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TMI Blog2024 (10) TMI 970X X X X Extracts X X X X X X X X Extracts X X X X ..... cle 14 of the Constitution of India - HELD THAT:- The Supreme Court in Brahmputra Mettalics [ 2020 (12) TMI 1241 - SUPREME COURT] has also drawn distinction between the doctrine of promissory estoppel and doctrine of legitimate expectation. The doctrine of legitimate expectations is founded on the principles of fairness in government dealings and would come into play if a public body leads an individual to believe that they will be a recipient of a substantive benefit. So far as difference between the doctrine of promissory estoppel and doctrine of legitimate expectation under English law is concerned; under English law the doctrine of legitimate expectation initially developed in the context of public law as an analogy to the doctrine of promissory estoppel found in private law. Another difference is that the legitimate expectation can constitute a cause of action whereas the doctrine of promissory estoppel can only be used as a shield. The scope of legitimate expectation is wider than the promissory estoppel because it not only takes into consideration a promise made by a public body but also official promise, as well. For invoking the principle of promissory estoppel there has t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have been extended the same in different form. In the absence of any prejudice pleaded by the petitioners, the action of the respondents, replacing the Budgetary Support Scheme by the other scheme, both aimed at providing incentives to the industrial units like the petitioners, cannot be said to be irrational, unreasonable or arbitrary. Firstly, there is nothing in the conduct exhibited by the Government of Jammu and Kashmir to raise any legitimate expectation in the petitioners and, secondly, even if it were there, the Government has not acted arbitrarily, unjustly or in an unfair manner. The benefit of incentives in the shape of reimbursement paid under IGST Act, 2017 is continued to be paid now under the Turnover Incentive Scheme 2021. It is only the mode and manner which has been changed. The Turnover Incentive Scheme 2021 came into operation with effect from 01-04-2021 and, therefore, it was necessary to do away with the Budgetary Support Scheme promulgated vide SRO N431 of 2018. It is because of this reason the impugned SO was issued and given effect from 01-04-2021. Thus, both the doctrines i.e. doctrine of promissory estoppel and the doctrine of legitimate expectations are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sale of goods in the course of interstate trade and commerce made by a manufacturer operating a Small, Medium and Large scale unit. The petitioners, who claim to have established their Units were allured by the incentives offered by the Industrial Policy-2004 to set up their units. These units, of course, availed the benefits including the benefit of CST exemption till 31-03-2015. However, vide SRO 113 of 2015 dated 01-04-2015 the benefit of CST exemption was extended up to 31-03-2016. 5. In the meanwhile Industrial Policy-2016 came to be promulgated vide Government Order No. 58-Ind of 2016 dated 15-03-2016 and in terms of para 2 of the Government order aforesaid, all existing units were held entitled to incentives specifically provided in the Industrial Policy 2016 subject to guidelines/procedures issued in respect of such incentives. Para 3.17 of the Industrial Policy 2016 provided for exemption from payment of additional toll tax, CST and VAT, as available to the industrial units under Industrial Policy 2004 and any subsequent orders of the State/Central Government till further orders subject to GST regime. With a view to extend the aforesaid benefit of incentives to the eligibl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing SO 239 dated 16-07-2021, which is impugned in these petitions. 9. The short grievance of the petitioners in all these petitions is that, all the petitioners have set up their units in the erstwhile State of Jammu and Kashmir (now Union Territory of Jammu and Kashmir) being allured by slew of incentives offered by the Government of Jammu and Kashmir from time to time. In terms of clause 3.19 of the Industrial Policy 2016, the Government issued SRO 431 of 2016 dated 25-09-2018 and introduced Budgetary Support Scheme to provide for reimbursement of the IGST paid under the IGST Act, 2017. SRO 431 clearly provided that the benefit of Budgetary Support Scheme shall be available to the eligible units till the last date of Industrial Policy 2016 i.e. 31-03-2026 and, therefore, the Government could not have withdrawn the scheme prematurely without allowing the petitioners to avail the benefit for complete period ending with 31st of March, 2026. By the issuance of impugned SO and withdrawing the Budgetary Scheme promulgated by SRO 431, the Government violated the doctrine of promissory estoppel. It is argued that, relying upon the consistent policy of the Government to encourage industri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the budgetary support policy was subject to review at the end of every financial year with special reference to its continuance in the next financial year. 11. Having heard the learned counsel for the parties and perused the material on record we are of the considered opinion that the petitioners have miserably failed to make out a case of breach of promissory estoppel or the doctrine of legitimate expectation. 