IN THE HIGH COURT OF JUDICATURE AT BOMBAY
\nM\/s K. M. Refineries and Infraspace Pvt.
\nLtd., a Company through its Director, Shri
\nVishnu Prasad Sankle, having Office at
\nSurvey No.30\/2, Dabha, Tq. Nandgaon
\nKhandeshwar, Distt. Amravati.
\n\u0085 PETITIONER
\nV E R S U S
\n1. The State of Maharashtra
\nthrough Principal Secretary, Department of
\nIndustries, Energy and Labour, Mantralaya,
\nMumbai \u0096 32.
\n2. The Director of Industries Maharashtra
\nState having Office at Directorate of
\nIndustries, New Administrative Building,
\n2nd Floor, Opposite Mantralaya, Madam
\nCama Road, Mumbai \u0096 32.
\n3. The General Manager,
\nDistrict Industries Centre, Amravati.
\n4. The Joint Commissioner of Sales Tax
\n(Adm.), Amravati Division, Amravati. \u0085 RESPONDENTS
\nMr. Firdos Mirza a\/w Mr. Gaurav V. Kathed, Advocate for Petitioner.
\nMr. K. L. Dharmadhikari, AGP for Respondent Nos.1 & 4.
\nCORAM : SUNIL B. SHUKRE AND
\nS. M. MODAK, JJ.
\nDATE : JULY 16, 2019
\nNAGPUR BENCH : NAGPUR
\nWRIT PETITION NO. 2209 OF 2018
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\nORAL JUDGMENT \u0096 [PER SUNIL B. SHUKRE, J.]
\n. Heard. Rule. Rule made returnable forthwith. Heard finally
\nby consent.
\n2. The facts of this Petition appear on quite a narrow canvass.
\nSuffice it to say, for the purposes of this Petition that the Petitioner \u0096 a
\nregistered Company dealing in manufacture of Vegetable Oil and Allied
\nOil products, fired by the enthusiasm created by the Government scheme
\nintending to have industries at disperse places all over Maharashtra under
\n\u2019New Package Scheme of Incentives, 1993\u2019 (for short, \u2019Incentive Scheme\u2019),
\nset up a factory unit at village Dabha, Tahil Nandgaon Khandeshwar,
\nDistrict Amravati with the hope that the incentives offered under the
\nIncentive Scheme would offset the increased cost of production and the
\nPetitioner would be able to compete with other similar industries in
\nmarketing its products at affordable rates, without causing any loss to the
\nPetitioner \u0096 Company.
\n3. Under the Incentive Scheme, monetary and other incentives
\nin the nature of tax subsidy or tax exemption at the rates prescribed in the
\nscheme and other benefits were given. The document of Incentive Scheme
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\nrequired that the Eligibility Certificate be issued by the Implementing
\nManager.
\n4. The Petitioner made an application for issuance of the
\nEligibility Certificate by the District Industries Center, Amravati. The
\nPetitioner was found eligible for getting the certificate, and therefore, by
\nthe final order issued on 20th March 2017, the General Manager, District
\nIndustries Centre, Amravati issued the Eligibility Certificate which was
\nvalid for nine years. Under the Incentive Scheme, the date from which the
\nEligibility Certificate shall take effect for availing of the sales tax
\nincentives was to be specified by the Commissioner of Sales Tax.
\n5. In the instant case, the Eligibility Certificate reached the table
\nof the Commissioner of Sales Tax for specifying the date from which the
\nincentives to be given to the Petitioner were to take effect. The
\nCommissioner of Sales Tax prescribed the effective date, but, while doing
\nso, curtailed the validity period by about three years by his order passed
\non 10th August 2017. The Petitioner has taken an exception to such
\ncurtailment of the validity period by filing this Petition. The Petitioner has
\nAgency and invariably the Implementing Agency would be the concerned
\nDistrict Industries Centre headed by an officer of the rank of General
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\nalso raised another grievance in this Petition. He submits that incentives
\nthis violates principle of promissory estoppel.
