(1.) THIS is a petition under Article 226 of the Constitution of India seeking a writ, order or direction in the nature of mandamus and for incidental and consequential relief against the respondents, on the ground that the respondents have wrongly withdrawn the rebate in Central Excise duty to which the mini cement plant of the petitioner No. 1 company is entitled.
(2.) THE petitioner No. 1 M/s. Dhar Cement Ltd. (hereinafter referred to as the Company) is a public limited company duly registered with the Registrar of Companies M. P. Gwalior under the Companies Act, 1956 and has its registered office at 50, Sitlamata Bazar, Indore, The Company is carrying on the business of manufacture of cement in its mini cement plant situated at village Karondiya, District Dhar, M. P. The petitioner No. 2 is one of the promoters as well as share holder of the Company and has also been appointed its Managing Director. According to the petitioners, on the representation, assurances and promises made by the respondents, the cement manufactured by the petitioner Company's mini Cement plant is entitled to rebate in the payment of excise duty upto 50 per cent for a period of five years from the commencement of its production. As the mini cement plant has commenced its production from 1-2-1985, the company is entitled to the rebate in excise duty upto January, 1990. However, the respondents have arbitrarily restricted the grant of the said rebate to the period upto 31-3-1984 by a notification issued in May, 1979. Against the said notification all the manufacturers of cement through mini cement plants throughout the country made representations to the respondents. The Government of India made a statement in the Parliament in December, 1981 that the mini cement plants in the country have been exempted from the operation of distribution control under the cement Control Order 1967 and a rebate in the payment of excise duty upto 50 per cent from the date of commencement of the production has been provided to the mini cement plants. By this public statement solemnly made in Parliament by the then Minister of Industry in December, 1981, the respondents expressly disvowed their earlier notification of May, 1979 restricting the grant of the said rebate to the period ending 31-3-1984 and clarified and affirmed their true policy and intent, namely to grant the said rebate for a period of five years from the date of commencement of production.
(3.) HOWEVER, despite the aforesaid assurances made in the Parliament the respondents had declined to grant the rebate to the petitioner Company, upon which in August, 1987 the All India Mini Cement Manufacturers Association, including the petitioners, made a representation to the respondents, but the respondents refused to honour their representations and assurances aforesaid. As a result, the mini cement plants, including the petitioner Company are in dire financial straits affecting their fundamental right to carry on the business. The petitioners have enumerated the circumstances under which normally a period of 5 or 6 years is spent in establishing a mini cement plant. The petitioners have also illustrated the time consumed by some companies in Rajasthan, Maharashtra and Gujarat in establishing the cement plants. On the basis of the aforesaid the petitioners aver that if the exemption sought to be given to the mini cement plant was for a particular date the declaration and assurances of the respondents was meaningless and acting on the assurance if a company takes steps for establishing a mini cement plant normally a time of 5 to 6 years shall be consumed in the completion of the plant itself. Therefore, when on the basis of the assurance a mini cement plant is established and its production starts, the period for exemption itself expires. Therefore, reading the assurance along with the factual position, it is clear that the assurance given by the respondents to give rebate in excise duty to the mini cement plants is for five years from the date of the plant going into production and not five years from the date of the notification. As such, from the doctrine of promissory estoppel the petitioners are entitled to get the rebate in the central excise duty for a period of five years from the date of production.
(4.) IT is a common ground that in the 1970 the Government of India sought to evlove expeditious measures for augmentation of cement production all over the country. One of the important measures considered by the Government of India for achieving a rapid increase in production of cement was the establishment of a large number of mini cement plants. Accordingly, in or about the year 1978, two working groups were set up by the Government of India for making recommendations in this behalf. One of the working groups was set up for considering the incentives to the mini cement plants. One of the recommendations of the said working group was exempting the mini cement plants from the operation of distribution control under the cement Control Order, 1967 and by providing a rebate in the payment of excise duty upto 50 per cent. The Government of India considered the report of the working group and took a decision to encourage expeditious establishment of mini cement plants in the country. Accordingly, a Press Note dated 4-1-1979 was issued by the Government of India in the Ministry of Industry (Department of Industrial Development). Relevant decisions Nos. (iv), (v), (vii) and (ix) taken by the Government of India are as under :
" (iv) The ex-works price of cement produced by the mini cement plants would be the same as the price admissible to new large sized plants viz. Rs. 296/- per tonne. This price will be assured for a period of five years from the date of going into commercial production. (v) Mini cement plants will be allowed a rebate in the payment of excise duty upto 50 per cent for a period of five years. (vii) Mini cement plants set up in hilly and remote areas will be eligible for additional excise duty relief and/or cash subsidy on merits. (ix) Large houses and foreign majority companies will not be allowed to set up mini cement plants. "
(5.) IT is also not disputed that after the issuance of the aforesaid Press Note the petitioner No. 1 Company was promoted and duly registered under the Companies Act on 24-11-1979. The registration was granted to the petitioner Company on 8-8-1980. The land was alloted to the petitioner Company on 8-12-1982 by the State of M. P. The mining leases were granted in favour of the petitioners on 24-9-1981 and 5-11-1981. The Ministry of Industries, Government of India granted the requisite Industrial licence, vide its letter dated 17-6-1983. It is not also controverted that the Government of India issued a notification on 30 th May, 1979 (Annexure-VII) exempting cement falling under Tariff Item 23 of the First Schedule to the Central Excises and Salt Act, 1944 and manufactured in a mini cement plant from some of the duties of excise as is in excess of Rs. 32. 40 per metric tonne. However, the Notification was made enforceable upto and inclusive of 31st day of March, 1984.
