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TMI Blog2025 (5) TMI 636X X X X Extracts X X X X X X X X Extracts X X X X ..... shed their manufacturing units pursuant to the incentives offered in the Industrial Policy of Assam 2008 and the Assam Industries (Tax Exemption) Scheme, 2009. All these petitioners have set up their industrial and manufacturing units for manufacturing their respective items believing that the petitioners would be able to avail the VAT exemption for a period of 7 (seven) years from the date of commencement of commercial production. In WP(C) No. 2068/2021 the petitioner, namely, M/s Lalit Poly Weave LLP is a limited liability partnership firm having its registered office and factory at the Industrial Growth Centre, Phase-III, Jambari Village No.2, Kamrup, Assam 781124. The petitioner is engaged in the manufacture of PP Woven Bags and sacks. The petitioner in WP(C) No. 2068/2021 is represented by Sri Mahabir Prasad Jain, authorized signatory of the petitioner firm. The petitioner made total investment of Rs. 14,33,77,608/- in its industrial unit for land, site development, building, electrical equipments etc. Commercial production in the new industrial unit commenced on 21.09.2013. In order to avail the benefits of VAT remission under the Industrial Policy of Assam, 2008 and the Assa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aged in the business of manufacture of non-woven fabric bag, paper cub, hide fabric bag. The petitioner in WP(C) No. 2500/2021 is represented by Sri Venus Agarwalla. The petitioner made total investment of Rs. 1,47,10,497/- in its industrial unit for land, site development, building and other civil construction work etc. Commercial production in the new industrial unit commenced on 25.02.2013. In order to avail the benefits of VAT remission under the Industrial Policy of Assam, 2008 and the Assam Industries (Tax Exemption) Scheme, 2009 applied for issuance of eligibility certificate bearing no. CI&C(II)(US)EC/223/2013/349/46 dated 11.08.2014. By the said certificate the petitioner was held to be entitled to the benefit of exemption of Tax under the Assam Industries (Tax Exemption) Scheme, 2009 to the tune of Rs. 1,47,10,497/- for a period of 7 seven years with effect from 25.03.2013 to 24.02.2020 or at the rate of 150% of the eligible fixed capital investment of Rs. 98,06,998/- whichever is earlier. The petitioner was thereafter issued the certificate of entitlement dated 09.01.2015 holding the petitioner to be entitled to be exemption of tax to the extent of Rs. 1,47,10,497/-. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es goods in Assam. The said scheme came into force with effect from 01.10.2008. In the said scheme it was mentioned that the benefits given under the scheme shall be available till the Assam VAT Act, 2003 remains in force. It is also stated that the said scheme shall be applicable to the units which manufactures goods in Assam which are considered eligible for partial tax exemption with reference to the Industrial Policy of Assam, 2008. It is submitted that as per the Scheme of 2009, the new industrial units of medium and large section was to be entitled to exemption of tax on sales of finished products for a period of 7 (seven) years subject to maximum of 100% of fixed capital investment. The procedure for grant of eligibility certificate was provided for in Clause 4 of the Scheme and Clause 5 provided for the issue of certificate of entitlement. Accordingly, the writ petitioners made the investment of Rs. 11,83,54,569/- Rs. 59,15,16,915/- and Rs. 1,47,10,497/- respectively for setting up its land, site development, buildings, electoral equipments, commercial production in respect of the writ petitioners commenced with effect from 21.09.2013 to 20.09.2020, 26.02.2014 to 25.02.2021 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ption under the said earlier schemes became liable to pay tax under the Assam Goods & Services Tax Act, 2017 from the date of coming into force of the said Act. 8. It is submitted that the Government of Assam thereafter brought out another scheme, namely, Assam Industries (Tax reimbursement for Eligible Units) Scheme, 2017 for granting reimbursement of tax to eligible units under the Industrial and Investment Policy of Assam, 2008 and/or under the Industrial and Investment Policy of Assam, 2014 or those which were covered by earlier Schemes or special notifications. The scope and operation of the scheme is prescribed under the Clause -3 of the said scheme. It is submitted that the Clause -4 of the Scheme provided for determination of amount reimbursable. The proviso to Clause 4 (1) (i) of the Scheme of 2017 provided for that if any existing eligible unit including a mega unit to which the customized tax incentives have been granted, is unable to utilize or avail of the full amount of monetary ceiling within the specified period of exemption, it may make an application to the Finance (Taxation) Department for extension of period of eligibility and upon examination of such an applic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tary, Finance (Taxation) Department requesting for extension of the period of exemption under the Policy of 2008 and the Scheme of 2009. In the said letter the petitioner firm requested for extension of the period of validity of the Certificate of Entitlement as the petitioner firm could only utilize less than half of the entitlement amount. In the said letter, the Petitioner stated that the entire amount for which the Petitioner was entitled to exemption could not be utilized by the industrial unit of the Petitioner inasmuch as the industrial product of the Petitioner Firm attracted low margin and value addition and as a result output tax generation over the input tax credit was also very low. It was further stated that VAT rate was just 5%/ 6% during VAT Regime and Central Sales Tax 2% against C Form and thus output tax generation was also very low. So only very little could be utilized by the petitioner firm and that since GST inception prices became very much competitive and SGST portion payable by the petitioner firm stayed on a lower side. In support of the prayer for extension of the period of eligibility, the Petitioner stated that PP Granule was the main raw material compo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or extension of period of eligibility had not been passed shall be deemed to have been rejected and thereby making a discrimination between the eligible industrial units in respect of which the orders of extension have already been passed prior to amendment of the said Scheme of 2017 by the Scheme of 2020 and in respect of eligible industrial units whose applications were left pending. 