TMI Blog2006 (6) TMI 503X X X X Extracts X X X X X X X X Extracts X X X X ..... es a Centra/assistance of ₹ 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 ₹ 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,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 ₹ 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 in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ea 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 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat 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. E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 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 Sch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er 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, s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lf 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 doctr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ne 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 resu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 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 le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reciate 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 St ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... espondents 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 Gene ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs, 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 industr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or 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 pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here 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 specif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 pleadin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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: T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hese 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 dut ..... X X X X Extracts X X X X X X X X Extracts X X X X
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