JUDGMENT
B. Sudershan Reddy, C.J.
1. On 24.12.1997 the Govt. of India, Ministry of Industry, Department of Industrial Policy and Promotion announced its new Industrial Policy and other concessions to new industries in the North Eastern Region. The policy recognised the continued backwardness of the North Eastern Region and noted that a new and synergetic incentive package was widely felt to stimulate development of industries in the region. The origin of the new industrial policy is traceable to a statement made on October 27th, 1996 by the hon’ble Prime Minister of India and as well as the views and recommendations of various interdepartmental Committees constituted for the specific purpose to suggest remedial measures in order to accelerate the process of industrialisation in the backward North Eastern Region. The following are the salient features of the new Industrial Policy.
A. Development of Industrial Infrastructure
(i) Currently the funding pattern for the growth, centers envisages a Centra/assistance of Rs. 40 crore for each Centre and balance amount to be, raised by the State Government. Government has approved that entire expenditure on the growth centers would be provided as Central assistance, subject to a ceiling of Rs. 10 crore.
(ii) In respect of the industries the funding pattern would be changed from 2: 3 between GOI and SIDIH to 4:1 and the GOI fund would be a grant.
B. Transport Subsidy Scheme
(i) The Transport subsidy scheme will be extended further in so far as MB States are concerned for a period of 10 years, i.e., upto 31.3.2007 being co-terminus with the 10th Five Years Plan on same term and conditions as are applicable now.
C. Fiscal Incentives to new Industries units and their substantial expansion.
(i) Government has approved for converting the growth centres and IIDCs into a total tax-free zone for the next 10 years. All industrial activity in these zones would be free from income-tax, excise for a period of 10 years from the commencement of production. State Governments would be requested to grant exemptions in respect of Sales tax and Municipal tax.
(ii) Industries located in the growth centers would also be given capital investment subsidy at the rate of 15 per cent of their investment in plant and machinery subject to maximum ceiling of Rs.30 lakh.
(iii) The commercial banks and the North East Development Financial Corporation CNEDFI) will have dedicated branches/counters in process applications for term loans and working capita in these centers. White sanctioning assistance NEDFI and commercial banks would take a liberal view of the debt equity ratio.
(iv) An interest subsidy of 3 per cent on the working capital loans would be provided for a period of ten years after the commencement of production. The working capital requirements would be worked out ” as per the Nayak Committee.
(v) Similar benefits would be extended to the new industries unit on their substantial expansion in other growth centres or IIDCs or industrial estates/parks/exports, promotions zones set up by the estate in the MB region. New industrial units or their substantial expansion in the specified Industries (as at annexure-A) located outside this growth centers and other identified locations would also be eligible for the similar fiscal incentives.
2. The Ministry of Finance, etc., were accordingly requested to amend Rules/Notifications, etc., and issue necessary instructions for giving effect to the decisions so announced in the policy. It reads as under:
Ministry of Finance, etc., are requested to amend rules/notifications, etc., and issue necessary instructions to give effect to these decisions.
3. The said policy decision itself is the outcome and based, on note dated 12.11.1997 submitted for consideration of the Cabinet on new Industrial Policy and other concessions to be provided in North Eastern Region. The note is a North Eastern Region specific one which takes into consideration the recommendations made by the Committee constituted by the Department of Industrial Policy and Promotion and as well as the recommendations made by High Level Expert Committee on Educated Unemployed of the North Eastern Region constituted by Planning Commission. While formulating the broad consensus on the recommendations and the proposals, it was decided that the Department of Industrial Policy and Promotion to prepare a consolidated note for consideration of the Union Cabinet.
4. The note submitted to the Cabinet noted that the North Eastern States cover a vast expanse of 255,000 sq. km. with relatively small population of under 40 million; the regional economies are simple and heavily dependent on rest of the country for many of their basic needs; all the seven States are special category States whose development plans are almost entirely centrally financed on the basis of 90 per cent grant and 10 per cent loan. The region is a late comer to the development and joined the planning process only in late 1970s.
5. The Cabinet note prepared after in-depth critical assessment and analysis of prevailing conditions noted reasons for backwardness of the region in the industrial sector and observed the total value of output of the industries in North East in 1993-94 was estimated to be around Rs. 6,000 crore; less than 1 per cent of the all India figures; more than 80 per cent of this output originated in Assam. The Net State Domestic Product originating from manufacturing sector has varied from little over 1 per cent in Nagaland, 2 per cent in Arunachal Pradesh, 3 per cent , in Meghalaya, 4 per cent in Tripura, 6 per cent in Manipur to around 11 per cent in Assam as against the all India average of 20 per cent; the per capita assistance disbursed by institutions stands at 174th of the all India average; the per capita investment in the manufacturing sector has varied from Rs. 3 in Manipur to Rs. 1247 in Meghalaya as against the all India average of Rs. 1,924 in 1989-90. After deregulation of industries since 1991, the situation has further deteriorated. The proportion of investment indicated in the intentions by entrepreneurs has been 0.3 per cent in North Eastern Region since August 1991 to May 1997.
6. The note prepared for consideration of the Cabinet states that in view of the continuing backwardness of the North Eastern Region and the failure of the earlier attempts to accelerate industrial development, the need for a strong and synergetic incentive package was widely felt. It refers to the statement of the hon’ble Prime Minister at Guwahati on October 27th, 1996 and some of the important recommendations of the Committee-I and Committee-II which were constituted to give effect to the statement of the honourable Prime Minister.
7. Based on the decisions taken in the inter-departmental meetings under the Chairmanship of the Member-Secretary (Planning Commission) the note proposed policy package, inter alia, providing fiscal incentives to new industrial units and their substantial expansion.
8. The said note has been circulated to the Ministries/Departments of Revenue, Economic Affairs, Expenditure, Banking, Insurance, Commerce, Industrial Development, Surface Transport, Petroleum and Natural Gas, Home Affairs, Legal Affairs, Textiles, SSI & ARI and Planning Commission before the same was placed before the Cabinet for its approval.
9. On consideration and approval of the note submitted to the Cabinet, the new Industrial Policy and the other concessions dated 24.12.1997 was announced by the Government of India.
10. Thereafter, the Government of India in the Ministry of Finance (Department of Revenue) issued notification dated 8.7.1999 in exercise of the powers conferred by Sub-section (1) of Section 5A of the Central Excise Act, 1944 (for short “the Act, 1944”) read with allied Acts exempting the goods specified in the First Schedule and the Second Schedule to the Central Excise Tariff Act, 1985 and cleared from a unit located in the Growth Centres or Integrated Infrastructure Development Centers or Export Promotion Industrial Park or Industrial Estates or its Industrial Area or Commercial Estate, as the case may be, specified in annexure appended thereto, from so much of the duty of excise or additional duty of excise, as the case may be, leviable thereon under any of those Acts. The relevant portion of the notification upon which the whole controversy centers around is to the following effect:
The exemption contained in this notification shall apply only to the following kind of units, namely:
(a) New industrial units which have commenced their commercial production on or after the 24th December, 1997,
(b) Industrial units existing before the 2nd December, 1997 but which have undertaken substantial expansion by way of increase in installed capacity by not less than twenty five per cent on or after the 24th December, 1997.
The exemption contained in this notification shall apply to any of the said units for a period not exceeding ten years from the date of publication of this notification in the Official Gazette or from the date of commencement of commercial production, whichever is later.
11. That, by a subsequent notification dated 29.3.2000 the exemptions so granted were made applicable to the industries located in Growth Centres in the State of Meghalaya also where the present industrial units, with which we are concerned, are situated.