11. Learned senior counsel for the petitioners highlighted that even before the amendment Scheme of 2020, cases of similarly situated industrial units who could not avail the benefit for the entire period were duly considered and extension was granted for the period of 5 years from the date on which the period of 7 years eligibility had expired. Learned senior counsel for the petitioner submits that The denial of benefit of exemption by not extending the period of eligibility for a further period not exceeding 5 years as provided for in the Scheme of 2017 by the Amendment Scheme of 2020 and making a discrimination between eligible industrial units in respect of which the orders of extension have already been passed prior to amendment of the said Scheme of 2017 by the Scheme of 2020 and in respect of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urtailed and made applicable only in respect of the tax accruing in cash to the State Government under the Assam Goods & Service Tax Act, 2017, and further because post GST the petitioner was getting benefit of (IGST) paid on import of goods as input tax credit and getting setoff of the IGST paid against CGST/SGST output liability and thereby the liability to pay tax under SGST gradually reduced. The State was aware that an eligible unit would not be able to avail the said benefit of remission within a period of 7 years under the Policy of 2008 and Scheme of 2009, in view of limiting the benefits only in respect of the tax accruing in cash to the State Government under the Assam Goods & Service Tax Act, 2017, the proviso to clause 4 (1) (i) of the Scheme of 2017 provided for an extension of the period of eligibility by a further period of 5 years which was in tune with promises and assurance made in the Policy of 2008 and Scheme of 2009 and thereby the withdrawal of the said power given in the Scheme of 2017 for extending the period of eligibility to those eligible units which could not utilize or avail the full amount of monetary ceiling within the specified period of exemption am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to be struck down. 12. Referring to the judgment of the Apex Court in Motilal Padampat Sugar Mills Co. Ltd. Vs. State of Uttar Pradesh reported in (1979) 2 SCC 409. It is submitted that 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 is submitted that the superstructure of the doctrine with its preconditions, strengths and limitations have been outlined by the Apex Court in this landmark judgment of Motilal Padampat (supra). The Apex Court reiterated the well known pre conditions for the operation of the Doctrine of Promissory Estoppel as under: (1) a clear and unequivocal promise knowing and intending that it would be acted upon by the promisee; (2) such acting upon the promise by the promisee so that it would be inequitable to allow the promisor to go back on the promise. 13. The Court further observed that that the doctrine was n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... against him to compel performance of the obligation arising out of his representation. Learned Senior Counsel for the petitioners has referred to the following judgments of the Apex Court: i) Pournami Oil Mills vs. State of Kerala reported in 1986 Supp SCC 728 ii) State of Bihar vs. Usha Martin Industries Ltd. reported in 1987 Supp SCC 710 iii) Shri Bakul Oil Industries vs. State of Gujarat reported in (1987) 1 SCC 31 iv) Pawan Alloys & Casting (P) Ltd. Vs. UP SEB reported in (1997) 7 SCC 251 v) Mahabir Vegetable Oils (P) Ltd. Vs. State of Haryana reported in (2006) 3 SCC 620 vi) State of Punjab vs. Nestle India Ltd. reported in (2004) 6 SCC 465 vii) Kasinka Trading vs. Union of India reported in (1995) 1 SCC 274 viii) MRF Ltd. Vs. Asstt. CST reported in (2006) 8 SCC 702 ix) State of Jharkhand vs. Brahmaputra Metallics Ltd. In Civil Appeal NO. 3860-3862/ 2020. 15. The further submission of the learned Senior Counsel for the petitioners is that the State authorities as well as its limbs covered by the sweep of Article 12 of the Constitution of India being treated as 'State' within the meaning of the said article, can be made subject to the equitable doctrine of Pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not been passed shall be deemed to have been rejected would go against the settled principles of legitimate expectation. It is submitted that the doctrine of legitimate expectation is one of the ways in which the guarantee of non-arbitrariness enshrined under Article 14 finds concrete expression. If denial of legitimate expectation in a given case amounts to denial of a right that is guaranteed or is arbitrary, discriminatory, unfair or biased, gross abuse of power or in violation of principles of natural justice, the same can be questioned on the well-known grounds attracting Article 14 of the Constitution. 17. In support of his contention he presses into service the judgment of the Apex Court rendered in Union of India vs. Lt. Col. P.K. Choudhary reported in (2016) 4 SCC 236 to submit that in the said matter the Apex Court went on to hold that if denial of legitimate expectation in a given case amounts to denial of a right that is guaranteed or is arbitrary, discriminatory, unfair or biased, gross abuse of power or in violation of principles of natural justice, the same can be questioned on the well-known grounds attracting Article 14 of the Constitution but a claim based on me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y in respect of industries whose applications are pending is a clear example of the arbitrary action of the State and such an action of the State cannot be justified on the touchstone of Article 14 of the Constitution. It is further submitted that the action of the State or its instrumentality must be in conformity with some principle which meets the test of reason and relevance. Functioning of a "democratic form of Government demands equality and absence of arbitrariness and discrimination". The rule of law prohibits arbitrary action and commands the authority concerned to act in accordance with law. Every action of the State or its instrumentalities should neither be suggestive of discrimination, nor even apparently give an impression of bias, favouritism and nepotism. If a decision is taken without any principle or without any rule, it is unpredictable and such a decision is antithesis to the decision taken in accordance with the rule of law. It is respectfully submitted that power vested by the State in a public authority should be viewed as a trust coupled with duty to be exercised in larger public and social interest. A decision taken in an arbitrary manner contradicts the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ders for extension of the period of eligibility have already been passed and such a discrimination is a hostile discrimination inasmuch as equals have been treated unequally and thereby such discrimination which is a hostile classification made under the Scheme of 2020 cannot withstand the scrutiny of Article 14 of the Constitution of India and thereby the said classification and/or discrimination is clearly in violation of Article 14 of the Constitution of India and thereby the Amendment Scheme of 2020 is liable to be declared illegal and consequently ultra vires and the respondent authorities are liable to be directed to also consider the case of the petitioner for extending the period of eligibility as promised by the Scheme of 2017. 