# UNION OF INDIA & ORS v. M/S UNICORN INDUSTRIES

- **Citation:** [2019] 12 S.C.R. 270
- **Court:** Supreme Court of India
- **Decided:** 2019-09-19
- **Case number:** Civil Appeal No. 7432 of 2019
- **Bench:** Arun Mishra, M. R. Shah, B. R. Gavai
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/union-of-india-ors-v-m-s-unicorn-industries-33166
- **Pages:** 23

## Headnote

Doctrines - Doctrine of Promissory Estoppel - When cannot
be invoked - Appellant vide notification dated 09.09.2003,
exempted certain goods from the payment of excise duty - By
notification dated. 25.04.2007, earlier notifications issued were
amended with the result that pan masala, tobacco, manufactured
tobacco substitutes and plastic carry bags of less than 20 microns
were no longer entitled for exemption from the excise dutyRespondent in the Civil Appeal arising out of SLP (C) No.36926 of
2012, approached the High Court of Sikkim by way of Writ Petition
- Allowed - Respondent in the Civil Appeal Nos.2345 and 2346 of
2017, approached the High Court of Gauhati - Writ Petition
dismissed by Single Judge vide order dated. 10.12.2010 - Writ
appeals allowed - Held: Exemption granted, even when the
notification granting exemption prescribes a particular period till
which it is available, can be withdrawn by the State, if it is found
that such withdrawal is in the public interest- Larger public interest
would outweigh the individual interest, if any - In such case, even
the doctrine of promissory estoppel would not come to the rescue of
the persons claiming exemptions and compel the State not to resile
from its promise, if the act of the State is found to be in public interest
- Scientific research conducted by Experts in the field has found
that the consumption of pan masala with tobacco as well as pan
masala sans tobacco is hazardous to health - It was further found
that the percentage of teenagers consuming the hazardous product
was very high and as such exposing large chunk of young population
of the country to the risk of oral cancer - Taking into consideration
this aspect, if the State has decided to withdraw the exemption
granted for manufacture of such products, it is not understood as
to how it can be said to be not in the public interest - Withdrawal of
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the exemption to the pan masala with tobacco and pan masala sans
tobacco is in the larger public interest - Doctrine of promissory
estoppel could not have been invoked in the present matter -
Judgments passed by the High Court of Sikkim and Appellate Bench
of the Gauhati High Court set aside - Order passed by Single Judge
dated. 10.12.2010 upheld - Central Excise Act, 1944 - s.5A -
Additional Duties of Excise (Goods of Special Importance) Act,
1957 - s.3 - Additional Duties of Excise (Textiles and Textile Articles)
Act, 1978 - s.3(3) - Central Excise Tariff Act, 1985 - CENVAT
Credit Rules, 2002 - Finance Act, 2003 - s.154 - Excise Duty.
Allowing the appeals, the Court
HELD: 1.1 The issue raised in these appeals is no more
res integra. The exemption granted, even when the notification
granting exemption prescribes a particular period till which it is
available, can be withdrawn by the State, if it is found that such a
withdrawal is in the public interest. In such a case, the larger
public interest would outweigh the individual interest, if any. In
such a case, even the doctrine of promissory estoppel would not
come to the rescue of the persons claiming exemptions and
compel the State not to resile from its promise, if the act of the
State is found to be in public interest. [Paras 12, 19 and 25][279F; 283-E; 285-G-H]
1.2 A judicial notice can be taken of the fact that by various
scientific studies on betel quid and substitutes, tobacco and their
substitutes, i.e., pan masala with tobacco and without tobacco,
these products have been found to be one of the main causes for
oral cancer. By a scientific research conducted by Experts in the
field, it has been found that the consumption of pan masala with
tobacco as well as pan masala sans tobacco is hazardous to health.
It has further been found that, the percentage of teenagers
consuming the hazardous product was very high and as such
exposing a large chunk of young population of this Country to
the risk of oral cancer. Taking into consideration this aspect, if

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SUPREME COURT REPORTS
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UNION OF INDIA & ORS.
v.
 M/S UNICORN INDUSTRIES
(Civil Appeal No. 7432 of 2019)
SEPTEMBER 19, 2019
[ARUN MISHRA, M. R. SHAH AND B. R. GAVAI, JJ.]
