# KASINKA TRADING AND ANR. ETC. ETC v. UNION OF INDIA AND ANR

- **Citation:** [1994] Supp. 4 S.C.R. 448
- **Court:** Supreme Court of India
- **Decided:** 1994-10-18
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/kasinka-trading-and-anr-etc-etc-v-union-of-india-and-anr-12567
- **Pages:** 20

## Headnote

A
KASINKA TRADING AND ANR. ETC. ETC.
v.
UNION OF INDIA AND ANR.
OCTOBER 18, 1994
B
!M.N. VENKATACHALIAH, CJ AND DR. A.S. ANAND, J.]
Customs Act, 19.62 :
Section 25(1}-Notification exempting certain goods from duty-SubC sequent notification withdrawing the exemption-Validity of the withdrawal
notification-Applicability of the doctrine of Promissory Estoppel.
D
E
Administrative Law :
Doctrine of Promissory Estoppef-Meaning and applicability of
In the first batch of appeals the respondents issued a notification
dated 15.3.1979 exempting PVC resins from basic import dnty. The
notification stated that it would be effective upto and inclusive of31.3.1981.
However, before the expiry oi the term another notification dated
16.10.1980 was issned withdrawing the exemption granted earlier.
In the second batch of appeals the respondent issned notifications
dated 18.4.1980 exempting aluminium wire rods and aluminium ingots
from the whole of customs duty as well as additional duty Ieviable, as also
auxiliary duty. By notification dated 29.8.1980, the earlier notification was
F
rescinded. Again on 9.9.80, a notification was issued exempting the
aluminium wire rods and ingots. During the period of ten days i.e. from
29.8.80 to 9-9-80, importers were required to pay both the customs duty
as well as the auxiliary duty, while imports of goods which arrived before
29.8.80 and after 9.9.80 were not subject to the levy.
G
Appeilants filed writ Petitions before the High Court ch.illenging the
notification by which the exemption was withdrawn, contending that the
Central Government must be held bound by the representation it had
made in the exemption notification and it was estopped from going back
on its promise. The High Court dismissed the writ petitions. Hence these
H appeals.
448
,
KASINKA TRDG. v. U.O.I.
449
Dismissing the appeals, this Court
HELD : 1.1 It has been settled by this Court that the doctrine of
promissory estoppel is applicable against the Government also particularA
ly where it is necessary.to prevent fraud or manifest injustice. The doctrine,
however, cannot be pressed into aid to compel the Government or the
public authority to carry out a representation or promise which is contrary B
to law or which is outside the authority or power of the officer of the
Government or of the public authority to make. There is preponderance
of judicial opinion that to invoke the do~trine of promissory estoppel,
clear, sound and positive foundation must be laid in the petition itself by
the party invoking the doctrine and that bald expressions, without any C
supporting material, to the effect that the doctrine is attracted because the
party invoking the doctrine has altered its position relying on the assurance of the Government would not be sufficient to press into aid the
doctrine. (457-G-H, 458-A-B]
1.2. The doctrine of promissory estoppel cannot be invoked in the D
abstract and the courts are bound to consider all aspects including the
results sought to be achieved and the public good at large while considering the applicability of the doctrine, the courts have to do equity and
therefore the fundamental principle of equity must for ever be present to
the mind of the court while considering the applicability of the doctrine. E
The doctrine must yield when the equity so demands, if it can be shown
having regard to the facts and circumstances of the case that it would be
inequitable to hold the Government or the public authority to its promise.
(458-B-C]
Union of India v. Anglo Afgan Agencies Pvt. Ltd., (1968] 2 SCR 366; F
Century Spi11ning and Mfg. Co. Ltd. and Anr., v. The Ulhasnagar Municipal
Council andAnr., [1970]3 SCR 854; Mis Motilal Padampat Sugar Mills Co.
(P) Ltd. v. f:tate of UP and Ors., (1979] 2 SCR 641; lit Ram Shive Kumar
and Ors. etc. v. State of Haryana andAnr., (1980] 3 SCR 689; Union of India
v. Godfrey Philips India Ltd., [1985] 4 SCC 369; Indian Express Newspapers G
(Born) Pvt. L_td. and Ors. v. Union of India and Ors., (1985

## Text

_Characters 0–39,922 of 49,734. This is a partial read: ask again with offset=39922 for what follows._

A
KASINKA TRADING AND ANR. ETC. ETC.
v.
UNION OF INDIA AND ANR.
OCTOBER 18, 1994
B
!M.N. VENKATACHALIAH, CJ AND DR. A.S. ANAND, J.]
Customs Act, 19.62 :
Section 25(1}-Notification exempting certain goods from duty-SubC sequent notification withdrawing the exemption-Validity of the withdrawal
notification-Applicability of the doctrine of Promissory Estoppel.
D
E
Administrative Law :
Doctrine of Promissory Estoppef-Meaning and applicability of
In the first batch of appeals the respondents issued a notification
dated 15.3.1979 exempting PVC resins from basic import dnty. The
notification stated that it would be effective upto and inclusive of31.3.1981.