\n6. It is the submission of the learned Counsel for the Petitioner
\nthat the curtailment of validity period is not permissible under the
\nIncentive Scheme. It is also his submission that, even if new tax structure
\nhas come into being it would have no adverse impact on the monetory
\nincentives given under the Incentive Scheme by virtue of the Application
\nof the doctrine of \u2019Promissory estoppel\u2019. The law consistently laid down by
\nthe Hon\u2019ble Apex Court right from the case of M\/s Motiram Padampat
\nSugar Mills Company Limited V\/s State of Uttar Pradesh and others,
\n(1979) 2 Supreme Court Cases 409, reiterated in the case of Gujarat
\nState Financial Corporation V\/s M\/s. Lotus Hotels Pvt. Ltd. (1983) 3
\nSupreme Court Cases 379, would demonstrate it, submits learned
\nCounsel.
\n7. Mr. Dharmadhikari, the learned AGP for Respondent Nos.1 &
\n4 submits that even if there is any change in the tax structure, the
\nPetitioner would not be entitled to receive the original tax benefits as
\ngiven in the Incentive Scheme have been substantially reduced by new
\npolicy prescribing new tax structure of the State and according to him,
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\nprovided under the Incentive Scheme of 1993 and whatever benefits that
\n12th June 2018 and
\nalso the other instructions that have been issued so far or would be issued
\nfrom time to time. He points out that under the new tax structure which
\nhas a centralized system of Sales Tax under the name General Sales Tax
\n(for short, \u2019GST\u2019 for the sake of convenience), there is no provision for
\ngrant of any exemption from GST, and therefore, the assesse or the tax
\npayer is liable to first pay the GST and at the most eligible units would get
\nrefunds based on Eligibility Certificates as provided under the Government
\nResolution dated 12th June 2018.
\n8. We have gone through the document of the Incentive Scheme
\nof 1993, placed on record. It elaboratively speaks of the incentives to be
\ngiven to the Industries. The object of the Incentive Scheme is to achieve
\ndispersal of the industries outside MumbaiThanePune
\nindustrial belt and
\nto attract industries to underdeveloped and developing areas of the State.
\nThe Incentive Scheme was originally introduced in 1964 and was
\namended from time to time. One of the significant amendments, was in
\nthe year 1993. It extended the period of Incentive Scheme to 30th
\nmight be conferred upon the Petitioner would be made available only in
\nterms of Government Resolution recently issued on 12
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\nSeptember 1998. Another significant amendment was made in the year
\n30th March, 2007. It appears that
\nthe Incentive Scheme has been further extended by few more Government
\nResolutions and there is no dispute about the fact that the Incentive
\nScheme came to be extended for further periods from time to time and it
\nwas in operation when the impugned order was passed by the
\nCommissioner of Sales Tax. In fact, there is no document placed on record
\nwhich shows that the Incentive Scheme has been superseded by any other
\nscheme or policy. Be that as it may, the fact remains that the scheme had
\nthe object of making an effort for ensuring even distribution of industrial
\nunits across the State of Maharashtra so that the employment is provided
\nto larger sections of the society and there occurs equal distribution of
\nwealth and means of production, to the common benefit of inhabitants of
\nState.
\n9. The Incentive Scheme as modified from time to time
\nenvisages giving of promotional and financial incentives. The financial
\nincentives include the tax exemptions, cash subsidies for payment of tax
\ninterest, subsidies, various matters and other exemptions. The
\npromotional incentives include Industrial Promotion subsidy, refund of
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\nOctroi\/Entry Tax (in lieu of Octroi) and the like. The promotional and
\nindustry is required to obtain an Eligibility Certificate from the
\nImplementing Agency, which is defined to be the concerned District
\nIndustries Centre. The decision of the Implementing Agency as per clause 3.1(
\n1), though subject to such directions as the Government may issue
\nfrom time to time in this regard, is final and binding on the Eligible Unit.
\nClause 3.1 (3) prescribes that the Commissioner of Sales Tax shall endorse
\nthe Eligibility Certificate issued by the Implementing Agency and it shall
\nbe his duty to specify the date of effect of eligibility for the incentives
\nunder the Incentive Scheme.