12. The writ petitioners claim that they are new industrial units having set up their industries in the notified areas pursuant to the Industrial Policy Resolution announced by the Government of India on 24.12.1997. It is asserted that they are new industrial units and commenced their commercial production much before the notifications dated 8.7.1999,1.3.2000 and 29.3.2000 were issued by the Government of India, Ministry of Finance. The petitioners claim that they had set up their industries in the notified areas, pursuant to promise held out in Industrial Policy Resolution dated 24.12.1997, for manufacturing MS Ingots which is one of the items entitled to grant of exemption from payment of excise duty. The main grievance raised by the petitioners in their writ petitions is that the Government of India, Ministry of Finance while issuing the exemption notifications in purported exercise of the powers under Section 5A of the Act, 1944 deviated from promise held out in Industrial Policy Resolution dated 24.12.1997 inasmuch as the benefit of exemption to industrial units from excise duty ought to have been given from the date of commencement of production and not from the date of notifications, i.e., 8.7.1999 and 29.3.2000. The notifications so issued are contrary to the Memorandum of New Industrial Policy dated 24.12.1997. The writ petitioners contend that the central excise authorities are bound by the doctrine of promissory estoppel to grant exemption from payment of the duty pursuant to the promise held out in Industrial Policy Resolution CIPR’) dated 24.12.1997. The benefit of exemption to the petitioners industries from central excise duty ought to have been given from the date of commencement of commercial production and not from the date of notification. The criteria notified for grant of exemption for a period of not exceeding 10 years “from the date of publication of the notification in the Official Gazette or from the date of commencement of commercial production, whichever is later” is totally contrary to the promise held out in the new Industrial Policy Resolution (IPR) dated 24.12.1997.
13. The present appellants contested the said writ petitions by filing affidavit-in-opposition. The stand taken in the affidavit-in-opposition is that the writ petitions are misconceived, inasmuch as no case has been made out for invoking the doctrine of promissory estoppel.
It is further pleaded that the industrial units in the State of Meghalaya are entitled to the benefit of refund of central excise duty from the effective date of announcement of the scheme, i.e., 29.3.2000 as per notification. Only such of the manufacturing units that became operative on or after 24.12.1997 and the units existing prior to 24.12.1997 but had undertaken expansion capacity of not less than 25% on or after 24.12.1997 are entitled for the benefits for a period of not exceeding 10 years from the date of publication of the notification in the Gazette or from the date of commencement of commercial production whichever is later.
14. In the process of defending its own action a plea has been taken, inter alia, contending that the memorandum dated 24.12.1997 issued by the Ministry of Industry “does not have any bearing on central excise matter. This was only a policy/statement made by the Ministry which has no bearing on the matter relating to central excise matters, central excise matter is under the sole purview of the Ministry of Finance. Exemption notifications of central excise duty are issued under Section 5A of the Act, 1944 by the Ministry of Finance, and the same announcement has been made by the Ministry of Finance only on 8.7.1999 and subsequently the assessee units have been brought under the purview on 29.3.2000 by an amendment to the said notification.” The stand taken by the Central Excise Department is that the Industrial units are entitled to exemption from payment of central excise duty only with effect from 29.3.2000, i.e., the date from which the scheme area in which the units are located has been brought under the purview of exemption regime by the Ministry of Finance vide notification No. 23/2000 dated 29.3.2000. That, a specific plea has been taken to the effect that “the respondents are bound by the order of the Ministry of Finance regarding levy/exemption of central excise duty and the policy decision of the Ministry of Industries dated 24.12.1997 has no bearing on the matter of collection and refund of central excise duty”.
15. The learned Single Judge after an elaborate consideration of the matter and placing particular reliance upon the judgment of the Apex Court in State of Bihar & Ors. v. Suprabhat Steel Ltd. and Ors. (1998) 1 SCC 31 held:
Coming back to the case in hand it is noticed that the Government by way of Office Memorandum dated 24.12.1997 has clearly laid down the a policy and requested the Ministry of Finance, etc., to amend the Rules/ Notifications and issue necessary instructions for giving effect to the decisions as per the office Memorandum. By issuing the impugned Notification No. 32/99 dated 8.7.1999 the benefits granted under the said office memorandum has been denied to the entrepreneurs of the , region who were encouraged to venture and establish their units immediately after the policy was announced in the said office memorandum. By Clause 4 of the Notification imposing a condition that the exemption shall be from the date of the Notification or commencement of the production whichever is later has defeated the very purpose for which the office memorandum was issued. After the office memorandum was issued the respondents cannot resile the promises made in the said Office Memorandum. They are bound by Promissory Estoppel. This was also observed by a Division Bench of this Court in the case of Dharampal Satyapal Ltd. v. Union of India and Ors. in Writ Appeal No. 219/2002 and another connected writ appeals. In the said writ appeals the Division Bench of this Court has dealt with the case where the benefit was already enjoyed by the party, but the same was withdrawn at a later stage. But in the instant case it may be mentioned that this Court has to deal with ‘the matter which relates to the availing of the concessions from the date of commencements of production by the units/petitioners. However, the doctrine of Promissory Estoppel was already observed by the Division Bench by holding that the finding of the learned Single Judge that the Government is bound by the principles of Promissory Estoppel.
16. The learned Judge further held that the notifications issued in exercise of the power under Section 5 of the Act, 1944 ought to have been in accordance with the Industrial Policy Resolution taken after its due approval by the Cabinet and the same cannot be undermined by issuing notification to make it effective from a later date which is not contemplated in the Industrial Policy notified in the office memorandum dated 24.12.1997.
17. The learned Judge also noticed that certain benefits under Interest Subsidy Scheme, 1997, which is also part of the Industrial Policy Resolution, were granted to the industrial units with effect from 24.12.1997, the date of announcement of the new Industrial Policy by the Central Government though the Scheme was notified on 19.2.1999 and thus there is no reason as to why the same principle should not be made applicable in the matter of granting exemption from the payment of excise duty.
18. The learned Judge accordingly declared the impugned notification No. 32/99 dated 8.7.1999 to be contrary to new Industrial Policy of the Union Government and the words ‘whichever is later’ in paragraph 4 of the impugned notification has been struck down. The authorities were accordingly directed to issue fresh notifications giving effect to the office memorandum dated 24.12.1997 granting exemption from the date of notification or commencement of production whichever is earlier and not later as provided for in the impugned notification. The learned Judge accordingly held that all the writ petitioners are entitled to the benefits of the exemption under the new Industrial Policy in terms of the office memorandum dated 24.12.1997 from the date of commencement of commercial production.
The learned Judge accordingly quashed all the impugned demand notices issued by the respondents.
Submissions
19. Sri K.N. Choudhury, learned senior counsel appearing on behalf of the Union of India has submitted that the directions issued by the learned Single Judge to issue a fresh notification to effectuate the promise as contained in Industrial Policy Resolution (IPR) by granting exemption from the date of notification or commencement of commercial production whichever is earlier are clearly unsustainable in law. No such direction could have been issued compelling the statutory authority to issue notification and grant exemption in a particular manner. The Industrial Policy Resolution by itself had not granted any exemption whatsoever to any of the industries from the payment of excise duty as such but merely expressed the intention of the government to grant such exemption from the date of the notifications to be issued by various departments. The Industrial Policy Resolution itself directed various departments to issue appropriate notifications in this regard. The contention was It is only under the notifications issued in exercise of the power under Section 5A of the Act, 1944 the benefit of exemption from payment of central excise duty can be granted subject to such terms and conditions as the Govt. of India may consider it proper in its discretion. Exemption from payment of central excise duty can only be granted in the manner laid down in Section 5A of the Act, 1944 and in no other manner. Reliance has been placed upon the decision of the Supreme Court in ITC Bhadrachalam Paper Boards v. Mandal Revenue Officers, AP .
It was further urged, the power to issue notifications is legislative in character and there can be no promissory estoppel against the exercise of legislative function.
It was further contended that at any rate Clause 4 of the notification dated 8.7.1999 provides the benefit to all industrial units for a period of not exceeding 10 years from the date of publication of the notification or from the date of commencement of commercial production whichever is later and, therefore, the same in no manner amounts to resiling from any assurance contained in the Industrial Policy Resolution.