(6.) ACCORDING to the petitioners, the said Notification dated 30-5-1979 was in respect of the mini cement plants already established and engaged in commercial production of cement. It was, thus, partly in furtherance of the overall policy and promises contained in the Press Note dated 4-1-1979. However, this Notification did not relate to the mini cement plants to be established in future as the said Press Note had already represented to and assured entrepreneurs that the same incentives would be granted to them for the cement that would be manufactured in their plants, for a period of five years from the date of going into commercial production. Therefore, the petitioners had reasonable and legitimate expectation that the respondents would honour and adhere to the representations, promises and assurances held out in the Press Note, dated 4-1-1979. The petitioners are, therefore, entitled to seek the relief against the respondents on the ground of the representations, promise and assurances made by them, acting on which the petitioners established the present mini cement plant.
(7.) THE petitioners further aver that in 1981 again the Government of India reiterated its position by making a statement in the Parliament on 23-12-1981 through the Minister of/industry as under :
"one of the main conclusion of the working group on incentives of Mini Cement Plants was that the cost of production in the case of mini cement plants works out of about Rs. 50/- to Rs. 60/per tonne over the price per tonne admissible to a new large cement plant. The additional cost is neutralised by exempting mini cement plants from the operation of distribution control order, the Cement Control Order 1967 and by providing a rebate in the payment of excise duty upto 50 per cent for a period of five years from the date of commencement of production. "
A reference has also been made in the petition that acting on the assurances given by the respondents, the Company's prospectus also stated inter alia that the Company is exempted from distribution control under Cement Control Order and eligible for excise benefits at Rs. 35/- per tonne in comparison to large cement plants.
(8.) AS such, after the actual commencement of the production by the petitioner company on 1-2-1985, the petitioner Company made representations to the respondents on 11-10-1986,29-1-1987,16-3-1987,3-6-1987 and 31-7-1987. On 4-8-1987 the petitioners also addressed representations to the Superintendent, Central Excise, Dhar Range, making a prayer for the exemption according to the policy of the Government, but in vain. As the relief sought by the petitioners was not granted to the petitioners, therefore, being aggrieved by the refusal of the respondents to grant exemption/rebate in Central Excise duty, the petitioners have filed this writ petition with a prayer that it be held and declared that the cement manufactured at their mini cement plant is entitled for grant of exemption/rebate in central exicse duty at the rate of 50 per cent from 1-2-1985 to 31-1-1990 and denial of the said exemption/rebate is violative of the fundamental rights of the petitioners under Articles 14 and 19 (1) (g) read with Article 39 (b) and (c) of the Constitution of India and also on the basis of the principles of promissory estoppel. A relief of issuance of a writ of mandamus is also sought directing the respondents to assess and levy the central excise duty on the cement manufactured and cleared in the petitioners' mini cement plant after granting exemption/rebate at the rate of 50 per cent for the period 1-2-1985 to 31-1-1990, and to reimburse and refund the amount of excess duty already paid and collected with interest at 18 per cent per annum and further to accept the revised classification list submitted by the petitioners under cover of letter, dated 4-8-1987 and to recover central excise duty from the petitioners only after giving them the benefit of the exemption/rebate as claimed by the petitioners.
(9.) THE respondents have resisted the petition mainly on the ground that the Government of India has issued Notification No. 194 of 79 dated 30th May, 1979 which entitles only those mini cement plants for rebate which had started production from the date of the notification dated 30-5-1979 and the rebate under the notification could be given only upto 31-3-1984. As the petitioners had started their production from 1-2-1985, therefore, the petitioners are not entitled for the benefit mentioned in the notification. The petitioners now actually want to avail the benefit of rebate in the central excise duty on the basis of certain persumptions and assumptions. The petitioners did not correctly interpret the notification exempting the mini cement plants from the payment of excise duty upto 50 per cent for a period of five years. In the Notification itself it has been clearly laid down that upto that date the rebate shall be permissible. In the Press Note also it was clearly stated that the rebate shall be allowed in the payment of Central Excise duty upto 50 per cent for a period of 5 years. Now, the petitioners want to add the words 'from the date of commencement of the production' which neither appeared in the Press Note nor in the Notification allowing the rebate to the mini cement plants. Regarding the speech of the Minister as stated by the petitioners it has been averred that it is not a subordinate or delegated legislation by which exemption can be granted. An exemption/rebate can be granted only by Notification.
(10.) THE petitioner Company had applied for the issuance of the Central Excise Licence on 18-10-1984 and the said licence was issued to the petitioner on 29-10-1984. As such, on the date of the issuance of the licence, the validity of the Notification No. 194/79 had already expired. Therefore, there was no question of allowing any rebate to the petitioner Company. The concession and rebate proposed in the Press Note was only a proposal and the speech of the Honourable Minister in the Lok Sabha was also on the same line. Therefore, unless the Government issued a notification in the gazette for the concession or rebate as claimed by the petitioners, the petitioners are not entitled to any exemption or rebate.
