Hero Motocorp Limited Vs Union of India & Ors (Supreme Court)
Date-17th October 2022
Sub-Whether a writ of mandamus lies against the Central Government to allow 100% exemption from GST in view of similar exemption of excise duty having been allowed vide office Memorandum issued in the year 2003? Whether there can be a promissory estoppel against a statute?

In this important judgement pronounced today(17th October, 2022) the Supreme Court was considering the SLP of Hero Moto Corp Limited and Sun Pharma where the companies had set up an industrial unit in the state of Uttaranchal and North Eastern State of Sikkim respectively. After the enactment of the GST law with effect from 1-7-2017, the Central Government in line with recommendation of Finance Commission determined the share of Central Government to be 58% of CGST and 29% of IGST and thus accordingly issued notification for the said exemption and simultaneously the notification which was earlier issued was withdrawn in terms of Section 174(2) of the CGST Act, 2017. On these facts the petitioners filed a writ of mandamus that they should have been allowed 100% exemption from GST on the basis of doctrine of promissory estoppel. On the other hand, the department argued that there could not be a writ of mandamus against the central government and moreover, there could not be a promissory estoppel against a statute. Moreover, it was also argued that if at all there was any grievance then the same should be raised against the state government as the centre had already issued notification to the extent of its own share of 58%. It was also cited that the State of Jammu & Kashmir had allowed similar notification towards 42% in respect of similarly placed units.

The court accepting all the arguments of the department dismissed the SLP of HERO MOTO though allowed them to make representation to the state government to get the share of the states.

This judgement is another landmark judgement in the context of promissory estoppel and while setting up any unit in view of tax benefits, the changes in law etc have to be evaluated properly and the agreements have to be accordingly worded.

Ramesh Patodia
17-10-2022