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2016 (2) TMI 6 - HC - VAT and Sales TaxDoctrine of promissory estoppel - Tax Incentive scheme during the sales tax regime to be continued under VAT regime or not - It is contented that the appellants had made its establishment based on the promises made by the Government of Karnataka to extend certain benefits to the assessee including the tax benefits which was in fact implemented and acted upon by issuing two different notifications dated 1.8.1998 under the KST regime in respect of infrastructure project. Having implemented the said FWA, the Government of Karnataka was bound to extend the same, even in the VAT regime. - Challenge to the re-assessment orders - seeking exemption from the whole of the tax payable by the first to third appellants and their subcontractors - Karnataka Value Added Tax Act, 2003 (KVAT) Held that:- the State is empowered to issue exemption notification to the appellant company on the sale of goods and cannot deny extending the exemption benefit agreed upon, on the pretext that it has no powers under KVAT Act to extend such exemption. The terms agreed in the FWA amounts to promissory estoppel. - It is settled law that the doctrine of promissory estoppel being an equitable doctrine, it must yield when the equity so requires. At this juncture, it is significant to note that admittedly, Appellant Company No.4 is not an affiliate of the appellant company No.1. As per the terms of FWA, the benefit of tax exemption is available only to the appellant company, and its affiliates. - We cannot direct the State Government to issue any notification exempting the nonaffiliates of the appellant company from the tax payable under the provisions of the KVAT Act in terms of FWA. The fourth appellant, if aggrieved by any assessment/reassessment order, has to take recourse of statutory appeal available under the KVAT Act. Writ Appeals are allowed in part. - State Government is directed to issue appropriate exemption notifications under section 5(1) of the KVAT Act on the sale of goods to/by the appellants No.1 to 3 in terms of Framework Agreement dated: 03.04.1997. - Decided party in favor of assessee.
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