(11.) IT has further been averred that the concession for which the petitioners applied for is not under proper authority i. e. the party's claim for concession was not based on any notification entitling the petitioners to claim the rebate. As stated earlier, Notification No. 194/79 dated 30th may, 1979 was not in force on the date of the application for rebate made by the petitioners. Therefore, the petitioners were directed to resubmit their application/declaration, showing the existence of a Notification entitling them to the said rebate. The order of the Superintendent Central Excise is a reasoned order which is appealable under Section 35 of the Central Excise Act. The Central Excise Act is a self contained Code and has a hierarchy of authorities where the appeal lies. The petitioners have not invoked the provisions of the Act, therefore, the petition is premature. Furthermore, the production of the petitioners is also more than the declared capacity of 200 M. T. per day and hence it is not a mini cement plant. Therefore, the petition of the petitioners may be dismissed with costs.
(12.) BY way of rejoinder the petitioners have averred that the licensed capacity of the petitioners plant is 66000 metric tonnes per annum and thus the petitioners plant is a mini cement plant. It has been certified as mini cement plant by the Cement Research Institute of India. The Government of India has itself decided to re-endorse the licenced capacity of the existing mini cement plants for production upto 300 tonnes per day and later on upto 600 tonnes per day. Therefore, also the petitioner No. 1 is a mini cement plant entitled to exemption.
(13.) SHRI P. P. Rao, learned Counsel for the petitioners ably assisted by Shri M. S. Ganesh, has built the castle of his arguments by vehemently urging that the doctrine of promissory estoppel is fully applicable to the facts of the instant case and, therefore, the Government is bound by its commitment as made in the Press Note declaring incentives to the mini cement plants and reiterating the same policy in the Parliament in reply to an unstarred question. Therefore, the Union of India being bound by the promise which it had made through the Press Note and in the Parliament leading the petitioners to spend huge amounts on the installation of their mini plant producing cement. As such, the petitioners having altered their position on the promise made by Union of India, now the Union of India cannot be heard to say that no such policy was formulated to grant rebate in the tax from the date of the production in the plant for a period of five years or that in view of the Notification No. 194 of 79 dated 30th May, 1979 the petitioners are not entitled for any rebate after 31-3-1984.
(14.) ON the other hand Shri Nema, learned standing counsel for the Union of India, vehemently argued that the policy formulated by the Government of India nowhere laid down that the rebate in the tax shall be available to the mini cement plants for a period of five years from the date of production. The Press Note clearly says that the concession in the tax as an incentive to the mini cement plants shall be available only for a period of five years. It does not say that it shall be available for a period of five years from the date the unit goes into production of cement through a mini cement plant. The policy formulated by the Union of India was implemented by the issuance of a Notification granting rebate in the tax and being fully aware of the policy of the Government and the notification issued under the relevant Act giving rebate to the industries for a period of five years only, the petitioners started working in the direction of establishing a mini cement plant. Therefore, they cannot say that they have altered their position i. e. installed the mini cement plant in question on the basis of any assurance given by the Union of India. The Notification issued under Rule 8 (i) of the central Excise Rules framed under the Central Excises and Salt Act, 1944, in unambiguous terms says that the rebate shall be available till March, 1984. Therefore, being fully aware of the stand of the Government of India the mini plant has been set up by the petitioners. Now, therefore, they cannot claim a rebate for a period of five years from the date of the production of cement invoking the doctrine of promissory estoppel. The doctrine of promissory estoppel is not applicable to the facts of the instant case at all. It has also been vehemently urged that the plant set up by the petitioners does not fall within the definition of a 'mini cement plant' because the production in the plant of the petitioners is more than the maximum production target in a mini cement plant.
(15.) IN view of the aforesaid contentions of the learned counsel for the parties, the main point which arises for determination in the instant case is whether the petitioners are entitled to the relief claimed by them on the basis of the doctrine of promissory estoppel. As regards the promissory estoppel, both the learned counsel have relied on various decisions of the Supreme court, wherein in the circumstances of the respective cases, the doctrine was made applicable. In the case of The Union of India and Ors. v. Anglo afghan Agencies etc. [air 1968 SC 718], the Supreme court while applying the doctrine of promissory estoppel was held as under :
"it could not be assumed merely because the Import Trade Policy was general in terms and dealt with the grant of licences for import of goods and related matters, that it was statutory in character. The Imports and Exports (Control) Act, 1947, authorised the Central Government to make provisions prohibiting, restricting or otherwise controlling import, export, carriage etc. of the goods and by the Imports (Control) Order, 1955, dated December 7, 1955, and by the provisions which were sought to be repealed, restrictions were already imposed. The order was clearly legislative in character. The Import Trade Policy was evolved to facilitate the mechanism of the Act and the orders issued thereunder. Even granting that the Import Trade Policy notifications were issued in exercise of the power under Section 3 of the Imports and Exports (Control) Act, 1947, the order authorised the making of executive or administrative instructions as well as legislative directions. It is not the form of the order, the method of its publication or the source of its authority, but its substance, which determines its true character. Granting that it was executive in character the Courts have the power in appropriate cases to compel performance of the obligations imposed by the Schemes upon the departmental authorities. It could not be said that the executive necessity releases the Government from honouring its solemn promises relyng on which citizens have acted to their determinant. Under the Constitutional set up, no person may be deprived of his right or liberty except in due course of and by authority of law; if a member of the executive seeks to deprive a citizen of his right or liberty otherwise than in exercise of power derived from the law-common or statute-the Courts will be competent to, and indeed would be bound to protect the rights of the aggrieved citizen. Even assuming that the provisions relating to the issue of Trade Notices offering inducement to the prospective exporters were in character executive, the Union Government and its officers were not entitled at their mere whim to ignore the promises made by the Government. It could not be said that the Textile Commissioner was the sole judge of the quantum of import licence to be granted to an exporter, and that the Courts were powerless to grant relief, if the promised import licence was not given to an exporter who had acted to his prejudice relying upon the representation. Hence, the persons aggrieved because of the failure to carry out the terms of the schemes were entitled to seek resort to the Court and claim that the obligation imposed upon the Textile Commissioner by the Scheme be ordered to be carried out. "