\n10. The provisions contained in clause 3.1
\nwould clearly show
\nthat it is for the Implementing Agency to decide about the issuance of
\nEligibility Certificate which decision is final and it is for the Commissioner
\nof Sales Tax to specify the date from which the Eligibility Certificate shall
\ntake effect. These provisions further indicate in clear terms that there is no
\nauthority given to the Commissioner of Sales Tax to modify, enlarge or
\ncurtail the validity period decided by the Implementing Agency and the
\nfinancial incentives could be availed of only upon the industry qualifying
\nitself in terms of the eligibility conditions prescribed in the scheme. The
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\nonly power which has been given to him is as regards specification of a
\n10th August, 2017, the curtailment has been
\ndone, which is beyond the powers of the Commissioner of Sales Tax. This
\norder, therefore, would have to be quashed and set aside.
\n11. Apart from the curtailment of the period of Eligibility
\nCertificate, the Petitioner has yet another grievance. The grievance is
\nabout reduction of the incentives offered under the Incentive Scheme
\nwhich is in detriment to the interest of the Petitioner and also the larger
\nsocietal interest. The Petitioner submits that no reduction of the incentives
\nalready offered under the Incentive Scheme in operation on the date on
\nwhich the Eligibility Certificate was issued could have been made and if it
\nhas been made now, it would be in violation of the principle of promissory
\nestoppel.
\n12. The learned Counsel for Petitioner submits that it is well
\nsettled law that the promise solemnly given by the State cannot be
\nwithdrawn to the detriment and the disadvantage of the person, who has
\nacted upon it and suffered liabilities. According to the learned AGP, even
\nif there is reduction in the incentives, it would not ultimately affect the
\nparticular date from which the Eligibility Certificate shall take effect. But
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\nPetitioner in adverse manner, and therefore, there is no breach of the
\nPromissory
\nestoppel.
\n13. An insightful exposition of the doctrine of promissory estoppel
\ncould be found in the case of M\/s. Motilal Padampat Sugar Mills Co.
\nLtd. V\/s State of Uttar Pradesh and Others reported in (1979) 2
\nSupreme Court Cases 409. The observations of the Hon\u2019ble Apex Court
\nappearing in Paragraph No.24 are relevant and they are reproduced thus :
\n\u0093 24. This Court finally, after referring to the decision in the
\nGanges Manufacturing Co. V. Sourujmull1, Municipal
\nCorporation of the City of Bombay v. Secretary of State for
\nIndia2 and Collector of Bombay v. Municipal Corporation of
\nthe City of Bombay3, summed up the position as follows :
\nUnder our jurisprudence the Government is not exempt
\nfrom liability to carry out the representation made by
\nit as to its future conduct and it cannot on some
\nundefined and undisclosed ground of necessity or
\nexpediency fail to carry out the promise solemnly made
\nby it, nor claim to be the judge of its own obligation to
\n1 (1880) ILR 5 Cal 669
\n2 (1905) ILR 29 Bom 580
\n3 1952 SCR 43
\nprinciple of promissory estoppel. In order to resolve the issue so raised, it
\nwould be necessary for us to first understand the doctrine of
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\nthe citizen on an ex parte appraisement of the
\ncircumstances in which the obligation has arisen.
\nThe law may, therefore, now be taken to be settled as a result of
\nthis decision, that where the Government makes a promise
\nknowing or intending that it would be acted on by the promisee
\nand, in fact, the promisee, acting in reliance on it, alters his
\nposition, the Government would be held bound by the promise and
\nthe promise would be enforceable against the Government at the
\ninstance of the promisee, notwithstanding that there is no
\nconsideration for the promise and the promise is not recorded in
\nthe form of a formal contract as required by Article 299 of the
\nConstitution. It is elementary that in a republic governed by the
\nrule of law, no one, howsoever high or low, is above the law.
\nEveryone is subject to the law as fully and completely as any other
\nand the Government is no exception. It is indeed the pride of
\nconstitutional democracy and rule of law that the Government
\nstands on the same footing as a private individual so far as the
\nobligation of the law is concerned : the former is equally bound as
\nthe latter. It is indeed difficult to see on what principle can a
\nGovernment, committed to the rule of law, claim immunity from
\nthe doctrine of promissory estoppel. Can the Government say that
\nit is under no obligation to act in a manner that is fair and just or
\nthat it is not bound by considerations of \u0093 honesty and good faith\u0094 ?