20. The learned senior counsel proceeded to submit that in order to invoke the doctrine of promissory estoppel clear, sound and positive foundation must be laid in the petition itself no such foundation has been laid in the instant cases and on their own pleadings the industrial units of the petitioners were set up and were in existence much prior to the Industrial Policy Resolution came into existence on 24.12.1997; the petitioners are required to plead and establish that they have undertaken expansion of the industrial capacity to the extent of 25 per cent and accordingly are entitled for the benefits under the Industrial Policy Resolution. The pleadings in this regard, according to the learned senior counsel, are totally vague and indefinite in their nature. The learned senior counsel contended that the writ petitioners are indulging in speculative litigation and such litigation cannot be encouraged by this Court. The contention was, it will be inequitable to hold the authority to be bound by the so called promise since the writ petitioners have failed to lay any basic foundation in their writ petitions as regards the applicability of doctrine of promissory estoppel.
21. Sri N Dutta, learned senior counsel appearing on behalf of the respondents while not supporting the operative portion of the judgment whereunder directions have been issued to issue revised notifications, submitted that Industrial Policy Resolution holds out promise of granting exemption from the payment of central excise duty on the scheduled items for a period of 10 years from the commencement of production and, therefore, all the subsequent notifications are required to be in conformity with the promise so held out in the Industrial Policy Resolution. It is the duty of every limb of the Government to give effect to the decision taken by the Government of India and no deviation therefrom is permissible in law. The learned senior counsel commended to bear in mind the broad constitutional scheme of Governance in order to decide the questions that arise for our consideration. The doctrine of promissory estoppel is clearly attracted to the fact situation was the submission.
Promissory estoppel and public law
22. The width, nature and scope of doctrine of promissory estoppel can never possibly be appreciated in isolation divorced from constitutional scheme and rule of law which we have given unto ourselves. In a way, it involves an exploration of terms of discourse of constitutionalism and as well as analysis of public power.
23. The scope of an official power cannot itself be interpreted in isolation from general principles governing the exercise of power in a constitutional democracy. Those principles apply to the exercise of all powers and that even where the decision maker is vested with discretion the discretion is to be exercised in accordance with those principles. One such principle, the rule of law, contains within it number of requirements such as that power should not be arbitrarily exercised. The rule of law above all rests upon the principle of legal certainty.
Public Bodies should suffer the consequences of their representations unless strongly compelling consideration of public policy indicates otherwise. The constitutional courts role is to protect individual rights against abuse of public power. The standards normally applied by the constitutional courts whenever complaints of abuse of official power come before them are well recognised. The standards applied must ultimately be justified by constitutional principles, which govern the proper exercise of public power in any democracy.
24. It is observed “the constitutional principles achieves practical effect as a constraint upon the exercise of all public power. Where the principle is violated it is enforced by the courts which define and articulate its precise content. Law now recognizes three principal “grounds” of judicial review, known as “procedural propriety”, “rationality” and “legality”. These grounds are not isolated requirements of a discrete area of law; they refer to and attempt to impose upon all decision makers standards that are inherent in a democracy…. The ground of legality involves the application both of the sovereignty of Parliament and the rule of law, by requiring Parliament’s will to be respected and official action to be congruent with legislative purpose. In applying the ground of legality the courts are effectively acting as guardians of Parliament’s intent.” [See Principles of Judicial Review – De Smithy Woolf & Jowell, 1999.
25. The broad constitutional principles and their concrete application are not static but keep evolving. Those rules are required to be articulated and applied in order to ensure standards of good administration. The general principles are always specifically applied and implemented in the context of contemporary standards of fairness as well as other cherished values. The equitable doctrine of promissory estoppel is an integral part of concept of fairness. Lord Diplock’s definition of the ground of review of irrationality as reflecting ‘accepted moral standards’ in Council for Civil Service Union v. Minister for the Civil Services (1985) AC 374 is one such example which is a mile stone in the growth and development of administrative law. The “zone of immunity” around a great deal of governmental action was progressively reduced. Legality, certainty, predictability are the important aspects of rule of law and the same is practically applied through the equitable principles of promissory estoppel in appropriate circumstances. These values are part of our constitutional and legal system, developed in accordance with accepted norms as to the proper role of the democratic State and the rights of individuals within it. These principles are-ingrained into the equitable principle of promissory estoppel.
26. It is settled principle in public law that the body entrusted with duties or with the discretionary power for the public benefit effectively may not avoid its duties or fetter itself in the discharge of its powers. The doctrine of promissory estoppel is one such principle articulated by the courts through which the public authorities have been held bound by assurances given even in disregard to a formal statutory requirement, upon which individuals relied to their detriment.
27. The doctrine of promissory estoppel is still an evolving doctrine though by now is well recognized and applied as against the public authorities preventing them from going back on the promise. Viscount Hailsham said in Woodhouse Ltd. v. Nigerian Produce Ltd. (1972) 2 All ER 271:
I desire to add that the time may soon come when the whole sequence of cases based upon promissory estoppel since the war, beginning with Central London Property Trust Ltd. v. High Trees House Ltd. 1947 KB 130, may need to be reviewed and reduced to a coherent body of doctrine by the courts. I do not mean to say that they are to be regarded with suspicion. But as is common with an expanding doctrine, they do raise problems of coherent exposition which have never been systematically explored.
28. The rule of promissory estoppel being equitable doctrine cannot be reduced to a rigid and inflexible doctrine. The principle may have to be moulded to suite the particular fact situation, the predominant objective is to do justice between the parties and to extend an equitable treatment to them. Allowing the public bodies to break the promise they made may amount to permitting them to act unfairly. The doctrine is, thus, an aspect of concept of fairness which itself is nothing but reflection of accepted moral standards.
29. That, so far as India is concerned, the seeds of doctrine of promissory estoppel were visibly sown by Chandrasekhara Aiyar, ‘J’ in Collector of Bombay v. Municipal Corporation of the City of Bombay and Ors. when the learned Judge in one of the famous dissenting judgments observed:
Can the Government be now allowed to go back on the representation, and, 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…. Whether it is the equity recognised in Ramsden’s case, or it is some other form of equity, is not of much importance. Courts must do justice by the promotion of honesty and good faith, as far as it lies in their’ power. As pointed out by Jenkins, CJ. in Dadota Janardhan’s case, 25 Born. 714, a different conclusion would be “opposed to what is reasonable, to what is probable, and to what is fair.
This view has received support in the celebrated judgment of the Supreme, Court in The Union of India and Ors. v. Anglo Afghan Agencies etc. AIR 1968 SC 718. Anglo Afghan Agencies acting in reliance on the Export Promotion Scheme issued by the Central Government exported woolen goods to Afghanistan and on the basis of their export claimed to obtain from the Textile Commissioner the Import Entitlement Certificate for the full f.o.b. value of the goods exported as provided under the scheme. The scheme, which was not a statutory scheme but nonetheless, provided that an exporter of woolen goods would be entitled to certificates to import materials of the total amount, equal to 100 per cent of the f.o.b. value of the goods exported. The Agency, relying on the promise contained in the scheme, contended that they were entitled to enforce the promise against the Government and to obtain Import Entitlement Certificate accordingly. The contention was sought to be answered on behalf of the Government by pleading the doctrine of executive necessity. The defence of executive necessity was clearly negated by the Apex Court and it was held that it did not release the Government from its obligation to honour the promises made by it, if the citizens, acting in reliance on the promise, had altered their position. The Supreme Court having considered the case held that the claim of Anglo Afghan Agencies “is appropriately founded upon the equity which arises in their favour as a result of the representation made on behalf of the Union of India in the Export Promotion Scheme, and the action taken by the respondents acting upon that representation under the belief that the Government would carry out the representation made by it…. 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 on 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 ex parte appraisement of the circumstances in which the obligation has arisen”. It was a case where relief was granted compelling the Union of India to comply with the representation made under the scheme called the Export Promotion Scheme which was a non-statutory one. The court observed:
… even assuming that the provisions relating to the issue of Trade Notices offering inducement to the prospective exporters are in character executive, the Union Government and its officers are, on the authorities of this Court not entitled at their mere whim to ignore the promises made by the Government. We cannot, therefore, accept the plea that the Textile Commissioner is the sole judge of the quantum of import licence to be granted to an exporter, and that the courts are powerless to grant relief, if the promised import licence is not given to an exporter who has acted to his prejudice relying upon the representation. To concede to the Departmental authorities that power would be to strike at the very root of the rule of law.
