contained in the Scheme, they had exported woolen goods to Afghanistan and were, therefore, entitled to enforce the promise against the Government and to obtain import entitlement certificate for the full f.o.b. value of the goods exported, on the principle of promissory estoppel. This contention was sought to be answered on behalf of the Government by pleading the doctrine of executive necessity and the argument of the Government based on this doctrine was that it is not competent for the Government to fetter its future executive action which must necessarily be determined by the needs of the community when the question arises and no promise or undertaking can be held to be binding on the Government so as to hamper its freedom of executive action. Certain observations of Rowlatt, J., in Rederiaktiabolaget Amphitrite v. R. (1921) 3 KB 500 (supra) were sought to be pressed into service on behalf of the Government in support of this argument. We have already referred to these observations earlier and we need ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ight : they are seeking to enforce compliance with the obligation which is laid upon the Textile Commissioner by the terms of the Scheme, and we are of the view that even if the Scheme is executive in character, the respondents who were aggrieved because of the failure to carry out the terms of the Scheme were entitled to seek resort to the Court and claim that the obligation imposed upon the Textile Commissioner by the Scheme be ordered to be carried out". It was thus laid down that a party who has, acted in reliance on a promise made by the Government, altered his position, is entitled to enforce the promise against the Government, even though the promise is not in the form of a formal contract as required by Article 299 and that Article does not militate against the applicability of the doctrine of promissory estoppel. against the Government. 24. This Court finally, after referring to the decisions in the Ganges Mfg. O. v. Surujmull (1880) ILR 5 Cal 669 (supra), Municipal Corporation of the City of Bombay v. Secy. of State for India (1905) ILR 29 Bom 580 (supra) and Collector of Bombay, AIR 1951 SC 469 (supra), summed up the position as follows : "Under our j ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t on the ground that such promise may fetter its future executive action. If the Government does not want its freedom of executive action to be hampered or restricted, the Government need not make a promise knowing or intending that it would be acted on by the promisee and the promisee would alter his position relying upon it. But if the Government makes such a promise and the promisee acts in reliance upon it and alters his position, there is no reason why the Government should not be compelled to make good such promise like any other private individual. The law cannot acquire legitimacy and gain social acceptance unless it accords with the moral values of the society and the constant endeavour of the Courts and the legislatures must, therefore, be to close the gap between law and morality and bring about as near an approximation between the two as possible. The doctrine of promissory estoppel. is a significant judicial contribution in that direction. But it is necessary to point out that since the doctrine of promissory estoppel. is an equitable doctrine, it must yield when the equity so requires. If it can be shown by the Government that having regard to the facts as they have s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee to act unfettered by it, that the Court would refuse to enforce the promise against the Government. The Court would not act on the mere ipse dixit of the Government, for it is the Court which has to decide and not the Government whether the Government should be held exempt from liability. This is the essence of the rule of law. The burden would be upon the Government to show that the public interest in the Government actiong otherwise than in accordance with the promise is so overwhelming that it would be inequitable to hold the Government bound by the promise and the Court would insists on a highly rigorous standard of proof in the discharge of this burden. But even where there is no such overriding public interest, it may still be competent to the Government to resile from the promise "on giving reasonable notice, which need not be a formal notice, giving the promisee a reasonable opportunity of resuming his position" provided of course it is possible for the promisee to restore status quo ante. If, however, the promisee cannot resume his position, the promise could become final and irrevocable. Vide Ajayi v. Birscoe (1964) 3 All ER 556. 25. The doctrine of promissory esto ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ved of the observations made by Denning J. in Robertson v. Minister of Pensions (1949) 1 KB 227 (supra) rejecting the doctrine of executive necessity and held them to be applicable in India. The learned Judge concluded by saying in words pregnant in the hope and meaning for democracy : "If our nascent democracy is to thrive different standards of conduct for the people and the public bodies cannot ordinarily be permitted. A public body is, in our judgment not exempt from liability to carry out its obligation arising out of representations made by it relying upon which a citizen has altered his position to his prejudice." This Court refused to make a distinction between a private individual and a public body so far as the doctrine of promissory estoppel. is concerned. 