20. Referring to the judgment of the Apex Court in Budhan Choudhury vs. State of Bihar AIR 1955 SC 191 it is submitted that while Article 14 forbids class legislation, it does not forbid reasonable classification for the purposes of legislation. In order, however, to pass the test of permissible classification two conditions must be fulfilled, namely, (i) that the classification must be founded on an intelligible differentia which distinguishes per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the petitioners submits that every differentiation is not discrimination but at the same time, differentiation must be founded on pertinent and real differences as distinguished from irrelevant and artificial ones. A simple physical grouping which separates one category from the other without any rational basis is not a sound or intelligible differentia. The separation or segregation must have a systematic relation and rational basis and the object of such segregation must not be discriminatory. 24. Learned Senior Counsel for the petitioners has also referred to the judgment rendered in Ayurveda Pharmacy vs. State of Tamil Nadu reported in (1989) 2 SCC 285, Amarendra Kumar Mohapatra vs. State of Orissa reported in (2014) 4 SCC 583, (1979) 1 SCC 380, Subramanian Swamy vs. Director, CBI, (2014) 8 SCC 682, Union of India vs. NS Rathnam and Son (2015) 10 SCC 681, State of UP vs. Deepak Fertilizers & Petro Chemicals Corp. Ltd. reported in (2007) 10 SCC 342 as well as Makum Tea Co. India Ltd. Vs. State of Assam reported in (1997) 1 GLR 138. 25. To sum up the argument, learned Senior Counsel for the petitioners submits that it is clear that when any statute and/ or Notification or Sch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emption and even under the Scheme of 2017, they will continue to enjoy the benefits till expiry of 15 years. The said period of 15 years was prescribed in the Policy of 2014 and the Scheme of 2015 keeping in view the fact that goods and service tax was supposed to be introduced and after the said introduction of the goods and service tax, the industrial units would not be able to enjoy the benefits of exemption on the goods sold in the course of inter-state trade and commerce as well as goods in respect of which tax is to be levied by the State, the same shall be restricted to a large extent. However, the industrial units which were established on the promises and assurances made in the Policy of 2008 and Scheme of 2009 were granted the benefit of exemption for a period of 7 years only and under the Scheme of 2017, powers were conferred on the Finance (Taxation) Department to increase the period of eligibility by a further period of 5 years to compensate such industrial units from the curtailment of the benefits of exemption after introduction of the GST regime. However, after introduction of the Amendment Scheme of 2020, such powers for extension of the period of eligibility have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s department for a period of 7 years w.e.f. 21.09.2013 to 20.09.2020 subject to the monetary limit of Rs 11,83,54,569.00/-. Subsequently Entitlement Certificate granting VAT exemption was issued for the said period. 29. There are two limits under the Industrial Policy 2008, monetary ceiling and time limit. Scheme 2009 had a clear condition that if the unit is unable to use its monetary tax incentive within the specified period of 7 years, the balanced unutilized amount would lapse. Against the available limit of tax exemption of Rs 1183.54 lacs, the petitioner availed Rs 456.20 lakhs during VAT i.e. upto 30.06.17 and Rs 52.88 lakhs during GST i.e. till September 2020. In total it availed Rs 509.09 lakhs out of the total Rs 1183.54 lakhs i.e. 38 % of the total amount of tax exemption during 4 years, under VAT regime. It is submitted that with the introduction of GST w.e.f. 01.07.2017, the tax exemption of VAT being not compatible with GST, the State Govt. as a mark of goodwill gesture and to honor its past commitments introduced, The Assam Industries (Tax Reimbursement for Eligible Units) Scheme, 2017. Under the Scheme the un-availed/unutilized amount of monetary incentive and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uring the time when the clause was in force. It is contended that Article 14, does not forbid classification for legislative purposes, provided that such classification is based on some differentia having a reasonable relation to the object and purposes of the law in question. There is a strong presumption in favour of the validity of legislative classification and it is for those who challenge it as unconstitutional to prove beyond all doubt that the legislation arbitrarily discriminates between different persons similarly circumstanced. It is now well-settled that though taxing laws are not outside Article 14, however, having regard to the wide variety of diverse economic criteria that go into the formulation of a fiscal policy, the legislature enjoys a wide latitude in the matter of selection of persons, subject-matter, events, etc., for taxation. The tests of the vice of discrimination in a taxing law are, accordingly, less rigorous. 32. Learned Advocate General, Assam, submits that no discrimination done in the context of Article 14, as the withdrawal of budgetary support was done in respect of all industries regardless of the Industrial policy under which they were availing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o force, proviso to Clause 4 was inserted which empowered the Finance(Taxation) Department to extend the period of eligibility by another 5(five) years, on an application, if it is satisfied that the eligible unit could not achieve the full quantum of monetary ceiling for a genuine reason and to sustain the Industrial Unit, it is necessary. Thus under Scheme 2017, the petitioner has not altered his position, rather he continued to enjoy the earlier incentives. From the pleading and submissions, it is abundantly clear that the petitioner has not altered his position pursuant to Scheme, 2017, as he was already reaping the benefit under the Industrial Policy, 2008 and Tax exemption Scheme, 2009 in terms of the Eligibility Certificate and Entitlement certificate issued there under. In that view of the matter the State has not resile from its promise on the basis of which the petitioner changed his position and invested for expansion. 36. It is submitted that there has been no discrimination in favour of certain entities leading to violation of Article 14 of the Constitution of India. In case of any extension under Clause 4 of Scheme 2017, the same was done as and when the Scheme was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... & Sarees vs. Directorate of Enforcement reported in (2008) 5 SCC 580 to submit that the discrimination on the ground of valid classification which answers the test of intelligible differentia does not attract the wrath of the Article 14. 38. Learned Advocate General, Assam, sums up his argument to submit that there is no violation of Doctrine of Promissory Estoppels, no infringement of Article 14 of the Constitution of India, no discrimination or classification without reasonable or cogent ground. Thus, all the writ petitions are liable to be dismissed. 