\nWhy should the Government not be held to a high \u0093 standard of
\nrectangular rectitude while dealing with its citizens\u0094 ? There was a
\ntime when the doctrine of executive necessity was regarded as
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\nsufficient justification for the Government to repudiate even its
\ncontractual obligations; but, let it be said to the eternal glory of
\nthis Court, this doctrine was emphatically negatived in the
\nUnion
\nof India v. IndoAfghan
\nAgencies1 case and the supremacy of the
\nrule of law was established. It was laid down by this Court that the
\nGovernment cannot claim to be immune from the applicability of
\nthe rule of promissory estoppel and repudiate a promise made by it
\non the ground that such promise may fetter its future executive
\naction. If the Government does not want its freedom of executive
\naction to be hampered or restricted, the Government need not
\nmake a promise knowing or intending that it would be acted on by
\nthe promisee and the promisee would alter his position relying
\nupon it. But if the Government makes such a promise and the
\npromisee acts in reliance upon it and alters his position, there is no
\nreason why the Government should not be compelled to make good
\nsuch promise like any other private individual. The law cannot
\nacquire legitimacy and gain social acceptance unless it accords
\nwith the moral values of the society and the constant endeavour of
\nthe Courts and the legislature must, therefore, be to close the gap
\nbetween law and morality and bring about as near an
\napproximation between the two as possible. The doctrine of
\npromissory estoppel is a significant judicial contribution in that
\ndirection. But it is necessary to point out that since the doctrine of
\npromissory estoppel is an equitable doctrine, it must yield when
\nthe equity so requires. If it can be shown by the Government that
\n1 (1968) 2 SCR 366
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\nhaving regard to the facts as they have transpired, it would be
\ninequitable to hold the Government to the promise made by it, the
\nCourt would not raise an equity in favour of the promisee and
\nenforce the promise against the Government. The doctrine of
\npromissory estoppel would be displaced in such a case because, on
\nthe facts, equity would not require that the Government should be
\nheld bound by the promise made by it. When the Government is
\nable to show that in view of the fats as have transpired since the
\nmaking of the promise, public interest would be prejudiced if the
\nGovernment were required to carry out the promise, the Court
\nwould have to balance the public interest in the Government
\ncarrying out a promise made to a citizen which has induced the
\ncitizen to act upon it and alter his position and the public interest
\nlikely to suffer if the promise were required to be carried out by the
\ngovernment and determine which way the equity lies. It would not
\nbe enough for the Government just to say that public interest
\nrequires that the Government should not be compelled to carry out
\nthe promise or that the public interest would suffer if the
\nGovernment were required to honour it. The Government cannot,
\nas Shah, J., pointed out in the IndoAfghan
\nAgencies case, claim
\nto be exempt from the liability to carry out the promise \u0093 on some
\nindefinite and undisclosed ground of necessity or expediency\u0094 , nor
\ncan the Government claim to be the sole judge of its liability and
\nrepudiate it \u0093 on an ex parte appraisement of the circumstances\u0094 . If
\nthe Government wants to resist the liability, it will have to disclose
\nto the Court what are the facts and circumstances on account of
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\nwhich the Government claims to be exempt from the liability and it
\nwould be for the Court to decide whether those facts and
\ncircumstances are such as to render it inequitable to enforce the
\nliability against the Government. Mere claim of change of policy
\nwould not be sufficient to exonerate the Government from the
\nliability: the Government would have to show what precisely is the
\nchanged policy and also its reason and justification so that the
\nCourt can judge for itself which way the public interest lies and
\nwhat the equity of the case demands. It is only if the Court is
\nsatisfied, on proper and adequate material placed by the
\nGovernment, that overriding public interest requires that the
\nGovernment should not be held bound by the promise but should
\nbe free to act unfettered by it, that the Court would refuse to
\nenforce the promise against the Government. The Court would not
\nact on the mere ipse dixit of the Government, for it is the Court
\nwhich has to decide and not the Government whether the
\nGovernment should be held exempt from liability. This is the
\nessence of the rule of law. The burden would be upon the
\nGovernment to show that the public interest in the Government
\nacting otherwise than in accordance with the promise is so
\noverwhelming that it would be inequitable to hold the Government
\nbound by the promise and the Court would insist on a highly
\nrigorous standard of proof in the discharge of this burden. But
\neven where there is no such overriding public interest, it may still
\nbe competent to the Government to resile from the promise \u0093 on
\ngiving reasonable notice, which need not be a formal notice, giving
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\nthe promisee a reasonable opportunity of resuming his position\u0094
\nprovided of course it is possible for the promisee to restore status
\nquo ante. If, however, the promisee cannot resume his position, the
\npromise would become final and irrevocable. Vide Emmanuel
\nAvodeji Ajaye v. Briscoe.\u0094
\n14. Two propositions of law emerge from the above observations.
