Vj Jindal Cocoa PVT LTD Th Rajesh Dogra vs. Ut Of J And K Th Chief Secretary And Others

Held

The Court held that the doctrine of promissory estoppel was not attracted in this case. The Budgetary Support Scheme was introduced as a replacement for the CST exemption, which was abolished with the implementation of the GST regime. The scheme itself, under clause 7 of SRO 431, clearly stated that its continuance would be reviewed annually. The introduction of the Turnover Incentive Scheme 2021, which subsumed the Budgetary Support Scheme, provided incentives in a different form but continued to support industrial units. The Court found no arbitrary or unreasonable action by the government. Regarding legitimate expectation, the Court held that the government's conduct did not create an expectation that could not be altered, especially when a new scheme offered similar benefits. The change in the mode of incentive delivery, from IGST reimbursement to a turnover-based incentive, was considered a rational and reasonable policy decision. The Court found no violation of Article 14 of the Constitution. Consequently, 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 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 adoption of the GST regime to provide incentives in lieu of previous exemptions like Central Sales Tax (CST). The scheme was intended to operate until March 31, 2026, but the Finance Department was to review its viability annually. The impugned S.O. was issued to align with the new Turnover Incentive Scheme 2021, which came into force on April 1, 2021.

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. The petitioners contended that the government's action was arbitrary and breached the promises made under the earlier scheme, which was introduced to compensate for the loss of benefits like CST exemption post-GST. They argued that the withdrawal without adequate justification amounted to a violation of the State's commitment. The respondents argued that the doctrine of promissory estoppel was not attracted as the Budgetary Support Scheme was introduced in lieu of CST exemption, which itself ceased to exist with the advent of GST. They further contended that the scheme was subject to annual review as per its own terms, and the introduction of a new scheme, the Turnover Incentive Scheme 2021, necessitated the withdrawal of the old one. 2. Whether the withdrawal of the Budgetary Support Scheme is in violation of the doctrine of legitimate expectation. The petitioners argued that they had a legitimate expectation of continued benefits based on the government's consistent policy to encourage industrialization. The respondents countered that the government's actions were not arbitrary or unjust, and the introduction of a new scheme providing similar incentives in a different form did not defeat the legitimate expectation, especially since the Budgetary Support Scheme was subsumed into the new scheme.