Facts:
Under the Industrial Policy for the period from 1st April, 1988 to 31st March, 1997, the State of Haryana announced sales tax exemption for industries set up in backward areas in the State. Schedule III appended to Rules provides for a negative list of the industries and/or class of industries which were not to be included therein. At the initial stage solvent extraction plant was not included in the negative list. On or about 3rd January, 1996, notice was given as regards intention of the State to amend the Rules in respect whereof a draft was circulated for information of persons likely to be affected, so as to file their objections or suggestions thereto. Thereafter on December 16, 1996 Schedule III to Rules was amended to include solvent extraction plant in the negative list. Thereafter, from time to time, rules were amended to withdraw the sales tax exemption to solvent extraction plant right from the date of announcement of sales tax exemption made by the State.
The respondent, only after the notice dated 3rd January, 1996, purchased land to set up a solvent extraction plant. The respondent had applied for grant of sales tax exemption on 16th December, 1996, which was rejected. The SC allowed appeal filed by the respondent in (2006) 145 STC 350 and held that the respondent was eligible for sales tax exemption by applying the doctrine of promissory estoppels. However, the issue of quantum of exemption was left to be decided by the sales tax authorities.
Subsequently, following the decision of SC, the Department approved sales tax exemption up to the amount of investment made up to 16th December, 1996 i.e., up to the date of amendment putting the unit in negative list. The High Court of Punjab and Haryana allowed writ petition filed by the respondent and held that once the respondent has been treated as eligible for exemption, there was no valid reason to further classify benefit of investment up to the date of amendment, putting the unit in the negative list. It was the contention of the respondent that quantum of sales tax exemption should depend upon entire investment and not on investment up to the date of amendment as granted by the Sales Tax Department.
Held:
(1) The doctrine of promissory estoppels is an equitable remedy and has to be moulded depending on the facts of each case and not straight-jacketed into pigeon holes.
(2) The principle of promissory estoppels is not applicable to facts of the case as the decision to put the solvent plant in the negative list was taken in public interest and it was not alleged that said decision was actuated by fraud or it was not bona fide.
(3) The withdrawal of exemption is a matter of policy and the Courts should not bind the Government in its policy decision. The Courts should not normally interfere with fiscal policy of the Government.
(4) Furthermore, in the facts of the case, it cannot be said that the respondent had altered its position relying on the promise.
(5) Note 2, appended to the amendment made to Schedule III, categorically states that the industrial units in which investment has been made up to 25% of the anticipated project and which have been included in the above list for the first time, shall be entitled to the sales tax benefits related to the extent of investment made up to January 3, 1996. However on May 28, 1995 the said Note was omitted retrospectively.
(6) The quantum of sales tax exemption was determined following the SC decision given earlier up to December 16, 1996 i.e., date of amendment instead of January 3, 1996 as mentioned in Note 2.
(7) The benefit has been granted till December 16, 1996 in terms of the decision of SC, it cannot be said that even now an attempt is made to give retrospective effect to the said amendment. The quantification of sales tax exemption made by the Department is in accordance with the ratio laid by this Court. Accordingly, the appeal filed by the Department was allowed.