12. Before we come to specific facts of the case of the petitioners, a look at the latest legal position on the aforesaid twin doctrines enunciated by Hon ble Supreme Court in the latest judgment in Brahmputra Mettalics (supra) is necessary. Hon ble the Supreme Court in Manuelsons Hotels Private Limited v. State of Kerala and ors, 2016 (6) SCC 766 examined the doctrine of promissory estoppel as laid down in Motilal Padampat Sugar Mills Co. Ltd v. State of U.P, (1979) 2 SCC 409 and as followed in State of Punjab v. Nestle India Limited, (2004) 6 SCC 465. It is held that the doctrine of promissory estoppel is a doctrine whose foundation is that an unconscionable departure by one party from the subject matter of an assumption which may be of fact or law, present or future, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... promissory estoppel operates even in the legislative field. The plea of promissory estoppel is in the nature of equitable plea and must be determined in the facts and circumstances of each case where it is raised. Para 21 and 22 of the judgment encapsulate the legal position in respect of promissory estoppel and are, therefore, set out below:- 21. In fact, we must never forget that the doctrine of promissory estoppel is a doctrine whose foundation is that an unconscionable departure by one party from the subject matter of an assumption which may be of fact or law, present or future, and which has been adopted by the other party as the basis of some course of conduct, act or omission, should not be allowed to pass muster. And the relief to be given in cases involving the doctrine of promissory estoppels contains a degree of flexibility which would ultimately render justice to the aggrieved party. The entire basis of this doctrine has been well put in a judgment of the Australian High Court reported in The Commonwealth of Australia v. Verwayen, 170 C.L.R. 394, by Deane,J. in the following words: 1. While the ordinary operation of estoppel by conduct is between parties to litigation, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o all the circumstances of the case, including the reasonableness of the conduct of the other party in acting upon the assumption and the nature and extent of the detriment which he would sustain by acting upon the assumption if departure from the assumed state of affairs were permitted. In cases falling within category (a), a critical consideration will commonly be that the allegedly estopped party knew or intended or clearly ought to have known that the other party would be induced by his conduct to adopt, and act on the basis of, the assumption. Particularly in cases falling within category (b), actual belief in the correctness of the fact or state of affairs assumed may not be necessary. Obviously, the facts of a particular case may be such that it falls within more than one of the above categories. 5. The assumption may be of fact or law, present or future. That is to say it may be about the present or future existence of a fact or state of affairs (including the state of the law or the existence of a legal right, interest or relationship or the content of future conduct). 6. The doctrine should be seen as a unified one which operates consistently in both law and equity. In th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he basis of a course of conduct which would affect the other party if the assumption be not adhered to. The assumption may be of fact or law, present or future. And two, that the relief that may be given on the facts of a given case is flexible enough to remedy injustice wherever it is found. And this would include the relief of acting on the basis that a future assumption either as to fact or law will be deemed to have taken place so as to afford relief to the wronged party. 14. The Supreme Court in Brahmputra Mettalics (supra) has also drawn distinction between the doctrine of promissory estoppel and doctrine of legitimate expectation. The doctrine of legitimate expectations is founded on the principles of fairness in government dealings and would come into play if a public body leads an individual to believe that they will be a recipient of a substantive benefit. So far as difference between the doctrine of promissory estoppel and doctrine of legitimate expectation under English law is concerned; under English law the doctrine of legitimate expectation initially developed in the context of public law as an analogy to the doctrine of promissory estoppel found in private law. Anot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sued under the relevant statutory powers. Alternatively, the Appellants are trying to make a case under the doctrine of legitimate expectations. The basis of this doctrine is in reasonableness and fairness. However, it can also not be invoked where the decision of the public authority is founded in a provision of law, and is in consonance with public interest. (emphasis supplied) 41. In Union of India vs Lt. Col. P.K. Choudhary32, speaking through Chief Justice T S Thakur, the Court discussed the decision in Monnet Ispat (supra) and noted its reliance on the judgment in Attorney General for New South Wales vs. Quinn 33. It then observed: This Court went on to hold that if denial of legitimate expectation in a given case amounts to denial of a right that is guaranteed or is arbitrary, discriminatory, unfair or