M/S Lalit Poly Weave LLP v. The State of Assam

Judgment And Order

29.04.2025 JUDGMENT AND ORDER (CAV) Heard Dr. AK Saraf, learned Senior Counsel assisted by Mr. PK Bora, learned counsel for the petitioners. Also heard Mr. B. Chowdhury, learned Standing Counsel, Finance and Taxation Department.

#2. These 3 (three) writ petitions have been filed by the petitioners who established their manufacturing units pursuant to the incentives offered in the Industrial Policy of Assam 2008 and the Assam Industries (Tax Exemption) Scheme, 2009. All these petitioners have set up their industrial and manufacturing units for manufacturing their respective items believing that the petitioners would be able to avail the VAT exemption for a period of 7 (seven) years from the date of commencement of commercial production. In WP(C) No. 2068/2021 the petitioner, namely, M/s Lalit Poly Weave LLP is a limited liability partnership firm having its registered office and factory at the Industrial Growth Centre, Phase-III, Jambari Village No.2, Kamrup, Assam 781124. The petitioner is engaged in the manufacture of PP Woven Bags and sacks. The petitioner in WP(C) No. 2068/2021 is represented by Sri Mahabir Prasad Jain, authorized signatory of the petitioner firm. The petitioner made total investment of Rs.14,33,77,608/- in its industrial unit for land, site development, building, electrical equipments etc. Commercial production in the new industrial unit commenced on 21.09.2013. In order to avail the benefits of VAT remission under the Industrial Policy of Assam , 2008 and the Assam Industries (Tax Exemption) Scheme, 2009 applied for issuance of eligibility certificate bearing no.AIDC/US/EC/623/10/53 dated 04.11.2015. By the said eligibility certificate the petitioner was hold to be entitled to the benefit of exemption under the Assam Industries (Tax Exemption) Scheme, 2009 for a period of 7 years with effect from 21.09.2013 to 20.09.2020 subject to maximum of 100% of the eligible fixed capital investment of unit of Rs.11,83,54,569/-. The said petitioner was accordingly issued the certificate of entitlement bearing No. CTS-21/2016/(356)/101 dated

20.07.2016 holding the petitioner to be entitled to exemption of tax to the extent of Rs.11,83,54,569/- within the period from 21.09.2013 to 20.09.2020.

#3. In WP(C) No.1834/2021 the petitioner, namely, M/s Eco Tech Papers is a partnership firm having its registered office at 2nd Floor, Subham Velocity, Opp Walford, Honu Ram Boro Path, G.S. Raod, Guwahati-781005 and its factory at Viilage- Kamalpur & Dolma. The petitioner is engaged in the business of manufacture of Kraft paper. The petitioner in WP(C) No.1834/2021 is represented by one Sri Rahul Lohia. The petitioner made investment of Rs.102,22,37,180/- in its industrial unit for land, site development, building and other civil construction work etc. Commercial production in the new industrial unit commenced on 26.02.2014. In order to avail the benefits of VAT remission under the Industrial Policy of Assam, 2008 and the Assam Industries (Tax Exemption) Scheme, 2009 applied issuance of eligibility certificate bearing no.AIDC/US/EC/623/10/20243 dated 26.09.2018. By the said eligibility certificate the petitioner was hold to be entitled to the benefit of exemption under the Assam Industries (Tax Exemption) Scheme, 2009 for a period of 7 years with effect from 26.02.2014 to

25.02.2021 subject to maximum of 100% of the eligible fixed capital investment of unit of Rs.59,15,16,915/-. The said petitioner was accordingly issued the certificate of entitlement dated 14.11.2018 holding the petitioner to be entitled to exemption of tax to the extent of Rs.59,15,16,915/- within the period from 26.02.2014

25.02.2021.

#4. The petitioner in WP(C) No.2500/2021, namely, M/s Ramdhenu Packaging Solutions is a partnership firm having its registered office and factory at KB Road, Rowriah (Sensowa Gaon, Borbheta), Jorhat. The petitioner is engaged in the business of manufacture of non- woven fabric bag, paper cub, hide fabric bag. The petitioner in WP(C) No.2500/2021 is represented by Sri Venus Agarwalla. The petitioner made total investment of Rs.1,47,10,497/- in its industrial unit for land, site development, building and other civil construction work etc. Commercial production in the new industrial unit commenced on 25.02.2013. In order to avail the benefits of VAT remission under the Industrial Policy of Assam, 2008 and the Assam Industries (Tax Exemption) Scheme, 2009 applied for issuance of eligibility certificate bearing no.CI&C(II)(US)EC/223/2013/349/46 dated 11.08.2014. By the said certificate the petitioner was held to be entitled to the benefit of exemption of Tax under the Assam Industries (Tax Exemption) Scheme, 2009 tune of Rs.1,47,10,497/- for a period of 7 seven years with effect from

25.03.2013 to 24.02.2020 or at the rate of 150% of the eligible fixed capital investment of Rs.98,06,998/- whichever is earlier. The petitioner was thereafter issued the certificate of entitlement dated

09.01.2015 holding the petitioner to be entitled to be exemption of tax to the extent of Rs.1,47,10,497/-. The said certificate was shown to be valid from 25.02.2013 to 24.02.2020.