(16.) IN the aforesaid case there was publication of a Scheme by the Textile Commissioner of the Union of India providing incentives to the exporters of woollen goods and in case of exports to Afghanistan, the exporters were invited to get themselves registered with the Textile Commissioner for exporting woollen goods. In the said scheme it was also represented that the exporters will be entitled to import raw materials of the total amount equal to 100 per cent of the f. o. b. value of the exports. A power was also reserved by the Textile Commissioner that if there be an attempt to secure an import certificate in excess of the true value of the goods exported, the import certificate shall be reduced to that extent. The Court, after ascertaining the character of the Scheme so published, held that the order of the Textile Commissioner was passed under the Imports (Control) Order 1955 dated December 7, 1955 and the policy was evolved to facilitate the mechanism of the Act and the orders were thus issued thereunder. Even if the order may be treated as an executive order, then also the Courts have power, in appropriate cases, to compel performance of the obligations imposed by the Scheme upon the Departmental Authorities. If a citizen has acted to his detriment, relying on a Government policy, then the Government has to honour its commitment. In such a case the Court is bound to protect the rights of the aggrieved citizen. The Union Government and its officers are not entitled merely on their whims to ignore the promises made by the Government. If the executive authority dealing with a matter in relation of which a promise is made by the Government in a manner which is consonent with the basic concept of justice and fair play and if the executive does not act in accordance with the basic concept and justice and fair play, then the proceedings of the executive are open to scrutiny and rectification by the Courts.
(17.) IN the case of Motilal Padampat Sugar Mills Co. Ltd. v. The State of Uttar Pradesh and Ors. [air 1979 SC, 621] the Supreme Court has very elaborately discussed the doctrine of promissory estoppel in the following words :
"doctrine of promissory estoppel has been variously called 'promissory estoppel', 'requisite estoppel', 'quashi estoppel' and 'new estoppel'. It 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. The true principle of promissory estoppel seems to be that where one party has by his words or conduct made to the other a clear and unequivocal promise which is intended to create legal relations or effect a legal relationship to arise in the future, knowing or intending that it would be acted upon by the other party, the promise would be binding on the party making it and he would not be entitled to go back upon it, if it would be inequitable to allow him to do so having regard to thedealings which have taken place between the parties, and this would be so irrespective of whether there is any pre-existing relationship between the parties or not. The doctrine of promissory estoppel need not be inhibited by the same limitation as estoppel in the strict sense of the term. It is an equitable principle evolved by the courts for doing justice and there is no reason why it should be given only a limited application by way of defence. There is no reason in logic or principle why promissory estoppel should also not be available as a cause of action, if necessary to satisfy the equity. It is not necessary, in order to attract the applicability of the doctrine of promissory estoppel, that the promises, acting in reliance on the promise, should suffer any detriment. What is necessary is only that the promise should have altered his position in reliance on the promise. But if by detriment we mean injustice to the promisee which would result if the promisor were to recede from his promise, then detriment would certainly come in as a necessary ingredient. The detriment in such a case is not some prejudice suffered by the promisee by acting on the promise, but the prejudice which would be caused to the promisee, if the promiser were allowed to go back on the promise. If this is the kind of detriment contemplated, it would necessarily be present in every case of promissory estoppel, because it is on account of such detriment which the promisee would suffer if the promiser were to act differently from his promise, that the Court would consider it inequitable to allow the promiser to go back upon his promise. In India not only has the doctrine of promissory estoppel been adopted in its fullness but it has been recognized as affording a cause of action to the person-to whom the promise is made. The requirement of consideration has not been allowed to stand in the way of enforcement of such promise. The doctrine of promissory estoppel has also been applied against the Government and the defence based on executive necessity has been categorically negatived. Where the Government makes a promise knowing or intending that it would be acted on by the promisee and, in fact, the promisee acting in reliance on it, alters his position, the Government would be held bound by the promise and the promise would be enforceable against the Government at the instance of the promisee, notwithstanding that there is consideration for the promise and the promise is not recorded in the form of a formal contract as required by Article 299 of the Constitution. It is elementary that in a republic governed by the rule of law, no one, howsoever high or low, is above the law. Every one is subject to the law as fully and completely as any other and the Government is no exception. It is indeed the pride of Constitutional democracy and rule of law that the Government stands on the same footing as a private individual so far as the obligation of the law is concerned : the former is equally bound as the latter. The Government cannot claim to be immune from the applicability of the rule of promissory estoppel and repudiate a promise made by it on the ground that such promise may fetter its future executive action. If the Government does not want its freedom of executive action to be hampered or restricted the Government need not make a promise knowing or intending that it would be acted on by the promisee and the promisee would alter his position relying upon it. But if the Government makes such a promise and the promisee acts in reliance upon it and alters his position, there is no reason why theGovernment should not be compelled to make good such promise like any other private individual. But 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 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. The doctrine of promissory estoppel would be displaced in such a case because, on the facts, comity 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 which have