39. Learned Senior Counsel for the petitioners reiterating his arguments submits that if fund crunch was the ground for non-consideration of the petitioners' application for extension then the same criteria ought to have been made applicable to all other similarly situated units/industries. Referring to one such instance of an application preferred by Varun Beverages Limited (Unit-II) it is submitted that the said unit also filed an application seeking extension of the period of exemption after coming into force the GST regime, and their application was duly considered and extension was granted to the said unit. It is submitted t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al Policy of 2008 and the Assam Tax Exemption Scheme of 2009, and the petitioners having made the required investments and have been granted the eligibility and the entitlement certificates clearly indicating the period till which their the benefits of VAT exemptions are to be granted, the subsequent curtailment of this benefit after the GST regime is violative of the doctrine of promissory estoppel. b) The extension of benefits granted to other similarly situated persons while denying the similar benefits to the writ petitioners are discriminatory without any reasonable basis and the same being arbitrary and the same are violative of Article 14 of the Constitution of India. c) The application of the writ petitioners having been filed before the authorities seeking extension of the benefit prior to the date of the Tax Exemption (Amendment) Scheme 2000, their applications ought not to have been kept pending and thereby rendering it nugatory after the notification dated 30.07.2020 whereby the Assam Industries (Tax reimbursement for eligible units) Scheme 2017 was further amended by rejecting all pending applications by a deeming provision. Such rejection that too by a deeming pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 200 Policy will be entertained after 31.03.2009. 45. The various definitions of existing unit, new unit, substantial expansion etc has also been provided under Clause 4.5 which reads as under: 4.5 DEFINITIONS 1) EXISTING UNIT means a unit, which is or was in commercial production in the State of Assam prior to 1/10 /2008. 2) NEW UNIT means a unit, which has commenced commercial production in the State of Assam during the validity period of Industrial Policy 2008. 3) SUBSTANTIAL EXPANSION means increase in value of fixed capital investment in plant and machinery of an existing unit by at least 25% as well as increase of employment by at least 10% and at least 25% increase in production compared to average annual production of previous three years. Prior to going for expansion, the unit should be operating at least at a minimum of 80% capacity during the period of three previous years and prior intimation to the concerned implementing agency. 4) NON-ELIGIBLE UNIT Non-eligible unit means those industries, which are declared as Non-eligible under this policy. 5) MANUFACTURE means any activity that brings out a change in an article or articles as a result of some process, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der this Industrial Policy. g) In case a new unit is promoted in the premises of an existing unit; it should be distinctly identifiable and be located in the open spaces available in the premises. The earlier unit in the premise should not be closed nor any plant & machinery be dislodged from the earlier unit. 47. Amongst the various fiscal incentives prescribed under the policy, the tax incentive includes VAT exemption. Under Clause 7.1 delineates the VAT exemption as under: 7.1 VAT EXEMPTION All eligible units, which manufacture goods in Assam, will be entitled to exemption of 99% of the tax payable under the Assam Value Added Tax Act, 2003 and the Central Sales Tax Act, 1956 subject to the limit mentioned below. Category Micro Small Medium & Large New Seven years subject to maximum of 200% of fixed capita investment Seven years subject to maximum of 15% of fixed capital investment Seven years subject to maximum of 100% capital investment Substantial Expansion Seven years subject to maximum of 150% of additional fixed capital investment Seven years subject to maximum of 100% of additional fixed capital investment Seven years subject to maximum of 90% of additio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it, which manufactures goods in Assam and has been declared sick by BIFR or as Assam Government Relief Undertaking and has recommended commercial production on or after 1st October, 2008 but upto 30th September, 2013 and is in compliance with the eligibility criteria under this Scheme shall be treated as an eligible unit under category "C". Provided that there should be increase by not less than 25% in the value of fixed capital assets in plant and machinery for revival of a unit under category "C". 49. That apart all these three categories were also required to fulfill the criteria specified therein namely: (a) A unit shall have employment of 80% from amongst people of Assam in the managerial cadre and 90% from amongst people of Assam in the non-managgerial cadre and that over a period of five years from the commencement of commercial production, such unit would take all effective steps to ensure 100% employment from amongst people of Assam in non-managerial cadre and at least 90% in managerial cadre. (b) A unit availing grants/incentives from a Department/an agency under the State/Central Government/Foreign agencies shall not be eligible for similar type of incentive under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ertificate was issued on 04.11.2015. In the said certificate, VAT exemption was shown to have been approved with effect from 21.09.2013 to 20.09.2020 (07 years) subject to a maximum of 100% of the eligible fixed capital investment of the unit i.e Rs. 11,83,54,569/-. Pursuant to the issuance of the eligibility certificate, the certificate of entitlement for exemption of tax to the extent of Rs. 11,83,54,569/- was also issued by the Commissioner of Taxes, Department of Finance and Taxation, Government of Assam. The certificate was shown to be valid from 21.09.2013 to 20.09.2020 and the certificate was issued on 20.07.2016. 53. In so far as the M/S Ramdhenu Packaging Solutions [W.P(C) No. 2500/2021] is concerned the eligibility certificate was issued on 11.08.2014. In the said certificate, VAT exemption was shown to have been approved with effect from 25.02.2013 to 24.02.2020 (07 years) subject to a maximum of 150% of the eligible fixed capital investment of the unit i.e Rs. 14710497/-. Pursuant to the issuance of the eligibility certificate, the certificate of entitlement for exemption of tax to the extent of Rs. 14710497/- was also issued by the Commissioner of Taxes, Department of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ayment of VAT and/or central sales tax under the Industrial and Investment Policy of Assam, 2008 or under the Industrial and Investment Policy of Assam, 2014, as the case may be, and covered by the corresponding earlier schemes i.e. the earlier Assam Industries (Tax Exemption) Scheme, 2009 or the Assam Industries (Tax Exemption) Scheme, 2015 or any special notification issued pursuant to such Policy of 2008 or Policy of 2014; (ii) 'expansion unit' which undertakes substantial expansion and commences its commercial production during the period commencing from 1st July, 2017 to 31st December, 2022 in terms of the eligibility criteria of Industrial and Investment Policy of Assam, 2014. Explanation- "substantial