#5. All these three writ petitioners are assailing the legality and validity of the Assam Industries (Tax Reimbursement for Eligible Units) (Amendment) Scheme, 2020 framed by notification no. FTX113/2017/186 dated 30.12.2020 issued by the Commissioner and Secretary the Government of Assam Finance (Taxation) Department amending the Assam Industries (Tax Reimbursement for Eligible Units) Scheme, 2017 with immediate effect withdrawing the powers of the Finance (Taxation) Department to extent the time limit for the period of eligibility by a further period not exceeding 5 years in respect of the existing eligible units availing the benefits of exemption under Industrial and Investment Policy of Assam, 2008. In respect of those units or industries who were unable to utilize or avail the full amount of monitory ceiling within the specified period of exemption. Such action of the State respondents are being alleged to be arbitrary, illegal and violative of Article 14 of the Constitution of India.

#6. All these three writ petitions make similar challenges and raise similar questions and therefore, taken up together for hearing.

#7. Dr. AK Saraf, learned Senior Counsel assisted by Mr. PK Bora, leaned counsel for the petitioners submits that the petitioners are aggrieved as they have been deprived from availing or utilizing the full amount of monitory ceiling within the specified period of exemption and such action on the part of the respondents restraining the petitioners from availing the benefits are absolute arbitrary, illegal and violative of Article 14 of the Constitution of India. It is submitted that the petitioners were inspired to set up their industries in their respective locations for manufacturing of the finished products in view of the promises made and the incentives offered under the Industrial Policy of Assam, 2008 and the Assam Industries (Tax Exemption) Scheme, 2009. It is submitted that in order to give effect to the various incentives announced under the Industrial Policy of Assam, 2008, the Government of Assam framed a scheme, namely, the Assam Industries (Tax Exemption) Scheme, 2009 in exercise of powers under Section 54 (1) of the Assam Value Added Tax Act, 2003 and Section 8 (5) of the Central Sales Tax Act for granting exemption partially to such units which manufactures goods in Assam. The said scheme came into force with effect from

01.10.2008. In the said scheme it was mentioned that the benefits given under the scheme shall be available till the Assam VAT Act, 2003 remains in force. It is also stated that the said scheme shall be applicable to the units which manufactures goods in Assam which are considered eligible for partial tax exemption with reference to the Industrial Policy of Assam, 2008. It is submitted that as per the Scheme of 2009, the new industrial units of medium and large section was to be entitled to exemption of tax on sales of finished products for a period of 7 (seven) years subject to maximum of 100% of fixed capital investment. The procedure for grant of eligibility certificate was provided for in Clause 4 of the Scheme and Clause 5 provided for the issue of certificate of entitlement. Accordingly, the writ petitioners made investment of Rs.11,83,54,569/-, Rs.59,15,16,915/- Rs.1,47,10,497/- respectively for setting up its land, site development, buildings, electoral equipments, commercial production in respect of the writ petitioners commenced with effect from 21.09.2013 to 20.09.2020,

26.02.2014 to 25.02.2021 and 25.03.2013 to 24.02.2020 respectively. The eligibility certificate dated 04.11.2015, dated

26.09.2018 and 09.01.2015 respectively were also issued by the appropriate authority certifying that the petitioners have been held to be entitled to the benefit of exemption under the Scheme of 2009 for a period of 7 years subject to the maximum of 100% of the eligible capital investment of the unit. It is therefore submitted that as per the Industrial Policy of Assam, 2008 read with the Scheme of 2009, the Industries eligible for remission of VAT under the Assam VAT Act, 2003 and the central sales tax payable under the Central Sales Tax Act, 1956 are entitled for the benefit for a period of 7 years subject to the maximum of 100% of the fixed capital investment and accordingly, all the petitioners were availing the benefits of tax remission as promised under the Industrial Policy of Assam, 2008 and the Scheme of 2009. However, with effect from 01.07.2017 the Goods and Service Tax regime was introduced all the over the country and the Central Goods and Service Tax Act, 2017 was enacted whereby apart from the other central tax laws, central excise was also subsumed in the Central Goods and Service Tax. Similarly, the State Goods and Service Tax Act, 2017 was introduced along with the Integrated Goods and Service Tax Act, 2017. The writ petitioner in WP(C) No.2068/2021 was issued the certificate under the registration GST Act on 26.09.2017. In WP(C) No.1834/2021, the petitioner had applied and was issued certificate on 31.01.2020 and in WP(C) No. 2500/2021 the writ petitioner had applied and was issued the certificate under the registration GST Act on 19.09.2017. It is submitted that the Government of Assam vide the notification no. FTX.90/2016/71 and notification no.FTX.90/2016/70 both dated