However, before the expiry oi the term another notification dated
16.10.1980 was issned withdrawing the exemption granted earlier.
In the second batch of appeals the respondent issned notifications
dated 18.4.1980 exempting aluminium wire rods and aluminium ingots
from the whole of customs duty as well as additional duty Ieviable, as also
auxiliary duty. By notification dated 29.8.1980, the earlier notification was
F
rescinded. Again on 9.9.80, a notification was issued exempting the
aluminium wire rods and ingots. During the period of ten days i.e. from
29.8.80 to 9-9-80, importers were required to pay both the customs duty
as well as the auxiliary duty, while imports of goods which arrived before
29.8.80 and after 9.9.80 were not subject to the levy.
G
Appeilants filed writ Petitions before the High Court ch.illenging the
notification by which the exemption was withdrawn, contending that the
Central Government must be held bound by the representation it had
made in the exemption notification and it was estopped from going back
on its promise. The High Court dismissed the writ petitions. Hence these
H appeals.
448
,
KASINKA TRDG. v. U.O.I.
449
Dismissing the appeals, this Court
HELD : 1.1 It has been settled by this Court that the doctrine of
promissory estoppel is applicable against the Government also particularA
ly where it is necessary.to prevent fraud or manifest injustice. The doctrine,
however, cannot be pressed into aid to compel the Government or the
public authority to carry out a representation or promise which is contrary B
to law or which is outside the authority or power of the officer of the
Government or of the public authority to make. There is preponderance
of judicial opinion that to invoke the do~trine of promissory estoppel,
clear, sound and positive foundation must be laid in the petition itself by
the party invoking the doctrine and that bald expressions, without any C
supporting material, to the effect that the doctrine is attracted because the
party invoking the doctrine has altered its position relying on the assurance of the Government would not be sufficient to press into aid the
doctrine. (457-G-H, 458-A-B]
1.2. The doctrine of promissory estoppel cannot be invoked in the D
abstract and the courts are bound to consider all aspects including the
results sought to be achieved and the public good at large while considering the applicability of the doctrine, the courts have to do equity and
therefore the fundamental principle of equity must for ever be present to
the mind of the court while considering the applicability of the doctrine. E
The doctrine must yield when the equity so demands, if it can be shown
having regard to the facts and circumstances of the case that it would be
inequitable to hold the Government or the public authority to its promise.
(458-B-C]
Union of India v. Anglo Afgan Agencies Pvt. Ltd., (1968] 2 SCR 366; F
Century Spi11ning and Mfg. Co. Ltd. and Anr., v. The Ulhasnagar Municipal
Council andAnr., [1970]3 SCR 854; Mis Motilal Padampat Sugar Mills Co.
(P) Ltd. v. f:tate of UP and Ors., (1979] 2 SCR 641; lit Ram Shive Kumar
and Ors. etc. v. State of Haryana andAnr., (1980] 3 SCR 689; Union of India
v. Godfrey Philips India Ltd., [1985] 4 SCC 369; Indian Express Newspapers G
(Born) Pvt. L_td. and Ors. v. Union of India and Ors., (1985] 1 SCC 641;
Poumami Oil Mills and Ors. v. State of Kera/a and Anr., (1986] Supp. SCC
728; ~I Oil Industries and Anr. v. State of Gujarat and Ant., (1987]_1
SCR 185;Asstt. Commissioner of Commercial Taxes and Ors. v. Dharmendra
Trading Co. and Ors., (1988] 3 SCC 570; Amrit Banaspati C/J. Ltd. and
Anr. v. State of Punjab and Anr., [1992] 2 SCC 411; Union of India and Ors. H
450
SUPREME COURT REPORTS [1994] SUPP. 4 S.C.R.
A
v. Hindustan Development Corporation and Ors, (1993) 3 JT SC 15; Excise
Commissioner, U.P. Allahabad etc. etc. v. Ram Kumar etc. etc., AIR (1976)
SC 2237 and Subhash Photographic v. Union of India, (1993) 66 ELT 3,
B
referred to .
. .
2.1. With a view to equalising sale prices of the indigenous and the
imported material and to make the commodity available to the consumer
at the uniform price, keeping in view the trends in the snpply of the
material, that the Cabinet had decided to issue the exemption Notification
under Section 25(1) of the Customs Act, 1962. Subsequently, when it was
found and realised that the international prices of the product were falling
C and consequently the import prices had become lower than the ex-factory
prices of the indigenous material, the case was examined by the Government of India and it was decided in "public interest" to withdraw the
exemption Notification. The Union of India has disclosed the circumstances under which the exemption was initially granted as well as the change
D of circumstances which warranted the withdrawal of the exemption
notification. The reasons given by the Union of India justifying withdrawal
of the exemption notification are not irrelevant to the exercise of the power
tit withdraw the exemption in 'public interest' nor are the same shown to
be insufficient to support the exercise of that power. (461-D-G]
E
2.2 From the material on record it is apparent that the exemption
Notification issued under Section 25(1) of the Act in "public interest" was
designed to off set the excess price which the local entrepreneurs were
required to pay for importing the goods at a time when the difference
between the indigenous product and the imported prodnct was substantial.