\nFirstly, once the promise is solemnly given by the State with an intention
\nthat when acted upon, it would create a legal relation and acting on it the
\npromisee has changed his\/her position and incurred liability, the State
\nmust be held as bound by the promise, except when owing to change of
\ncircumstances or subsequent developments larger public interests demand
\nthat the promise be not enforced against the State lest newly established
\nbalance of equities would tilt against the Government or larger public
\ninterest. Secondly, the doctrine is equitable in nature, and therefore, it
\nmust yield when the equity so requires. But, that does not mean that the
\nGovernment can claim to be exempt from the liability to carry out the
\npromise on some indefinite and undisclosed ground of necessity or
\nunacceptability and that the Government will have to disclose the facts
\nand circumstances on account of which the Government seeks its
\nexemption from the liability. Thus, the exemption to the Government can
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\nbe granted only on the basis of facts and circumstances of each case and
\n15. The principle of promissory estoppel has now been firmly
\nentrenched in India with its consistent reiteration and following in the
\nlater cases. One of such cases is that of Gujarat State Financial
\nCorporation V\/s M\/s. Lotus Hotels Pvt. Ltd. Reported in (1983) 3
\nSupreme Court Cases 379.
\n16. Now, if we look at the Incentive Scheme, one feature of the
\nScheme that would prominently strike us is that of a promise given by the
\nState to the industries. The promise is that, if the industries come out of
\ntheir secure shells in MumbaiThanePune
\nindustrial belt and set up their
\nindustrial units in diffused virgin pastures of the State, spread out in rural
\nand remote areas, the industrial units would be eligible for various
\nincentives offered in the Incentive Scheme. These incentives are meant for
\noffsetting the additional investment and increase in cost of production of
\nthe industrial units so that the goods and services could be produced at
\ncompetitive rates and without incurring any losses.
\nthe burden to establish a case for exemption would be upon the
\nGovernment.
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\n17. Relying upon such a promise and assurance given by the
\nand the promise had been given by the State with an intention to create
\nlegal relation. The Petitioner having changed its position and having made
\ninvestments, has forged a legal relation with the State, and therefore, now
\nthe State would be bound by the promise that it gave to the Petitioner
\nthrough the Incentive Scheme and which it confirmed it by issuing the
\nEligibility Certificate.
\n18. It would be clear from the facts stated and the discussion
\nmade by us thus far that the doctrine of promissory estoppel clearly apply
\nhere and would forbid the Government from taking any decision of not
\ncompletely implementing the Incentive Scheme or reducing the incentives
\nto the detriment of the Petitioner and to that extent the decision would
\nhave to be held as illegal. Once a promise has been solemnly given with
\nan intention that it would be acted upon and which has been indeed acted
\nupon and liabilities suffered by the promisee, the State cannot be
\npermitted to backtrack on the promise and change its position so as to
\ncause loss to the promisee. There can be an exception to the application of
\nState, the Petitioner has opened its industrial unit at village Dabha by
\nmaking substantial investment. The Petitioner has acted upon the promise
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\nthe principle of promissory estoppel, but, the facts and circumstances
\nnecessary for exempting the Government from its liability do not exist on
\nrecord and the reply of the State also does not convincingly point out any
\nsuch exceptional facts and circumstances warranting toning down or
\nwithdrawing of its promise, much to the disadvantage of the Petitioner. If
\nthe State has to reverse its promise, it must demonstrate specifically the
\nfacts and circumstances showing that enforcing of the promise against it
\nwould be highly iniquitous. The Government cannot change its stand
\nmerely upon its ipse dixit. There must be in existence justifiable facts and
\ncircumstances to change the decision or otherwise the State must give full
\neffect to the decision, which in the present case is to be found in the
\nIncentive Scheme. This is the essence of the rule of law.
