BANNARI AMMAN SUGARS LTD. versus COMMERCIAL TAX OFFICER AND ORS.

Citation: [2004] SUPP. 6 S.C.R. 264 · Decided: 22-11-2004 · Supreme Court of India · Bench: ARIJIT PASAYAT · Disposal: Disposed off

Judgment (excerpt)

A 
BANNARI AMMAN SUGARS LTD. 
v. 
COMMERCIAL TAX OFFICER AND ORS. 
NOVEMBER 22, 2004 
B 
[ARIJIT PASAYAT AND C.K. THAKKER, JJ.] 
Administrative Law : 
Promissory estoppel and legitimate expectation-Applicability of-
C Purchase tax on sugarcane-State Government granting exemption in favour 
of sugar mills established in cooperative and public sectors-Subsequent 
withdrawal thereof with retrospective effect-Tribunal holding withdrawal 
of benefit unsustainable on the ground of promissory estoppel and legitimate 
expectation-:-High Court ,reversing the same-Correctness of-Held : 
Person who is granted exemption cannot claim vested right-Promissory 
D estoppel can be invoked when industry was established to avail benefit on 
the basis of representations made by the Government-On facts, there was 
no assurance by the Government to set up industries, hence, promissory 
estoppel not applicable-Furthermore, State did not take any specific 
grounds to justify withdrawal of benefit-Though claimants not entitled to 
E opportunity of hearing before the withdrawal, fair play justifies grant of 
F 
1 opportunity since High Court with reference to the files recorded on the 
basis thereof-Also High Court did not deal with the retrospecti/Je 
withdrawal of benefit-Hence, order of High Court not justified and matter 
remitted to High Court for fresh consideration regarding application of 
legitimate expectation and retrospective withdrawal of benefit-Evidence 
Act, 1872-Section 115-Constitution of India, 1950-Article 166. 
Policy decision-Change of, by State's action-Requirement for 
validity-Discussed. 
G 
Policy decision-Restriction imposed-Reasonableness of-
Determination of. 
Doctrines : 
Promissory estoppe/-Scope and object of-Requirement for 
H Invocation-Discussed. 
264 
BANNARI AMMAN SUGARS LTD. v. COMMERCIAL TAX OFFICER 265 
Legitimate Expectation-General principles-Discussed 
State Government granted exemption from purchase tax on 
sugarcane in favour of sugar mills established in co-operative :rnd public 
sectors in the from of annual subsidy equivalent to purchase tax in 1975. 
A 
By Government Order of 1.9.88, the exemption was withdrawn and by B 
letter of 28.12.88 the order was made operative retrospectively from 
1.4.1988. Appellants, who had set up its units and started its commercial 
production in year 1984 and 1986, challenged the withdrawal of benefit 
contending that they were induced by the Governmental action to set 
up industries. Tribunal applying the principles of promissory estoppel c 
and legitimate expectation held the withdrawal of benefit is not 
sustainable. Respondent-State filed writ petition. Division Bench of 
High Court found that the respondents have established their units 
prior to the Government, orders granting subsidy; that there was no 
inducement by the Government to establish the units and respondents 
have not acted on the basis of the Government Order; that the Order D 
granting subsidy can be: withdrawn in public interest, as such the 
Government exercised their right to modify the scheme; and that no 
prejudice is caused to the respondents Hence, the present appeals. 
Appellants contended that the doctrines of promissory estoppel 
and legitimate expectation were applicable to the facts of the case; that 
there was no material to show existence of any overriding public interest; 
that there was no scope for retrospective withdrawal of benefit on the 
basis of an executive decision; and that the appellants were not granted 
opportunity of hearing before withdrawal of the benefits. 
Disposing of the appeals, the Court . 
HELD : 1.1. No vested right as to tax holding is acquired by a 
person who is granted concession. If any concession has been given it 
E 
F 
can be withdrawn at any time and no time limit could be insisted upon G 
before in was w;thdrawn. (273-F-G] 
1.2. The doctrine of promissory estoppel can be invoked only if on 
the basis of representation made by the Government, the industry was 
established to avail the benefit of exemption. In order to invoke the H 
266 
SUPREME COURT REPORTS [2004] SUPP. 6 S.C.R. 
A doctrine, clear, sound and positive foundation must be laid in the petition 
itself by the party invoking the doctrine and bald expressions without 
any supporting material to the effect that the doctrine is attracted 
because the party invoking the doctrine has altered its position relying 
on the assurance of the Government would not be sufficient to press into 
B a

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