F
No importer could be expected to import the goods after paying duty and
incur losses. The exemption Notification, was therefore, issued with a view
to off set the losses to the extent possible and not as a potential sonrce of
extra profit for the importer. Again, at the time when the Notification was
withdrawn by the Government there was no scope for any loss to be
suffered by the importers. It is abundantly clear from the records that the
G necessity for the continuation of the exemption, in view of the changed
circumstances, was no longer necessary. The exemption Notification did
not hold out to the appellant any enforceable promise. (461-H, 462-A-B]
3. Admittedly, the Notification was not even intended to be an incepH tive for import. The Notification on the plain langnage of it was conceived
KASINKA TRDG. v. U.0.1.
451
and issued on the Central Government "being satisfied that it is necessary A
in the public interest so to do". Strictly speaking, therefore, the Notification
cannot be said to have extended any
11representation
11 much less a "promise"
to a party getting the benefit of it to enable it to invoke the doctrine of
promissory estoppel against the State. [463-D]
Malhotra and Sons v. Union of India, AIR (1976) J & K 41 and Excise B
Commissioner v. Ram Kumar, AIR (1976) SC 2237, referred to.
4. The burden of customs duty etc. is passed on the consumer and
therefore the question of the appellants being put to a huge loss is not
understandable. No injustice has been done much less fraud practised by C
the Government in withdrawing the exemption. [ 464-H, 465-A]
5. The withdrawal of exemption "in public interest" is a matter of
policy and the courts would not bind the Government to its policy decisions
for all times to come irrespective of the satisfaction of the Government that
a change in the Policy was necessary in the "public interest". The courts do D
not interfere with the fiscal policy where the Government acts in "public
interest" and neither any fraud or lack of bonafides is alleged, much less
established. The Government has to be left free to determine the priorities
in the matter of utilisation of finances and to act in the "public interest"
while issuing or modifying or withdrawing an exemption Notification under
Section 25(1) of the Act. [465-C-D]
E
6. Since the Government in the instant case was satisfied that the very
"public interest" which had demanded a total exemption from payment of
customs duty now demanded that the exemption should be withdrawn, it
was free to act in the manner it did. If the Notification could be validly
issued in "public interest" there is no reason why it could not be also
curtailed in "public interest". Individual interest must yield in favour of
societal interest. [ 465-G-H, 466-A]
CIVIL APPELLATE JURISDICT.ION : Civil Appeal No. 4336 of
1983 etc. etc.
From the Judgment and Order dated 16.3.83 of the Delhi High Court
in W.A No. 1671 of 1980.
F
G
Ashok H. Desai, Harish N. Salve, S.K. Dholakia, Ravindra Narain,
Ashok Sagar, Ms. Arnita Mitra, D.N. Mishra for the J.B.D. & Co., Ms. H
452
SUPREME COURT REPORTS (1994] SUPP. 4 S.C.R.
A
Bina, P.H. Parekh, A.K. Agarwal, M. K. D. Namboodiary, Ms. Yashmin
Tarapore, Janendra Lal, Ms. Alpana Podar, Kailash Vasdev, Moniak
Mobil, Ms. Meenakshi, Ms. Mena Gupta, S. Ganesh, Rajiv Garg, N.D.
Garg, U.A. Rana, Anand Prasad, Rajiv Tyagi for Gagrat & Co., G.L.
Rawal, Alpana Poddar, Kailash Vasdev, Vimal Roy, Anip Sachthey, Ms.
B
c
D
E
F
G
H
Kamini Jaiswal, R.K. Mehta, K.R. Nambiar, A.N. Kirpal, K.K. Gupta,
Kishan Kumar Ms. Poonam Madan for Khaitan & Co. for the appellants.
D.N. Dwivedi, A.K. Ganguli, A. Subba Rao, Ms. Sushma Suri, Dilip
Tandon, P. Parmeswaran, C.V.S. Rao and Ms. A. Subhashini for the
Respondents.
The Judgment of the Court was delivered by
DR. ANAND, J. Leave granted in (C.A.Nos. 6983, 6984 & 6985 of
1994) SLP (c) Nos. 7370, 12304/83 and 725/84.
These two batches of appeals by special leave are directed against
the judgment of the High Court of Delhi dismissing the writ petitions filed
by the appellants, challenging the action of the Union of India in withdrawing a time bound exemption Notification No. 66 dated 15.3.1979 for the
import of PVC resins. Notification No. 66 dated 15.3.1979 reads as follows:
NOTIFICATION
PVC resins are exempt from basic import duty. 66 - Cus. Dt.
15.3.1979 as amendment by 1780Cus. Dt. 29.8.79, 37 - Cus. dt.
253.80.