30. Then we come to the pronouncement of the Apex Court in Motilal Padampat Sugar Mills v. State of Uttar Pradesh and Ors. . The appellants therein on the basis of the news item in which it was stated that the State of UP had decided to give exemption from sales tax for a period of three years under Section 4A of the UP Sales Tax Act to all new industrial units in the State with a view to enabling them “to come on firm footing in developing stage” addressed to the Director of Industries stating that in view of the Salae Tax Holiday announced by the Government, the appellant intended to set up a Hydro-generation Plant for manufacture of vanaspati and sought for confirmation that the proposed unit, would be entitled to sales tax holiday for a period of three years from the date it commences production. The Director of Industries replied in positive terms. The appellant thereupon took steps for setting up the factory. The appellant every time informed the Government that it had undertaken setting up of the factory solely on the assurance given by the Government that the appellant would be entitled to exemption from sales tax for a period of three years from the date of commencement of production. Authorities after authorities reassured the appellant that it would be entitled to sales tax holiday. The appellant made considerable progress in the setting up of the factory. The appellant thereafter was put on notice by the Industries Department intimating that a meeting has been called by the Chief Minister to discuss the question of giving concessions on the sales tax on vanaspati products and the appellant was required to attend the meeting. The appellant immediately replied that so far as it was concerned the Government had already granted exemption from the sales tax by the letter of the Chief Secretary dated January 23rd, 1969, but still it would be glad to send its representative to attend the meeting. The State Government, however, went back upon the assurance and the letter dated January 20th, 1970 was addressed by one of the officers of the Government intimating that the Government had taken a policy decision that new vanaspati units in the State which go into commercial production by September 30th, 1970 would be given partial concession in sales tax at the rates specified therein for a period of three years.
The appellant assailed the policy so taken by the Government unsuccessfully in the High Court. The claim of the appellant for exemption based on the doctrine of promissory estoppel did not find favour with the High Court. The Supreme Court after elaborate consideration of the matter held:
The law may, therefore, now be taken to be settled as a result of this decision, that where the Government makes a promise knowing or intending that it would be acted on by the promisee and, in fact, the promisee acting in reliance on it, alters his position, the Government would be held bound by the promise and the promise would be enforceable against the government at the instance of the promisee, notwithstanding that there is no consideration for the promise and the promise is not recorded in the form of a formal contract as required by Article 299 of the Constitution. It is elementary that in a republic governed by the rule of law, no one, howsoever high or low, is above the law. Everyone is subject to the law as fully and completely as any other and the Government is no exception. It is indeed the pride of constitutional democracy and rule of law that the government stands on the same footing as a private individual so far as the obligation of the law is concerned the former is equally bound as the fatter. It is indeed difficult to see on what principle can a Government committed to the rule of law, claim immunity from the doctrine of promissory estoppel. Can the Government say that it is under no obligation to act in a manner that is fair and just or that it is not bound by considerations of “honesty and good faith” ? Why should the Government not be held to a high “standard of rectangular rectitude while dealing with its citizens” ? There was a time when the doctrine of executive necessity was regarded as sufficient justification for the Government to repudiate even its contractual obligations; but, let it be said to the eternal glory of this Court, this doctrine was emphatically negatived in the Indo-Afghan Agencies case and the supremacy of the rule of law was established. It was laid down by this Court that the Government cannot claim to be immune from the applicability of the rule of promissory estoppel and repudiate a promise made by it on the ground that such promise may fetter its future executive action. If the Government does not want its freedom of executive action to be hampered or restricted, the Government need not make a promise knowing or intending that it would be acted on by the promisee and the promisee would alter his position relying upon it. But if the Government makes such a promise and the promisee acts in reliance upon it and alters his position, there is no reason why the Government should not be compelled to make good such promise like any other private individual. The law cannot acquire legitimacy and gain social acceptance unless it accords with the moral values of the society and the constant endeavour of the courts and the legislature must, therefore, be to close the gap between law and morality and bring about as near an approximation between the two as possible. The doctrine of promissory estoppel is a significant judicial contribution in that direction. But it is necessary to point out that since the doctrine of promissory estoppel is an equitable doctrine, it must yield when the equity so requires. If it can be shown by the Government that having regard to the facts as they have transpired, it would be inequitable to hold the Government to the promise made by it, the court would not raise any equity in favour of the promisee and enforce the promise against the Government. The doctrine of promissory estoppel would be displaced in such a case because, on the facts, equity would not require that the Government should be held bound by the promise made by it. When the government is able to show that in view of the facts as have transpired since the making of the promise, public interest would be prejudiced if the Government, were required to carry out the promise, the court would have to balance the public interest in the government carrying out a promise made to a citizen which has induced the citizen to act upon it and after his position and the public interest likely to suffer if the promise were required to be carried out by the government and determine which way the equity lies.
The court further held that it is not necessary, in order to attract the applicability of the doctrine of promissory estoppel that the promisee acting in reliance on the promise should suffer any detriment. “What is necessary is only that the promisee should have altered his position in reliance on the promise”. The court accordingly held that the Government was bound to exempt the appellant therein from payment of sales tax in respect of sales of vanaspati effected by it in the State of UP for a period of three years from the date of commencement of the production. Be it noted that even in the absence of appropriate formal order granting exemption from sales tax under Section 4A of the UP Sales Tax Act relief has been granted based on the promises made by the authorities from time to time.
31. In Union of India and Ors v. Godfrey Philips India Ltd. the doctrine of promissory estoppel was pressed into service based on a letter dated May 24th, 1976 issued by the Central Board of Excise and Customs intimating the Cigarette Manufacturers’Association that “instructions have been issued to the Collector of Central Excise that the cost of corrugated fibreboard containers in question does not form part of the value of cigarettes for the purposes of excise duty”. The manufacturers of cigarette acting upon the representation so made, proceeded on the basis that the cost of corrugated fibrebo’ard containers were not liable to be included in the value of cigarette for the purposes of assessment of excise duty and did not recover from the wholesale dealers, to whom they sold the cigarettes, any amount by way of excise duty attributable to the cost of such corrugated fibreboard containers.The representation contained in the letter dated May 24th, 1976 continued to be in operation until November 2nd, 1982 when the Central Board of Excise and Customs had withdrawn the same and cancelled it on re-examination of the issue in consultation with the Ministry of Law. In that case also no notification granting exemption from duty had been issued. The whole claim of the manufacturers was based on the letter dated May 24th, 1976 itself. The Supreme Court declared that the manufacturers would be entitled to exclusion of the cost of, corrugated fibreboard containers from the value of cigarettes during the period May 24th, 1976 to November 2nd, 1982. The relief has been granted on the ground of promissory estoppel against the Central Board of Excise and Customs and the Central Government. The representation contained in the letter dated May 24th, 1976 made by the Central Board of Excise and Customs has been treated as a promise made to the cigarette manufacturers and held that the Central Board of Excise and Customs as well as the Central Government was bound by the promise so made. The width, scope and amplitude of the doctrine of promissory estoppel has been explained by the Supreme Court as follows:
The true principle of promissory estoppel is that where one party has by his word or conduct made to the other a clear and unequivocal promise or representation which is intended to create legal relations or effect a legal relationship to arise in the future, knowing or intending that it would be acted upon by the other party to whom the promise or representation is made and it is in fact so acted upon by the other party, the promise or representation would be binding on the party making it and he would not be entitled to go back upon it, if it would be inequitable to allow him to do so, having regard to the dealings which have taken place between the parties.
