Judgment:
ORDER
Arijit Pasayat, C.J.
1. Petitioner, a society registered under the Societies Registration Act, 1960 (in short, the Societies Act) calls in question legality of the notification dated 5th August, 1998 issued by the Lt Governor of NCT of Delhi in exercise of powers conferred under Section 71 of the Delhi Sales Tax Act, 1975 (in short, the Act) by which Clause XXVI under Rule 11 of the Delhi Sales Tax Rules, 1975 (in short, the Rules) was omitted.
2. Background facts in a nutshell are as follows :-
By notification of the Finance Department of Delhi Administration, as published in the Extraordinary Gazette dated 12.4.1978, a new clause (xxvi) was inserted under Rule 11, which reads as follows:
'(XXVI) Sale of papads by Shri Mahila Griha Udyog Lijjat Papad for so long as it is holding a certificate of recognition for 'papad' as Village Industries product issued by the Commission constituted under the Khadi and Village Industries Commission Act, 1956 (61 of 1956)
Subsequently by the impugned notification the same has been withdrawn. Petitioner's stand in essence is that it still continues to hold a certificate of recognition for 'Papad' as village industries product by the Commission constituted under Khadi & Village Industries Commission Act, 1956 and thereforee the withdrawal is illegal. According to it, without application of mind and existence of any reason, exemption has been withdrawn. The concept of promissory estoppel is pressed into service
Stand of the Revenue, in short, is that incentive was given to promote and encourage the petitioner society to face competition in the market and two decades cannot be said to be an inadequate period for that purpose. It is also submitted that the State has wide discretion in selecting the person or the object that it will tax, and even if exemption was granted it has power to withdraw the same. There is no scope for applying the doctrine of promissory estoppel so far as statutory provisions are concerned. Reference was made to the speech of the Finance Minister while presenting the budget for 1996-97 wherein it was indicated that with the passage of time a number of organisations to whom exemptions were granted have increased and it would not be desirable to continue exemption and to keep the organisation out of the purview of sales tax.
3. We shall first deal with the promissory estoppel aspect. The doctrine of promissory estoppel or equitable estoppel is well established in the administrative law of the country. To put it simply, the doctrine represents a principle evolved by equity to avoid injustice. The basis of the doctrine is that where any party has by his word or conduct made to the other party an unequivocal promise or representation by word or conduct, which is intended to create legal relations or effect a legal relationship to arise in ;the future, knowing as well as intending that the representation, assurance or the promise would be acted upon by the other party to whom it has been made and has in fact been so acted upon by the other party, promise, assurance or representation should be binding on the party making it and that party should not be permitted to go back upon it, if it would be inequitable to allow him to do so having regard to the dealings, which have taken place or are intended to take place between the parties.
4. It has been settled by the Apex Court that the doctrine of promissory estoppel is applicable against the Government also particularly where it is necessary to prevent fraud or manifest injustice. The doctrine, however, cannot be pressed into aid to compel the Government or the public authority to carry out a representation or promise which is contrary to law or which was outside the authority or power of the officer of the Government or of the public authority to make. There is preponderance of judicial opinion that to invoke the doctrine or promissory estoppel clear, sound and positive foundation must be laid int he petition itself by the party invoking the doctrine and that 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 aid the doctrine. The doctrine of promissory estoppel cannot be invoked in the abstract and the Courts are bound to consider all aspects including the results sought to be achieved and the public good at large, because while considering the applicability of the doctrine, the Courts have to do equity and the fundamental principles of equity must for ever be present to the mind of the Court while considering the applicability of the doctrine. The doctrine must yield when the equity so demands if it can be shown having regard to the facts and circumstances of the case that it would be inequitable to hold the Government or the public authority to its promise, assurance or representation.
5. The ambit, scope and amplitude of the doctrine of promissory estoppel has been evolved in this country over the last quarter of a century through several decisions of the Apex Court starting with Union of India v. Indo-Afghan Agencies Ltd, AIR 1968 SC 718. Reference in this connection may be made with advantage to Century Spg. & Mfg. Co. Ltd v. Ulhasnagar Municipal Council : [1970]3SCR854 ; Motilal Padampat Sugar Mills Co. Ltd v. State of U.P. : [1979]118ITR326(SC) ; Jit Ram Shiv Kumar v. State of Haryana : [1980]3SCR689 ; Union of India v. Godfrey Philips India Ltd, : [1986]158ITR574(SC) ; Indian Express Newspapers (Bom) (P) Ltd v. Union of India ; Amrit Banaspati Co. Ltd. v. State of Punjab, (1992) 2 SCC 511 and Union of India v. Hindustan Development Corpn : AIR1994SC988 . In Godfrey Philips India Ltd (supra), the Apex Court observed as under:
'We may also point out that the doctrine of promissory estoppel being an equitable doctrine, it must yield when the equity so requires; if ti can be shown by the government or public authority that having regard to the facts as they have transpired, it would be inequitable to hold the Government or public authority to the promise or representation made by it, the Court would not raise an equity in favor of the person to whom the promise or representation is made and enforce the promise or representation against the Government or public authority. The doctrine of promissory estoppel would be displaced in such a case, because on the facts, equity would not require that the Government or public authority should be held bound by the promise or representation made by it.
6. In Excise Commissioner, U.P. v. Ram Kumar, : AIR1976SC2237 the Apex Court observed in para 19 as under :-
'The fact that sales of country liquor had been exempted form sales tax vide Notification No. ST-1149/X-802 (33)-51 dated 6-4-1959 could not operate as an estoppel against the State Government and preclude it from subjecting the sales to tax if it felt impelled to do so int he interest of the revenues of the State which are required for execution of the plans designed to meet the ever increasing pressing needs of the developing society. It is now well settled by a catena of decisions that there can be no question of estoppel against the government in the exercise of its legislative, sovereign of executive powers.'