G.S.R. - In exercise of the powers conferred by sub-section (1)
of Section 25 of the Customs Act, 1962 (52 of 1962). and in
supersession of the Notification of the Government of India in the
Ministry of Finance, Department of Revenue, No.145 - Customs
dated 27th July 1978, the Central Government, being satisfied that
it is necessary in the public interest so to do, hereby exempts
polyvinyl chloride resins, falling within chapter 39 of the First
Schedule to the Customs Tariff Act 1975 (51 of 1975) when
irriported into India, from the whole of the duty of Customs
LeViable therein which is specified in the said First Schedule.
This Notification shall be in force upto and inclusive of 31st
KASINKA TRDG. v. U.0.1. [DR. ANAND, J.]
March 1981."
453
Before the expiry of the time fixed in the Notification i.e. 31.3.1980
the withdrawal notification bearing No. 205 dt. 16.10.80 was issued which
reads as follows :
"New Delhi the 16th Oct. 1980
24th Asvina 1902 (SAKA)
NOTIFICATION
CUSTOMS
A
B
G.S.R. In exercise of the powers conferred by sub-section (1)
C
of Section 25 of the Customs Act, 1962(52 of 1962) and in supersession of the Notification of the Government of India in the
Ministry of Finance, Department of Revenue No.66 Customs,
dated the 15th March 1979, the Central Government, being satisfied that it is necessary in the public interest so to do, hereby D
exempts polyvinyl chloride resins, falling within chapter 39 of the
First Schedule to the Customs Tariff Act, 1975 (51 of 1975), when
imported into India, from so much of the duty of customs leviable
thereon which is specified in the said First Schedule as is in excess
four percent ad-volorem.
E
Sci/- (K. Chandramouli)
Under Secretary to the Govt. of India
No. 205/F. No.355/141/89/Cus. 1.
Attested
F
(V.K. Mulick)
Asstt. Collector of Customs,
Correspondence Deptt."
The appellants, in these appeals, invoking the doctrine of promissory G
estoppel have urged that the Central Government could not have
withdrawn the exemption before 31.3.1981, because relying on the exemption Notification, the appellants had placed orders for the import of PVC
resin on the understanding that the PVC resin was totally exempt from.
customs duty. It is argued that the Government must be held bound by the
representation it had made in the exemption Notification and it was H
454
SUPREME COURT REPORTS [1994] SUPP. 4 S.C.R,
A
estopped on the basis of the promissory estoppel to go back on its promise.
B
Reliance has been placed on various judgments of this Court in support of
the argument that the doctrine of promissory estoppel can be invoked to
bind the Government to its promise. We shall refer to the judgments at the
appropriate place in this Judgment.
The respondents have supported the judgment of the High Court and
urged that though the doctrine of promissory estoppel can in appropriate
cases be invoked against the Government to bind it to its promise, the
doctrine, however, has no application to the present appeals because to the
exemption had been withdrawn in 'public interest' and the individual
C interest must give way to the public interest. It is urged that the doctrine,
being a product of equity, most give way when equity so demands. Argued
Mr. Ganguli, learned senior counsel appearing for the respondents, that
the doctrine of promissory estoppel cannot operate against the State to the
detriment of the society at large. If the Government after a review of its
D policy finds that modification, alteration or ~upersession is required, in its
earlier policy, in the larger public interest, the courts cannot debar it from
reviewing its policy, except in cases, where the subsequent act of the
Government can be shown not to be in public interest. The Government,
it is urged, must be given a free hand to determine the priorities and unless
E
it can be established that while functioning in its sovereign, government or
public capacity, as distinct from its executive or commercial capacity, its
action is not bonafide or is actuated extraneous consideration, the courts
will not allow a party to invoke the doctrine of promissory estoppel against
the Government. It is submitted that the Notification No. 66 of 1979 had
been superseded in the public interest for good and valid reasons and the
F
judgment of the High Court did not call for any interference.
The Customs Act 1962 consolidates and amends the law relating to
customs spread over in the Sea Customs Act 1878, the Land Customs Act
1924 and the Indian Aircraft Act 1934. The Act with came into force on
February 1, 1963 seeks to codify the entire law relating to sea, land, and
G air customs into a single comprehensive measure. Customs duties or tariffs
are legal duties levied on the transit of goods from one country to another.
They are both the source of revenue to the State as well as regulatory
measures to protect and prmnote indigenous industries and trade. The
Customs Tariff Act 1975, was enacted by the Parliament, with a view to
H consolidating and amending the law relating to customs duties as com-
KASINKA TRDG. v. U.O.l. [DR. ANAND, J.]
455
plimentary to the Act. Section 57 of the Customs Act confers upon the A
Central Board of Excise and Customs the power to make regulations
consistent with, and the rules to generally to carry out the purposes of, the
Act. Sub-section (2) thereof particularises certain matters with respect to
which regulations can be made. The specification of certain matters in
sub-section (2) is of course without prejudice to the generality of the power B
conferred by sub-section (1). Section 156 of the Act confers upon the
Central Government the power to make rules consistent with the Act
generally to carry out the purposes of the Act and sub-section (2) of
Section 156 specifies the matters with respect to which rules can be made.
