2003 (7) TMI 660 - HC - VAT and Sales Tax

Summary

Issues:
Challenge to circular dated February 1, 2000 regarding retrospective withdrawal of concessions granted by earlier circulars, Constitutional validity of section 13AA of the State Act, Doctrine of promissory estoppel against the State Government, Competence of respondent No. 2 to alter government policy through administrative circulars.

Analysis:
1. Challenge to Circular dated February 1, 2000: The petition under article 226 challenged the circular dated February 1, 2000 issued by respondent No. 2, withdrawing administrative concessions granted by earlier circulars with retrospective effect from July 1, 1981. The petitioners contended that such retrospective withdrawal was impermissible and violated the doctrine of promissory estoppel. The impugned circular was declared invalid as it attempted to alter government policy without competence.

2. Constitutional Validity of Section 13AA: Section 13AA of the State Act, introduced in 1982, was challenged for imposing additional liabilities on dealers exporting goods manufactured from raw materials procured under concessions. The Supreme Court upheld the validity of section 13AA in subsequent judgments, leading to amendments and substitutions in the provision over the years.

3. Doctrine of Promissory Estoppel: The petitioners invoked the doctrine of promissory estoppel against the State Government, arguing that the withdrawal of concessions should have been prospective, not retrospective. Citing legal precedents, including the case of Godfrey Philips India Limited, the petitioners contended that retrospective withdrawal of concessions was unconstitutional.

4. Competence of Respondent No. 2: The competence of respondent No. 2 to alter government policy through administrative circulars was questioned. It was argued that only the State Government had the authority to change policy decisions, and an administrative clarification could not override existing concessions granted by government circulars. The impugned circular was deemed invalid as it exceeded the authority of respondent No. 2.

In conclusion, the High Court allowed the petition, quashing and setting aside the impugned circular to the extent of clarifications regarding retrospective withdrawal of concessions. The court ruled in favor of the petitioners, emphasizing the invalidity of the circular and upholding the principles of promissory estoppel against the State Government.