7. Prof. S.A. de Smith in his celebrated treatise Judicial Review of Administrative Action, 3rd Edn., at p. 279 sums up the position thus :
'Contracts and covenants entered into by the Crown are not be construed as being subject to implied terms that would exclude the exercise of general discretionary powers for the public good. On the contrary they are to be construed as incorporating an implied term that such powers remain exercisable. This is broadly true of other public authorities also. But the status and functions of the Crown in this regard are of a higher order. The Crown cannot be allowed to tie its hand completely by prior undertakings is as clear as the proposition that the Courts cannot allow the Crown to evade compliance with ostensibly binding obligations whenever it thinks fit. If a public authority lawfully repudiates or departs from the terms of a binding contract in order to have been bound in law by an ostensibly binding contract because the undertakings would improperly fetter it general discretionary powers the other party to the agreement has no right whatsoever to damages or compensation under the general law, no matter how serious the damages that party may have suffered.'
8. In Subash Photographic v. Union of India : 1993ECR234(SC) , it was observed as under :-
'In statutes like Customs Act and Customs Tariff Act one has also to keep in mind that such legislation can be properly administered only by constantly adjusting it to the needs of the situation. This calls for a good amount of discretion to be allowed to the delegate. As is often pointed out flexibility is essential (in law-making) and it is one of the advantages of rules and regulations that they can be altered much more quickly and easily than can Acts of Parliament. We have pointed out hereinbefore the necessity of constant and continuous monitoring of the nation's economy by the Government (and its various institutions) and the relevance and the relevance of these enactments as a means of ensuring a proper and healthy growth.'
XXXX XXXX XXXX XXXX 'The Parliament has appointed two authorities, i.e. Central Government and the Board to make rules/regulations to carry out the purposes of the Act generally. The character of rules and of the regulations made under Section 156 and 157 respectively is the same --both constitute delegated legislation. The regulations are subject to an additional limitation, viz. they should not be contrary to the rules made under Section 156. The purpose of sub-section (2) in both the sections is inter alias to allocate certain matters to each of them exclusively; subject to these sub sections, both the delegates can exercise the power vested in them for carrying out the purpose of the Act. No established legislature practice of any considerable duration has been brought to out notice to read any further limitation into the regulation -making power under Section 157 assuming that a legislative practice can be read as a limitation.'
9. In M.P. Sugar Mills case (supra) it was observed that the doctrine of promissory estoppel would not apply in the teeth of an obligation or liability imposed by law and that there can be no promissory estoppel against the exercise of legislative power.
10. Determination of applicability of promissory estoppel against the Government hinges upon balance of equity or public interest. In case there is a supervening factor i.e. public equity, the Government would be allowed to change its stand; it would then be able to withdraw from the representation made by it which induced persons to take certain steps which may have gone adverse to the interest of such persons on account of such withdrawal. Once public interest was accepted as the superior equity which can override individual equity, the aforesaid principle should be applicable even in cases where a period had been indicated for operation of the promise. Similar view was expressed by the Apex Court in Shijee Sales Corporation v UOI : 1997(89)ELT452(SC) . In that case, a notification was issued exempting customs duty on PVC. By a second notification the exemption was withdrawn. The Court held that the facts of ;the case revealed that there was a supervening public Interest and the government was competent to withdraw the first notification without giving any prior notice tot eh respondent. View on identical lines taken earlier in Kasinka Trading v. Union of India : 1994ECR637(SC) was reiterated.
11. This view was again reiterated by the Apex Court in Sales Tax Officer v. Shree Durga Oil Mills (1998) 108 STC 274. The principle which can be culled out from various decisions is that once public interest is accepted as superior equity the same can override the equity, the same is applicable in cases where a period had been indicated for operation of the promise. As stand of the Government would go to show that there was considerable loss of revenue and the purpose for which the exemption was granted was amply fulfillled.
12. The Courts will only bind the Government by its promises to prevent manifest injustice or fraud and will not make the Government a slave of its policy for all times to come when the Government acts in its governmental, public or sovereign capacity.
13. The petitioner appears to be under the impression that even if, in the altered market conditions the continuance of the exemption may not have been justified, yet, Government was bound to continue it to give extra profit to them. That certainly was not the object with which the notification had been issued. The withdrawal of exemption 'in public interest' is a matter of policy and the Courts would not bind the Government to its policy decisions for all times to come, irrespective of the satisfaction of the Government that a change in the policy was necessary in ;the 'public interest'. The Courts, do not interfere with the fiscal policy where the Government acts in 'public interest' and neither any fraud or lack of bona fides is alleged much less established. The Government has to be left free to determine the priorities in the matter of utilization of finances and to act in the public interest while issuing or modifying or withdrawing an exemption notification.
14. The power of exemption available under the Act has been granted to the Government by the Legislature with a view to, inter alia, encourage certain class of persons, undertaking specific class of activities where the Government on the basis of material available before, it, bona fide, is satisfied that the public interest shall be served by either granting exemption or by withdrawing, modifying or rescinding an exemption already granted, it should be allowed a free hand to do so.
15. Judged in the background of aforesaid principles, the withdrawal of exemption by the impugned notification cannot be held to be illegal particularly when the petitioner is one amongst large number of beneficiaries to whom exemptions were also granted which came to be withdrawn by the impugned notification.
16. Writ petition fails and is dismissed.