biased, gross abuse of power or in violation of principles of natural justice, the same can be questioned on the well-known grounds attracting Article 14 of the Constitution but a claim based on mere legitimate expectation without anything more cannot ipso facto give a right to invoke these principles. Thus, the Court held that the doctrine of legitimate expectation cannot be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s while the Industrial Policy 2004 was in operation. The Industrial Policy 2004, as is apparent from its clause 1.2, was to remain in operation till 31-03-2015. It is not the case of the petitioners that the incentives provided in the policy were not availed by them or the same were prematurely withdrawn. It is true that Industrial Policy 2004 worked its full tenure till 31-03-2015 when it was replaced by Industrial Policy 2016. Clause 3.17 of the Policy provided exemptions inter alia from payment of CST to the industrial units under the Industrial Policy 2016. For facility of reference clause 3.17 is reproduced hereunder:- 3.17 Tax Exemptions. The exemption from payment of additional toll tax, CST, VAT as available to the industrial units under Industrial Policy 2004 and any subsequent orders of the State and Central Government shall continue for now and also be applicable to all new MSME/Large scale units in Zone- A and Zone- B till further orders, subject to the GST regime. 20. Clause 3.19 of the Industrial Policy 2016 made it clear that in the event of adoption of GST regime by the State Government, fresh guidelines/ orders/ notification separately relating to Tax matters and i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... promulgated vide SRO 431 of 2018 dated 25-09-2018. Initially it was envisaged in the scheme that the benefit of budgetary support to the manufacturing units in the shape of IGST shall be continued till 31-03-2026. This is evident from the preamble of the Scheme in the heading Short title and commencement which reads thus:- The scheme shall be called as Jammu and Kashmir Reimbursement of Integrated Goods and Services Tax for promotion of Small/ Medium/ Large Scale Industries in the State of Jammu and Kashmir. The said scheme shall deemed to have come into operation w.e.f. 01-04-2018 for an eligible unit and shall remain in force till the last date of Industrial Policy 2016. 23. The mode of determination of amount of reimbursement was laid down in clause 3.1, which reads thus:- 3.1. The amount of Reimbursement under the scheme for specified goods manufactured by the eligible unit shall be the: two percent of the taxable turnover with respect to the interstate supplies made by the Industrial Unit under Integrated Goods and Services Tax Act, 2017 provided that the maximum amount of annual reimbursement shall be limited to 2% of the interstate sales turnover reflected by the dealer in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ise specified, the quantum of incentive admissible to an Existing Industrial Unit located in Jammu and Kashmir as per applicability of incentive given at para 6 above is:- a. 3% of the gross turnover of the industrial unit for the year, in case of Micro category units as defined under the MSMED Act 2006 and modified vide notification of Government of India dated 01-06-2020, subject to a maximum of Rs. 10 lakh per annum per unit for a period of 5 years from the appointed date. b. 2% of the gross turnover of the unit for the year, in case of Small, Medium and Large category Industrial Units as defined under the MSMED Act 2006 and modified vide notification of Government of India, dated: 01-06-20020, subject to a maximum of Rs 50 lakh per annum per unit for a period of 5 years from the appointed date. ii. Notwithstanding anything contained in this Scheme, the turnover incentive shall be available subject to availability of funds on proportionate basis of the turnover disclosed. iii. The incentive shall be calculated on the basis of turnover so determined. For the purpose of determining the turnover, the highest turnover of the three preceding years up to 2020-21 shall form the turnove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reimbursement of IGST which was to be calculated at the rate of 2% of the taxable turnover in respect to interstate supplies made by the Industrial Units under IGST Act, 2017. This was obviously a benefit extended to the manufacturing units like the petitioners in lieu of benefit of exemptions like the CST which was being enjoyed by the petitioners under the Industrial Policy 2016. In terms of clause 7 of SRO 431 it was clearly and unequivocally made clear to the industrial units that though the Budgetary Support Scheme is envisaged to remain in operation till 31-03-2026, yet the Finance Department will review its viability at the end of every financial year with respect to its continuance in the next financial year. 30. While the scheme was operating, the Industrial Policy 2021-30 came to be promulgated by the Government vide Government Order No. 117-Ind of 2021 dated 19-04-2021. The policy, of course, made a representation to the existing industrial units that they shall be entitled to avail all the incentives envisaged under the erstwhile Industrial Policy 2016, undoubtedly the Budgetary Support Scheme, was issued in lieu of GST exemption envisaged under the Industrial Policy 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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