The court, however, clarified that “there can be no promissory estoppel against the Legislature in the exercise of its legislative functions nor can the Government or public authority be debarred by promissory estoppel from enforcing a statutory prohibition. It is equally true that promissory estoppel cannot be used to compel the Government or a public authority to carry out a representation or promise which is contrary to law or which was outside the authority or power of the officer of the Government or of the public authority to make. We may also point out that the doctrine of promissory estoppel being an equitable doctrine, it must yield when the equity so requires; if it can be shown by the Government or public authority that having regard to the facts as they have transpired, it would be inequitable to hold the Government or public authority to the promise or representation made by it, the court would not raise an equity in favour of the person to whom the promise or representation is made and enforce the promise or representation against the government or public authority. The doctrine of promissory estoppel would be displaced in such a case, because on the facts, equity would not require that the Government or public authority should be held bound by the promise or representation made by it.”
32. In State of Punjab v. Nestle India Ltd. and Anr. the Supreme Court in clear and categorical terms held that the representation made by the Government or its agencies itself was enforceable despite the requirement of the statute prescribing the manner and form to grant exemption from payment of taxes or duty, as the case may be. The court considered the Godfrey Philips as an authority for the proposition that appropriate directions by the courts can always be issued granting exemption on the ground of promissory estoppel even where statute requires issuance of notification for granting exemption. In order to appreciate the ratio, facts in somewhat details are required to be noted.
The respondents therein are the owners of the factories in the State of Punjab where they produce various milk products. For the purpose of their business, they purchase milk from villages, each from a particular “milk shed area” which covers several hundred villages in and around the factories. They are registered dealers under the Punjab General Sales Tax Act, 1948 (the Act, 1948) and were regularly paying purchase tax on milk in terms of Section 4B of the Act, 1948. However, for one year, i.e., for the period 1.4.1996 to 4.6.1997, none of the respondents paid the purchase tax on the assertion that the Government had decided to abolish purchase tax on period in question and was estopped from contending to the contrary. When the State raised demands for purchase tax on milk from the factory owners for the period 1996-97, writ petitions were filed before the High Court which were allowed by the High Court quashing the demand notices.
The circumstances under which the parties had approached the court chronologically commenced with an announcement made by the Chief Minister of Punjab on 26.2.1996 that the State Government had abolished purchase tax on milk and milk products in the State. The announcement was given wide publicity in the State which was followed by the speech given by the Finance Minister of the State in the Assembly while presenting the budget for the year 1996-97. Thereafter, the Financial Commissioner issued memorandum dated 26.4.1996 addressed to the Excise and Taxation Commissioner requesting him to issue necessary instructions to the Field Officers on the basis of the announcement made by the Finance Minister on the floor of the House and the announcement made by the Chief Minister, Punjab on 26.2.1996 relating to exemption of purchase tax on milk. In the memorandum, it was stated to the effect that it has been decided in principle, to abolish the purchase tax on milk w.e.f. 1.4.1996. In response to the memorandum a circular dated 18.5.1996 was issued by the Excise and Taxation Commissioner, Punjab to all the subordinate officers duly informing them that the Government has decided to abolish purchase tax on milk. However, to implement the decisions necessary notifications were not issued but were under process.
Thereafter, on 27.6.1996 a meeting was held under the Chairmanship of the Chief Minister which was attended by the Finance Minister and various Financial commissioners in which the decision to abolish purchase tax on milk was reiterated and it was decided to issue formal notification “in a day or two”. The Finance Minister made an announcement that with a view to encourage milk producers and for granting relief to the common people the Government had decided to abolish the tax on milk. The Finance Department formally approved the proposal of the Administrative Department to abolish purchase tax on milk and the Council of Ministers gave its approval to the decision at its meeting held on 21.9.1996. Thereafter, on 4.6.1997 the Council of Ministers held a meeting to consider various items on its agenda and one of the items related to abolishing of purchase tax on milk in which the decision to abolish purchase tax on milk was reversed. Thereafter the Excise and Taxation Officer issued notices to the factory owners requiring them to pay the amount of purchase tax for the whole of the year 1996-97.
The High Court having noticed the sequence of events held that the State Government was bound by its promise/representation made to the respondents to abolish purchase tax. The High Court took the view “the absence of a formal notification was no more than a ministerial act” which remained to be performed, since the factory owners had acted on the representation made, they could not be asked to pay the purchase tax w.e.f. 1.4.1996.
In the Supreme Court the State of Punjab contended that the principle of promissory estoppel would not be applicable based on mere promise when the relevant statute prescribes a particular mode to grant of relief in respect of which the representation has been made, even if promisee acted based on such representation. The contention was that there can be no estoppel against the statute and since no notification had been issued, as is required by the statute, the factory owners could not refuse to pay the tax on any principle of promissory estoppel. The submission was more or less similar to the one made by the Union of India before us in these appeals.
The Supreme Court while upholding the decision of the High Court held that it would be inequitable to allow the State Government to resile from its decision to exempt milk from tax and demand the purchase tax with retrospective effect from 1.4.1996. While observing the power of the State Government to grant exemption under the Act to be discretionary in nature the court held that the State Government’s refusal to exercise its discretion to issue the necessary notification exempting the tax on milk was not reasonably exercised and accordingly the plea of promissory estoppel was upheld.
33. In view of the authoritative pronouncement of the Apex Court in Nestle India (supra) we have no hesitation to reject the contention urged by the appellants that no relief could be granted to the writ petitioners based on the Industrial Policy Resolution dated 24.12.1997. We accordingly hold the notification that was required to be issued pursuant to the Industrial Policy Resolution as a ministerial one in its nature. The notifications issued were required to be in conformity and in terms of the Industrial Policy Resolution dated 24.12.1997 which held out a promise to grant exemption from the payment of excise duties in favour of all those specified industries for a period of 10 years from the commencement of commercial production on or after 24.12.1997. But the impugned notifications issued granted exemption from the date of publication of the notification in the Official Gazette or from the date of commencement of commercial production whichever is later which in our considered opinion are not in conformity with Industrial Policy Resolution dated 24.12.1997. We accordingly hold that paragraph 4 of the impugned notification is not in conformity with the Industrial Policy Resolution dated 24.12.1997 and the same is required to be read down so as to make it to be inconformity with the Industrial Policy Resolution.
34. The decisions in Kasinka Trading v. Union of India (1997) 1 SCC 274, ITC Bhadrachalam Paper Boards v. Mandal Revenue Officers, AP (supra), STO v. Shree Durga Oil Mills , Shrijee Sales Corpn v. Union of India upon which reliance has been placed by the appellants before us were all referred to and explained in Nestle India (supra). The Supreme Court observed – the view expressed by two Judges in Jit Ram Case [Jit Ram Shivkumar v. State of Haryana has been disapproved in Godfrey Philips (supra) but it was ostensibly resuscitated in ITC Bhadrachalam (supra). The court held that the observations made in ITC Bhadrachalam are in conflict with the earlier or subsequent pronouncements on the law of promissory estoppel. The Supreme Court observed:
39. The doctrine of promissory estoppel has also been extended to service law. In Surya Narain Yadav v. Bihar SEE , it was found as a fact that the Bihar State Electricity Board had made representations that graduates who would be taken as training engineers would be regularised against appropriate posts and the submission that such appointments would be contrary to statutory rules of the Board was brushed aside and the court directed the Board, following Chandrasekhara Aiyar, J, opinion in Collector of Bombay v. Municipal Corporation of the City of Bombay , as well as the decisions in Union of India v. Anglo Afghan Agencies AIR 1968 SC 718, and Century Spg. & Mfg. Co. Ltd v. Ulhasnagar Municipal Council and Motilal Padampat Sugar Mills Co. Ltd. v. State of UP to act in terms of the representation made. Indeed the principles of promissory estoppel have been applied time and again by this Court and it is unnecessary to burden our decision by referring to all the cases except to note that the view expressed by Chandrasekhara Aiyar, J in 1952 still holds good. See State of MP v. Orient Paper Mills Ltd. , Delhi Cloth and General Mills Ltd. v. Union of India , Sharma Transport v. Govt. of AP (1992) 2 SCC 188 and State of Orissa v. Mangalam Timber Products Ltd. .