transpired since the making of the promise, public interest would be prejudiced if the Government were required to carry out the promise, the court would have to balance the public interest in the Government carrying out a promise made to a citizen which has induced the citizen to act upon it and alter his position and the public interest likely to suffer if the promise were required to be carried out by the Government and determine which way the equity lies. It would not be enough for the Government just to say that public interest requires that the Government should not be compelled to carry out the promise or that the public interest would suffer if the Government were required to honour it. The Government cannot claim to be exempt from the liability to carry out the promise on some indefinite and undisclosed ground of necessity or expediency, nor can the Government claim to be the sole judge of its liability and repudiate it on an ex parte appraisement of the circumstances. If the Government wants to resist the liability, it will have to disclose to the Court what are the subsequent events on account of which the Government claims to be exempt from the liability and it would be for the Court to decide whether those events are such as to render it inequitable to enforce the liability against the Government. Mere claim of change of policy would not be sufficient to exonerate the Government from the liability, the Government would have to show what precisely is the changed policy and also its reason and justification so that the Court can judge for itself which way the public interest lies and what the equity of the case demands. 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. The Court would not act on the mere ipse dixit of the Government, for it is the Court which has to decide and not the Government whether the Government should be held exempt from liability. This is the essence of the rule of law. "
(18.) IN the aforementioned case, the Supreme Court has followed the decision of the Court in Anglo Afghan Agencies case (supra) and has also discussed elaborately the circumstances under which the Government may set up a plea that the equitable principle of promissory estoppel be not raised against it. The court has also enumerated the circumstances under which the Government can plead that it will be inequitable to hold the Government to the promise made by it. The Court has emphasised that in such a case the Government has to show that the public interest in the Government acting otherwise than the promise made by it is so overwhelming that it would be inequitable to hold the Government bound by the promise and in that event the Court would insist on a highly rigorous standard of proof in the discharge of that burden. It has also been held that the doctrine of promissory estoppel cannot be applied in teeth of an obligation or liability imposed by law and the doctrine cannot be invoked to compel the Government or even a private party to do an act prohibited by law. There can also be no promissory estoppel against the exercise of legislative power. In the aforementioned case, the decision of the Government of U. P. was published in a newspaper wherein an exemption from sales tax for a period of three years under Section 4a of the U. P. Sales Tax Act was to be given to all new industrial units in the State with a view to enabling them to come to a firm footing in developing stage. The appellant in that case on the basis of the announcement addressed a letter to the Director of Industries that in view of the Sales Tax exemption he intended to set up a plant for manufacture of Vanaspati and to further confirm whether in the event of setting up of such a unit they will be entitled to the sales tax exemption for a period of three years from the date it commences Industries replied by his letter dated 14th October, 1968 confirming that there will be no sales tax for three years on the finished product of the Vanaspati factory of the appellant from the date it gets power connection for commencing production. But the appellant to reconfirm the factual position again addressed a letter to the Chief Secretary of the Government, and the Chief Secretary of the U. P. Government confirmed that the tax exemption shall be available for a period of three years from the date of the production. In the aforesaid circumstances, it was held that from the letters of the Director of Industries and the Chief Secretary of the U. P. Government it was clearly represented to the appellant on behalf of the Government that it shall be entitled for the sales tax exemption for a period of three years from the date of production and acting upon that representation the appellant borrowed money from varous financial institutions and set up a Vanaspati factory at Kanpur. Therefore, it was held that the Government was bound to carry out the representation and exempt the appellant from sales tax for a period of three years from the date of production, because the Government was bound on the principle of promissory estoppel to make good the representation made by it.
(19.) BEFORE the judgment in the M/s. M. P. Sugar Factory case (supra) was given and after the decision in the Anglo Afghan Agencies case (supra) a Bench of four Judges of the Supreme Court in the case of Excise Commissioner U. P. , Allahabad etc. . Ram Kumar etc. (AIR 1976 SC, 2237) held that there can be no question of estoppel against the Government in exercise of its legislative, sovereign or executive powers. Hence the fact that sales of country liquor had been exempted from sales tax at the time of auction of licences to sell such liquor by retail, could not operate as an estoppel against the State Government and preclude it from subjecting the sales to tax if it felt impelled to do so in the interest of the Revenues of the State which are required for execution of the plans designed to meet the ever increasing pressing needs of the developing society. The Government cannot divest itself of the right incidental to its office by conduct which in the case of a private person would amount to estoppel.
(20.) THE Supreme Court, however, in M. P. Sugar Mills's case (supra) has considered the judgment of the Supreme Court in Ram Kumar's case (supra) in paras 29, 30 and 31 of the decision and has held that the observation made by the court that there cannot be any estoppel against the Government in the exercise of its legislative, sovereign and executive powers, was clearly in the nature of obiter and it cannot prevail as against the averment of law laid down in the Indo-Afghan Agencies's case. It was further held that from paragraph 14 of the judgment it was clear that the court did not intend to lay down any proposition of law different from that enunciated in the Indo-Afghan Agencies case, because the aforesaid decision was approved. However, on the facts of the case before the court it was distinguished. The Court also made reference to the cases of Radhakrishna Agarwal v. State of Bihar (AIR 1977 SC, 1496) and the case of Century Spg. and Mfg. Co. 's case (AIR 1971 SC, 1021) wherein it was held that the public bodies of the State are as much bound as private individuals are, to carry out obligations incurred by them because parties seeking to bind the authorities have altered their position to their disadvantage or have acted to their detriment on the strength of the representations made by these authorities.