Doctrines - Doctrine of Promissory Estoppel - When cannot
be invoked - Appellant vide notification dated 09.09.2003,
exempted certain goods from the payment of excise duty - By
notification dated. 25.04.2007, earlier notifications issued were
amended with the result that pan masala, tobacco, manufactured
tobacco substitutes and plastic carry bags of less than 20 microns
were no longer entitled for exemption from the excise dutyRespondent in the Civil Appeal arising out of SLP (C) No.36926 of
2012, approached the High Court of Sikkim by way of Writ Petition
- Allowed - Respondent in the Civil Appeal Nos.2345 and 2346 of
2017, approached the High Court of Gauhati - Writ Petition
dismissed by Single Judge vide order dated. 10.12.2010 - Writ
appeals allowed - Held: Exemption granted, even when the
notification granting exemption prescribes a particular period till
which it is available, can be withdrawn by the State, if it is found
that such withdrawal is in the public interest- Larger public interest
would outweigh the individual interest, if any - In such case, even
the doctrine of promissory estoppel would not come to the rescue of
the persons claiming exemptions and compel the State not to resile
from its promise, if the act of the State is found to be in public interest
- Scientific research conducted by Experts in the field has found
that the consumption of pan masala with tobacco as well as pan
masala sans tobacco is hazardous to health - It was further found
that the percentage of teenagers consuming the hazardous product
was very high and as such exposing large chunk of young population
of the country to the risk of oral cancer - Taking into consideration
this aspect, if the State has decided to withdraw the exemption
granted for manufacture of such products, it is not understood as
to how it can be said to be not in the public interest - Withdrawal of
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the exemption to the pan masala with tobacco and pan masala sans
tobacco is in the larger public interest - Doctrine of promissory
estoppel could not have been invoked in the present matter -
Judgments passed by the High Court of Sikkim and Appellate Bench
of the Gauhati High Court set aside - Order passed by Single Judge
dated. 10.12.2010 upheld - Central Excise Act, 1944 - s.5A -
Additional Duties of Excise (Goods of Special Importance) Act,
1957 - s.3 - Additional Duties of Excise (Textiles and Textile Articles)
Act, 1978 - s.3(3) - Central Excise Tariff Act, 1985 - CENVAT
Credit Rules, 2002 - Finance Act, 2003 - s.154 - Excise Duty.
Allowing the appeals, the Court
HELD: 1.1 The issue raised in these appeals is no more
res integra. The exemption granted, even when the notification
granting exemption prescribes a particular period till which it is
available, can be withdrawn by the State, if it is found that such a
withdrawal is in the public interest. In such a case, the larger
public interest would outweigh the individual interest, if any. In
such a case, even the doctrine of promissory estoppel would not
come to the rescue of the persons claiming exemptions and
compel the State not to resile from its promise, if the act of the
State is found to be in public interest. [Paras 12, 19 and 25][279F; 283-E; 285-G-H]
1.2 A judicial notice can be taken of the fact that by various
scientific studies on betel quid and substitutes, tobacco and their
substitutes, i.e., pan masala with tobacco and without tobacco,
these products have been found to be one of the main causes for
oral cancer. By a scientific research conducted by Experts in the
field, it has been found that the consumption of pan masala with
tobacco as well as pan masala sans tobacco is hazardous to health.