35. Kasinka Trading v. Union of India (supra) has no relevance to the facts of these cases where the representations in Industrial Policy Resolutions are clear and unequivocal. Kasinka Trading is the authority for the proposition that an exemption notification issued under the provision of a fiscal statute itself could not create any promissory estoppel because such an exemption by its very nature is susceptible to being revoked or modified or subjected to other conditions. The Government for justifiable reasons can always withdraw such exemption notifications on relevant reasons in the public interest. In the case on hand the Industrial Policy Resolution which made the promise is not withdrawn and continues to be in operation.
36. In the case before us, the Govt. of India indisputably had the power to make Group Centres and IIDCs into a total tax free zone for the specified period in order to accelerate the pace of industrialisation. The promise was held out to the effect that all industrial activity in those zones would be free from, payment of excise duty for a period of 10 years from the commencement of production. There is nothing in law which prohibited the Government of India from doing so. It was a well thought out policy decision taken in perceived public interest with a view to promote economic and industrial development of North Eastern States which remained economically backward in comparison to remaining parts of India.
37. The sequence of events even at the cost of repetition may be noted. The sequence commenced with the hon’ble Prime Minister’s speech at Guwahati on 27.10.1996 that new initiatives would be announced for the industrial development of the North Eastern Region. Subsequently inter-departmental meetings were held to consider the recommendations made by various Committees and finalise the proposals. The views of various Committees have been carefully considered and a note was accordingly placed before the Cabinet for its approval. Based on those proposals contained in the note the Cabinet approved the new Industrial Policy granting certain concessions to new industrial units and accordingly issued Memorandum dated 24.12.1997 whereunder clear- cut specific promises have been held out granting concessions.
The role of Prime Minister and Cabinet in Parliamentary Democracy
38. The Prime Minister and the Cabinet are cardinal features of the Indian Constitution. They are the creatures of the Constitution. The Prime Minister’, said Mr. John Morley, ‘is the keystone of the Cabinet arch’. Sir Ivor Jennings described “the Prime Minister as the keystone of the Constitution itself. The Prime Minister is considered to be the senior partner in every department as well as the Head of the whole. He is not merely primus inter pares rather “a sun around which planets revolve”. Sir Ivor Jennings in his Cabinet Government stated, “the Cabinet is the directing body of the national policy consisting of the principal leaders of the party in power, it is able to forward that policy by reason of its control of the House of Commons. Consisting, too of the heads of the more important Government departments, it is able to forward its policy by laying down the principles to be followed by the central administrative machine”. It is considered to be the directing body of the national policy…. “It is a policy formulating body. When it has determined on a policy, the appropriate department carries it out, either by administrative action with the law or by drafting a Bill to be submitted to Parliament so as to change the law ” The Cabinet is characterized as a general controlling body of the national policy. It is the Cabinet which retains power or coordination of policy; it is the Cabinet which effectually control over a departmental policy. The Departmental Minister’s individual responsibility is always subordinate to the Cabinet’s collective responsibility. This principle is an integral part of the concept of collective responsibility of the Cabinet to Parliament. The department may be an autonomous unit but controlled at the political level by Cabinet and the Prime Minister and administratively coordinated under the authority of the Prime Minister.
39. The main functions of the Cabinet was set out in the Report of the Machinery of Government Committees (1918) as:
(a) the final determination of the Government policy to be submitted to the Parliament;
(b) …
(c) the continuous co-ordination and delimitation of the authorities of the several Departments of State.
(Set; Ivor Jennings — Cabinet Government).
40. The executive function of the Cabinet comprises both determination of the policy as well as carrying it into execution. The Cabinet enjoying, as it does, a majority in the legislature concentrates in itself the virtual control of both legislative and executive functions and as the Ministers constituting the Cabinet are presumably agreed on fundamentals and act on the principle of collective responsibility, the most important questions of policy are all formulated by them. See Rai Sahib Ram Jawaya Kapur and Ors. v. The State of Punjab .
41. The Cabinet being a general controlling body is constitutionally entrusted with the duty of formulating national policy whose decisions are binding on all governmental departments. The decisions so taken by the Cabinet are bound to be implemented by each and every wing of the Government, as it is not open to any individual department either to modify or act contrary to the decisions so taken by the Cabinet every department is bound by the collective decisions taken by the Cabinet. The Cabinet is an integral one which functions through various departments. It is on the basis of the documents submitted, and the result of the discussion amongst its Members, the Cabinet comes to a conclusion thereafter the decision is carried out by all the departments. The department concerned is required to issue appropriate notifications in order to effectuate the policy decision so taken by the Cabinet even if it involves drafting of a Legislation or framing of a rules as the case may be. Issuance of notification in exercise of the statutory functions in order to give effect to a broad policy decision of the Cabinet, are considered to be ministerial acts. It would be futile to contend that the policy decisions taken by the Cabinet would remain dead letter unless the concerned department moves in the matter and issue notification implementing the decisions. The argument if accepted may result in disastrous consequences and may cut at the very system of Constitutional Governance which we have given unto ourselves. Citizens cannot be made scape goats in the cross fire between the interdepartmental feuds or deadlocks. Implied recognition of the stated principles:
42. In State of Bihar and Ors. v. Suprabhat Steel Ltd. and Ors. (supra) the facts are more or less similar to the one on hand. The State of Bihar with the object of accelerating industrial progress have been declaring industrial policy from time to time; being of the opinion that the incentives given under its earlier policy have not achieved the desired industrial progress and to achieve balanced growth in planned manner the industrial incentives required new dimension, the State Government introduced New Industrial Policy of 1993; Clause 10.4(i)(b) of the policy dealt with the facility of sales tax exemption on the purchase of raw materials. The State Government after introducing the new industrial policy of 1993 issued the exemption notification on 4.4.1994 in exercise of the power under Section 7 of the Bihar Finance Act which was not in conformity with the New Industrial Policy of 1993. The Supreme Court in no uncertain terms observed “the industrial incentive policy is issued by the State Government after such policy is approved by the Cabinet itself. The issuance of the notification under Section 7 of the Bihar Finance Act is by the State Government in the Finance Department which notification is issued to carry out the objective and the policy decision taken in the industrial policy itself. In this view of the matter any notification issued by the Government order in exercise of power under Section 7 of Bihar Finance Act, if it is found to be repugnant to the industrial policy declared in a Government resolution, then the said notification must be held to be had to that extent…. We are not persuaded to accept the contention that it would be open for the Government to issue a notification in exercise of power under Section 7 of the Bihar Finance Act, which may override the incentive policy itself”. This in our considered opinion is the complete answer to the submissions made by the learned Senior Counsel for the appellants contending that it was open to the Government in the finance Department to issue notification granting exemption from payment of excise duty subject to such terms and conditions as it may consider fit and the same cannot be tested on the touch stone of the Industrial Policy Resolution.
43. The ratio of the decision in Suprabhat Steel has been understood by the Apex Court in State of Jharkhand v. Tata Cummins Ltd. and Ors. in the following manner:
We have, however, noted the ratio of the decision of this Court in State of Bihar v. Suprabhat Steel Ltd. in which it has been held that the notifications meant for implementing the industrial policy of the State Government cannot override the incentive policy.
(emphasis supplied).
44. The statement of law in such categorical terms should put an end to the controversy raised as to whether notifications meant for implementing the industrial policy could be at variance and override Industrial Policy Resolution. It is needless to restate that any such notification issued even in exercise of statutory power are required to be in conformity with the Industrial Policy Resolution. The promisee is entitled to seek appropriate directions from the court in case if the notifications so issued are not in conformity with the Industrial Policy Resolution. We do not find any legal or constitutional inhibitions to issue such directions as may be necessary compelling the promissor to act in conformity with the Industrial Policy Resolution. In Mahabir Vegetable Oils (P.) Ltd. and Anr. v. State of Haryana (2006) 3 SCC more or less similar contention, as urged before us by the Union of India, found favour with the High Court when it observed “there cannot be any restraint on the State Government to exercise the delegated legislative functions with the parameters laid down by the statute”. The Supreme Court relying on its own decision in Nestle India (supra), reversed the decision of the High Court and accordingly set aside the same.
