Uflex Limited Unit - Iii Th Varun Kumar Sharma Sidco Industrial Complex Bari Brahmana Samba vs. Union Terriotory 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, introduced via SRO 431 of 2018, was a measure to compensate for the abolition of CST due to the GST regime. Upon the introduction of the IGST Act, 2017, the CST Act was abolished, making the continuation of CST exemption impossible. The scheme provided budgetary support as reimbursement of IGST, calculated at 2% of the taxable turnover for interstate supplies. Clause 7 of SRO 431 explicitly stated that the scheme's viability would be reviewed annually. The Court found that the subsequent promulgation of the Industrial Policy 2021-30 and the introduction of the Turnover Incentive Scheme 2021, effective from April 1, 2021, subsumed the earlier scheme. The new scheme offered benefits based on a fixed percentage of gross turnover, which included taxable turnover from interstate supplies. The Court reasoned that the Government had not acted arbitrarily, and the petitioners were not deprived of incentives but received them in a different form. The change in the mode and manner of providing incentives did not breach legitimate expectations. Therefore, the impugned S.O. 239 was issued to align with the new scheme and was not in violation of Article 14 of the Constitution.

Facts

The petitioners, who are industrial units established in Jammu and Kashmir, challenged S.O. 239 dated July 16, 2021, issued by the Government of Jammu and Kashmir. This order 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 after the GST regime to provide incentives to industrial units in lieu of previous exemptions like Central Sales Tax (CST). The scheme was to remain in operation until March 31, 2026, subject to annual review. The respondents argued that the scheme was replaced by a new Turnover Incentive Scheme 2021, which provided similar benefits in a different form.

Key Issues

1. Whether the withdrawal of the Budgetary Support Scheme, notified vide SRO 431 of 2018, by S.O. 239 dated July 16, 2021, is hit by the doctrine of promissory estoppel, considering the representations made by the Government to encourage industrialization in Jammu and Kashmir? The petitioners contended that the Government's consistent policy to offer incentives created a legitimate expectation and that the withdrawal amounted to a breach of promise. The respondents argued that the doctrine of promissory estoppel was not attracted as the scheme was replaced by a new one offering similar benefits. 2. Whether the withdrawal of the Budgetary Support Scheme violates the doctrine of legitimate expectation? The petitioners argued that they had a legitimate expectation of continued benefits based on the earlier policy. The respondents contended that the Government had not acted arbitrarily, and the new scheme provided benefits in a different form, thus not frustrating the legitimate expectation.