expansion" means increase in value of initial fixed capital investment of a new or existing unit by at least 10% as well as increase in employment by at least 10% and at least 25% increase in production compared to average annual production of previous 3 years. Prior to going for substantial expansion, the unit should be operating at least at an average of 75% of its installed total capacity during the period of 3 previous years; (iii) 'new unit' which commences its comme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... electronic cash ledger account maintained by the unit in terms of sub-section (1) of section 49 the Assam Goods and Services Act, 2017 after utilization of the input tax credit of the State tax (SGST) and Integrated tax (IGST) available until the amount of such tax reimbursement exceeds the un-availed quantum of monetary ceiling or till the expiry of residual period of eligibility, whichever is earlier, irrespective of condition of capacity utilization: Provided that if an existing eligible unit including a Mega Unit to which the customized tax incentives have been granted, is unable to utilize or avail of the full amount of monetary ceiling within the specified period of exemption, it may make an application to the Finance (Taxation) Department for extension of period of eligibility. Upon examination of such an application, if the Finance (Taxation) Department is satisfied that the unit could not or is not in a position to attain the full quantum of monetary ceiling due to some genuine reasons and in order to sustain the industrial unit, it is necessary to extend such time limit, it may, by an order, extend such time limit by a further period not exceeding five years." 55.4. Un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issued thereunder by the Finance (Taxation Department for extension of period of eligibility shall be deemed to have been validly issued, as if this Scheme has not been amended. Further, all pending applications on which order for extension of period of eligibility has not been passed, shall be deemed to have been rejected. SHYAM JAGANNATHAN, Commissioner & Secretary to the Government of Assam, Finance (Taxation) Department" 57. As discussed above, the petitioner has assailed the validity of the amendments and the non-issuance of appropriate order by the Finance (Taxation) Department for extension of the period of eligibility in respect of the writ petitioners on the ground that they are violative of the doctrine of promissory estoppel and further the extensions have been granted to other similarly situated industries while similar benefits have been denied to the writ petitioners and therefore they are facing hostile discrimination in the hands of the department which is arbitrary and therefore violative of Article 14. 58. It will now be apposite to refer to the various Judgments referred placed before this Court to examine the doctrine of promissory estoppel as urged by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le doctrine, it must yield when the equity so requires. But it is only if the Court is satisfied, on proper and adequate material placed by the Government, that overriding public interest requires that the Government should not be held bound by the promise but should be free to act unfettered by it, that the Court would refuse to enforce the promise against the Government. (2) No representation can be enforced which is prohibited by law in the sense that the person or authority making the representation or promise must have the power to carry out the promise. If the power is there, then subject to the preconditions and limitations noted earlier, it must be exercised. Thus, if the statute does not contain a provision enabling the Government to grant exemption, it would not be possible to enforce the representation against the Government, because the Government cannot be compelled to act contrary to the statute. But if the statute confers power on the Government to grant the exemption, the Government can legitimately be held bound by its promise to exempt the promisee from payment of sales tax." 60. In Century Spg. & Mfg. Co. Ltd. v. Ulhasnagar Municipal Council, reported in (1970 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... parties had altered their position by acting upon the representations and suffered any prejudice. On facts, therefore, no case for raising the plea of estoppel was held to have been made out. This Court proceeded on the footing that the notification granting exemption retrospectively was not in accordance with Section 10 of the State Sales Tax Act as it then stood, as there was no power to grant exemption retrospectively. By an amendment that power has been subsequently conferred. In these appeals there is no question of retrospective exemption. We also find that no reference was made by the High Court to the decision in M.P. Sugar Mills case [Motilal Padampat Sugar Mills Co. Ltd. v. State of U.P., (1979) 2 SCC 409 : 1979 SCC (Tax) 144]. In our view, to the facts of the present case, the ratio of M.P. Sugar Mills case [Motilal Padampat Sugar Mills Co. Ltd. v. State of U.P., (1979) 2 SCC 409 : 1979 SCC (Tax) 144] directly applies and the plea of estoppel is unanswerable. ... Such exemption would continue for the full period of five years from the date they started production. New industries set up after 21-10-1980 obviously would not be entitled to that benefit as they had notice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the face of any statutory prohibition, absence of power and authority of the promisor and is otherwise not opposed to public interest, and also when equity in favour of the promisee does not outweigh equity in favour of the promisor entitling the latter to legally get out of the promise. *** 24. ... We, therefore, agree with the finding of the High Court on Issue 1 that by these notifications the Board had clearly held out a promise to these new industries and as these new industries had admittedly got established in the region where the Board was operating, acting on such promise, the same in equity would bind the Board. Such a promise was not contrary to any statutory provision but on the contrary was in compliance with the directions issued under Section 78-A of the Act. These new industries which got attracted to this region relying upon the promise had altered their position irretrievably. They had spent large amounts of money for establishing the infrastructure, had entered into agreements with the Board for supply of electricity and, therefore, had necessarily altered their position relying on these representations thinking that they would be assured of at least three ye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ustice and fairness demand, prevent a person from insisting on strict legal rights, even where they arise, not under any contract, but on his own title deeds or under statute. *** Whatever be the nature of the function which the Government is discharging, the Government is subject to the rule of promissory estoppel and if the essential ingredients of this rule are satisfied, the Government can be compelled to carry out the promise made by it." The Apex Court distinguished its earlier decision in Kasinka Trading v. Union of India, (1995) 1 SCC 274, by holding as under: "40. The case of Kasinka Trading v. Union of India [(1995) 1 SCC 274] cited by the appellant is an authority for the proposition that the mere issuance of an exemption notification under a provision in a fiscal statute such as Section 25 of the Customs Act, 1962, 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. In other words, there is no unequivocal representation. The seeds of equivocation are inherent in the power to grant exemption. Therefore, an exemption notification can be revoked without fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons cited if the Government withdraws its earlier promise on public policy of the public good then depending on the facts and circumstances of such cases promissory estoppels may not apply to such cases. 