45. We may again profitably notice as to what has been held by the Supreme Court in Century Spg & Mfg Co. Ltd. v. Ulhasnagar Municipal Council .
If the representation is acted upon by another person it may, unless the statute governing the person making the representation provides otherwise, result in an agreement enforceable at law, if the statute requires that the agreement shall be in a certain form, no contract may result from the representation and acting thereupon but the law is not powerless to raise in appropriate cases an equity against him to compel performance of the obligation arising out of his representation.
46. It is true, if the statute prohibits the Government from grant of such exemption, it may not be possible to issue any direction enforcing the representation against the Government, because the Government and its agencies cannot be compelled to act contrary to the statute. But if the statute confers power on the Government to grant exemption, the Government can legitimately be held bound by its promise to exempt the promisee from payment of tax, fee, duties or whatever it is and appropriate directions can always be issued enforcing the promise.
Limitations
47. So much about the width and scope of doctrine of promissory estoppel. What are the limitations then ?
48. Now we shall proceed to deal with the limitations to the doctrine of promissory estoppel to the extent that may be necessary for the disposal of this batch of appeals. One principle on which no divergent views are to be found that can be culled out from various decisions referred to hereinabove is that one of the necessary conditions for invoking the equitable doctrine of promissory estoppel is altering the position by the promisee acting in reliance on the promise made by the Government knowing that it would be acted on by the promisee. It is alteration of position, and not necessarily damage or detriment or prejudice suffered by a party.
It is equally well settled that to invoke the doctrine of promissory estoppel, clear foundation must be laid in the petition itself by the person invoking the doctrine. In Sharma Transport v. Govt. of Andhra Pradesh the Supreme Court held “there is preponderance of judicial opinion that to invoke the doctrine of promissory estoppel, clear, sound and positive foundation must be laid in the petition itself by the party invoking the doctrine and that bald expression, without any supporting material, to the effect that the doctrine is attracted because the party invoking the doctrine has altered its position relying on the , assurance of the Government would not be sufficient to press into aid the doctrine”. The same principle has been reiterated in Bannari Amman Sugars Ltd. .
Application of the principles to the facts in each case
49. The question that falls for our consideration is whether the writ petitioners laid any clear, positive foundations in their writ petitions together with supporting materials ? Is there any pleading that the petitioners have altered their position relying on industrial policy decision ? Is there any material made available by the writ petitioners to the satisfaction of the court that they have undertaken expansion of the installed capacity to the extent of 25 per cent pursuant- to the promise/representation made in the Industrial Policy Resolution dated 24.12.1997 ? Is there any specific case as such set up by them that based on the promise/representation through the Industrial Policy Resolution dated 24.12.1997 they have established their manufacturing units in the backward region of North East ? We shall, therefore, examine each on its own merits.
50. Writ Appeal No. 208/2003 arising out of WP(C) No. 69(SH)/2000, Shree Ganapati Rolling Mills (P.) Ltd. v. Union of India and Ors. – The petitioner has stated in the writ petition itself that it is registered under the Central Excise Act w.e.f. 11.4.1997 for manufacturing and marketing of MS Ingots; that a proposal has been made to the Govt. of India for manufacturing of MS Ingots and the same has been acknowledged on 26.7.1996, much before the IPR came into operation. The writ petitioner contends that it started commercial production w.e.f. 12.2.1999; whereas No Objection from the Head of the Village Darbar of Byrnihat for establishment of the unit was obtained as early as in 1996. In paragraph 10, it is sought to be contended that the company started its unit w.e.f. 12.2.1999 after observing all formalities in Scheme Area No. 1. The petitioner candidly admits that it has been regularly paying central excise duties w.e.f. 11.3.1993 to October 1999. The petitioner seems to be labouring under the impression that it is automatically entitled to grant of exemption from the payment of excise duties from the date of commencement of production regardless of the fact that the unit has been established even prior to Industrial Policy Resolution dated 24.12.1997 came into operation. It is nowhere pleaded that the petitioner’s unit has come into existence pursuant to the promise/ representation made through Industrial Policy Resolution dated 24.12.1997 nor there is any pleading that it had undertaken expansion of the installed capacity to the extent of 25 per cent based on the promise held out in IPR. Neither there is any pleading nor any material in, support to rely upon the doctrine of promissory estoppel. The requirement in law is that there must be specific, unambiguous plea that the promisee had relied upon the promise and altered its position under the promise so made. The contention that appellants/respondents did not raise any objection in their affidavit in this regard is of no consequence, since the burden is heavily cast on the party invoking the doctrine to plead and establish that it had acted on the promise made and altered its position. In the absence of any such specific, sound and unambiguous plea and proof it is impermissible for the petitioner to rely upon the equitable doctrine of promissory estoppel. The petitioner miserably failed to plead and establish the relevant foundational facts attracting the promissory- estoppel. We accordingly hold that the writ petitioner is not entitled to grant of any relief based on promissory estoppel.
51. Writ Appeal No.224/2003 arising out of WP(C) No. 67(SH)/2000, Sree Sai Megha Alloys (P.) Ltd. – The writ petitioner admits that the company started its unit w.e.f. 17.9.1997 observing all the formalities and permission with all relevant certificates including No Objection Certificate granted by the authorities. It is also admitted that it had commenced its commercial production on and from 17.9.1997. It is, however, stated that the petitioner company regularly has been submitting monthly return timely with full particulars to the Central Excise Department. It is, therefore, obvious that the petitioner company did not establish its manufacturing units pursuant to the Industrial Policy Resolution dated 24.12.1997 and had altered its position based on Industrial Policy Resolution dated 24.12.1997. In paragraph 11 of the writ petition, however, one sentence is incorporated in hand writing, which bears nobody’s signature, stating “thereafter the capacities of the unit was extended from 3 MT to 7 MT and production of extended unit was started from 1.4.1999”. There is no material made available in support of this plea. It is not even pleaded that such expansion has been undertaken altering its position based on the Industrial Policy Resolution dated 24.12.1997. It is evidently an after thought to add a self serving stray sentence into the writ petition so as to place reliance upon the doctrine of promissory estoppel. The plea so taken is totally vague and unsupported by relevant material and the same is not acceptable to us. The writ petition is thus devoid of any merit.
52. Writ Appeal No. 223/2003 arising out of WP(C) No. 68(SH)/2000, Satyam Steel & Alloys (P.) Ltd. v. Union of India and Ors. – It is yet a another manufacturing unit which was set up at Byrnihat Scheme Area No. 1 prior to Industrial Policy Resolution dated 24.12.1997 coming into force as is evident from averments made in paragraphs 3, 4, 7, 12, 18 and 19 of the writ petition. It is, however, asserted in paragraphs 8 and 9 of the writ petition that the unit commenced commercial production w.e.f. 16.1.1998 after observing all the necessary formalities but there is no specific plea much less any material on record to the effect that the unit was set up or expanded, as the case may be, pursuant to Industrial Policy Resolution dated 24.12.1997. There is not even a plea that the petitioner had altered c its position based on the promise/representation made in the Industrial Policy Resolution dated 24.12.1997. On the other hand it is pleaded in paragraphs 19 and 23 that the writ petitioner’s unit comes under the purview of notification dated 8.7.1999 pursuant to the notification dated 29.3.2000 and as such is entitled to the benefit of exemption from the payment of excise duty for a period of 10 years. It is admitted in the writ petition that the unit has been paying central excise duty from 1.1.1998. It is not even pleaded that such payment has been made under any protest. The pleadings are totally insufficient in order to decide as to whether the writ petitioner is entitled to rely on the doctrine of promissory estoppel. It is not possible to grant any relief to the writ petitioner, as prayed for, in the absence of any relevant factual foundation as regards the applicability of the doctrine of promissory estoppel.
