Case Note & Summary
The petitioner, M/s K. M. Refineries and Infraspace Pvt. Ltd., a registered company manufacturing vegetable oil and allied products, set up a factory unit at village Dabha, District Amravati, relying on the 'New Package Scheme of Incentives, 1993' (Incentive Scheme) which offered tax subsidies and exemptions to promote industries in dispersed locations. The petitioner applied for an Eligibility Certificate from the District Industries Centre, Amravati, which was issued on 20th March 2017, valid for nine years. However, when the petitioner sought to avail the tax exemption, the Joint Commissioner of Sales Tax (Respondent No. 4) rejected the claim, contending that the Eligibility Certificate was not valid or that the petitioner was not entitled to the benefits. The petitioner challenged this rejection by way of a writ petition before the Bombay High Court. The court examined the provisions of the Incentive Scheme and the circumstances under which the Eligibility Certificate was issued. It found that the petitioner had fulfilled all conditions and the certificate was validly issued by the competent authority. The court held that the rejection by the Sales Tax authorities was arbitrary and contrary to the scheme. Applying the principles of promissory estoppel and legitimate expectation, the court ruled that the government cannot backtrack on its promise once the petitioner has invested and set up the industry based on that promise. The court allowed the petition, quashed the rejection order, and directed the respondents to grant the tax incentives as per the Eligibility Certificate.
Headnote
A) Industrial Incentives - Eligibility Certificate - New Package Scheme of Incentives, 1993 - Issuance of Eligibility Certificate - The petitioner, a company manufacturing vegetable oil, applied for an Eligibility Certificate under the Incentive Scheme. The General Manager, District Industries Centre issued the certificate valid for nine years. However, the Joint Commissioner of Sales Tax rejected the claim for tax exemption, contending that the certificate was not valid. The court examined the scheme's provisions and held that the Eligibility Certificate was validly issued and the rejection was arbitrary. (Paras 2-10) B) Promissory Estoppel - Government Scheme - Legitimate Expectation - The court applied the principle of promissory estoppel, holding that the government cannot resile from its promise of incentives once the petitioner has acted upon it and set up the industry. The rejection of the tax exemption claim was contrary to the legitimate expectation of the petitioner. (Paras 11-15)
Issue of Consideration
Whether the rejection of the Eligibility Certificate for tax incentives under the New Package Scheme of Incentives, 1993 was arbitrary and contrary to the scheme's provisions.
Final Decision
The court allowed the writ petition, quashed the rejection order, and directed the respondents to grant the tax incentives as per the Eligibility Certificate.
Law Points
- Eligibility Certificate
- Tax Subsidy
- New Package Scheme of Incentives 1993
- Promissory Estoppel
- Legitimate Expectation
- Government Scheme Interpretation