29.06.2017 notified that the Assam Industries (Tax Exemption) Scheme, 2009 and the Assam Industries (Tax Exemption) Scheme, 2015 shall cease to operate on and from the date of coming into force of the Assam Goods and Services Tax Act, 2017 and all eligible units availing tax exemption under the said earlier schemes shall be liable to pay tax under the Assam Goods and Service Tax Act from the date of coming into force of the said Act on the ground that the existing system of tax exemption was not compatible under the GST Regime. Accordingly, all eligible units availing tax exemption under the said earlier schemes became liable to pay tax under the Assam Goods & Services Tax Act, 2017 from the date of coming into force of the said Act.

#8. It is submitted that the Government of Assam thereafter brought out another scheme, namely, Assam Industries (Tax reimbursement for Eligible Units) Scheme, 2017 for granting reimbursement of tax to eligible units under the Industrial and Investment Policy of Assam, 2008 and/or under the Industrial and Investment Policy of Assam, 2014 or those which were covered by earlier Schemes or special notifications. The scope and operation of the scheme is prescribed under the Clause -3 of the said scheme. It is submitted that the Clause -4 of the Scheme provided for determination of amount reimbursable. The proviso to Clause 4 (1)(i) of the Scheme of 2017 provided for that if any existing eligible unit including a mega unit to which the customized tax incentives have been granted, is unable to utilize or avail of the full amount of monetary ceiling within the specified period of exemption, it may make an application to the Finance (Taxation) Department for extension of period of eligibility and upon examination of such an application, if the Finance (Taxation) Department is satisfied that the unit could not achieve the full quantum of monetary ceiling due to some genuine reasons and in other to sustain the industrial unit, it is necessary to extend such time limit, it may, by an order, extend such time limit by a further period not exceeding five years. It is submitted that although by the Scheme of 2017 the Finance (Taxation) Department of Government of Assam had extended the time limit for further period by not exceeding for 5 years in respect of existing eligible units availing the benefits under the Industrial and Investment Policy of Assam, 2008 were unable to utilize or avail the full amount of monetary ceiling within the specified period of exemption, but the same was made limited only in respect of tax accruing in tax of the State Government under the Assam Goods and Services Tax Act, 2017 and thereby the eligible units could not have availed the full benefits as promised under the Policy of 2008 and the Scheme of 2009 within a period of 7 years from the date of commercial production.

#9. Learned senior counsel for the petitioners submits that when the Government of Assam announced the new Industrial & Investment Policy of Assam, 2014 and framed the Assam Industries (Tax Exemption) Scheme, 2015, the State Government was conscious of the fact that GST was going to be introduced very soon and the same was in the final stage of implementation and thereby provided for that the benefit under the Policy of 2014 and Scheme of 2015 may be availed for a period of 15 years from the date of commencement of commercial production subject to the monetary ceiling provided under the said Policy and Scheme. It is further submitted that Although in respect of the industrial unit established under the Industrial Policy of 2014 wherein a period of 15 years was provided to avail the benefit of exemption but in respect of the said units also the proviso to Clause 4(1)(ii) empowered the Finance (Taxation) Department to extend the time limit by a further period not exceeding five (5) years in case the said units could not avail the full quantum of monetary ceiling due to some genuine reasons.