(21.) THEREAFTER the Supreme Court had an occasion to consider the doctrine of promissory estoppel in the case of Jit Ram Shiv Kumar and Ors. v. The State of Haryana and Anr. (AIR 1980 SC 1285) wherein it was held that the doctrine of promissory estoppel is not available against the exercise of legislative functions of the State and it cannot be invoked for preventing the Government from discharging its functions under the law and when the Officer of the Government acts outside the scope of the Authority, the plea of promissory estoppel is not available to one who has acted upon these unauthorised promise. But when the officer acts within the scope of the authority under a scheme and makes a representation acting on which a citizen puts himself in a disadvantageous position, the Court is entitled to require the officer to act according to the scheme and the agreement or representation. But the officer would be justified in changing the terms of the agreement to the prejudice of the other party on special considerations such as difficult foreign exchange position or other matters which have a bearing on general interest of the State. As such, it would be open to the authority to plead and prove that there were special considerations which necessitated his not being able to comply with his obligations in public interest.
(22.) IN another case of Bhim Singh v. State of Haryana (AIR 1980 SC, 768) it was held that in the field of purely executive functions of the State, the doctrine of promissory estoppel is applicable.
(23.) IN the year 1986, in the case of Express Newspapers Pvt. Ltd. v. Union of India (AIR 1986 SC 872), the Supreme Court has reiterated that the principle of promissory estoppel can be invoked against the Government. In that case it was held as under :
"the Express Newspapers Pvt. Ltd. having acted upon the grant of permission by the then Minister of Works and Housing and constructed the new Express Building with an increased FAR of 360 and a double basement in conformity with the permission granted by the lessor i. e. the Union of India, Ministry of Works and Housing with the concurrence of the Vice Chairman, Delhi Development Authority on the amalgamation of plots Nos. 9 and 10 as ordered by the Vice Chairman by his order dated Oct. 21,1970 as on special appeal as envisaged in the Master Plan having been directed, the lessor is clearly precluded from contending that the order of the Minister was illegal, improper or invalid by application of the doctrine of promissory estoppel. "
(24.) IN the same year in Union of India v. Godfrey Philips India Ltd. [air 1986 SC 806] it was again held that the doctrine of promissory estoppel is applicable against the Government in the exercise of its governmental, public or executive functions and the doctrine of executive necessity or freedom of future executive action cannot be invoked to defeat the applicability of the doctrine of promissory estoppel. However, there can be no promissory estoppel against the legislature in the exercise of its legislative functions nor can the Government and the public authority be debarred by promissory estoppel from enforcing a statutory prohibition. Similarly, the Govt. cannot be compelled to carry out a representation or promise which is contrary to law or which was outside the authority or power of the officer of the Government or of the public authority to make. The doctrine of promissory estoppel can be pressed into service only if the equity requires and the Government is always free to show that it will be inequitable and against the public interest to invoke the doctrine of promissory estoppel directing the Government to fulfill a promise or representation made by the Government or public authority.
(25.) IN the case of Usha Martin Industries Ltd. v. Addl. Supdt. of Commercial Taxes [1984 (55) Sales Tax Cases, 380] the State Government of Bihar resolved to offer incentives to new large and medium industries for 10 years from date of starting of production. However, the gazette notification gave incentives only for a period of five years. Therefore, the petitioner wrote to the Director of Industries to confirm whether it was entitled to incentives for 10 years and the Director confirmed that the petitioner was entitled to incentives for 10 years. On the basis of that representation, the petitioner started production. But he was not given the exemption by the Government according to the resolution of the Government. Therefore, he filed a writ petition. During the pendency of the writ petition also it was confirmed by the Director of Industries that the petitioner was entitled to exemption in terms of the resolution of the Government. A Division Bench of the Patna High Court, in the circumstances held that as the Director of Industries assured the petitioner that it would get incentive according to the Government resolution dated 29th September, 1973 and even during the pendency of the petition, the Director of Industries informed the petitioner that it was entitled to the incentives in terms of the resolution of the Government, therefore, the Government was bound to give the necessary exemption under the Sales Tax in accordance with the policy of the Government. The State of Bihar aggrieved by the aforesaid judgment appealed to the Supreme Court. The Supreme Court, in the case of State of Bihar and Anr. v. Usha Martin Industries Ltd. [1987 (65) STC 430] confirmed the decision of the Patna High Court and held that in the facts and circumstances of the case the Sales Tax Authorities were bound to give exemption on the basis of the resolution and the respondent was entitled to the incentive in terms of the resolution.
(26.) IN a recent judgment in Assistant Commission of Commercial Taxes (Asstt.)
Dharwar and Ors. v. Dharmendra Trading Co. (AIR 1988 SC 1247) the Supreme Court has held that the doctrine of promissory estoppel must be regarded as good law in view of the decision of the court in the State of Bihar v. Usha Martin Industries Ltd. (supra).
(27.) IN the case decided by the Full Bench of the Delhi High Court in Bombay Conductors and Electricals v. Government of India and Ors. [1986 (23) ELT 87] it has been held, that the object of promissory estoppel is to enforce contractual obligations. But taxation is not contract. It is an expression of unilateral will of the legislature. Tax is an exaction by the State in the exercise of the soverign powers. There are no promises. Nor there are contractual obligations. If there are promises, they are subject to the overriding public interest. Taxation is the very antithesis of contract. In the aforesaid case the Delhi High Court has considered the cases of M. P. Sugar Mills v. State of U. P. (supra) and Jit Ram Shiv Kumar v. State of Haryana (supra) and other cases on promissory estoppel. But we are not inclined to discuss this decision elaborately in view of the fact that the aforesaid decisions of the Supreme Court have taken a consistent view that the doctrine of promissory estoppel can be invoked in those cases where the Government makes unequivocal promise to the citizens and acting on that promise the citizens altered their position to their detriment and the Government is not able to plead and prove that the Government resiled from the promise in the public interest and the public interest was of such a nature where the individual interest of a citizen can be subordinated to the public interest, then the court shall direct the Government to act in accordance with the promise. However, the doctrine cannot be invoked in the legislative functions or for compelling the State to do any act which is prohibited by law or which is contrary to the statutory obligation of the State.