70. In Shrijee Sales Corporation and Anr. Vs. Union of India, reported in (1997) 3 SCC 398, the Apex Court held that the principle of promissory estoppel is applicable against the Government but in case there is a supervening public equity, the Government would be allowed to change its stand; it would then be able to withdraw from representation made by it which induced persons to take certain steps which may have gone adverse to the interest of such persons on account of such withdrawal. The Apex Court further held that Once public interest is accepted as the superior equity which can override individual equity, the aforesaid principle should be applicable even in cases where a period has been indicated for the operation of the promise. The Apex Court held that the Court must satisfy itself that such a public interest exist and it has to determine whether the Government should be held exempt from the liability of promise of representation. The Apex Court went on to hold that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is not a hard-and-fast rule but an elastic one, the objective of which is to do justice between the parties and to extend an equitable treatment to them. This doctrine is a principle evolved by equity, to avoid injustice and though commonly named promissory estoppel, it is neither in the realm of contract nor in the realm of estoppel. For application of the doctrine of promissory estoppel the promisee must establish that he suffered in detriment or altered his position by reliance on the promise. 33. Normally, the doctrine of promissory estoppel is being applied against the Government and defence based on executive necessity would not be accepted by the court. However, if it can be shown by the Government that having regard to the facts as they have subsequently transpired, it would be inequitable to hold the Government to the promise made by it, the court would not raise an equity in favour of the promisee and enforce the promise against the Government. Where public interest warrants, the principles of promissory estoppel cannot be invoked. The Government can change the policy in public interest. However, it is well settled that taking cue from this doctrine, the authority canno ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Vs. Union of India & Ors, reported in (2000) 4 SCC 57 referring to the earlier precedents in Kasinka Trading (Supra) and Shrijee Sales Corporation (Supra), the Apex Court held that the law in respect of promissory estoppels is well settled and that even in respect of exemptions made by the Government the doctrine of promissory estoppel will not be applicable if the change in the stand of the Government is made on account of public policy. 73. In Union of India & ors Vs. VVF Limited & Anr, reported in (2020) 20 SCC 57, the Apex Court while dealing in a bunch of writ petitions challenging the withdrawal of the benefits and incentives by the Government held as under: 21.1. In Kasinka Trading [Kasinka Trading v. Union of India, (1995) 1 SCC 274], in paras 12, 20 and 23, it is observed and held as follows : (SCC pp. 283-84, 287 & 289) "12. It has been settled by this Court that the doctrine of promissory estoppel is applicable against the Government also particularly where it is necessary to prevent fraud or manifest injustice. The doctrine, however, cannot be pressed into aid to compel the Government or the public authority 'to carry out a representation or promise which is contrar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respondence exchanged between the State and the petitioners therein it was held out to the petitioners that the industry would be exempted from sales tax for a particular number of initial years but when the State sought to levy the sales tax it was held by this Court that it was precluded from doing so because of the categorical representation made by it to the petitioners through letters in writing, who had relied upon the same and set up the industry. *** 23. The appellants appear to be under the impression that even if, in the altered market conditions the continuance of the exemption may not have been justified, yet, Government was bound to continue it to give extra profit to them. That certainly was not the object with which the notification had been issued. The withdrawal of exemption "in public interest" is a matter of policy and the courts would not bind the Government to its policy decisions for all times to come, irrespective of the satisfaction of the Government that a change in the policy was necessary in "public interest". The courts, do not interfere with the fiscal policy where the Government acts in "public interest" and neither any fraud or lack of bona fides ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .2. In Shrijee Sales Corpn. [Shrijee Sales Corpn. v. Union of India, (1997) 3 SCC 398], it is observed and held that the principle of promissory estoppel may be applicable against the Government. But the determination of applicability of promissory estoppel against public authority/Government hinges upon balance of equity or "public interest". In case there is a supervening public interest, the Government would be allowed to change its stand; it would then be able to withdraw from representation made by it which induced persons to take certain steps which may have gone adverse to the interest of such persons on account of such withdrawal. Once public interest is accepted as the superior equity which can override individual equity, the aforesaid principle should be applicable even in cases where a period has been indicated for operation of the promise. 