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TMI Blog1990 (1) TMI 85X X X X Extracts X X X X X X X X Extracts X X X X ..... nor oils like Rice Bran Oil, Mahua Oil, Water-melon seed Oil, Solvent extracted cottonseed Oil etc. They are known as non-traditional oils in the trade amongst the manufacturers and the persons dealing with Vanaspati. Utilising the non-traditional oils for the manufacture of Vanaspati is a time consuming and costlier process, than its manufacture by hydrogenation of traditional oils. 3. The Union of India with an object to cut the import of excisable oils, to save the foreign exchange, to encourage the utilisation, or consumption of indigenously available non-traditional oils and to make it feasible as well as financially viable for the manufacture of Vanaspati and further to allure the manufacturers of Vanaspati to utilise the same for its manufacture, and with a further object of granting incentive for the greater production of non-traditional oils in the country, granted various concessions from excise duty and also in other excisable goods. The Central Government introduced a scheme granting concession from excise duty on the use of the non-traditional oils in the manufacture of Vanaspati and other excisable articles. The scheme proposing the excise concession on the Vanaspat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to as the 1987 Rules) were promulgated. The Notification was issued specifying the rates of concession in conformity with the amended Rules of 1987. 6. Speeches of the Finance Minister, Prime Minister and others in the Parliament were referred to in order to contend that it amounted to making the offer of the credit on the use of indigenous vegetable oils (non-traditional oils) for the manufacture of Vanaspati prior to or after the issue of the Notification, dated March 1,1987. The petitioners keeping in view the Notification, dated March 1,1987 as well as the speeches made in the Parliament and implied assurances given by the Central Government, used the specified oils which were entitled to the concession in the excise duty for the manufacture of Vanaspati. They earned the credit to the extent of the utilisation of the non-traditional oils in terms of the Notification and had earned credit of the amount of excise permissible under notification, by utilising the oils notified. 7. Before the petitioners could utilise the credit earned by them in terms of Notification issued by the respondents and the implied and express assurances made, the respondents rescinded the Notificatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... utilisation of credit in terms of the scheme as the petitioners have irreversibly changed their position adversely to them by acting in good faith on the promise as well as the Notification. The credit earned for the payment of excise duty on the final product is the property of the petitioners which can be taken away by the respondents by simplicities rescinding the earlier Notification. The rescinding of the earlier Notification by subsequent Notification is prospective and cannot take away the rights of the petitioners already vested in them. The Government cannot approbate and reprobate. The Legislature alone could have taken away the rights vested in the petitioners. The delegated authority of the Central Government cannot deprive the petitioners of their vested rights and the property. The petitioners have changed their position to their detriment on an active representation of the respondents. The petitioners cannot be put back in the same position. It was pointed out that there was no public interest or grounds for rescinding the scheme making the concession available to the petitioners. The rescinding Notification cannot in its sweep take away the vested rights of the cred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as well as issuance of Notification there under cannot be taken note of. In a taxing statute its plain language is to be interpreted. The speeches made in the Parliament are immaterial and cannot be taken note of. It is averred that taxation is not a contract, it is a unilateral will of the Legislature and is an exaction by the State in exercise of its sovereign power and as such there can neither be any promissory estoppel nor any contractual obligation which can be enforced in a Court of law. The very concept pf taxation is repugnant to the concept of contract and both are anti-thesis of each other. Thus, the question of representations or assurances are irrelevant in case of taxation, nor can be given effect to. The petitioners hydrogenated the oils in their own interest Profit and loss are the ordinary concomitants of business. Once an item becomes excisable or the excise duty is increased on it, it being earlier exempted from the excise duty, is of no consequence. The date of manufacture or it being not earlier excisable or the intention of the manufacturer having manufactured the same being not excisable in view of some earlier scheme or policy, is of no consequence and the S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ised by way of adjustment to a limited extent of Rs. 1,000/- per metric tonne out of the total excise duty payable on the finished goods. The credit was earned on the date of hydrogenation of the non-traditional oils, though it could have been used in the payment of the excise duty on the final product in the next month. Unutilised credit could be carried forward. 17. The petitioners on the said assurance, express and implied, believed the same and acted on it in good faith. The act on the part of the petitioners was complete on the day they hydrogenated the non-traditional oils. It was an irreversible act. The parties acted in the belief that they had and would be given such right, i.e. the credit earned and right to utilise the same in terms of the assurances. The petitioners had acted in a particular fashion and had changed their position to their detriment and could not be placed in the same position in which they were before acting on the assurance. The respondents withdrew their assurance and refused to comply with their part of the promise. The respondents could not be allowed to act inconsistently with their implied and express conduct on which the petitioners had acted. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... collected for the public good and it is for the respondents to withdraw the concession in the public interest and to grant it keeping the facts and circumstances in view and the public interest at a particular moment. Numerous matters are taken into consideration while granting exemption or levying the excise duty. The said circumstances are not open to judicial review. The Central Government was satisfied that it was necessary in public interest to withdraw the exemption from duty under the circumstances prevailing. It being the prerogative of legislation, its implementation is the only objective function. 20. The learned counsel for the respondents relied on A.I.R. 1973 S.C. 2641, A.I.R. 1976 S.C. 2237, A.I.R. 1983 S.C. 937, A.I.R. 1985 S.C. 537=1985 (20) E.L.T. 212 (SC), 1986 (23) E.L.T. 87 (F.B.) and A.I.R. 1987 S.C. 142 = 1987 (27) E.L.T. 572 (SC). 