Uflex Limited Unit - Ii 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 is not attracted in this case. It found that the Budgetary Support Scheme, notified by SRO 431 of 2018, was introduced immediately after the adoption of the GST regime, replacing the CST exemption. The scheme itself stipulated an annual review of its viability. The Court noted that the Industrial Policy 2021-30 and the subsequent Turnover Incentive Scheme 2021 replaced the Budgetary Support Scheme. The new scheme provided benefits on a fixed percentage of gross turnover, which included taxable turnover for inter-state supplies. The Court reasoned that the Budgetary Support Scheme was subsumed by the Turnover Incentive Scheme 2021, and the change in the mode and manner of providing incentives did not amount to arbitrary or unreasonable action. The Court concluded that the petitioners were not deprived of incentives, but rather received them in a different form. Therefore, the Court found no breach of legitimate expectation or violation of Article 14 of the Constitution of India. The writ petitions were dismissed.

Facts

The petitioners, industrial units established 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 Goods and Services Tax (GST) regime came into effect, providing reimbursement of Integrated Goods and Services Tax (IGST) at 2% of taxable turnover for inter-state supplies, in lieu of previous Central Sales Tax (CST) exemptions under earlier industrial policies. The respondents contended that the withdrawal was necessitated by the introduction of a new Turnover Incentive Scheme 2021, which subsumed the earlier scheme.

Key Issues

1. Whether the withdrawal of the Budgetary Support Scheme, 2018, 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 earlier industrial policies and subsequent schemes. The petitioners argued that the government's consistent policy to encourage industrialization created a legitimate expectation, and the withdrawal of the scheme without adequate justification constitutes a breach of this expectation and promissory estoppel. They contended that the new scheme, while similar in intent, changed the basis of calculation and was implemented abruptly. The respondents argued that the Budgetary Support Scheme was introduced in lieu of the abolished CST exemption due to the GST regime. They asserted that SRO 431 of 2018 itself contained a clause for annual review of its viability. Furthermore, they contended that the new Turnover Incentive Scheme 2021, which came into effect from April 1, 2021, replaced the earlier scheme, ensuring continued support to industrial units, albeit through a different mechanism. They maintained that the government's actions were not arbitrary or unreasonable, and no prejudice was caused to the petitioners.