21.3. In Shree Durga Oil Mills [STO v. Shree Durga Oil Mills, (1998) 1 SCC 572], it has been held that when the withdrawal of exemption is in public interest, the public interest must override any consideration of private loss or gain. In the said case, the change in policy and withdrawal of the exemption on the ground of severe res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CGST Act. 75. Coming to the facts of the present proceedings, there is no doubt that the benefits under the Industrial Policy of 2008 was sought to be given effect to by the Scheme of Assam Industrial (Tax Exemption) Scheme 2009. The scheme itself makes it very clear that these benefits for exemption of VAT is till the currency of the VAT Act. Subsequent to the GST regime, the Assam Industries (Tax Reimbursement for Eligible Units) Scheme 2017 was introduced for extension of the period for granting customized tax incentives under the Industrial Policy of 2008 although only in respect of the States share of the GST paid by such industries. The Industrial Policy of 2008 was a policy announced by the Government of Assam and not by the Central Government. In so far as the State of Assam is Concerned, it can only make a representation or a promise in respect of the incentives to be granted by the State of Assam. Post GST regime, the manner of tax imposition and collection of tax underwent complete change. Under the GST regime, the imposition of Tax on Goods and Services rendered has two components namely the State's share and the Central Share. Therefore, it cannot be said that the St ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r reason why such contention cannot be accepted and no mandamus can be issued inasmuch as the State in its Industrial Policy of 2008 read with the Tax Reimbursement Scheme of 2009 only gave the assurance of reimbursement of VAT paid under the Assam VAT Act, 2003 as the said legislation was in force at that relevant point in time. Subsequently, across the country, the Central GST and the State GST legislations have been enacted and enforced with effect from 01.07.2017. All other taxes including state sales tax, central sales tax, central excise etc were subsumed in the GST. Under such circumstances, State cannot be compelled to continue to extend the benefit of 100% VAT exemption when with effect from 01.07.2017 the various State taxes including VAT came to be subsumed under the State GST. Therefore the State while continuing to extend its benefit of exemption notified the Assam Reimbursement Scheme of 2017 to give benefits to such industries for any residual period in respect of GST paid to the State exchequer. Therefore, the contention of the petitioners that such action of the respondent department in not reimbursing the benefit of taxes paid to the extent of 100% including the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, as have been discussed elaborately above, there can be no promissory estoppels against the statute. The law enunciated by this Court by several judgments has made the position very clear to the effect that the Government can alter its position or resile from his promise earlier made in view of any public policy. The Apex Court has even held that the Government can resile from its promise earlier made even if there is no public policy, if the situation requires that the Government has to alter its position. In the facts of the present case, the industrial policy read with the tax exemption scheme 2009 was brought into effect at the time when the Value Added Tax regime was in force. However, with effect from 01.07.2017, the GST regime replace the then existing system of taxation prevalent subsuming various taxes including sales tax, VAT and Central Excise into GST. The nature of taxation on products also underwent a complete change with the advent of GST regime. Earlier the situs of sale was the basis for imposition of tax under the VAT regime. However, under the GST regime, the component of tax deducted between the State and the Centre. Therefore pursuant to the GST regime notwit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons or things that are grouped together from others left out of the group, and (ii) that that differentia must have a rational relation to the object sought to be achieved by the statute in question. The classification may be founded on different bases; namely, geographical, or according to objects or occupations or the like. What is necessary is that there must be a nexus between the basis of classification and the object of the Act under consideration. It is also well established by the decisions of this Court that Article 14 condemns discrimination not only by a substantive law but also by a law of procedure. 80. Again in Ram Krishna Dalmia vs. SR Tendolkar, AIR 1958 SC 538, the Constitution Bench of the Apex Court culled out the following principles: "11. ... (a) that a law may be constitutional even though it relates to a single individual if, on account of some special circumstances or reasons applicable to him and not applicable to others, that single individual may be treated as a class by himself; (b) that there is always a presumption in favour of the constitutionality of an enactment and the burden is upon him who attacks it to show that there has been a clear trans ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the same remedies should be made available to them irrespective of differences of circumstances. It only means that all persons similarly circumstanced shall be treated alike both in privileges conferred and liabilities imposed. Equal laws would have to be applied to all in the same situation, and there should be no discrimination between one person and another if as regards the subject-matter of the legislation their position is substantially the same. 82. In E.P. Toyappa Vs. State of T. N, reported in (1974) 4 SCC 3, the Apex Court held that the basic principle which conforms both Article 14 and 16 are equality and inhibition against discrimination. The Apex Court held that from a positivistic point of view, equality is antithetic to arbitrariness. In fact equality and arbitrariness are sworn enemies; one belongs to the rule of law in a republic while the other, to the whim and caprice of an absolute monarch. Where an act is arbitrary, it is implicit in it that it is unequal both according to political logic and constitutional law and is therefore violative of Article 14, and if it affects any matter relating to public employment, it is also violative of Article 16. Articles 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oach to be adopted and the principles applicable to any forensic exercise aimed at examining the validity of a legislation on the touchstone of Article 14 of the Constitution have been long since settled by several decisions of this Court. Restatement or repetition of those principles was, therefore, considered platitudinous. The real difficulty as often acknowledged by this Court lies not in stating the principles applicable but in applying them to varying fact situations that come up for consideration. Trite it is to say at the outset that a piece of legislation carries with it a presumption of constitutional validity. Also settled by now is the principle that Article 14 does not forbid reasonable classification. A classification is valid on the anvil of Article 14, if the same is reasonable that is it is based on a reasonable and rational differentia and has a nexus with the object sought to be achieved. These principles have again been summarized by the Apex Court in Re: (1979) 1 SCC 380. These principles have been summarized by the Apex Court as under: "(1) *** (2) The State, in the exercise of its governmental power, has of necessity to make laws operating differently on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at is to say, it must not only be based on some qualities or characteristics which are to be found in all the persons grouped together and not in others who are left out but those qualities or characteristics must have a reasonable relation to the object of the