26. We then come to another important decision of this Court in Turner Morrison and Co. Ltd. v. Hungerford Investment Trust Ltd. (1972) 3 SCR 711 : (AIR 1972 SC 1311) where the doctrine of promissory estoppel. was once again affirmed by this Court. Hedge, J. speaking on behalf of the Court, pointed out: "Estoppel' is a rule of equity. That rule has gained new dimensions in recent years. A new class of est ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upon on behalf of the State but we fail to see how it can assist the contention of the State. In the first place, this observation was clearly obiter, since, as pointed out by us, there was on the facts of the present case no scope for the applicability of the doctrine of promissory estoppel. Secondly, this observation was based upon a quotation from the passage in para 123 at page 783 of Volume 28 of American Jurisprudence (2 d), but unfortunately this quotation was incomplete and it overlooked, perhaps inadvertently, the following two important sentences at the commencement of the paragraph, which clearly show that even in the United States the doctrine of promissory estoppel. is applied against the State "when justified by the facts" : "There is considerable dispute as to the application of estoppel. with respect to the State. While it is said that equitable estoppel. will be invoked against the State when justified by the facts, clearly the doctrine of estoppel. should not be lightly invoked against the Sate." (emphasis supplied). Even the truncated passage quoted by the Court recognised in the last sentence that though, as a general rule, the doctrine of promissory estopp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the duty, cannot by estoppel. be prevented from exercising his statutory powers." [Maritime Elec. Co. Ltd. v. General Diaries Ltd. 1937 AC 610 and Halsburys Laws of England para 1515.] "A petitioner in a divorce suit cannot obtain relief simply because the respondent is estopped from denying the charges, as the court has a statutory duty to inquiry into the truth of a petition." [Hudson v. Hudson (1948) P. 292 and Halsburys Laws of England Para 1515]. The luminous footnote cites rulings and states that "This rule probably also applies where the statute bestows a discretion rather than imposing a duty." (Emphasis supplied) 19. The Apex Court in case of Jit Ram Vs.State of Haryana reported in AIR 1980 SC 1285 made observations which were not in conformity with the view expressed by the Apex court earlier in case of Motilal Padampat (Supra), however, few observations made in this decision also deserve to be cited for highlighting and underlining the consistency of approach of the Courts and the Benches so far as the principle of promissory estoppel and its applicability to the executive legislative and statutory function of the 'State' are concerned. On a consideratio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntation 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. This aspect has been dealt with fully in Motilal Sugar Mills case (supra) and we find ourselves wholly in agreement with what has been said in that decision on this point. (emphasis supplied) 22. The Apex Court in case of Shri Bakul Oil Industries Vs.State of Gujarat reported in AIR 1987 SC 142 = 1987 (1) SCC 31 observed as under : 11. For the purposes of this appeal we do not think it necessary to go into the question whether the earlier Notification had created existing rights and whether the impugned Notification had the effect of only taking away the existing rights. We are taking this view because we have already pointed out that the State Government was under no obligation to grant exemption and that the granting of tax exemption was only by way of a concession. Having regard to this conclusion there is no need for any probe to be made to determine whether the Notification had created vested right ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he concession offered in the first Notification. they would not have established the industry in question and that the entire venture was attributable only to the inducement offered by the Government. From the facts set out supra it may be seen that the first Notification was made on 29-4-1970 while the oil mill constructed by the appellant came to be commissioned on 17-5-1970 itself. It is not the appellants' case and indeed it can never be so contended that they launched the project and commenced the construction of the oil mill only after the Notification of 29-4-1970 was made and that the entire construction was completed in about two weeks' time so as to enable the appellants to commission the plant on 17-7-1970. What is envisaged under the Notification is that the project must have been undertaken and construction work itself should have been started in response to and acting on the Notification. It is not sufficient to rely on the commissioning of an industry after completion of construction work which had been commenced long before the Notification was made by the Government. In respect of such an industry as the present one, the issuance of a Notification granting tax exem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It cannot, therefore be said that even if the public interest so demanded and the Central Government was satisfied any further, it could still not withdraw the exemption. In such a case, merely by mentioning the date as 31st March, 1981, as the date up to which the exemption Notification was to be operative, no unequivocal representation could be said to have been made that it could not be rescinded or modified before that date even if the Government was satisfied that it was necessary in the public interest to rescind it. Since, the Notification had been issued under Section 25(1) of the Act, the very same power was available to the authority for rescinding or modifying that Notification and the dealer ought to have known that the said Notification was capable of or liable to be revoked, modified or rescinded at any time even before the expiry of 31st March if the `public interest' so demanded. Moreover, it was not permissible to postpone the compulsions of "public interest" till after 31st March, 1981 if the Government is satisfied as to the change in the circumstances before that date. (Emphasis supplied) 25. The Apex Court in the case of S.B. International versus Asst. Dire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fication issued under Section 25 of the Customs Act, 1962 granting complete exemption from payment of customs duty to PVC resin imported into India by manufacturers of certain products requiring the said resin as one of the raw materials, which was issued in