It has further been found that, the percentage of teenagers
consuming the hazardous product was very high and as such
exposing a large chunk of young population of this Country to
the risk of oral cancer. Taking into consideration this aspect, if
the State has decided to withdraw the exemption granted for
manufacture of such products, it cannot be understood as to how
it can be said to be not in the public interest. [Paras 26, 31]
[285-A; 290-D-E]
UNION OF INDIA & ORS. v. M/S UNICORN INDUSTRIES
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1.3 The legislative policy as reflected in Section 154 of the
Finance Act, 2003 was to withdraw the exemption granted to the
manufacturers of cigarettes as well as pan masala with tobacco
and that too with retrospective effect. Apart from the fact that, it
is a common knowledge that tobacco is highly hazardous, the
legislative intent was also unambiguous. In these circumstances,
the finding of the High Court that the withdrawal of exemption
for tobacco products was not in the public interest, to say the
least is shocking. The approach of the Appellate Bench of the
High Court was totally unsustainable. The withdrawal of the
exemption to the pan masala with tobacco and pan masala sans
tobacco is in the larger public interest. As such, the doctrine of
promissory estoppel could not have been invoked in the present
matter. The State could not be compelled to continue the
exemption, though it was satisfied that it was not in the public
interest to do so. The larger public interest would outweigh an
individual loss, if any. The appeals are allowed. The judgments
and orders passed by the Appellate Bench of the Gauhati High
Court dated 20.04.2016 and 25.05.2016 are quashed and set
aside. The Order passed by the Single Judge dated 10.12.2010
dismissing the writ petitions is upheld. [Paras 35, 36 and 39][292A-D, F]
Kasinka Trading v. Union of India (1995) 1 SCC 274 :
[1994] 4 Suppl. SCR 448; STO v. Shree Durga Oil Mills
(1998) 1 SCC 572 : [1997] 6 Suppl. SCR 488; Shrijee
Sales Corpn. v. Union of India (1997) 3 SCC 398 :
[1996] 10 Suppl. SCR 888; State of Rajasthan v.
Mahaveer Oil Industries (1999) 4 SCC 357 : [1999] 2
SCR 798; Shree Sidhbali Steels Ltd. v. State of U.P.
(2011) 3 SCC 193 : [2011] 3 SCR 134; DG of Foreign
Trade v. Kanak Exports (2016) 2 SCC 226 : [2015] 15
SCR 287 - relied on.
Darshan Oils (P) Ltd. v. Union of India (1995) 1 SCC
345 : [1994] 5 Suppl. SCR 278; Pappu Sweets and
Biscuits v. Commr. Of Trade Tax, U.P. (1998) 7 SCC
228 : [1998] 2 Suppl. SCR 119; Commr. of Customs v.
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Dilip Kumar & Co. (2018) 9 SCC 1 : [2018] 7 SCR
1191; M/s Motilal Padampat Sugar Mills Co. Ltd. v.
State of Uttar Pradesh and Ors. (1979) 2 SCC 409 :
[1979] 2 SCR 641; Union of India & Ors. v. Godfrey
Philips India Ltd. & Ors. (1985) 4 SCC 369 : [1985] 3
Suppl. SCR 123; Pawan Alloys & Casting Pvt. Ltd. v.
U.P. State Electricity Board & Ors. (1997) 7 SCC 251 :
[1997] 3 Suppl. SCR 266 - referred to.
Research Paper titled "Alert for an epidemic of oral
cancer due to use of the betel quid substitutes gutkha
and pan masala: A review of agents and causative
mechanisms"- Mutagenesis Vol. 19 No. 4; Study Paper
titled "Smokeless Tobacco and Its Adverse Effects on
Hematological Parameters: A Cross-Sectional Study"-
Advances in Preventive Medicine 2019; Study Report
titled "A review on Harmful Effects of Pan Masala"-
Indian Journal of Cancer (October-December 2015)
Volume 52, Issue 4 - referred to.
Case Law Reference
[1994]4 Suppl. SCR 448
relied on
Para 10
[1994] 5 Suppl. SCR 278
referred to
Para 10
[1997] 6 Suppl. SCR 488
relied on
Para 10
[1996] 10 Suppl. SCR 888
relied on
Para 10
[1999] 2 SCR 798
relied on
Para 10
[2011] 3 SCR 134
relied on
Para 10
[2015] 15 SCR 287
relied on
Para 10
[1998] 2 Suppl. SCR 119
referred to
Para 10
[2018] 7 SCR 1191
referred to
Para 10
[1979] 2 SCR 641
referred to
Para 11
[1985] 3 Suppl. SCR 123
referred to
Para 11
[1997] 3 Suppl. SCR 266
referred to
Para 11
UNION OF INDIA & ORS. v. M/S UNICORN INDUSTRIES
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SUPREME COURT REPORTS
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CIVIL APPELLATE JURISDICTION: Civil Appeal No. 7432
of 2019.
From the Judgment and Order dated 11.05.2012 of the High
Court of Sikkim at Gangtok in Writ Petition (C) No. 22 of 2007.
With
Civil Appeal Nos. 2345, 2346 of 2017.