21. In Pournami Oil Mills etc. v. State of Kerala Anr. - A.I.R. 1987 S.C. 590 = 1987 (27) E.L.T. 594 (SC), their Lordships of the Supreme Court were of the view that if in order to boost the industrialization in the State a concession in sales tax was given by the Government in exercise of its power to exempt the tax under Ke ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... approximation with justice, an ideal for which the law has been constantly striving. The principle of promissory estoppel has been invoked and established itself in law essentially to end the injustice with the changing social concepts and values and in conformity with the legal science. It was further observed that the principle has been applied against the Government where the interest of justice, morality and common fairness clearly dictated such a course and to the extent to which it can be applied has to be determined taking into consideration the peculiar facts and circumstances of each case. It was clearly observed that the Government ought to set a high standard of dealings and relationship with the citizens and the word of the duly authorised Government Agent acting within the scope of his authority ought to be as good as Govt. bond. 24. While dealing with the facts and circumstances of the case, their Lordships of the Supreme Court laid down "If we do so, would it not amount to our countenancing the perpetration of what can be compendiously described as legal fraud which a Court of equity must prevent being committed?" "Courts must do justice by the promotion of honesty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elieved to perform its part of the promise solely on the ground of some undefined and undisclosed necessity or expediency, nor the Government can claim to be the judge of their own obligation and decide the same in their own favour. The reasons are justifiable in a Court of law and the Government is to satisfy the Court's conscience that it would not be in the interest of justice or the public interest to keep the promisee bound by its promise. Then and then alone the Court would refuse to enforce the promise extended by the Government. 25. In the course of judgment, it was accepted that the Government or Crown cannot be estopped from enforcing the statutory prohibition, nor can it be asked and compelled to act in a manner which has been prohibited by law. There cannot be any promissory estoppel against the exercise of legislative power, there cannot be any promissory estoppel where the Government owes a duty to the public, i.e. a course of conduct enjoined by law to be performed by the Government, the Government cannot be estopped from acting in discharge of its duties under the law. The doctrine cannot be applied to a obligation or liability imposed by law. It was further accep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... necessity. The Government cannot be permitted to go back upon their promises made in exercise of their discretionary powers as embodied in the scheme merely on whim. It was further laid down, "Under our jurisprudence the Government is not exempt from liability to carry out the representation made by it as to its future conduct and it cannot be some undefined and undisclosed ground of necessity or expediency fail to carry out the promise solemnly made by it, nor claim to be the judge of its own obligation to the citizen on an exparte appraisement of the circumstances; in which the obligation has arisen." 28. The principle of estoppel was not applied against the Government when the Government acted in its Governmental functions, public or sovereign capacity, though an exception is carved out to the effect that the doctrine of promissory estoppel would be acted upon where it is necessary to prevent fraud or manifest injustice. 29. It was observed that "the Court is entitled to require the Officer to act according to the Scheme or representation. He cannot act arbitrarily on his whim and his promise and some undefined and undisclosed grounds of necessity or changed the conditions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as the Recommendation of the Municipal Committee to the Government to levy octroi is concerned, though it is contrary to rules, the Municipal Committee is not estopped as the representation made by it was beyond the scope of its authority". It was in those peculiar facts and circumstances that it was observed that the principle of estoppel is not available: 35. While dealing with Ram Kumar's case (supra) in M/s. Motilal Padampat Sugar Mills Co. Ltd. case (supra) it was observed, "It will, thus, be seen from the decision relied upon in the judgment that the Court could not possibly have intended to lay down an absolute proposition that there can be no promissory estoppel against the Government in the exercise of its governmental, public or executive powers. That would have been in complete contradiction of the decision of this Court in the Indo Afghan Agencies case. Century Spinning and Manufacturing Company's case and we find it difficult to believe that the Court could have ever intended to lay down any such proposition without expressly referring to these earlier decisions and overruling them. We are, therefore, of the opinion that the observation made by the Court in Ram Kuma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n excise for use of the inputs was granted. The petitioners could have enjoyed the concession in the form of taking credit to the extent concession has been provided and to utilise the said credit in payment of excise duty on the finished goods. Detailed facts have been referred to in the earlier part of the judgment while reproducing the facts. Again it cannot be disputed that the petitioners did use the inputs carrying the concession from payment of excise duty on their use and used the same in terms of the said Scheme. The respondents granted the concession on March 1,1987, it continued up to August 25,1989 and was re-granted on October 11,1989. Nothing has been placed on the record to show that it was either in the public interest or it was necessary to rescind the Notification between August 25,1989 and October 11,1989, nor, any explanation has been put forth in the written statement or during the course of arguments. No expediency for the State or the Executive was pointed out, to justify the withdrawal of concessions for one month only, much less declining the utilisation after credit already earned. 40. There is no gainsaying that the executive had to act in a just manner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ima facie that the power has been exercised without any reasonable basis, the onus is on the State to show that the power has been exercised in public interest and was exercised in exercise of objective satisfaction and not, the subjective satisfaction. Wherever the power is abused, the Courts will grant necessary relief to the aggrieved persons. 41. Summing up the facts as emerged in the course of arguments, pleading of the parties and various Notifications read in Court, we are of the opinion that the Notification granting the concession from payment of excise duty by taking a credit on the use of the input of non-traditional oils, the petitioner did act bona fide and on the belief that they would be entitled to the concession enumerated in the Notification and further they will have a right to utilise the credit earned in terms of the said Notification. The petitioners did act and earned credit, keeping in view the Parliamentary speeches and the subsequent amendment of rules and the conduct of the respondents, the petitioner further bona fidely believed in it by taking the entire conduct of Government from its entire perspective as a normal ordinary prudent person would have b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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