public interest and which had stated that it would remain in force up to and inclusive of 31st March, 1981 could be withdrawn before the expiry of the said period by fresh notification issued by the Government in exercise of the very same power under Section 25 of the Customs Act. This Court speaking through Dr. Anand, J. took the view that as the said notification was issued in public interest it could be withdrawn even before the time fixed therein for its operation also in public interest and while issuing such a notification no promise can be said to have been held out or any representation made to the importers in general on the basis of which they could insist on the doctrine of promissory estoppel. that the customs duty exemption granted earlier by the first notification could not be reduced by the second one. The following pertinent observations are found in paragraphs 11 and 12 (of SCC) : (Paras 12 and 13 of AIR) of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hen the equity so demands if it can be shown having regard to the facts and circumstances of the case that it would be inequitable to hold the Government or the public authority to its promise, assurance or representation." It may, however, be mentioned that in paragraph 21 of the Report the Court has observed that the notification which was impugned before it was not designed or issued to induce the appellants to import PVC resin. Admittedly, the said notification was not even intended as an incentive for import. The notification on the plain language of it was conceived and issued by the Central Government 'being satisfied that it was necessary in the public interest so to do'. Strictly speaking, therefore, the notification could not be said to have extended any 'representation' much less a 'promise' to a party getting the benefit of it to enable it to invoke the doctrine of promissory estoppel. against the State. It must, therefore, be held that the aforesaid decision had clearly proceeded on the basis that by issuing the earlier notification under Section 25 of the Customs Act no promise was held out to any of the importers that the notification's life will not be curtailed e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /charges to the Board. 27. Shri Dave next invited our attention to a three-Judge Bench judgment of this Court in the case of Shrijee Sales Corporation (1997 (3) SCC 398) (supra), wherein A. M. Ahmadi, C.J., speaking for the Bench considered the correctness of the aforesaid decision in Kasinka Trading (1995 AIR SCW 680) (supra). As the decision in Shrijee Sales Corporation (supra) has laid down the parameters of the field in which the doctrine of promissory estoppel. can apply it is necessary to closely refer to the relevant observations found in the said judgment. It may be mentioned that the very same customs exemption notification which was considered by the Bench of two learned Judges in Kasinka Trading (supra) was considered by a three-Judge Bench in Shrijee Sales Corporation (supra). While upholding the said notification Ahmadi, C.J., in paragraphs 3 and 4 of the Report observed as under : "It is not necessary for us to go into a historical analysis of the case-law relating to promissory estoppel. against the Government. Suffice it to say that the principle of promissory estoppel. is applicable against the Government but in case there is a supervening public equity, the Go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vernment being satisfied that it is necessary in public interest to do so ...'. In the notification issued later which gave rise to the present cause of action, the same recitation is present." It is, therefore, obvious that even though it may be found that the Government or any other competent authority had held out any promise on the basis of which the promisee might have acted, if public interest required recall of such a promise and such a public interest outweighed the interest of the promisee then the doctrine of promissory estoppel. against the Government would lose its rigour and cannot be of any avail to such promisee. In the aforesaid decision the further contention canvassed on behalf of the appellant-promisee was also examined. That centered round the question whether the notification having fixed a time limit for its operation could be rescinded prior to the expiry of the said period. Rejecting the said contention and upholding the right of the authorities to recall such a notification even earlier it was observed in paragraph 7 of the Report that once public interest is accepted as the superior equity which can override individual equity, the principle should be app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he State of Orissa. For that purpose, a package of measures for stimulating the growth of industries were announced. It was specifically made clear in the IPR dated 18-7-1979 that : "Government orders will issue laying down the mode of administering the concessions and incentives by concerned departments." 15. In other words, the IPR dated 18-7-79 by itself did not grant any exemption to the persons who set up industries pursuant to that IPR. The IPR merely promised that orders will be issued laying down the mode of administering the concessions and incentives by concerned departments. Exemption of sales tax can only be granted in the manner laid down by the Sales Tax Act. The Government by an executive order cannot override the requirement of the statute. The method and manner of granting exemption has been laid down in S. 6 of the Orissa Sales Tax Act. This Section specifically says that exemptions have to be granted by a notification. It further provides that exemption granted by a notification issued under S. 6 can be modified or withdrawn by the State Government at any point of time. The State Government in the instant case, initially issued the exemption notifications und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad indicated that orders will be issued by various departments for granting the exemptions. The exemption order under sales tax could only be issued under S. 6 which could be