(28.) SHRI Rao, learned Counsel for the petitioners has placed heavy reliance on the judgment of the Supreme Court in M. P. Sugar Mill's case and Ushal Martin Industries's case. According to Shri Rao in those two cases even though in the policy intially declared by the Government there was no mention of the words 'from the date of production', still the court came to a conclusion that the petitioners were entitled to get the benefit for the number of years as declared in the policy from the date of going into production. After going through the aforesaid judgments and having given our anxious considerations, we are unable to agree with the learned counsel for the simple reason that in Usha Martin's case the petitioners had written to the Director of Industries asking whether they are entitled to the exemption for 10 years and the Director of Industries confirmed that they shall be entitled to exemption for a period of 10 years from the date of production. Even during the pendency of the petition the Director, of Industries had reconfirmed that the petitioners shall be entitled to incentive for a period of 10 years. Similarly in the M. P. Sugar Mill's case, after the publication of a news item in the National Herald that the U. P. Government had decided to give exemption from sales tax for a period of 3 years to the new industrial units, the appellant in that case addressed a letter to the Director of Industries making express query whether it was entitled to the tax concession for three years from the date of the commencement of the production and the query was answered in the affirmative. The appellant being not satisfied with the assurance of the Director of Industries again addressed a letter to the Chief Secretary to the State who also affirmed that the incentive shall be available to the petitioner-appellant for a period of three years, from the date of going into production. As such, in both these cases despite there being an omission of the words 'from the date of production', the authorities concerned who were entitled to grant exemption on behalf of the Government had confirmed to the petitioners that the exemption shall be available to them from the date of production. Therefore, in both these cases the promise to give incentive for the specified period from the date of the commencement of the production, was in unambiguous terms and relying on the representation made by the Officers of the Government, the petitioners. Holding that the Government is bound by the promise and representations made by the officers, who had an authority to do so, and, therefore, the doctrine of promissory estoppel was invoked in those cases.
(29.) HOWEVER, in the instant case we find that the Press Note dated 4th January, 1979 issued by the Government of India, Ministry of Industry, in clause 5, clearly says that mini cement plants will be allowed rebate in the payment of excise duty upto 50 per cent for a period of 5 years. It does not say that the rebate in the payment of the duty shall be for a period of five years from the date of the production in the mini cement plants. The policy was formulated by the Govt. of India and for implementation of that policy a notification by the Government of India, Ministry of Finance (Department of Revenue) was issued on 30th May, 1979. The Notification reads as under :
GOVERNMENT OF INDIA Ministry of Finance (Department of Revenue) = x = NOTIFICATION Central Excise G. S. R. (E) In exercise of the powers conferred by sub-rule (i) of Rule 8 of the Central Excise Rules, 1944, the Central Government hereby exempts cement, falling under item No. 23 of the First Schedule to the Central Excises and Salt Act, 1944 (1 of 1944) and manufactured in a mini cement plant from so much of the duty of excise as in excess of rupees thirty two and paise fifty per metric tonne.
2. Nothing contained in this notification shall apply to : (i) Cement manufactured by a company which is registered or registerable under Section 26 of the Monopolies and Restrictive Trade Practices Act, 1969 (54 of 1969) or to which Section 29 of the Foreign Exchange Regulation Act, 1973 (46 of 1973) is applicable; (ii) Cement manufactured in a unit Operated by a large cement plant either as a separate plant or as a part of the main plaint; (iii) White cement or other varieties of cement, the price of which is not controlled by Cement Control Order, 1967, as amended from time to time; (iv) Cement commonly known as (a) Sagol obtained by heating lime stone and burnt coal; and (b) ashmoh obtained by fine grinding of paddy husk ash and hydrated lime with an additive; Explanation :- In this notification. (a) The expression 'mini cement plant' means a cement plant consisting of one or more kilns and having a total installed capacity not exceeding 200 tonnes per day. (b) The expression 'large cement plant' means a cement plant consisting of one or more kilns and having a total licensed or registered capacity exceeding 300 (sic) per day. 3. This notification shall be in force upto and inclusive of 31st day of March, 1984. (194/79) Sd/- S. N. Pusi Under Secretary to the Govt. of India. "
By reading clause 3 of the Notification it is clear that the Notification was to remain in force upto and inclusive of 31st day of March, 1984. As such, the policy formulated and published in the Press Note dated 4th January, 1979 was implemented by the Government of India by issuance of the Notification dated 30th May, 1979. The policy formulated by the Government was clearly to grant incentives to the new mini plants of a rebate in the payment of excise duty upto 50 per cent for a period of 5 years and the said policy was implemented by the Union of India by issuance of the notification dated 30th May, 1979 wherein it was clearly stated that the incentive shall be available only upto 31st day of March, 1984. As such, there is neither any ambiguity nor any promise contained in either the Press Note or the notification to the effect that tax rebate shall be available to the mini cement plants for a period of five years from the date of their production, irrespective of any time limit.