53. Writ Appeal No. 226/2003 arising out of WP(C) No. 37(SH)/ 2001, Satyam Steel & Alloys (P.) Ltd. v. Union of India and Ors. – The writ petitioner is the same as in Writ Appeal No. 223/2003 arising out of WP(C) No. 68(SH)/2000. It is not known as to how the writ petitioner could have filed two writ petitions seeking the same relief parties having realized the futility of invoking the doctrine of promissory estoppel in WP(C) No. 68(SH)/2000 the petitioner had filed the WP(C) No. 37(SH)/2001 with some improved pleadings. In our considered opinion the writ petitioner cannot be allowed to abuse the judicial process by filing successive writ petitions for the same relief based on the same cause of action. The conduct of the writ petitioner disentitles it for the grant of equitable relief. It would be inequitable to hold the writ appellants/respondents bound by the promise/representation made in the Industrial Policy Resolution dated 24.12.1997. The improvised pleadings do not inspire any confidence requiring us to seriously examine the contention based on promissory estoppel. Even the pleadings in this subsequent writ petition are not sufficient to apply the doctrine of promissory estoppel. There is no specific and clear plea taken that it had altered its position based on the promise field out in the Industrial Policy Resolution dated 24.12.1997.
54. Writ Appeal No. 216/2003 arising out of WP(C) No. 66(SH)/99, Pawan Ispat (Meghalaya) (P.) Ltd. – The writ petitioner in clear and categorical terms stated that the company obtained registration under Customs and Central Excise Act dated 11.4.1997 for manufacturing and marketing of MS Ingots. The company started their commercial production w.e.f. 1.1.1998. After the commencement of production on 1.1.1998 it had been regularly submitting monthly returns timely with all necessary particulars to the Central Excise Department. On its own admission, the petitioner’s unit had already paid excise duty on its products on and from 1.1.1998 amounting to Rs. 7,959,932.00. It is, however, contended that the said amount was illegally realized by the department. It is nowhere pleaded that the petitioner had set up the manufacturing unit based on the promise/representation made in Industrial Policy Resolution dated 24.12.1997. There is no plea of its altering position based on the said promise/representation. The petitioner’s industry even on its own admission made in the writ petition came into existence much prior to 24.12.1997. It is not its case that basing on the representation/promise made in the Industrial Policy Resolution dated 24.12.1997 the unit has been expanded increasing its capacity by 25 per cent. There is no specific, clear factual foundation as such laid in the writ petition invoking the doctrine of promissory estoppel.
55. Writ Appeal No. 227/2003 arising out of WP(C) No. 227(SH)/99), Meghalaya Steel & Concrete Products (P.) Ltd. – The pleadings in this writ petition may have to be noticed in somewhat details. The company came into existence some time in the year 1974 with the main object to carry on the business of manufacturing tools, implement, machineries, equipments, etc. The company had also obtained registration under Customs and Central Excise Act dated 27.8.1992 for manufacturing and marketing of PSC Poles and Steel Fabricated Structures. The company started its production but due to some unavoidable circumstances, the production of ‘the company was closed. Later on new Directors were inducted and thereafter some amendments in the articles of association were made and it started production of MS Ingots, Runners and Risers, etc. The company vide its letter dated 18.5.1999 informed the Superintendent of Central Excise, Byrnihat about the change in the composition of the Board of Directors and its intention to start manufacturing of MS Ingots falling under CE Classification 7,206.90. The Central Excise Department at the request of the petitioner amended the Registration Certificate by duly striking off the entries made in the relevant columns showing the manufacturing of PSC Poles and Steel Fabricated structures and in its place adding MS Ingots, etc., under CE Classification 7206.90 vide proceedings dated 1.6.1999. Thereafter the company started its commercial production w.e.f. , 14.7.1999 and the same was intimated by letter dated 21.7.1999 to Assistant Commissioner, Central Excise Division, Shillong. In paragraph 30 of the writ petition the plea invoking the doctrine of promissory estoppel is stated as follows:
That the petitioner based on the announcement made by the Government of India took steps after 24.12.1997 for creating facilities for manufacturing Ingots at its factory at Byrnihat in the district of Rebhoi, Meghalaya and the petitioner fulfilled all the criteria required as per notification No.EA/ 1/2/96-IPS dated 24.12.1997 issued by the Joint Secretary, Ministry of Industry, Government of India and since the unit, of the petitioner was set up after 24.12.1997 and started production w.e.f. 14.7.1999 and so the petitioner is entitled to the incentives provided by the Central Government.
It is further pleaded in the writ petition that the petitioner has set up its factory on the basis of explicit announcement on incentives by the Govt. of India and accordingly altered its position by undertaking manufacture of MS Ingots since the facilities of exemption from payment of excise duties for a period of 10 years from the date of commercial production has been promised by the Government of India.
It is asserted that the writ petitioner fulfilled “all the criteria required as per notification No. EA/1/2/96-IPS dated 24.12.1997 since the unit of the petitioner was set up after 24.12.1997 and started production w.e.f. 14.7.1999 and so the petitioner is entitled to the incentive provided by the Central Government”. It is further pleaded that the petitioner started manufacturing of M.S. Ingots and sold them in absolute faith and confidence relying upon the promise held out in the IPR.
56. The plea as regards the petitioner altering its position relying on the promise is taken in the following manner:
That it is stated that the petitioner started the production on 14.7.1999 keeping in view the exemptions promised the respondent No. 1 for giving 100 per cent excise duty free and so the petitioner purchased the machineries and raw materials after payment of excise duty at the time of purchase as the promise was for 100 per cent excise duty free and so the petitioner is entitled to self its products without any excise duty and also is entitled to get the refund of excise duty paid by it on capital goods and inputs and so the respondents may be directed not to insist for payment of any excise duty in the products of the unit of the petitioner and they may also be directed to refund the excise duty pa id or to be paid as capital goods and inputs.
57. None of these specific pleas are dealt with in the affidavit filed in opposition by the respondents. The facts stated in the writ petition are riot denied. That, while answering the plea of promissory estoppel, the respondents stated as follows:
That your humble respondents beg to submit in reply to the paragraph No. 34 of the writ petition that the question of promissory estoppel can not be raised in matters relating to levy and collection of Central Excise duty.
58. While adverting to the plea taken by the writ petitioner as regards altering its position pursuant to the promise made in IPR, the respondents stated in paragraph 22 of the affidavit in opposition as follows:
That your humble respondents most respectfully further submit here that as per the paragraph No. 51 of the writ petition that as per Rule 570(1), vide Col. 3, and 57A(6) read with notification No. 58/97 dated 30.8.1997 as amended by 2/98, dated 10.3.1998, units operating under Section 3A, r/w R 96ZO(3) manufacturing Ingots and billets of non alloy steel are not, eligible to claim MOD VAT on capital goods as well as inputs. Neither is the petitioner entitled to clear goods from their factory without payment of duty as per CEA 1944 and CER 1944.
59. We are unable to appreciate the relevancy of the plea taken by the appellants in their affidavit-in-opposition to the writ petition. The issues raised in the writ petition are in no manner dealt with by the appellants and they remain unanswered.
Relief
The writ petitioner has clearly pleaded that it had altered its position relying upon the promise made in the IPR and accordingly undertaken the manufacture of MS Ingots which is entitled to grant of exemption in term of the Industrial Policy Resolution dated 24.12.1997. In fact, there is a specific plea that there has been a radical transformation in the very manufacturing of the items based on the promise held out in the IPR which fact has been brought to the notice of the respondents from time to time and at every stage. This aspect remains unanswered in the counter by the appellants.
60. The writ petitioner, in our considered opinion, has made out a clear case requiring the interference of this Court. We accordingly hold that the writ petitioner is entitled to grant of exemption with effect from the date of production and manufacturing of MS Ingots, i.e., from 14.7.1999 onwards for a period of 10 years in terms of office memorandum issued vide notification No. EA/1/2/96-IPS dated 24.12.1997 by the Government of India, Ministry of Industry, Department of Industrial Policy and Promotion. The respondents are accordingly directed to take appropriate steps in terms of the law declared and observations made in this order.
61. The. Writ Appeal Nos. 208, 216, 223, 224, 226 of 2003 preferred by the Union of India are accordingly allowed and Writ Appeal No. 227 of 2003 is dismissed with the observation and direction as above.
62. The parties are directed to bear their own costs.