Ultimate Flexipack Limited Th Ravindra Adhikari Sidco Industrial Complex Bari Brahmana Samba vs. Union Territory Of Jammu And Kashmir Th Financial Commissioner Finance Deptt And Others

Held

The Court held that the doctrine of promissory estoppel was not attracted in this case. The Budgetary Support Scheme under SRO 431 of 2018 was introduced immediately after the adoption of the GST regime, replacing the benefit of CST exemption. Clause 7 of SRO 431 explicitly stated that the scheme's viability would be reviewed annually. The Court found that the Government's action was not arbitrary, as the Budgetary Support Scheme was subsumed by the new Turnover Incentive Scheme 2021, which aimed to provide similar incentives to industrial units. The change in the mode of providing incentives, from IGST reimbursement to a percentage of gross turnover, did not prejudice the petitioners. The Court also held that the petitioners' legitimate expectations were not violated, as the Government had not acted unfairly or unjustly. The issuance of S.O. 239 was a necessary step to align with the new scheme, which came into effect from April 1, 2021. Therefore, the Court found no violation of Article 14 of the Constitution. The writ petitions were dismissed.

Facts

The petitioners, various industrial units in Jammu and Kashmir, challenged S.O. 239 dated July 16, 2021, which withdrew the Budgetary Support Scheme notified earlier by SRO 431 dated September 25, 2018, effective from April 1, 2021. The petitioners argued that this withdrawal violated the doctrines of promissory estoppel and legitimate expectation. The Budgetary Support Scheme was introduced following the adoption of the GST regime, providing reimbursement of IGST at 2% of taxable turnover for inter-state supplies, in lieu of previous exemptions like Central Sales Tax (CST). The respondents contended that the withdrawal was necessitated by the promulgation of the Industrial Policy 2021-30 and the subsequent Turnover Incentive Scheme 2021, which replaced the Budgetary Support Scheme.

Key Issues

1. Whether the withdrawal of the Budgetary Support Scheme by S.O. 239 dated July 16, 2021, is hit by the doctrine of promissory estoppel, considering the petitioners' reliance on the incentives offered under SRO 431 dated September 25, 2018. 2. Whether the withdrawal of the Budgetary Support Scheme violates the legitimate expectations of the petitioners, who had set up their industrial units based on the State's policy of encouraging industrialization. Petitioner's arguments: The petitioners contended that the Government's action was arbitrary and breached their legitimate expectations. They argued that SRO 431 provided a clear incentive and its withdrawal without adequate justification amounted to a breach of promise. They relied on the principle that once a policy is announced and acted upon by industrialists, the government cannot arbitrarily withdraw it. Respondent's arguments: The respondents argued that the Budgetary Support Scheme was introduced as a transitional measure after the GST regime and was intended to be reviewed annually. They asserted that the scheme was subsumed by the new Turnover Incentive Scheme 2021, which provided benefits in a different form but with the same objective of supporting industrial units. They maintained that the Government had not acted arbitrarily and that the petitioners were not deprived of incentives, only the mode of delivery changed. They also pointed out that the CST Act was abolished with the introduction of GST, making the continuation of CST exemption benefits impossible.