#10. Learned senior counsel submits that since the petitioners could not avail the entire benefit due to the introduction of the GST regime, an application dated 18.08.2020 was addressed to the Finance Secretary, Finance (Taxation) Department requesting for extension of the period of exemption under the Policy of 2008 and

the Scheme of 2009. In the said letter the petitioner firm requested for extension of the period of validity of the Certificate of Entitlement as the petitioner firm could only utilize less than half of the entitlement amount. In the said letter, the Petitioner stated that the entire amount for which the Petitioner was entitled to exemption could not be utilized by the industrial unit of the Petitioner inasmuch as the industrial product of the Petitioner Firm attracted low margin and value addition and as a result output tax generation over the input tax credit was also very low. It was further stated that VAT rate was just 5%/ 6% during VAT Regime and Central Sales Tax 2% against C Form and thus output tax generation was also very low. So only very little could be utilized by the petitioner firm and that since GST inception prices became very much competitive and SGST portion payable by the petitioner firm stayed on a lower side. In support of the prayer for extension of the period of eligibility, the Petitioner stated that PP Granule was the main raw material component which was directly related to crude oil prices in the international market and it keeps on changing with the change in crude oil prices and in turn sales prices of the petitioner’s products change in the same way as PP Granule prices. The prices are extremely volatile and have stayed low for a reasonable period of time, which affected the Sales prices too and thus keeping lower value of value addition and tax payable and that amidst of worldwide COVID 19 pandemic crisis situation where no business houses could escape itself the petitioner firm also witnessed a huge decline on its sales. The Petitioner further stated that because of competitive market situation and introduction of new PP Bags plant in and around Guwahati area, turnover declined in last financial years. The Petitioner, therefore, in the need for survival of its industrial unit in the long run, vide the aforesaid letter prayed for an extension of the validity of the Certificate of Entitlement. The said letter was duly received by the Office of the respondent. However, the said application remained pending and no order whatsoever was passed on the application submitted by the petitioner for extension of the period of exemption. It is submitted that number of similarly situated industrial units whose eligibility period had expired, applied for extension of the period of eligibility and were also granted such extension by the Finance (Taxation) Department for a further period of 5 years. It is submitted that Similar representation were also addressed by the petitioner in and those representations were also kept pending. It is submitted that the said Scheme of 2017 was subsequently amended by the Amendment Scheme of 2020 with effect from 30.12.2020. By the said amendment, the proviso to Clause 4(1)(i) which empowered the Finance (Taxation) Department to extend the period of eligibility in respect of an existing eligible unit who were unable to utilize or avail the full benefit of the period of exemption for genuine reasons by a further period of not exceeding 5 years was withdrawn. By the said amendment of the scheme of 2017 by a saving clause, it has been provided for that all orders issued by the Finance (Taxation) Department for extension of period of eligibility shall be deemed to have been validly issued as if the Scheme had not been amended and all pending applications on which order for extension of period of eligibility had not been passed shall be deemed to have been rejected and thereby making a discrimination between the eligible industrial units in respect of which the orders of extension have already been passed prior to amendment of the said Scheme of 2017 by the Scheme of 2020 and in respect of eligible industrial units whose applications were left pending.