The specification in sub-section (2) is also without prejudice to the
generality of the power conferred by sub-section (1).
C
The Parliament has designated two authorities i.e. Central Government and the Central Board of Excise and Customs to make rules/regulations to carry out the purposes of the Act generally. The character of rules
and the regulations made under Sections 156 and 157 respectively is the D
same, namely, they constitute delegated legislation.
Section 12 of the Customs Act, which is the
charging section,
provides that duties of customs shall be levied at such rates as may be
specified under the Customs Tariff Act 1975 or any other law for the time
being in force on the goods imported into India. Section 2 of the Customs E
Tariff Act 1975 read with the First and Second Schedule thereto lays down
the rates at which duties of customs shall be levied under the Customs Act
on various goods imported into India. Section 25 of the Act, with which we
are primarily concerned in this batch of appeals, confers powers on the
Central Government to grant exemptions from levy of duty in "public F
interest". Sub-sections (1) and (2) of Section 25 which are relevant for our
purposes provide as under :
"Power to grant exemption from duty -
( 1) If the Central Government is satisfied that it is necessary in G
the public interest so to do it may, by notification in the Official
Gazette, exempt generally either absolutely or subject to such
conditions (to be fulfilled before or after clearance) as may be
specified in the notification goods of any specified description from
the whole or any part of duty of customs leviable therein.
H
A
B
c
456
SUPREME COURT REPORTS [1994] SUPP. 4 S.C.R.
(2) If the Central Government is satisfied that it is necessary in
the public interest so to do, it may, b:• special order in each case,
exempt from the payment of duty, under circumstances of an
exceptional natural to be stated in such order, any good on which
duty is leviable."
The power to grant exemption from duty, wholly or in part, on the
plain language of Section 25(supra) is contingent upon the satisfaction of
the Government that it would be in "public interest' to do so. Thus, "public
interest" is the guiding criteria for exercising the power under Section 25
(Supra).
Having noticed the background and the relevant provisions as also
two Notifications, it shall now be appropriate to refer in brief to the facts
of the cases before us. For the sake of convenience, we shall refer to the
facts of the case as appearing in the Paper Book of Kasinak Trading & Ors.
D v. Union of India & Ors., C.A. No. 4336/93. The appellants are importers
of P.V.C. resins which at the relevant time were chargeable to basic
customs duty under Tariff Entry No. 39. 01/06 of the Customs Tariff Act
Act 1975 read with Customs Act 1962. In addition to it, the import of PVC
resins is also chargeable to auxilliary duty, additional duty and special duty
E
F
of customs. Respondent No. 1 issued Notification No. 66 dated 15.3.1979
under Section 25 of the Customs Act 1962, exempting PVC resins from the
whole of the basic customs duty payable on the import of PVC resins till
31st March 1981. The appellants say that they had placed indents with their
indenting agents for the import of PVC resins on the basis of the representation that the exemption as granted by the Notification dated 15th
March 1979 would continue to remain effective till 31st March 1981, but
Respondent Nos. 2 issued another Notification bearing No. 205 dated 16th
October 1980 (supra) (hereinafter withdrawal Notification) purporting to
supersede Notification No. 66 dated 15th March 1979, before its expiry
date i.e. before 31st March 1981. The effect of the withdrawal Notification
was to do away the total exemption from the basic customs duty allowed
G by the said earlier Notification No. 66 dated 15th March 1979, and instead
to direct levy of 40% basic customs duty on the imports of PVC resins. The
grievance of the appellants is that they had placed orders for the import
of PVC resins on the basis of the exemption granted under Notification
No. 66 dated 15th March 1979 which was to remain in force till 31st March
H 1981 and had so adjusted their affairs, that if they are compelled to pay
'
KASJNKA TRDG. v. U.0.1. [DR. ANAND, J.]
457
basic customs duty at the rate of 40% ad valorem in respect of their orders A
for the impcirt of PVC resins they would suffer a great loss since their
goods arrived in India before 31st March 1981 but after the date of
withdrawal of the exemption Notification by the Notification dated
16.10.1980. Aggrieved by the issuance of notification dated 16th October
1980 superseding the Notification dated 15th March 1979, the appellants B
filed a writ petition (CWP No. 1671 of 1980) in the High Court of Delhi
invoking the doctrine of promissory estoppel and praying for a direction
to quash the withdrawal Notification to the extent that it superseded the
earlier Notification before, the expiry of the date i.e. 31st March 1981 and
a Division Bench of the Delhi High Court vide its judgment and order
dated 16th March 1983 dismissed the same.
C
Can the appellants invoke the doctrine of promissory estoppel in the
facts and circumstances of these cases, is therefore, the pivotal question
requiring our consideration?
