LexAMRIT BANASPATI CO. LTD. AND ANR. versus STATE OF PUNJAB AND ANR.
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AMRIT BANASPATI CO. LTD. AND ANR. A v. STATE OF PUNJAB AND ANR. MARCH 5, 1992 [R. M. SAHAI AND S. MOHAN, JJ.] B ~ Promissory Estoppe~ature extent and applicability of-Promissory estoppel cannot be enforced against Statute or public policy. Stat~Announcement of policy of incentives and concession including c refund of sales tax to persons. establishing large scale industries in focal point-Establishment of Vanaspati Unit-Authorities assuring concession and -ol. incentive-Claim for refund of sales tm:-Action of authorities held not unauthorised nor beyond the scope of their authority-Held there was estoppel ..,,.. against the Government-But scheme of refund of sales tax held contrary to public policy and void under section 23 of the Contract Act and not enforce- D able in law. Constitution of India, 1950: Article 265. Taxation-Nature of power-Taxation is a sovereig.: power. E Taxation-Refund of tax-:-Pennissibility and legality of-.No law can be made to refund the tax except when the levj is contrary to law-A promise or agreement to refund tax is a fraud on Constitution-Exemption from tax and ..-.-. refund of tax-Distinction between-Exemption is neither illegal nor against public policy-Refund of tax, unless levied contrary to law, would be invalid F ~ and ultra vires. ).. The Government of Punjab issued a brochure in December, 1966 announcing its 'New Policy' declaring that incentives and concession, one .... of the them being refund of sales-tax. would be available to those persons who were willin~ to set up selective large scale industries in the focal point. G Attracted by the concessions and incentives the appellant's Manager wrote a letter in June, 1968 to the Chief Minister of Punjab expressing his .. ~. willingness to set up a vanaspati unit provided the concession was made available to it. By its letter dated 2nd July, 1968 the Director of Industries replied the appellant assuring that the concession would be granted to it. H 13 14 SUPREME COURT REPORTS [1992] 2 S.C.R A Thereafter there had been exchange of correspondence and various meet- ings between the appellant's representative and officials of file Govern- ment. By its letter dated 25th October, 1968 the appellant requested for confirmation of the concession. By a letter dated 16th June, 1969 it was confirmed that the State Government had agreed to give the concession B and incentives. Acting on the assurance the appellant purchased the land, which by a notification issued by the Government was included in the focal ....J, point, and also invested substantial amount in setting up the unit. Subsequently, the appellant claimed refund of sales tax paid by it to the State Government on sale made by it of its fiDished products. On c respondents failure to refund the amount, the appellant filed a writ -r- petition in the High Court of Punjab and Haryana for a direction to refund the sales tax to the appellant. >-- A single judge of the High Court allowed the petition and directed the Government to honour its commitment of refunding sales tax to the .. D appellant on principle of promissory estoppel. On appeal the order of Single Judge was set aside by the Division Bench holding that (i) the decision of the Government to grant concession came in June, 1969 but before that i.e. in May, 1969 the policy had E undergone a change; (ii) in view of the decision of the Cabinet Sub-Com- mittee in 1966 not to give any refund of sales tax the brochure itself was unauthorised and consequently the actions of the Government officials y- could not create any right in favour of the appellant; a~d (iii) the refund of amount paid as sales tax by the appellant would be contrary to Articles 265 and 266 of the Constitution of India. - F In appeal to this court it was contended on behalf of the State that (i) in the absence of any assurance by a competent authority on behalf of ~ the State the promise if any was incapable of giving rise to any equity; and - .J.. (ii) that the policy of the Government announced in the brochure was only an offer and letter of the appellant sent on 25th October, 1968 was a .... G counter offer which was under consideration of Government which made another counter offer on 16th June which was accepted by the appellant who thereafter applied for registration and the Government issued a notification declaring the factory in the focal point. 7- H Dismissing the appeal, thi
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