\n19. In the earlier paragraph, we have found that the Incentive
\nScheme has been framed by the State with a view to ensure equal
\ndistribution of wealth and means of production to the common benefit of
\ncitizenry of the State. The ostensible purpose was to encourage setting up
\nof industrial units across the State of Maharashtra so that the employment
\nis made available to greater sections of the society and the economy of the
\nState as a whole stands to gain. The object and purpose of the Incentive
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\nScheme is in consonance with the ideals held aloft by the directive
\n\u0093 39. Certain principles of policy to be followed by the State \u0096
\nThe State shall, in particular, direct its policy towards securing \u0096
\n(a) \u0085. …………………………………………………………………………;
\n(b) \u0085. …………………………………………………………………………;
\n(c) that the operation of the economic system does not result in
\nthe concentration of wealth and means of production to the
\ncommon detriment;
\n(d) \u0085. ………………………………………………………………………….;
\n(e) \u0085. ………………………………………………………………………….;
\n(f) \u0085. ………………………………………………………………………….\u0094
\n20. Though the earlier decisions of the Hon\u2019ble Supreme Court
\nindicated that the courts were hardly concerned with the directive
\nprinciples, they being not justiciable or enforceable in the courts of law
\nlike the fundamental rights, the duty of the courts in relation to the
\ndirective principles of the State policy came to be stressed much in later
\ndecisions, especially after 13member
\nBench in Keshavananda V\/s State
\nof Kerala, (1973) 4 SCC 225. This case laid down certain broad
\npropositions as regards fundamental rights, such as \u0096
\nprinciples of State policy contained in Part \u0096 IV of the Constitution of
\nIndia, in particular, Article 39(c). Article 39(c) lays down thus :
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\n(i) There is no disharmony between the directives and the fundamental
\n(ii) Fundamental rights cannot be enjoyed fully unless conducive
\natmosphere for their enjoyment is created, which is possible only
\nwhen the directive principles are implemented;
\n(iii) Parliament is competent to abrogate any of the fundamental rights
\nby amending the Constitution in order to enable the State to
\nimplement the directive principles;
\n(iv) Though the mandate of Article 37 is directed at the State, the courts
\nare also bound by the mandate, within the parameters of the
\nConstitution or any other statute under their consideration; and
\n(v) The courts have a duty while interpreting the Constitution and
\nstatutes to harmonise the social objective underlying the directive
\nprinciples with the individual rights.
\n21. In the case of Centre of Legal Research V\/s State of Kerala
\nreported in AIR 1986 SC 1322, the Hon\u2019ble Apex Court held that the
\nCourt may issue suitable directions so that the Government may perform
\nits duty to implement the directive principles of State Policy.
\nrights, because they supplement each other in achieving the
\ncommon goal and establishing a welfare of State;
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\n22. In the case of Sheela V\/s Union of India, reported in 1986
\nSC 1773, the Hon\u2019ble Apex Court had taken a similar view in order to
\nenforce the legislation passed to protect children. The Hon\u2019ble Apex Court
\nhas also struck down an executive order or law for violating the directive
\nprinciples (See \u0096 Cf. Ashwathanarayana V\/s State of Karnataka, (1989)
\nSupp. (1) SCC 698; A. I. Bank Officers V\/s Union of India, (1989) 4 SCC
\n96).
\n23. The law so crystallized in relation to the status of the
\ndirective principles of State Policy would tell us that if there is any action
\nof the State or any executive order made by the State which dilutes or
\nabridges the mandate of the directives, the Court in exercise of power of
\njudicial review can annul the action or the executive order. The only
\ncondition necessary for doing so would be that the executive order or the
\nlaw underlying the impugned action or order should have a reasonable
\nnexus with the directive principles or should be made for implementing
\nthe directive principles and this has to be ascertained by examining nature
\nand character of the basic executive order or the law. Sometimes, even the
\nbasic law or order could be in derogation of the directives. In that event
\nalso, the court would have the power to strike down the same. A useful
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\nreference in this regard may be made to the observations of the Hon\u2019ble
\nApex Court in paragraph Nos.3, 4 and 5 of Tinsukhia Electric Supply Co.