D
The doctrine of promissory estoppel or equitable estoppel is well
established in the administrative law of the country. To put it simply, the
doctrine represents a principle evolved by equity to avoid injustice. The
basis of the doctrine is that where any party has by his word or conduct
made to the other party an unequivocal promise or representation by word
or conduct, which intended to create legal relations or effect a legal E
relationship to arise in the future, knowing as well as intending that the
representation, assurance of the promise would be acted upon by the other
party to whom it has been made and has in fact been so acted cpon by the
other party, the promise, assurance or representation should be binding on
the party malting it and that party should not be permitted to go back upon
F
it, if it would be inequitable to allow him to do so, having regard to the
dealing, which have taken place or are intended to take between the
parties.
It has been settled by the Court that the doctrine of promissory
estoppel is applicable against the Government also particularly where it is G
necessary to prevent fraud or manifest injustice. The doctrine, however,
cannot be pressed into aid to compel the Government or the public
authority "to carry out a representation or promise which is contrary to law
or which was outside the authority or power of the officer of the Government or of the public authority to make." There is preponderance of H
458
SUPREME COURT REPORTS [1994) SUPP. 4 S.C.R.
A judicial opinion that to invoke the doctrine of promissory estoppel clear
sound and positive foundation must be laid in the petition itself by the party
invoking the doctrine and that bald expressions, without any supporting
material, to the effect that the doctrine is attracted because the party
invoking the doctrine has altered its position relying on the assurance of
B the Government would not be sufficient to press into aid the doctrine. In
our opinion, the doctrine of promissory estoppel cannot be invoked in the
abstract and the courts are bound to consider all aspect including the
results sought to be achieved and the public good at large, because while
considering the applicability of the doctrine, the courts have to do equity
and the fundamental principles of equity must for ever be present to the
C mind of the court, while considering the applicability of the doctrine. The
doctrine must yield when the equity so demands if it can be shown having
regard to the facts and circumstances of the case that it would be inequitable to hold the Government or the public authority to its promise,
D
assurance or representation.
The ambit, scope and amplitude of the doctrine of promissory estoppel has been evolved in this country over the last quarter of a century
through successive decision of this Court starting with Union of India v.
Anglo Afgan Agencies Pvt. Limited, [1968) 2 SCR 366. Reference in this
connection may be made with advantage to Century Spinning & ManufacE turing Co. Ltd. & Anr. v. The U/hasnagar Municipal Council & Anr., [1970)
3 SCR 854; Mis Moti/a/ Padampat Sugar Mills Co. (P) Ltd. v. State of UP
& Ors., (1979] 2 SCR 641; lit Ram Shiv Kumar & Ors. etc v. State of
Haryana & Anr., [1980] 3 SCR 689; Union of India v. Godfrey Philips India
Ltd., [1985] 4 SCC 369; Indian Express News papers (Born) Pvt. Ltd. & Ors.,
F
v. Union of India & Ors., [1985] 1 SCC 641; Pomami Oil Mills & Ors. v.
State of Kera/a & Anr., [1986] Supp. SCC 728; Baku/ Oil Industries & Anr.
v. State of Gujarat & Anr., [1987] 1 SCR 185; Asst. Commissioner of
Commercial Taxes & Ors v. Dharmendra Trading Co. & Ors., [1988] 3 SCC
570; Amrit Banaspati Co. Ltd. & Anr. v. State of Punjab &Anr., [1992] 2
SCC 411 and Union of India & Ors. v. Hindustan Development Corporation
G & Ors., [1993] 3 JT SC 15. In Godfrey Philips India Limited (supra) this of
Court opined:
'We may also point out that the doctrine of promissory estoppel
being an equitable doctrine, it must yield when the equity so
H
requires, if it can be shown by the Government or public authority
·-
KASINKA TRDG. v. U.0.l. [DR. ANAND, J.]
459
that having regard to the facts as they have they have transpired, A
it would be inequitable to hold the Government or Public authority
to the promise of representation made by it, the Court would not
raise an equity in favonr of the person to whom the promise or
representation is made and enforce the promise or representation
against the Government or Public authority. The doctrine of B
promissory estoppel would be displaced in such a case, because
on the facts, equity would not require that the Government or
Public authority should be bound by the promise or representation
made by it."
In Excise Commissioner U.P. Allahabad etc. etc. v. Ram Kumar etc. etc.,
C
AIR (1976) SC 2237 fonr learned Judges of this Conrt observed :
"The fact that sales of country liquor had been exempted from.
sales tax vide Notification No. ST 1149/x-802 (33)- 51 dated April
6, 1959 could not operate as an estoppel against the State GovernD
ment and preclude it from subjecting the sales to tax if it felt
impelled to do so in the interest of the Revenues of the State which
are required for execution of the plans designed to meet the ever
increasing pressing needs of the developing society. It is now well
settfod by catena of decisions that there can be no question of
estoppel against the Government in the exercise of its legislative, E.
