M/S HERO MOTOCORP LTD versus UNION OF INDIA & ORS.

Citation: [2022] 13 S.C.R. 592 · Decided: 17-10-2022 · Supreme Court of India · Bench: BHUSHAN RAMKRISHNA GAVAI · Disposal: Dismissed

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Judgment (excerpt)

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SUPREME COURT REPORTS
[2022] 13 S.C.R.
   [2022] 13 S.C.R. 592
592
M/S HERO MOTOCORP LTD.
v.
UNION OF INDIA & ORS.
(Civil Appeal No. 7405 Of 2022)
OCTOBER 17, 2022
[B. R. GAVAI AND B. V. NAGARATHNA, JJ.]
Central Goods And Services Tax Act, 2017: ss.. 11 , 174(2)(c)
– Repeal and saving – Tax exemption – Office Memorandum of
2003 provided 100 % exemption of excise duty for 10 years from
the date of commencement of commercial production in the State of
Uttrakhand and Himachal Pradesh to new industrial units and
existing industrial units – Appellants availed the exemption for the
said period whereafter the Goods and Service Tax regime came
into existence and the benefit being enjoyed by the appellants was
reduced to 58% through the Budgetary Support Policy – Writ
petitions challenging the same, dismissed by the High Court – On
appeal, held: Though the first part of clause (c) of sub-section (2)
of s. 174 would protect any right, privilege, obligation, etc. under
the amended Act or repealed Acts, the proviso thereto provides that
any tax exemption granted as an incentive against investment shall
not continue as a privilege if the said notification is rescinded on
or after the appointed day – Benefit which was granted under the
2003 Notification stands rescinded in view of the notification issued
under proviso to clause (c) of sub-section (2) of s. 174 – When the
legislature exercises its powers for the public good, the earlier
representation would not operate against the Government as
equitable estoppels – There can be no promissory estoppel against
the exercise of the legislative functions of the State – If the plea of
appellants is accepted, it would amount to enforcing a representation
made in the said O.M. and Notification of 2003 contrary to the
legislative incorporation in the proviso to s. 174(2)(c) – Thus, the
claim of the appellant on estoppel is rejected – However, the
appellants permitted to make representations to the respective State
Government and the GST Council.
Doctrine of promissory estoppel – Applicability of, against
the the legislature in the exercise of its legislative functions – When
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a subsequent statute specifically providing for rescinding the benefits
granted under an earlier statute, can the Union Government be
compelled to stand by the representation made by it through the
earlier notification – Explained and discussed.
Writ of Mandamus – Issuance of – When – Held: Writ of
mandamus can be issued where the Authority has failed to exercise
the discretion vested in it or has exercised such a discretion
malafidely or on an irrelevant consideration – A writ of mandamus
cannot be issued to the Central Government to exercise power under
Section 11 of the CGST Act in a particular manner –This Court
cannot interfere in policy matters of the Government unless such
policy is found to be palpably arbitrary and irrational.
Dismissing the appeals, the Court
HELD: 1.1 Though the first part of clause (c) of sub-section
(2) of Section 174 of the Central Goods And Services Tax Act,
2017 would protect any right, privilege, obligation, etc. under
the amended Act or repealed Acts, the proviso thereto provides
that any tax exemption granted as an incentive against investment
shall not continue as a privilege if the said notification is rescinded
on or after the appointed day. Admittedly, vide Notification No.21/
2017 dated 18th July 2017, various earlier area-based exemption
notifications have been rescinded. It is thus clear that the benefit
which was granted under the 2003 Notification stands rescinded
in view of the notification issued under proviso to clause (c) of
sub-section (2) of Section 174 of the CGST Act. [Para 30][610-G-
H; 611-A-B]
1.2 There can be no estoppel against the legislature in the
exercise of its legislative functions. The Constitution Bench in
the case of M. Ramanatha Pillai’s case has approved the view in
American Jurisprudence that the doctrine of estoppel will not be
applied against the State in its governmental, public or sovereign
capacity. It further held that the only exception with regard to
applicability of the doctrine of estoppel is where it is necessary
to prevent fraud or manifest injustice. [Para 54][624-E-G]
1.3. Undisputedly, the Notification dated 18th July 2017
withdrawing the exemption notifications was issued in pursuance
of the statutory mandate as provided under Section 174(2)(c) of
the CGST Act. If the contention as raised by the

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