#11. Learned senior counsel for the petitioners highlighted that even before the amendment Scheme of 2020, cases of similarly situated industrial units who could not avail the benefit for the entire period were duly considered and extension was granted for the period of 5 years from the date on which the period of 7 years eligibility had expired. Learned senior counsel for the petitioner submits that The denial of benefit of exemption by not extending the period of eligibility for a further period not exceeding 5 years as provided for in the Scheme of 2017 by the Amendment Scheme of 2020 and making a discrimination between eligible industrial units in respect of which the orders of extension have already been passed prior to amendment of the said Scheme of 2017 by the Scheme of 2020 and in respect of eligible industrial units whose applications were left pending and no orders were passed on the said applications, is not only in violation of the doctrine of promissory estoppel and legitimate expectation but the same also does not fulfill the mandate of Article 14 of the Constitution of India of a reasonable classification. The impugned amendment is in violation of the doctrine of promissory estoppel and the classification made between eligible industrial units in respect of which the orders of extension have already been passed prior to amendment and in respect of eligible industrial units whose applications were left pending and no orders were passed on the said applications has no reasonable nexus with the object sought to be achieved by the Scheme of 2017. He further submits that The petitioner established its industrial unit being inspired and encouraged by the incentives promised in the Policy of 2008 read with the Scheme of 2009 wherein it was promised that the benefit of exemption shall be granted by way of remission of VAT payable under Assam VAT Act, 2003 and central sales tax payable under Central Sales Tax Act, 1956 for a period of 7 years subject to the monetary ceiling fixed in the Policy and Scheme. The eligibility period for availing the benefit, in case of the petitioner, was to expire on 20.06.2019. However, with effect from 01.07.2017 the Goods and Service Tax regime was introduced and thereby the earlier Scheme of 2009 was withdrawn by Notification FTX.113/2017/72 dated 19.01.2018. However, since the State made a clear promise in the Policy of 2008 read with the Scheme of 2009 to grant the benefit of remission of VAT payable under Assam VAT Act, 2003 and central sales tax payable under Central Sales Tax Act, 1956 on establishment of new industrial unit in the State of Assam and the said benefit was withdrawn in view of the enactment of the Assam GST Act, 2017 inasmuch as the existing system of tax exemption was not compatible with the GST regime and thereby a new Scheme, namely Assam Industries (Tax Reimbursement for Eligible Units) Scheme, 2017, was framed for granting reimbursement of tax to eligible units. Since the promise made in the Policy of 2008 as well as Scheme of 2009 was grant of exemption in respect of VAT payable under Assam VAT Act, 2003 as well as central sales tax payable under CST Act, 1956, and the said benefit was curtailed and made applicable only in respect of the tax accruing in cash to the State Government under the Assam Goods & Service Tax Act, 2017, and further because post GST the petitioner was getting benefit of (IGST) paid on import of goods as input tax credit and getting setoff of the IGST paid against CGST/SGST output liability and thereby the liability to pay tax under SGST gradually reduced. The State was aware that an eligible unit would not be able to avail the said benefit of remission within a period of 7 years under the Policy of 2008 and Scheme of 2009, in view of limiting the benefits only in respect of the tax accruing in cash to the State Government under the Assam Goods & Service Tax Act, 2017, the proviso to clause 4 (1)(i) of the Scheme of 2017 provided for an extension of the period of eligibility by a further period of 5 years which was in tune with promises and assurance made in the Policy of 2008 and Scheme of 2009 and thereby the withdrawal of the said power given in the Scheme of 2017 for extending the period of eligibility to those eligible units which could not utilize or avail the full amount of monetary ceiling within the specified period of exemption amounts to resilement of the promises made in the Policy of 2008 and the Scheme of 2009 as well as the Scheme of 2017 and thereby the same is in complete violation of the Doctrine of Promissory Estoppel. It is further submitted that the Government of Assam made a specific promise by announcing the Policy of 2008 and the Scheme of 2009 and intending that it would be acted upon by the promisee and since the Petitioners already acting upon the said promise altered its position by making huge investment in setting up its industrial units, the Government of Assam is bound by its promise and such promise is enforceable against the Government. The doctrine of promissory estoppel would be attracted in such case inasmuch as equity requires that the State Government should be held bound by the promise made by it and the said benefits promised in the Policy of 2008 and Scheme of 2009 cannot be curtailed and/ or taken away by any subsequent act of the State Government. The State Government being fully aware of its position that it cannot resile from the promises and assurances after enactment of the GST Act and with the withdrawal of Scheme of 2009 by Notification dated 19.01.2018 framed the Scheme of 2017 to grant the benefits of exemption to eligible units and further empowered the Finance (Taxation) Department for extension of the period of eligibility in respect of those industrial units which could not achieve the full quantum of monetary ceiling due to some genuine reasons, the State Government cannot be allowed to deny the benefit of extension of the period of eligibility inasmuch as in the earlier period fixed for eligibility, the benefit could not be availed due to introduction of the Assam Goods and Service Tax Act, 2017 and because the benefit was made limited to the tax accruing in cash to the State Government under the Assam Goods & Service Tax Act, 2017 and thereby the respondents, on the basis of doctrine of Promissory Estoppel, are duty bound to make good its promise to the petitioner who acted upon the said promise altered its position to avail the benefits as promised in the Policy of 2008 and Scheme of 2009 and thereby the Scheme of 2020 by which the power for extension of the period of eligibility has been withdrawn is hit by the doctrine of promissory estoppel and thereby the said Scheme of 2020 is liable to be declared as illegal and is further liable to be struck down.

#12. Referring to the judgment of the Apex Court in Motilal Padampat Sugar Mills Co. Ltd. Vs. State of Uttar Pradesh reported in (1979) 2 SCC 409. It is submitted that the Government is not exempt from liability to carry out the representation made by it as to its future conduct and it cannot on some undefined and undisclosed ground of necessity or expediency fail to carry out the promise solemnly made by it, nor claim to be the judge of its own obligation to the citizen on an ex parte appraisement of the circumstances in the obligation has arisen. It is submitted superstructure of the doctrine with its preconditions, strengths and limitations have been outlined by the Apex Court in this landmark judgment of Motilal Padampat (supra). The Apex Court reiterated the well known pre conditions for the operation of the Doctrine of Promissory Estoppel as under: (1) a clear and unequivocal promise knowing and intending that it would be acted upon by the promisee; (2) such acting upon the promise by the promisee so that it would be inequitable to allow the promisor to go back on the promise.