sovereign or executive powers
11
•
Prof. S.A. De Smith in his celebrated treatise "Judicial Review
of Administrative Action", 3rd Edn. at p.279 sums up the position
thus : "Contracts and Covenants entered into by the Crown are not F
to be construed as being subject to implied terms that would
exclude the exercise of general discretionary powers for the public
good : On the contrary they are to be construed as incorporating
an· implied term that such powers remain exercisable. This is
broadly true of other public authorities also. But the status and G
functions of the Crown in this regard are of a higher order. This
Crown cannot be allowed to tie its hands completely by prior
undertakings is as clear as the proposition that the Courts cannot
allow the Crown to evade compliance with ostensibly binding
obligations whenever it thinks fit : If a public authority lawfully
repudiates or departs from the terms of a binding contract in order H
A
B
c
D
E
F
G
H
460
SUPREME COURT REPORTS [1994] SUPP. 4 S.C.R.
to have been bound in law by an ostensibly binding contract
because the undertakings would improperly fetter its general discretionary powers the other party to the agreement has no right
whatsoever to damages or compensation under the general law, no
matter how serious the damages that part may have suffered. "
In Subhash Photographies v. Union of India, (1993) 66 ELT 3 Jeevan
Reddy, J. Speaking for the Bench observed :
"In Statutes like Customs Act and Customs Tariff Act one has also
to keep in mind that such legislation can be properly administered
only by constantly adjusting it to the needs of the situation. This
calls for a goods amount of discretion to be allowed to the delegate.
As is often pointed out 'flexibility is essential (in law-making) and
it is one of the advantages of rules and regulations that they can
be altered much more quickly and easily than can Acts of Parliament." We have pointed out hereinbefore the necessity of constant
and continuous monitoring of the nation's economy by the
Government (and its various institutions) and the relevance of
these enactments as a means of ensuring a proper and healthy
growth".
The learned Judge went on to opine :
"The Parliament has appointed two authorities i.e., Central
Government and the Board to make rules/regulations to carry out
the purposes of the Act generally. The character of Rules and of
the Regulations made under Sections 156 and 157 respectively is
the same - both constitute delegated legislation. The Regulations
are subject to an additional limitation viz., they should not be
contrary to the Rules made under Section 156. The purpose of
sub-section (2) in both the sections is illter a/ia to allocate certain
matters to each of them exclusively; subject to these sub-sections,
both the delegatees can exercise the power vested in them for
carrying out the purposes of the Act. No established legislative
practice of any consideration duration has been brought to our
notice to read any further limitation into the regulation-making
power under Section 157, assuming that a legislative practice can
be read as a limitation."
KASINKA TRDG. v. U.O.I. [DR. ANAND, J.]
461
In M.P. Sugar Mills case (supra) it was observed that tlie doctrine of A
promissory estoppel would not apply in the teeth of an obligation or
liability imposed by law and that there can be no promissory estoppel
against the exercise of legislative power.
·
Coming now to the facts of the cases before us, we "shall first take up B
for consideration whether any enforceable promise had been held out to
the appellants, through Notification No. 66 dated 15.3.1979, and whether
the Union of India can be estopped from superseding that Notification by
Notification No. 205 dated 16.10.1980, withdrawing the exemption granted
by the 1979 Notification.
The appellants in this batch of cases are manufacturers of certain
products, requiring PVC resin as one of the raw material for the manufacturing process. PVC resin, it is not disputed, is manufactured in India and
is also imported from abroad. In the counter to the Writ Petition filed by
c
the Union of India in the High Court, the justification for the issuance of D
the exemption Notification No. 66/79 in the "public interest" was spelt out
by the respondents. It was stated that it was with a view to equalising sale
prices of the indigenous and the imported material and to make the
commodity available to the consumer at a uniform price, keeping in view
the trends in the supply of the material, that the Cabinet had decided to
issue the exemption Notification No. 66 of 1979 under Section 25(1) of the
Act. Subsequently, when it was found and realised that the international
prices of the product were falling and consequently the import prices had
become lower than the ex-factory prices of the indigenous material, the
matter was examined by the Government of India and it was decided in
1'public interest
11 to withdraw the. .exemption Notification. Thus, the Union
of India has disclosed the circumstances under which the exemption was
initially granted as well as the change of circumstances which warranted
the withdrawal of the exemption notification. The reasons given by the
Union of India justifying withdrawal of the exemption notification, in our
opinion, are not irrelevant to the exercise of the power in 'public interest',
E
F
nor are the same shown to be insufficient to support the exercise of that G
power. From the material on the record it is apparent that the exemption
Notification issued under Section 25(1) of the Act, in "public interest", was
designed to off set the excess price which the local entrepreneurs were
required to pay for importing PVC resin at a time when the difference
between the indigenous product and the imported product was substantial.
No importer could be expected to import PVC resins after paying duty and H
462
SUPREME COURT REPORTS [1994] SUPP. 4 S.C.R.
A incur losses. The exemption Notification, was therefore, issued with a view
to off set losses to the extent possible. The exemption Notification was not
issued as a potential source of extra profit for the importer. Again, at the
time when the Notification was withdrawn by the Government there was
no scope for any loss to be suffered by the importers as was clearly stated
B
c
in the counter filed by the Union of India and which contention has
remained unrebutted. From the counter filed by the Union of India in the
High Court it is abundantly clear that the necessity for the continuation of
the exemption, in view of the changed circumstances, was no longer necessary. The exemption Notification did not hold out to the appellants any
enforceable promise.