legislation. In order to pass the test, two conditions must be fulfilled, namely, (1) that the classification must be founded on an intelligible differentia which distinguishes those that are grouped together from others and (2) that that differentia must have a rational relation to the object sought to be achieved by the Act. (8) The differentia which is the basis of the classification and the object of the Act are distinct things and what is necessary is that there must be a nexus between them. In short, while Article 14 forbids class discrimination by conferring privileges or imposing liabilities upon persons arbitrarily selected out of a large number of other persons similarly situated in relation to the privileges sought to be conferred or the liabilities proposed to be imposed, it does not forbid classification for the purpose of legislation, provided such classification is not arbitrary in the sense abovementio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of classification, what should be regarded as a class for purposes of legislation and in relation to law enacted on a particular subject. There is bound to be some degree of inequality when there is segregation of one class from the other. However, such segregation must be rational and not artificial or evasive. In other words, the classification must not only be based on some qualities or characteristics, which are to be found in all persons grouped together and not in others who are left out but those qualities or characteristics must have a reasonable relation to the object of the legislation. Differentia which is the basis of classification must be sound and must have reasonable relation to the object of the legislation. If the object itself is discriminatory, then explanation that classification is reasonable having rational relation to the object sought to be achieved is immaterial. 88. In Union of India Vs. N.S Rathnam and Sons, reported in (2015) 10 SCC 681, the Apex Court while examining the validity of two excise notifications whereby the role of duly of excise was exempted in respect of iron and steel scrap obtained by breaking the ship subject to the condition that cu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tial against a claim by the State that the infringement of the right was not the object of the provision. It is not the object of the law which impairs the rights of the citizens. Nor is the form of the action taken determinative of the protection that can be claimed. It is the effect of the law upon the fundamental right which calls the courts to step in and remedy the violation. The individual is aggrieved because the law hurts. The loss suffered by the individual is measured by the violation of a protected right. Hence, while assessing whether a law infringes a fundamental right, it is not the intention of the lawmaker that is determinative, but whether the effect or operation of the law infringes fundamental rights. 91. The notification dated 30.12.2019, whereby the Government notified the Assam Industries (Tax Reimbursement for Eligible Units) (Amendment) Scheme, 2020 reflects the policy decision taken by the Government. The Respondents have taken a stand that this is the policy adopted by the Government in view of the financial hardships which has been faced by the Government for various reasons. There is no gain saying that constitutional courts in exercise of the powers of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... adopted or because another method or procedure may be considered to be better and more effective manner of addressing the issue by framing more appropriate economic or social policies. It must be remembered that the courts will not substitute their views on what such policies should be. It is best left to the discretion of the government. 94. Under such circumstances where resiling from a promise earlier made by the Government is pursuant to legislative changes brought about by enacting a new statute and as an natural corollary thereof, the exemption offered to the units or industries like the petitioners came to be restricted to the extent of the collection of tax by way of GST to the extent of the share of the State, such action of the respondents, therefore, cannot be faulted with to come to the conclusion that such change in the position subsequent to promises made is hit by the doctrine of promissory estoppel and that thereby the petitioners have been deprived of any legitimate expectation and/or any accrued or vested rights in favour of the writ petitioners. The challenge made to the legality of the Assam Industries (Tax Reimbursement for eligible Units) Scheme 2020 (Amenmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... overnment has resorted to unreasonable classification by which the petitioners' have been ignored while other similarly situated units have been given due benefit. It is also settled that where a vires of a statute is under challenge, courts must adopt every possibility to arrive at an interpretation that will not render the legislation otiose or unconstitutional. 97. In the context of the present proceedings, what is ultimately seen is that the grievance of the petitioner essentially is that their cases prior to the impugned amendment dated 30.12.2019 was not examined as have been done in the cases of other similarly situated units or industries. The petitioners had filed their applications seeking extension of the period of exemption well prior to the impugned notification. There is no explanation by the respondents as to why the application was not considered and appropriate orders were passed. Such non consideration of the claim of the petitioners has not been justified by the respondent authority while considering the claims of other similarly situated units or industries like that Varun Beverages save and accept that the decision of the government to accept the findings to c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssuing appropriate direction to the respondent authorities to consider the claim the petitioners ventilated through to the applications filed before the authorities in terms of the 2019 scheme as it stood prior to its amendment in 2020 by the impugned Notification. Since it is seen that the challenge made to the amendment on the ground of violation of Article 14 emerge from the non consideration of the representation, the grievance of the petitioner can be appropriately redressed by issuing specific direction to the respondent authorities to consider their claims Under the 2020 Scheme as it stood prior to its amendment by way of the impugned Notification dated 30.12.2019. It is ordered accordingly. While considering such representation, the Respondents will give due consideration to all the attending facts and circumstances as have been done in cases of other similarly situated units or industries. Since this Court has come to a finding that the case of the petitioners deserve consideration by the Respondents in the same manner as other similarly situated units were given their consideration prior to impugned amendment, there is no necessity to interfere with the impugned amendment ..... X X X X Extracts X X X X X X X X Extracts X X X X
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