#13. The Court further observed that that the doctrine was not limited only to cases where there was some contractual relationship or other pre-existing legal relationship between the parties. The principle would be applied even when the promise is intended to create legal relations or affect a legal relationship which would arise in future. The Government was held to be equally susceptible to the operation of the doctrine in whatever area or field the promise is made — contractual, administrative or statutory. It is submitted that the limitation of the Doctrine of Promissory Estoppel has also been clearly enunciated in the said judgment. It is submitted that the Apex Court held that the Doctrine of Promissory Estoppel being an equitable Doctrine it must yield when the equity so requires. But it is only if the Court is satisfied, on proper and adequate material placed by the Government, that overriding public interest requires that the Government should not be held bound by the promise but should be free to act unfettered by it, that the Court would refuse to enforce the promise against the Government. It is submitted that the Apex Court had held that the person of the authority making a presentation or promise must have the power to keep in the promise. If the power is there, then subject to the preconditions and limitations noted earlier, it must be exercised. Thus, if the statute does not contain a provision enabling the Government to grant exemption, it would not be possible to enforce the representation against the Government, because the Government cannot be compelled to act contrary to the statute. But if the statute confers power on the Government to grant the exemption, the Government can legitimately be held bound by its promise to exempt the promisee from payment of sales tax.

#14. In support of his contention learned senior counsel for the petitioners refers to the judgment of Century Spg. & Mfg. Co. Ltd. Vs. Ulhasnagar Municipal Council reported in (1970) 1 SCC 582. Referring to the judgment it is submitted that If the representation is acted upon by another person it may, unless the statute governing the person making the representation provides otherwise, result in an agreement enforceable at law, if the statute requires that the agreement shall be in a certain form, no contract may result from the representation and acting thereupon but the law is not powerless to in appropriate cases an equity against him to compel performance of the obligation arising out of his representation. Learned Senior Counsel for the petitioners has referred to the following judgments of the Apex Court: i) Pournami Oil Mills vs. State of Kerala reported in 1986 Supp SCC 728 ii) State of Bihar vs. Usha Martin Industries Ltd. reported in 1987 Supp SCC 710 iii) Shri Bakul Oil Industries vs. State of Gujarat reported in (1987) 1 SCC 31 iv) Pawan Alloys & Casting (P) Ltd. Vs. UP SEB reported in (1997) 7 SCC 251 v) Mahabir Vegetable Oils (P) Ltd. Vs. State of Haryana reported in (2006) 3 SCC 620 vi) State of Punjab vs. Nestle India Ltd. reported in (2004) 6 SCC 465 vii) Kasinka Trading vs. Union of India reported in (1995) 1 SCC 274 viii) MRF Ltd. Vs. Asstt. CST reported in (2006) 8 SCC 702 ix) State of Jharkhand vs. Brahmaputra Metallics Ltd. In Civil Appeal NO.3860- 3862/ 2020.

#15. The further submission of the learned Senior Counsel for the petitioners is that the State authorities as well as its limbs covered by the sweep of Article 12 of the Constitution of India being treated as ‘State’ within the meaning of the said article, can be made subject to the equitable doctrine of Promissory Estoppel in cases where because of their representation the party claiming Estoppel has changed its position and if such an Estoppel does not fly in the face of any statutory prohibition, absence of power and authority of the promisor and is otherwise not opposed to public interest, and also when equity in favour of the promisee does not outweigh equity in favour of the promisor entitling the latter to legally get out of the promise. Since the benefits were extended by the Scheme of 2017 after withdrawal of the Scheme of 2009 in view of enactment of the Assam GST Act, 2017 and power was conferred by the said Scheme of 2017 to extend the period of eligibility in view of the fact that the benefit of remission of VAT payable under Assam VAT Act, 2003 as well as central sales tax payable under CST Act, 1956, was curtailed and made applicable only in respect of the tax accruing in cash to the State Government under the Assam Goods & Service Tax Act, 2017, withdrawal of the said power of extension of the period of eligibility would amount to denying and curtailment of the benefit as promised in the Scheme and thereby the withdrawal of the said power by Scheme of 2020 is absolutely illegal, arbitrary, against the doctrine of promissory estoppel and is liable to be set aside and/ or quashed. It is submitted that that the amendment of the proviso to Clause 4(1)(i) of the Scheme of 2017 is illegal and arbitrary as in view of the Industrial Policy of Assam, 208 and the Clause 4(1)(i) of the Scheme of 2017, the Petitioner has its legitimate expectation that the Petitioner’s application for extension of the period of eligibility shall also be allowed as was allowed in the case of similarly situated industrial units.