 Dhruv Aggarwal, Dr. Ashok Saraf, Nakul Dewan, Balbir Singh,
Guru Krishan Kumar, K. V. Viswanathan, S. Ganesh, Tarun Gulati, Sr.
Advs., Ms. Nisha Bagchi, Rupesh Kumar, Ms. Aruna Gupta, Dharmendra
Gupta, B. K. Prasad, Shriram P. Pingle, Gangdeep Sharma, M. L. Lahoty,
Paban K. Sharma, Anchit Sripat, Himanshu Shekhar, Vishal Gupta,
M/s. AP & J Chambers, Kaushik Choudhary, Mukunda Rao, Pawanshree
Agrawal, K. J. John, M/s. K J John & Co. Ajoy K. Roy, Shantanu Tyagi,
Ms. Nandita Chauhan, Ravinder Nijhawan, S. S. Shroff, Rahul Narayan,
Shashwat Goel, Ajoy K. Roy, Ajay Aggarwal, Ms. Mallika Joshi, Ishan
Narain, Rajan Narain, Ms. Kavita Jha, Ms. Swati Agarwal, Pawanshree
Agrawal, Ms. Devika Jain, Kumar Visalaksh, Udit Jain, Mahfooz A.
Nazki, Rana Ranjit Singh, Vivek Kumar Singh, Ms. Akanksha Singh,
Shuvodeep Roy, Kabir Shankar Bose, Satropp Das, Ms. Neelima Tripathi,
Ms. Gunjan Singh, K. V. Mohan, Vishal Gupta, Sumeet Sharma,
Diviyanshu Gupta, Rakesh Sinha, Partha Sil, Parthiv K. Goswami, Ishan
Bisht, Vivek Gupta, Ms. Palak Mahajan, Ms. Diksha Rai, Raghvendra
Kumar, Ms. Aruna Mathur, Sunil Murarka, Kunal Chatterji,
Ms. Maitrayee Banerjee, Supratik Sarkar, V. Lakshmikumaran,
Ms. Charanya Lakshmikumaran, Aditya Bhattacharya, Mrs. Ishita
Mathur, Ms. Apeksha Mehta, Ms. Monica Kasturi, R. Parthasarthy,
Kshitij Vaibhav, Ms. Bina Gupta, Ms. Sheona Taqvi, R. Jawahar Lal,
Siddharth Bawa, Shaymal Anand, Mayank Kshirsagar, Nikhil Singhvi,
Mohit Seth, Ms. Sonia Dubey, Obhirup Ghosh, M/s. Legal Option, Gaurav
Juneja, Aayush Jain, M/s. Khaitan & Co., V. K. Sidharthan, Ramendra
Lal Auddy, B. Krishna Prasad, M/s. Arputham Aruna & Co., Satya
Mitra, Ms. Hemantika Wahi, Gopal Singh, Advs. for the appearing parties.
The Judgment of the Court was delivered by
B. R. GAVAI, J.
1. Leave granted in S.L.P.(C) No. 36926 of 2012.
2. The question of law that arises for consideration in these appeals
is, 'as to whether, by invoking the doctrine of promissory estoppel, can
the Union of India be estopped from withdrawing the exemption from
payment of Excise Duty in respect of certain products, which exemption
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is granted by an earlier notification; when the Union of India finds that
such a withdrawal is necessary in the public interest.