amended or withdrawn altogether. This is expressly provided by S. 6. If the respondent acted on the basis of a notification issued under S. 6 it should have known that such notification was liable to be amended or rescinded at any point of time, if the Government felt that it was necessary to do so in public interest. That is exactly what has happened in this case. 28. The Apex court has also in case of Dai-Ichi Karkaria Ltd. v. Union of India reported in AIR 2000 SUPREME COURT 1741 = 2000 AIR SCW 1784 observed as under:- ..........para8 In Indian Express Newspapers (Bombay) Private Ltd. v. Union of India, (1985) 2 SCR 287 : (AIR 1986 SC 515) scope of interference in the notification issued under Section 25 of the Customs Act, 1962 is considered. This Court held that power to grant exemption under Section 25 of the Customs Act is a legislative power and a notification issued by the Government thereunder amounts to a piece of subordinate legislation, even then the notification is liable to be questioned o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Customs Act to grant exemption from the levy of customs duty. It is ordinarily assumed that while such wide power is given to the Government, it will consider all relevant aspects governing the question whether exemption should be granted or not. 29. The Apex court in case of UP Power Corporation Ltd. Vs. Sant Steels Alloys (P) Ltd., reported in AIR 2008 SC 693 held that Notification issued under Section 499 for giving the benefits of exemptions for new industrial units in the hill areas was in the nature of delegated legislation and not an Act framed by the State Legislature. Therefore, the distinction made between the subordinate legislation and primary legislation. The promissory estoppel. therefore, would not be whittled down in case of delegated legislation. 30. The Apex Court in case of Southern Petrochemical Industries Co. Ltd. Vs. Electricity Inspector ETIO and others, reported (2007) 5 SCC 447 has held that it cannot be accepted that the exemption from tax is a mere concession defeasible by the Government and does not confer any accrued right to the recipient. Right of exemption with a valid notification issued gives rise to an accrual right. The doctr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court has stated unequivocally that the principle of law of Promissory Estoppel shall have no applicability to the Statute and Legislation. As could be seen from the observations made in Para-28 highlighted with emphasis hereinabove. Thus, till Motilal Padampat (supra) was decided, the Apex Court was also absolutely and emphatically of the view that there shall not be any estoppel and applicability of promissory estoppel against the Legislation. 32. In fact the majority of the decisions cited herein above go to show that there cannot be promissory estoppel against statute and legislation. The following principles of law in respect of Promissory Estoppel could be culled out as under : i. The doctrine of promissory estopple has no more remained a ground of defense only. The doctrine of promissory estopple is now considered as an independent ground conferring right upon a party i.e. promissee to lay his claim based thereon. ii. The doctrine of promissory estopple is nonetheless a principal originating from and pertaining to equity jurisdiction. In our legal system, the doctrine of promissory estopple has been recognized as such and is being now permitted to be wielded as sward r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pra) in order to claim the benefit of doctrine of promissory estopple the party must establish that it, in fact acted pursuant to the promise held out to it and but for the promise it would not have so acted. x. The doctrine of promissory estopple is essentially a principle evolved by equity to avoid injustice. Thus, the party invoking promissory estopple has, essentially, to establish injustice to them on account of State resiling from its promise. xi. The Courts have time and again held that for invoking the doctrine of promissory estopple clear, sound and positive foundation is required to be laid by the petitioner invoking the doctrine of promissory estopple. Thus, the party invoking the promissory estopple has to establish his claim on clear foundation based upon the facts and material in support of his submission. xii. The recent decisions of the Apex Court has made distinction between the delegated legislation and primary legislation and viewed delegated legislation on a little different footing as the Apex Court in case of U.P. Power Construction Ltd. Vs. Sant Still (supra) held that the delegated legislation is not an Act framed by the State Legislature and the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the Public Interest so to do, it may by issuing notification in the official gazette exempt generally either absolutely or subject to such conditions as may be specified in the notification exercisable goods of any specified discretion from the whole or any part of the duty of excise leviable thereon, the relevant portion of Section 5A is extract hereunder :- Section 5(A) : Power to grant exemption from duty of excise: (1) If the Central Government is satisfied that it is necessary in the public interest so to do, it may, by notification in the Official Gazette, exempt generally either absolutely or subject to such conditions (to be fulfilled before or after removal) as may be specified in the notification, excisable goods of any specified description from the whole or any part of the duty of excise leviable thereon: Provided that, unless specifically provided in such notification, no exemption therein shall apply to excisable goods which are produced or manufactured - (i) in a free trade zone [or a special economic zone] and brought to an other place in India; or (ii) by a hundred per cent, export-oriented undertaking and [brought to any other place in India]. Thus, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n side like Sikkim is similar namely helping the region in improving its economy as the exemption in payment of excise duty would encourage