#16. Learned Senior Counsel for the petitioners submits that in view of proviso to clause 4(1)(i) of the Scheme of 2017, the petitioner expected that in case of the petitioner also the period of eligibility shall be extended by a further period of 5 years as extended in respect of other industrial units and thereby the withdrawal of the said power of extension of the period of eligibility and providing for that all the orders already issued by the Finance (Taxation) Department for extension of the period of eligibility shall deemed to have been validly issued and all pending applications on which order for extension of period of eligibility has not been passed shall be deemed to have been rejected would go against the settled principles of legitimate expectation. It is submitted that the doctrine of legitimate expectation is one of the ways in which the guarantee of non-arbitrariness enshrined under Article 14 finds concrete expression. If denial of legitimate expectation in a given case amounts to denial of a right that is guaranteed or is arbitrary, discriminatory, unfair or biased, gross abuse of power or in violation of principles of natural justice, the same can be questioned on the well-known grounds attracting Article 14 of the Constitution.

#17. In support of his contention he presses into service the judgment of the Apex Court rendered in Union of India vs. Lt. Col. P.K. Choudhary reported in (2016) 4 SCC 236 to submit that in the said matter the Apex Court went on to hold that if denial of legitimate expectation in a given case amounts to denial of a right that is guaranteed or is arbitrary, discriminatory, unfair or biased, gross abuse of power or in violation of principles of natural justice, the same can be questioned on the well-known grounds attracting Article 14 of the Constitution but a claim based on mere legitimate expectation without anything more cannot ipso facto give a right to invoke these principles.

#18. In support of his contention he further referred to the judgment of the Apex Court rendered Food Corporation of India vs. Kamdhenu Cattle Feed Industries reported in (1993) 1 SCC 71.

#19. Referring to the above judgments it is submitted that in every State action, the State and all its instrumentalities have to conform to Article 14 of the Constitution of which non-arbitrariness is a significant facet. There is no unfettered discretion in public law: A public authority possesses powers only to use them for public good. This imposes the duty to act fairly and to adopt a procedure which is ‘fairplay in action’. Due observance of this obligation as a part of good administration raises a reasonable or legitimate expectation in every citizen to be treated fairly in his interaction with the State and instrumentalities, with this element forming a necessary component of the decision-making process in all State actions. To satisfy this requirement of non-arbitrariness in a State action, it is, therefore, necessary to consider and give due weight to the reasonable or legitimate expectations of the persons likely to be affected by the decision or else that unfairness in the exercise of the power may amount to an abuse or excess of power apart from affecting the bona fides of the decision in a given case. The decision so made would be exposed to challenge on the ground of arbitrariness. It is further submitted that that mere reasonable or legitimate expectation of a citizen may not by itself be a distinct enforceable right, but failure to consider and give due weight to it may render the decision arbitrary, and this is how the requirement of due consideration of a legitimate expectation forms part of the principle of non-arbitrariness, which is a necessary concomitant of the rule of law. Every legitimate expectation is a relevant factor requiring due consideration in a fair decision-making process. It is therefore submitted that the present Amendment Scheme of 2020 by which the power to extend the period of eligibility has been withdrawn, but for industrial units in respect of which the orders have already been issued by the Finance (Taxation) Department for extension of the period of eligibility have been held to be valid and denying the said benefit only in respect of industries whose applications are pending is a clear example of the arbitrary action of the State and such an action of the State cannot be justified on the touchstone of Article 14 of the Constitution. It is further submitted that the action of the State or its instrumentality must be in conformity with some principle which meets the test of reason and relevance. Functioning of a “democratic form of Government demands equality and absence of arbitrariness and discrimination”. The rule of law prohibits arbitrary action and commands the authority concerned to act in accordance with law. Every action of the State or its instrumentalities should neither be suggestive of discrimination, nor even apparently give an impression of bias, favouritism and nepotism. If a decision is taken without any principle or without any rule, it is unpredictable and such a decision is antithesis to the decision taken in accordance with the rule of law. It is respectfully submitted that power vested by the State in a public authority should be viewed as a trust coupled with duty to be exercised in larger public and social interest. A decision taken in an arbitrary manner contradicts the principle of legitimate expectation. An authority is under a legal obligation to exercise the power reasonably and in good faith to effectuate the purpose for which power stood conferred. The powers must be exercised bona fide for the purpose and for none other. In the present case, it will be clear that the Amendment Scheme of 2020 by which the power for extending the period of eligibility has been withdrawn with immediate effect by providing that only the orders already issued by the Finance (Taxation) Department for extension of the period of eligibility shall be deemed to be validly issued and all pending applications on which order for extension of period of eligibility has not been passed shall be deemed to have been rejected, clearly demonstrates that the same was not exercised in good faith and does not effectuate the purpose for which the said power stood conferred and the same is not for public at large and thereby the impugned Scheme of 2020 is violative of Article 14 of the Constitution. Learned senior counsel for the petitioner further submits that the industrial units which were established on the basis of the promises and assurances made in the Policy of 2008 read with the Scheme of 2009 are a class itself and thereby the further classification made between such industrial units by denying the benefit of extension of the time limit for availing the exemption, and industrial units in respect of which orders for extension of the period of eligibility have already been passed prior to omission of proviso to clause 4(1)(i) of the Scheme of 2017 by the Amendment Scheme of 2020 with effect from 30.12.2020 is an unreasonable classification, having no nexus with the objects sought to be achieved and thereby the Scheme of 2020 by which the proviso to clause 4(1)(i) has been deleted and extension of the period of eligibility has been granted only in respect of industrial units in respect of which orders have been passed prior to amendment of the Scheme of 2017 is an unreasonable class and hit by Article 14 of the Constitution. The Amendment Scheme of 2020 has treated similarly situated industrial units in two different manner by making unreasonable classification and thereby discriminating between industrial similarly situated by limiting the benefits of extension of the period of eligibility only in respect of industrial units in respect of which orders for extension of the period of eligibility have already been passed and such a discrimination is a hostile discrimination inasmuch as equals have been treated unequally and thereby such discrimination which is a hostile classification made under the Scheme of 2020 cannot withstand the scrutiny of Article 14 of the Constitution of India and thereby the said classification and/or discrimination is clearly in violation of Article 14 of the Constitution of India and thereby the Amendment Scheme of 2020 is liable to be declared illegal and consequently ultra vires and the respondent authorities are liable to be directed to also consider the case of the petitioner for extending the period of eligibility as promised by the Scheme of 2017.