3. Since the factual position as well as the question of law arising
in the present three appeals are common, they are heard together and
disposed of by this common judgment. The appellant, Union of India, in
exercise of powers conferred by sub-section (1) of Section 5A of the
Central Excise Act, 1944 (1 of 1994) (hereinafter referred to as the
"Central Excise Act") read with sub-section (3) of Section 3 of the
Additional Duties of Excise (Goods of Special Importance) Act, 1957
(58 of 1957) and sub-section (3) of Section 3 of the Additional Duties of
Excise (Textiles and Textile Articles) Act, 1978 (40 of 1978), being satisfied
that it is necessary in the public interest, by Notification No. 71 of 2003
dated 09.09.2003, exempted the goods specified in the First Schedule
and the Second Schedule to the Central Excise Tariff Act, 1985 (5 of
1986) other than the goods specified in Annexure-I to the said Notification,
from the payment of duties under the said statutes. The notification
provided that so much of the duty of excise or additional duty of excise,
as the case may be, leviable thereon under any of the said Acts as was
equivalent to the amount of duty paid by the manufacturer of the said
goods, other than the amount of duty paid by utilisation of CENVAT
credit under the CENVAT Credit Rules, 2002, was exempted. This
exemption was available to the units located in Industrial Growth Centre
or Industrial Infrastructure Development Centre or Export Promotion
Industrial Park or Industrial Estate or Industrial Area or Commercial
Estate or Scheme Area, as the case may be, in the State of Sikkim, as
specified in Annexure-II appended to the said notification. A procedure
was also prescribed under the said notification for availing the benefit of
exemption. Annexure-I thereto provides the list of the products which
were not entitled for exemption. Clause 1 of the said Annexure reads
thus:
"1. Tobacco and Tobacco products including Cigarettes/
Cigars/ Gutkha"
 Similar notifications were issued by the Union of India being
Notification Nos. 32 of 1999-CE and 33 of 1999-CE dated 08.07.1999
insofar as the State of Assam is concerned.
4. By Notification No. 21 of 2007-CE dated 25.04.2007, the earlier
notifications issued by it were amended. The effect of the amendment
was that the product 'pan masala' falling under Chapter 21 of the First
Schedule of the Central Excise Tariff Act, 1985, the goods falling under
Chapter 24 of said First Schedule, i.e., tobacco and manufactured tobacco
substitutes and plastic carry bags of less than 20 microns were included
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in the negative list and as such were no longer entitled for exemption
from the excise duty. Being aggrieved by the said notification, the
respondent, namely, Unicorn Industries in the Civil Appeal arising out of
Special Leave Petition (C) No. 36926 of 2012, approached the High
Court of Sikkim by way of Writ Petition (C) No. 22 of 2007. The High
Court of Sikkim vide its judgment and order dated 11.05.2012 allowed
the writ petition and held that the petitioner therein was entitled to
exemption from payment of excise duty on the manufacture of pan
masala from its unit situated in the State of Sikkim for a period of 10
years from the date of commencement of the commercial production,
i.e., 27.06.2006.
5. Similarly, the respondent in Civil Appeal No. 2346 of 2017,
namely, M/s Dharampal Satyapal Ltd., which was a manufacturer of
pan masala with tobacco and other tobacco products, approached the
Gauhati High Court by way of a petition bearing No. PW(C) 749 of
2010. The said petition was with regard to withdrawal of exemption in
respect of pan masala with tobacco. The Single Judge of the Gauhati
High Court vide judgment and order dated 10.12.2010 found no substance
in the petition and as such dismissed the petition. Being aggrieved thereby,
the said respondent filed Writ Appeal No. 81 of 2011 before the Appellate
Bench of Gauhati High Court. Vide the judgment and order dated
20.04.2016, the Appellate Bench of the High Court allowed the appeal;
set aside the judgment and order passed by the Single Judge dated
10.12.2010 and quashed Notification No. 11 of 2007-CE dated
01.03.2007. It further directed the Investment Appraisal Committee to
give an opportunity of hearing to the appellant before it (respondent
herein) so that it can prove the amount it had actually invested in the
specified items for availing the benefits under the earlier notifications
and further directed that if the appellant proves that it had actually invested
the amount, the respondent authorities shall refund to the appellant so
much of the excise duty to which the appellant therein would be entitled
as per the earlier notifications.
6. The respondent in Civil Appeal No. 2345 of 2017, namely, M/s
Dharampal Satyapal Ltd., had also filed another petition being Writ Petition
(C) No. 749 of 2010 insofar as its product 'pan masala without tobacco',
is concerned. The same was also dismissed by the learned Single Judge
of the Gauhati High Court vide the common judgment and order dated
10.12.2010. It appears that the appeal arising from the said petition being
Writ Appeal No. 223 of 2011 was separately heard by another Appellate
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Bench of the Gauhati High Court. However, noticing that the writ appeal
arising out of the order of the Single Judge regarding the product of the
appellant therein, i.e., 'pan masala containing tobacco' was already
allowed by the Appellate Bench of the High Court by Order dated
20.04.2016, the said writ appeal was also allowed, by the judgment and
order dated 25.05.2016 thereby setting aside the Order passed by the
learned Single Judge in Writ Petition (C) No. 749 of 2010 so also the
Notification dated 25.04.2007. The respondent therein was directed to
refund the excise duty component to the appellant as is admissible under
the law.
