Curtailment of incentives under Package Scheme of Incentives due to introduction of GST
Facts: Assessee-company deals in manufacture of Vegetable Oil and Allied Oil products. Fired by the enthusiasm created by the Government scheme intending to have industries at disperse places all over Maharashtra under ‘New Package Scheme of Incentives, 1993’, it set up a factory unit at village Dabha, Tahil Nandgaon Khandeshwar, District Amravati with the hope that the incentives offered under the Incentive Scheme would offset the increased cost of production and the assessee would be able to compete with other similar industries in marketing its products at affordable rates.
Under the Incentive Scheme, monetary and other incentives in the nature of tax subsidy or tax exemption at the rates prescribed in the scheme and other benefits were given.
The document of Incentive Scheme required that the Eligibility Certificate be issued by the Implementing Agency and invariably the Implementing Agency would be the concerned District Industries Centre headed by an officer of the rank of General Manager.
The assessee made an application for issuance of the Eligibility Certificate which was issued on 20th March 2017 and it was valid for nine years. Under the Incentive Scheme, the date from which the Eligibility Certificate shall take effect for availing of the sales tax incentives was to be specified by the Commissioner of Sales Tax. The Commissioner prescribed the effective date, but, while doing so, curtailed the validity period by about three years by his order passed on 10th August 2017. The assessee was aggrieved. In its writ petition, the assessee has also raised the issue of tax policy change reducing the benefits under the Scheme which violated the principle of promissory estoppel.
The Hon’ble High Court inter alia held as under
The doctrine of promissory estoppel clearly apply here and would forbid the Government from taking any decision of not completely implementing the Incentive Scheme or reducing the incentives to the detriment of the Petitioner and to that extent the decision would have to be held as illegal. Once a promise has been solemnly given with an intention that it would be acted upon and which has been indeed acted upon and liabilities suffered by the promisee, the State cannot be permitted to backtrack on the promise and change its position so as to cause loss to the promisee. There can be an exception to the application of the principle of promissory estoppel, but, the facts and circumstances necessary for exempting the Government from its liability do not exist on record and the reply of the State also does not convincingly point out any such exceptional facts and circumstances warranting toning down or withdrawing of its promise, much to disadvantage of the Petitioner.
If the State has to reverse its promise, it must demonstrate specifically the facts and circumstances showing that enforcing of the promise against it would be highly iniquitous. The Government cannot change its stand merely upon its ipse dixit. There must be in existence justifiable facts and circumstances to change the decision or otherwise the State must give full effect to the decision, which in the present case is to be found in the Incentive Scheme. This is essence of the rule of law.
The Respondents are directed to implement the Incentive Scheme as amended up-to-date with a discretion to modify the scheme so as to bring it in line with the new tax structure under the General Sales Tax scheme, but without reducing or restricting the benefits as conferred upon the Petitioner under the Incentive Scheme within a period of eight weeks from the date of receipt of this Judgment.
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