entrepreneur to setting up industries which in turn would generate more employment for the people of region. Thus, the motive and object of exemptions notification so far as Kutch district and other region like area of J K and Sikkim and north east region cannot be said to be different so as to claim any different treatment. Of course, the reason for granting exemption in case of north eastern region, Sikkim was backwardness and helping the people thereof in getting more employment opportunity, whereas, the reason for exemptions to Kutch district was for helping people in over coming the calamity and rehabilitating them in wake of the earthquake. Thus, the reasons for exemption may vary but the object of exemption being similar, the similar treatment was required to be accorded to the all these regions. The Court hastened to add here that it is always open to the Central Government to make appropriate modification in the scheme on account of peculiarity of the region but by and large the object of granting exemption would remain same and from t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also required to be noted that the central Government has, as it is stated herein above, implemented the similar exemptions scheme in other region also, and wherein also the similar changes have been effected. The petitioners have challenged two notifications namely notification No. 16 of 2008 dated 27th March, 2008 as well as notification No. 33 of 2008 dated 10th June, 2008, where under, according to them the entire basis of granting exemption is substantially changed resulting into curtailing sizable benefits which was otherwise available to the petitioner under notification dated 31st July, 2001. 45. The notification dated 31st July 2001 and impugned notifications dated 27th March, 2008 and 10th June, 2008 are required to be viewed in their proper prospective. The question arises as to whether can it be said that by impugned notification dated 27.3.2008 and 10.6.2008, the Central Government has made so drastic a change as to severely affect the industries in question. The answer is emphatic NO . The Section 5A of the Central Excise Act 1944 provides that the Central Government has requisite power to implement change or revoke the scheme of exemption of payment of excise duty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has observed in R.K Garg (supra) that the court must always remember that legislation is directed to practical problems, that the economic mechanism is highly sensitive and complex that many problems are singular and contingent, that laws are not abstract proposition and do not relate to abstract units and are not to be measured by abstract symmetric that exact wisdom and nice adoption of remedy are not always possible. Every legislation particularly in economic matters is essentially empiric and is based on experimentation or what one may call trial and error method and therefore it cannot provide for all possible situation or anticipate all possible abuses. There may be crudities and inequities in complicated experimental economic legislation but on that count alone it cannot be struck down as invalid. The Apex Court has further observed that the courts cannot, as pointed out by the United States Supreme Court in Secretary of Agriculture Vs. Central Reig Refining Company be converted into Tribunal for relief from such crudities and such inequities. There may be even possibilities of abuse but that itself cannot be the ground for invalidating a legislation because it is not possi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hastened to add here that the similar exemption scheme operating in other areas are also suitably amended and therefore, the petitioners alone cannot have grievances that the people of Kutch Region should be treated alike others though the reason for issuing exemption notification was earthquake and not backwardness of area. It is required to be noted at the cost of repetition that the distinction with regard to object of the implementation of the exemption scheme in Kutch district as well as other backward areas would be not sustainable as could be seen from the underline purpose of helping the people of region on account of establishment of new industries in that area and the connected opportunities thereunder. 50. Thus, in the first instance it can be said that by impugned notification dated 27.3.2008 as well as 10.6.2008 no drastic change affecting the basis objective of notification dated 31.7.2001 is said to have been made so as to give any reason for grievances to the petitioners. At this stage, it is essential to note that the possibility of creating anomaly voiced by the petitioner in the representation to the central Government has been taken care of, as could be seen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of those notifications as could be seen from the record. The interest of entrepreneur cannot be understood as interest of people of Kutch. In fact, the petitioners have lost sight of the interest of the people of region for whose benefits the notification dated 31.7.2001 was promulgated. 54. The Public Interest should outweigh the interest of the petitioner entrepreneur. This Court reiterates at the cost of repetition that the distinction with regard to implementation of the scheme qua region of backward areas and Kutch people would have really held to be discriminatory. That being not so and the implementation of exemptions only to value addition would certainly be correct and in furtherance of the avowed object of helping the people of region in getting more job opportunities and other incidental opportunities. This Court is therefore of the view that the impugned notifications cannot be said to be suffering from any infirmity so as to call any interference under Article 226 of the Constitution of India. 55. Section 38A of the Act also would be of no avail to the petitioners as in fact a plain reading of Section 38A would go to show that it is meant for not undoing the benefi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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