(30.) IT has next been contended by Shri P. P. Rao that the Press Note dated 4th January, 1979 issued by the Government of India, Ministry of Industry, should be read along with the reply of the Honourable Minister for Industries in the Lok Sabha given on 23-12-1981 in reply to an unstarred question, wherein the Minister has categorically said that the additional cost incurred by the mini cement plants is neutralised by exempting the mini cement plants from the operation of Distribution Control Order, the Cement Control Order, 1967 and by providing a rebate in the payment of excise duty upto 50 per cent for a period of five years from the date of commencement of production. According to Shri Rao, if both the Press Note and the statement of the Honourable Minister for Industries in the Parliament are read together, they will lead to only one inference that the rebate in excise duty upto 50 per cent for a period of five years was from the date of commencement of production and not for a particular time.
(31.) IT is true that the words, 'from the date of commencement of production' have been added in relation to the rebate in the payment of excise duty upto 50 per cent for a period of 5 years in the statement of the Minister given in the Lok Sabha. But, in our opinion, the statement so made in the Parliament by the Minister would not in any way help the case of the petitioners. As discussed earlier, the Press Note issued by the Government of India containing the policy dec
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ision of the Government in respect of the mini cement plants was in clear and unequivocal terms. It had announced an incentive of a relief of 50 per cent rebate in the excise duty for a period of five years and that decision of the Government was translated into action by issuance of a notification under sub-rule (i) of Rule 8 of the Central Excise Rules, 1944 whereby a rebate was granted to the mini cement plants upto 31-3-1984. Thereafter no further notification was issued to extend the benefit of the mini cement plants beyond this period or to give a general rebate in the excise duty for a period of 5 years from the date of the production of cement in any mini cement plant. Therefore, if in the statement of the Minister in the Parliament any thing is stated contrary to the existing position, it cannot be said that the statement contained a promise divorced from the factual and legal position as it existed on the date of the statement in the Parliament i. e. 23-12-1981. The aforesaid statement cannot also be pressed into service for interpreting the Press Note which is in unambiguous terms. The statement does not contain any promise for the future to give the rebate in the excise duty upto 50 per cent for a period of five years from the date of commencement of production. On the contrary, the statement simply states the incentives which have been provided to the mini cement plants and the incentives were for a period of five years from the date of notification. Therefore, if the statement in the Parliament is loosely worded it would not be construed to mean that the Minister has put an interpretation to the decision of the Government, published in the Press Note dated 4th January, 1979. Therefore, the principle of promissory estoppel cannot be invoked by the statement made in the Parliament. Even in a case where there may be a declaration of the policy in the Parliament, the statement made in the Parliament cannot form basis for raising an equity in favour of a person who merely on the basis of a statement of the Minister in the Parliament has acted upon it and altered his position to his detriment. If a statement made in the Parliament may be factually incorrect or some consequences arise out of that statement, then the Parliament has to deal with that matter exclusively. If there may be a case of breach of privilege, then the Parliamentary Committee for the breach of privilege is the only body to effectively probe into the matter and make a recommendation to the Parliament. The decision of the Parliament in that matter shall be final. Hence, the statement of the Honourable Minister for Industry in the Parliament can also not be pressed into service for holding that a promise was made in unequivocal terms to the petitioners that a rebate in the payment of excise duty to the extent of 50 per cent shall be available to the petitioners for a period of five years from the date of the production of cement in their mini cement plant. (32.) DURING the course of the arguments, we repeatedly asked the learned Counsel appearing on behalf of the petitioners as to whether after the issuance of the Press Note and the Notification under sub-rule (i) of Rule 8 of the Central Excise Rules, did the petitioners make any enquiry from the concerned authorities pertaining to eligibility of their unit for rebate in the excise duty to the extent of 50 per cent even beyond the period of 31-3-1984? The learned Counsel has not been able to place before us any material to show that before the installation of the plant the petitioners made any attempt to approach the concerned authorities to find out whether they were eligible for the concession in the excise duty even after the expiry of the date contained in the notification. It appears that the petitioners all though have been labouring under the idea that they will get the benefit of rebate for a period of five years from the date of production and that is why they represented this fact in their prospectus and to other financial institutions. But their interpretation of the Press Note or the Notification would not in any way change the factual and legal position as it existed. (33.) IN all the above referred cases wherein the Supreme Court had invoked the doctrine of promissory estoppel, there was a definite promise and representation made by the persons authorised to take a decision to the petitioeners that they shall be entitled to the benefits enumerated in the policy and acting on those representation the petitioners in those cases had altered their position to their detriment. In these circumstances the Supreme Court was of the view that the equity should be raised in favour of such petitioners and on the basis of the doctrine of promissory estoppel the relief was granted to them. However, in the instant case, it appears, that the petitioners have made no attempt to ascertain the position about the tax relief despite the Press Note and the Notification under sub-rule (i) of Rule 8 of the Central Excise Rules clearly limiting the benefit of the tax exemption upto a particular period. Therefore, it is not a fit case wherein any relief can be granted to the petitioners by invoking the doctrine of promissory estoppel in their favour. (34.) IN view of the fact that we have arrived at a conclusion that the petitioners are not entitled to claim any relief by invoking the doctrine of promissory estoppel in their favour, we need not go into the question whether the plant in question is a mini cement plant or not. (35.) IN the result we find no force in this petition, which is accordingly dismissed. However, in the circumstances of the case there shall be no order as to costs. The amount of security deposit, if any, on vertification shall be returned to the petitioners.