Uflex Limited Unit - I Th Varun Kumar Sharma 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. It reasoned that the Budgetary Support Scheme was introduced as a replacement for the CST exemption, which was abolished with the advent of the IGST Act, 2017. The scheme itself, under clause 7 of SRO 431, explicitly stated that its continuance would be reviewed annually. The introduction of the Turnover Incentive Scheme 2021, effective from 01-04-2021, which provided benefits based on a fixed percentage of gross turnover, was seen as a continuation of incentives in a different form, rather than a withdrawal. The Court found that the two schemes could not operate simultaneously and that the replacement was a logical step. Therefore, the Government's action was not arbitrary, irrational, or unreasonable, and it did not violate the petitioners' legitimate expectations or 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 16-07-2021, which withdrew the Budgetary Support Scheme notified under SRO 431 dated 25-09-2018, effective from 01-04-2021. The petitioners argued this withdrawal violated the doctrines of promissory estoppel and legitimate expectation. The Budgetary Support Scheme was introduced after the adoption of GST, providing reimbursement of IGST at 2% of taxable turnover for interstate supplies, in lieu of previous CST exemptions under the Industrial Policy 2016. The scheme was intended to remain operational until 31-03-2026, subject to annual review.

Key Issues

1. Whether the withdrawal of the Budgetary Support Scheme, notified vide SRO 431 of 2018, by S.O. 239 dated 16-07-2021, is hit by the doctrine of promissory estoppel, thereby violating the legitimate expectations of the petitioners? (This issue turns on the principles of promissory estoppel and legitimate expectation as applied to government policies and incentives). Petitioner's Arguments: The petitioners contended that the Government's action was arbitrary and breached their legitimate expectations, as they had invested in industrial units based on the incentives offered. They argued that the withdrawal of the scheme, which was meant to continue until 2026, constituted a breach of promise. Respondent's Arguments: The respondents argued that the Budgetary Support Scheme was introduced in lieu of the Central Sales Tax (CST) exemption, which ceased to exist with the implementation of the IGST Act, 2017. They contended that the scheme was subject to annual review as per its terms and that a new scheme, the Turnover Incentive Scheme 2021, was introduced to provide similar benefits in a different form, subsuming the earlier scheme. They asserted that the Government's actions were not arbitrary or unreasonable.