Doctrine of promissory estoppel inapplicable in larger public interest. Supreme Court upheld withdrawal of custom exemption notifications
ABCAUS Case Law Citation:
ABCAUS 3151 (2019) (09) SC
Important case law relied upon by the parties:
Kasinka Trading vs. Union of India
Darshan Oils (P) Ltd. vs. Union of India
STO vs. Shree Durga Oil Mills
Shrijee Sales Corpn. vs. Union of India
State of Rajasthan vs. Mahaveer Oil Industries
Shree Sidhbali Steels Ltd. vs. State of U.P.
DG of Foreign Trade vs. Kanak Exports
Pappu Sweets and Biscuits vs. Commr. Of Trade Tax, U.P.
Commr. of Customs vs. Dilip Kumar & Co.
M/s Motilal Padampat Sugar Mills Co. Ltd. vs. State of Uttar Pradesh and Ors.
Union of India & Ors. Vs. Godfrey Philips India Ltd. & Ors.
Pawan Alloys & Casting Pvt. Ltd. vs. U.P. State Electricity Board & Ors.
In these appeals filed by the Government of India, the question of law that arose for consideration was as to whether, by invoking the doctrine of promissory estoppel, can the Union of India be estopped from withdrawing the exemption from payment of Excise Duty in respect of certain products, which exemption is granted by an earlier notification; when the Union of India finds that such a withdrawal is necessary in the public interest.
In the instant case, the appellant, Union of India had exempted specified goods from the payment of excise duties including additional duties. This exemption was available to the units located in the State of Sikkim and Assam.
By a subsequent amendment notification, tobacco and manufactured tobacco substitutes and plastic carry bags of less than 20 microns were included in the negative list and as such were no longer entitled for exemption from the excise duty.
Aggrieved by the exemption withdrawal, the respondent(s) approached the High Courts which allowed the writ petitions and held that the petitioner therein was entitled to exemptions.
Being aggrieved by the aforesaid judgments passed by the Sikkim High Court and the Gauhati High Court, the Union of India was before Hon’ble Supreme Court.
The case of the Union was that it had withdrawn the notification taking into consideration the public interest, that the consumption of pan masala with tobacco or pan masala without tobacco is hazardous to the human health.
It was also contended that in the conflict between the interest of an individual and the public interest, individual interest should give way to the larger public interest
On the other hand, the respondents that the exemption notifications were issued in view of the industrial policy of the Union of India as well as the State Governments that on account of backwardness in these areas, the industrialisation in these areas should be promoted so that the economic development takes place.
It was submitted that, only on the assurance of the Central as well as the State Governments, the respondents had invested huge amount and, as such, now the Union of India could not be permitted in law to resile from the assurance given by them. It was submitted that, considering these principles, the High Courts had granted relief.
The Hon’ble Supreme Court stated that issue raised is no more res integra. In a catena of decisions the Hon’ble Supreme Court had considered the issue with regard to inapplicability of the doctrine of promissory estoppel, when the larger public interest demands so.
The Hon’ble Supreme Court recalled what was held in its earlier judgments on this aspects as under:
Doctrine of promissory estoppel cannot be invoked in the abstract
It was held that the doctrine of promissory estoppel cannot be invoked in the abstract and the courts are bound to see all aspects including the objective to be achieved and the public good at large. It has been held that while considering the applicability of the doctrine, the courts have to do equity and the fundamental principle of equity must forever be present in the mind of the Court while considering the applicability of the doctrine. It has been held that the doctrine of promissory estoppel must yield when the equity so demands and when 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.
Exemption Notification only suspends the levy and collection of customs duty etc.
It was held that an exemption notification does not make the items which are subject to levy of customs duty etc. as items not leviable to such duty. It only suspends the levy and collection of customs duty etc. subject to such conditions as may be laid down in the “public interest”. An exemption by its very nature is susceptible of being revoked or modified or subjected to other conditions. The supersession or revocation of an exemption notification in the public interest is an exercise of the statutory power by the State under the law itself. Under the General Clauses Act an authority which has the power to issue a notification has the undoubted power to rescind or modify the notification in a like manner.
Withdrawal of exemption in public interest is a matter of policy
It had been held that 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. Where the Government acts in public interest and neither any fraud or lack of bona fides is alleged much less established, it would not be appropriate for this Court to interfere with the same.
Public interest must override any consideration of private loss or gain
It had been held that when withdrawal of the exemption is in public interest, the public interest must override any consideration of private loss or gain. In the said case, the change in policy and withdrawal of the exemption on the ground of severe resource crunch have been found to be a valid ground and to be in public interest.
Once public interest is accepted as a superior equity. It can override period prescribed
It had been held by a Full Bench that once public interest is accepted as a superior equity which can override an individual equity, the same principle should be applicable in such cases where the period is prescribed.
Incentive scheme are privilege of the Central Government
It was held that the incentive scheme was in the nature of concession or incentive which was a privilege of the Central Government. It was for the Government to take a decision to grant such a privilege or not. Grant of exemption, concession or incentive and modification thereof are the matters in the domain of public decisions of the Government.
Thus the Hon’ble Supreme Court pointed out that it is more than well settled that the exemption granted, even when the notification granting exemption prescribes a particular period till which it is available, can be withdrawn by the State, if it is found that such a withdrawal is in the public interest.
The Hon’ble Supreme Court stated that in such a case, the larger public interest would outweigh the individual interest, if any. In such a case, even the doctrine of promissory estoppel would not come to the rescue of the persons claiming exemptions and compel the State not to resile from its promise, if the act of the State is found to be in public interest to do so.
The Hon’ble Supreme Court noted that the studies have found that gutkha and pan masala have been one of the major causes of oral cancer. The Court opined that in view of the fact that gutkha and pan masala have flooded the Indian markets and become popular amongst all age groups, banning the manufacture and sale of these products would reduce oral cancer incidence rates.
Accordingly, the Hon’ble Supreme Court held that the withdrawal of the exemption to the pan masala with tobacco and pan masala sans tobacco was in the larger public interest. As such, the doctrine of promissory estoppel could not have been invoked in the present matter.
It was held that the State could not be compelled to continue the exemption, though it was satisfied that it was not in the public interest to do so. The larger public interest would outweigh an individual loss, if any. In that view of the matter we find that the appeals deserve to be allowed.
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