\nLtd. V\/s State of Assam and Others, reported in (1989) 3 Supreme
\nCourt Cases 709. For the sake of convenience, we reproduce here a
\nportion from the relevant observations made in paragraph No.5, which
\nreads as follows :
\n\u0093 5. Whenever a question is raised that the Parliament or the
\nState legislature have abused their powers and inserted a
\ndeclaration in a law for not giving effect to securing the Directive
\nPrinciples specified in Article 39(b) and (c), the court can and must
\nnecessarily go into that question and decide. See the observations of
\nJustice Mathew in Kesavananda Bharati Case at page 855 of the
\nreport (SCC p.896). If the court comes to the conclusion that the
\ndeclaration was merely a pretence and that the real purpose of the
\nlaw is the accomplishment of some object other than to give effect
\nto the policy of the State towards securing the Directive Principles
\nas enjoined by Articles 39(b) and (c), the declaration would not
\ndebar the court from striking down any provision therein which
\nviolates Article 14, 19 or 31………………………………………………….\u0094
\n24. The interpretation given by the Hon\u2019ble Apex Court as regards
\nthe status of the directive principles of State Policy, in our considered
\nopinion, applies to the facts and circumstances of the present case. The
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\n915.wp.2209.18
\nIncentive Scheme, as stated earlier, has been framed ostensibly to achieve
\nindustries have been offered and many of the industries have also availed
\nof those incentives by setting up their industrial units situated in various
\nparts across the State of Maharashtra. These units have been established
\nby making substantial investment and even at the risk of increase in the
\nexpenditure on account of transportation, marketing and the like. Thus,
\nthese units have suffered liabilities with the hope that the increased cost of
\nproduction would be evened out appropriately by the incentives given to
\nthem.
\n25. Now, midway through the operation of the Incentive Scheme,
\nmany of the incentives are being taken away or reduced and if this is
\npermitted, it would certainly adversely affect not only the industrial units,
\nbut also the whole process of achieving the directive of Article 39(c) that
\noperation of economic system does not result in the concentration of
\nwealth and means of production to the common detriment. Such
\nreduction under the Incentive Scheme in the name of new policy of GST is
\nclearly not permissible and the Incentive Scheme that was in operation on
\none of the directives contained in Article 39(c) for ensuring equal
\ndistribution of wealth and means of production. Specific incentives to the
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\n915.wp.2209.18
\nthe date of issuance of Eligibility Certificate would have to be enforced
\nconsistent with the new tax structure under the General Sales Tax Scheme
\nand at the same time it also does not result in reducing or restricting the
\nbenefits which have been conferred upon an industrial unit like that of the
\nPetitioner under the Incentive Scheme.
\n26. In the result, we find that this Petition deserves to be allowed
\nand it is allowed accordingly.
\n27. The impugned order dated 10th August 2017 is hereby
\nquashed and setaside
\nand the Commissioner of Sales Tax or any
\nauthorized Officer is directed to specify the effective date of the Eligibility
\nCertificate without curtailing the validity period in terms of clause \u0096
\n3.1(3) of the Incentive Scheme within a period of four weeks from the
\ndate of receipt of this Judgment.
\n28. The Respondents are directed to implement the Incentive
\nScheme as amended uptodate
\nwith a discretion to modify the scheme so
\nas to bring it in line with the new tax structure under the General Sales
\nagainst the State. The only liberty that could be granted to the State
\nwould be of modifying the Incentive Scheme in such a way that it is
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\n915.wp.2209.18
\nTax scheme, but without reducing or restricting the benefits as conferred
\n29. Rule is made absolute in these terms. No order as to costs.
\nJUDGE JUDGE
\nYadav VG
\nupon the Petitioner under the Incentive Scheme within a period of eight
\nweeks from the date of receipt of this Judgment.
\n::: Uploaded on – 06\/08\/2019 ::: Downloaded on – 31\/08\/2019 10:12:24 :::<\/p>\n","protected":false},"excerpt":{"rendered":"
Two propositions of law emerge from the above observations. Firstly, once the promise is solemnly given by the State with an intention that when acted upon, it would create a legal relation and acting on it the promisee has changed his\/her position and incurred liability, the State must be held as bound by the promise, except when owing to change of circumstances or subsequent developments larger public interests demand that the promise be not enforced against the State lest newly established balance of equities would tilt against the Government or larger public interest. Secondly, the doctrine is equitable in nature, and therefore, it must yield when the equity so requires.<\/p>\n