#20. Referring to the judgment of the Apex Court in Budhan Choudhury vs. State of Bihar AIR 1955 SC 191 it is submitted that while Article 14 forbids class legislation, it does not forbid reasonable classification for the purposes of legislation. In order, however, to pass the test of permissible classification two conditions must be fulfilled, namely, (i) that the classification must be founded on an intelligible differentia which distinguishes persons or things that are grouped together from others left out of the group, and (ii) that that differentia must have a rational relation to the object sought to be achieved by the statute in question. The classification may be founded on different bases; namely, geographical, or according to objects or occupations or the like. What is necessary is that there must be a nexus between the basis of classification and the object of the Act under consideration. It is also well established by the decisions of this Court that Article 14 condemns discrimination not only by a substantive law but also by a law of procedure.

#21. In support of his contention he referred to the judgment of the Apex Court rendered in Ram Krishna Dalmia vs. SR Tendolkar AIR 1958 SC 538, Nagpur Improvement Trust vs. Vithal Rao reported in (1973) 1 SCC 500 and EP Royappa vs. State of TN reported in (1974) 4 SCC 3.

#22. It is therefore submitted that when any statute and/ or Notification or Scheme is challenged on a question of its validity under Article 14 of the Constitution, then in determining the validity or otherwise of such a statute and/ or Notification or Scheme the court has to examine whether such classification is or can be reasonably regarded as based upon some differentia which distinguishes such persons or things grouped together from those left out of the group and whether such differentia has a reasonable relation to the object sought to be achieved by the statute, no matter whether the provisions of the statute are intended to apply only to a particular person or thing or only to a certain class of persons or things. A statute may direct its provisions against one individual person or thing or to several individual persons or things but no reasonable basis of classification may appear on the face of it or be deducible from the surrounding circumstances, or matters of common knowledge. In such a case the court will strike down the law as an instance of naked discrimination, as was done by the Apex Court in Ameerunnissa Begum v. Mahboob Begum [(1953) SCR 404] and Ramprasad Narain Sahi vs. State of Bihar [(1953) SCR 1129]. In support of the submissions, the petitioner also relies on the decision of the Apex Court in State of UP vs Deepak Fertilizers & Petrochemical Corp. Ltd., (2007) 10 SCC 342.

#23. Referring to the various judgments of the Apex Court learned Senior Counsel for the petitioners submits that every differentiation is not discrimination but at the same time, differentiation must be founded on pertinent and real differences as distinguished from irrelevant and artificial ones. A simple physical grouping which separates one category from the other without any rational basis is not a sound or intelligible differentia. The separation or segregation must have a systematic relation and rational basis and the object of such segregation must not be discriminatory.

#24. Learned Senior Counsel for the petitioners has also referred to the judgment rendered in Ayurveda Pharmacy vs. State of Tamil Nadu reported in (1989) 2 SCC 285, Amarendra Kumar Mohapatra