MAHABIR VEGETABLE OILS PVT. LTD. AND ANR. versus STATE OF HARYANA AND ORS.

Citation: [2006] 2 S.C.R. 1172 · Decided: 10-03-2006 · Supreme Court of India · Bench: S.B. SINHA

Cited by 3 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

A 
MAHABIR VEG ET ABLE OILS PVT. LTD. AND ANR. 
v. 
STATE OF HARYANA AND ORS. 
MARCH I 0, 2006 
B 
[S.B. SINHA AND P.K. BALASUBRAMANY AN, JJ.) 
Promissory estoppel; 
Promissory estoppe/-Whether operates even in the legislative fie/d-
C Held. yes unless it can be shown that there was no overriding public interest 
which would make it inequitable to enforce estoppel against the State as it 
was well within the power of the State to grant such exemption. 
The State of Haryana announced an Industrial Policy for the period 
D 1.4.1988 to 31.3.1997 wherein inter alia incentive by way of sales tax 
exemption was to be given for the industries set up in backward areas in 
the State. 
The Appellants are owners of solvent extraction plants. The 
Appellants had made investments pursuant to or in furtherance of the 
E representation made by the State in making Rule 28A and as on the date 
when Rule 28A was amended i.e. on 16.12.1996, the Appellant had 
substantially complied with the provisions of the said rule. As in Schedule 
III appended to the Rules, the solvent extraction plant was not included, 
the Appellant invested a large amount to the tune of 45% of the total 
project cost and, thus, reached an irretrievable position. 
F 
Pursuant to or in furtherance of the rule making power under 
Section 25-A the State made rules known as the Haryana General Sales 
Tax Rules, 1975 (for short 'the Rules'). Rule 28A occurring in Chapter 
IV A of the Rules provide for class of industries, period and other 
G conditions for exemption/deferment from payment of tax as envisaged both 
under Sections 138 and 25A of the Act. 
On or about 3.1.1996, notice was given as regards the intention of 
the Sate to amend the rules in respect whereof a draft was circulated for 
information of persons likely to be affected thereby so as to enable them 
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MAHABIR VEGETABLE OILS PVT. LTD. v. STATE OF HARYANA 
1173 
to file objections and suggestions thereto. Amendments in terms of the said A 
draft rules were notified on 16/12/1996 substituting Schedule III appended 
to the Rules whereby and whereunder the solvent extraction plant was 
included therein. On or about 28th May, 1997, the said rules were amended 
inter alia by omitting Note 2 deeming to have always been omitted. Yet 
again on 3rd June, 1997, in clause (a) of sub-rule (2) of Rule 28A of the B 
Rules instead and in place of 31st March, 1997, the words "date on which 
new policy for incentive to industry is announced by the Government of 
Haryana in Industries Department" was substituted. On 26th June, 2001, 
in Section 13-8 after the words "for such period", the words "either 
prospectively or retrospectively" were inserted. 
c 
By 16.12.1996, the appellant had invested about 80% of the total 
project cost. The Appellants had applied for grant of exemption from 
payment of sales tax as on 16.12.1996 which was rejected. Writ petition 
filed by the appellant challenging the decision of the State Government 
was dismissed by the High Court. 
D 
The Appellants contended inter alia that they had made investments 
pursuant to or in furtherance of the representation made by the State in 
making Rule 28A and as on the date when Rule 28A was amended i.e. on 
16.12.1996, the appellant had substantially complied with the provisions 
of the said rule. As in Schedule III appended to the rules, the solvent E 
extraction plant was not included, the Appellant invested a larger amount 
as would appear from the letter dated 4.9.1997 of the Director oflndustries 
that it had invested 45% of the total project cost and, thus, reached an 
irretrievable position. It was further contended that no reason has been 
assigned by the State as to why amendment had been made at the end of 
the operative period; the withdrawal of such exemption provision with F 
retrospective effect is otherwise bad in law. 
Allowing the appeal and disposing of the writ petition, the Court 
HELD: I. I. It is beyond any cavil that the doctrine of promissory 
estoppel operates even in the legislative field unless it can be shown that G 
there was no overriding public interest which would make it inequitable 
to enforce estoppel against the State as it was well within the power of 
the State to grant such exemption. [1182-F; 1185-A] 
Central London Property Trust Ltd. v. High Trees House Ltd., (1947) 1 H 
1174 
SUPREME COURT REPORTS 
[2006] 2 S.C.R. 
A KB 130; Collector of Bombay v. Municipa

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