Augustan Textile Colours Pvt ltd Vs Director of Industries & Anr (Supreme Court)
Date-8th April,2022

Sub- Doctrine of Promissory estoppel- Tax exemption in respect of Works Contract made under SICA Act 1985- whether can be withdrawn by subsequent notification under the Kerala State Sales Tax Act?

The limited question in this appeal was the validity of withdrawal of the tax exemption which was granted to the company under the SICA Act in 2004 which was later on withdrawn by order u/s 10(3) of the Kerala Sales tax Act in Nov 2006. The exemption which was initially apparently granted without any time limit.The Appellant contended that the initial exemption which was granted did not mention any provision under which it was granted and as such following Section 19(3) of the SICA Act, 1985 the exemption could not have been withdrawn.

The Supreme COurt however following Pournami Oil Mills and others Vs State of Kerala & Anr(1986) Supp SCC 728(SC) and other judgements dismissed the Writ appeal by observing that the exemption under the Sales tax law could not have been granted to an individual under Section 10(1) of the Act where the power to grant exemption was to class of persons or class of industries and no promissory estoppel can be claimed against violation of the law. Justice K M Joseph wrote a concurring but separate judgement.

This judgement therefore leads to the fact that while availing tax exemptions etc on the basis of promises made by Government, thread bare scrutiny must be made before one ventures out to avail the same.

Ramesh Patodia
11-04-2022