The facts of the appeals before us are not analogous to the facts in
Anglo Afgan Agencies (supra) or M.P. Sugar Mills (supra). In the first case
the petitioner therein had acted upon the unequivocal promises held out
to it and exported goods on the specific assurance given to it and it was in
that fact situation that it was held that Textile Commissioner who had
D enuciated the scheme was bound by the assurance thereof and obliged to
carry out the promise made thereunder. As already noticed, in the present
batch of cases neither the Notification is of an executive character nor does
it represent a scheme designed to achieve a particular purpose. It was a
Notification issued in public interest and again withdrawn in public inter-
,E
F
est. So far as the second case (MP Sugar Mills case) is concerned the facts
were totally different. In the correspondence exchanged between the State
and the petitioners therein it was held out to the petitioners that the
industry would be exempted from sales tax for a particular number of initial
years but when the State sought to levy the sales tax it was held by this
Court that it was precluded from doing so because of the categorical
representation made by it to the petitioners through letters in writing, who
had relied upon the same and set up the industry.
The power to grant exemption from payment of duty, additional duty
etc. under the Act, as already noticed flows from the provisions of Section
G 25(1) of the Act. The power to exempt includes the power to modify or
withdraw the same. The liability to pay customs duty or additional duty
under the Act arises when the taxable event occurs. They are then subject
to the payment of duty as prevalent on the date of the entry of the goods.
An exemption notification issued under Section 25 of the Act had the effect
of suspending the collection of Customs duty. It does not make items which
H are subject to levy of customs duty etc. as items not leviable to such duty.
KASINKA TRDG. v. U.0.1. [DR. ANAND, J.]
463
It only suspends the levy and collection of customs duty etc., wholly or A
partially and subject to such conditions as may be laid down in the
Notification by the Government in "public interest". Such an exemption by
its very nature is susceptible of being revoked or modified or subjected to
other conditions. The supersession or revokation of an exemption notifica-
.tion, in the "public interest", is an exercise of the statutory power of the B
State under the law itself as is obvious from the language of Section 25 of
the Act. Under the General Clauses Act an authority which has the power
to issue a notification has the undoubted power to rescind or modify the
notification in a like manner. From the very nature of power of exemption
granted to the Government under Section 25 of the Act, it follows that the
. same is with a view to enabling the Government to regulate, control and C
promote the industries and industrial production in the country. Notification
No. 66 of 1979 in our opinion, was not designed or issued to induce the
appellants to import PVC resin. Admittedly, the said Notification was not
even intended as an incentive for import. The Notification on the plain
language of it was conceived and issued on the Central Government "being
satisfied that it is necessary in the public interest so to do." Strictly speak- D
ing, therefore, the Notification cannot be said to have extended any "ri:presentation" much less a "promise" to a party getting the benefit of it 'to
enable it to invoke the doctrine of promissory estoppel against the State.
It would bear repetition that in order to invoke the doctrine of promissory
estoppel, it is necessary that the promise which is sought to be enforced
E
must be shown to be an unequivocal promise to the other party intended
to create a legal relationship and that it was acted upon as such by the
party to whom the same was made. A Notification issued under Section 25
of the Act cannot be said to be holding out of any such unequivocal
promise by the Government which was intended to create any legal
relationship between the Government and the party drawing benefit flowing from of the said Notification. It is, therefore, futile to contend that even
if the public interest so demanded and the Central Government was
satisfied that the exemption did not require to be extended any further, it
could still not withdraw the exemption.
The argument on behalf of the appellants, vehemently pressed by Mr.
Ashoke Desai and Mr. Harish Salve, their learned senior advocates, is to
the effect that since the Notification 6fJn9 had itself indicated that it shall
F
G
be operative till 31st March 1981, the Government could not withdraw the
same before the expiry of the date. It was argued that the appellants had
placed orders for the import of PVC resin relying upon the exemption H
464
SUPREME COURT REPORTS [1994] SUPP. 4 S.C.R.
A
Notificatiori on the understanding that it was to remain operative till 31st
March 1981 and had made arrangements for importing the goods accordingly and they could not be prejudiced by the withdrawal of that Notification before 31st March 1981. We cannot persuade ourselves to accept this
submission of the learned counsel. Merely by mentioning the date as 31st
B
March 1981, as the date upto which the exemption Notification No. 66/79
was to be operative, no unequivocal representation could be said to have
been made that it could not be rescinded or modified before that date even
if the Govemment was satisfied that it was necessary in the public interest to
rescind it. Since, the Notification had been issued under Section 25(1) of
the Act, the very same power was available to the authority for rescinding
C or modifying that Notification and the appellant ought to have know that
the said notification was capable of or liable to be revoked, modified or
rescinded at any time even before the expiry of 31st March 1981 if the
'public interest' so demanded.