7. Being aggrieved by the aforesaid judgments and orders, one
passed by the Sikkim High Court in the writ petition and the other two
passed by the Gauhati High Court in the writ appeals, the Union of India
is before this Court.
8. Mr. Dhruv Agrawal, learned senior counsel appearing on behalf
of the appellants, submits that both, the Sikkim High Court as well as the
Appellate Benches of the Gauhati High Court have grossly erred in
allowing the writ petition and the writ appeals of the assessees. It is
submitted that, though the Union of India had specifically contended
before both the High Courts that the 2007 Notifications were issued in
the public interest, the same has not been considered. It is submitted that
the Union of India, in exercise of its delegated powers, is always
empowered to modify and withdraw the exemptions granted by it under
the earlier notification(s). It is submitted that the Union of India, taking
into consideration the public interest, that the consumption of pan masala
with tobacco or pan masala without tobacco is hazardous to the human
health and, therefore, for curbing its consumption, had issued the 2007
Notifications thereby including pan masala in Chapter 21 and all products
contained in Chapter 24, i.e., tobacco and manufactured tobacco
substitutes, in the negative list. It is submitted that, after taking into
consideration that the 2007 Notification was issued in public interest, the
Sikkim High Court ought not to have interfered with it. He further
submitted that the reasoning given by the Sikkim High Court that pan
masala is not hazardous and, therefore, the 2007 Notification cannot be
said to be in the public interest is totally erroneous. It is further submitted
that while doing so, the Sikkim High Court has assumed the role of an
expert in the field and, therefore, travelled beyond its jurisdiction.
9. Insofar as the Gauhati High Court is concerned, the learned
senior counsel submitted that the learned Single Judge of the Gauhati
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High Court had rightly dismissed the writ petitions, finding that in the
conflict between the interest of an individual and the public interest,
individual interest should give way to the larger public interest. It is
submitted that, the Appellate Bench of the Gauhati High Court in its
judgment dated 20.04.2016 has grossly erred in interfering with the
reasoned order passed by the learned Single Judge. It is submitted that,
in the said appeal, the product that fell for consideration before the
Appellate Bench of the High Court was Zarda scented tobacco and pan
masala containing tobacco. It is submitted that, the products containing
tobacco are indisputably hazardous to health and, therefore, the
Notification which withdraws exemption granted for the manufacture
of the said products is undoubtedly in the larger public interest. However,
overlooking this aspect, the appeals have been allowed. It is submitted
that insofar as the other appeal is concerned, the another Appellate Bench
has only relied upon the judgment by the earlier Appellate Bench and
has observed that the only distinction in both the matters was that in the
earlier matter, the issue was with regard to pan masala containing tobacco
and in the matter before them, the issue was with regard to pan masala
without tobacco and with these observation allowed the appeal.
10. The learned senior counsel relied on the following judgments
of this Court in the cases of Kasinka Trading vs. Union of India1, Darshan
Oils (P) Ltd. vs. Union of India2, STO vs. Shree Durga Oil Mills3, Shrijee
Sales Corpn. vs. Union of India4, State of Rajasthan vs. Mahaveer Oil
Industries5, Shree Sidhbali Steels Ltd. vs. State of U.P.6, DG of Foreign
Trade vs. Kanak Exports7, Pappu Sweets and Biscuits vs. Commr. Of
Trade Tax, U.P.8 and Commr. of Customs vs. Dilip Kumar & Co.9,.
11. Shri Balbir Singh and Shri Nakul Dewan, learned senior counsel
appearing on behalf of the respondents, have supported the impugned
judgments and orders. It is submitted that, the Sikkim High Court as well
as the Appellate Benches of the Gauhati High Court have rightly relied
upon the doctrine of promissory estoppel and allowed the appeals. It is
1 (1995) 1 SCC 274
2 (1995) 1 SCC 345
3 (1998) 1 SCC 572
4 (1997) 3 SCC 398
5 (1999) 4 SCC 357
6 (2011) 3 SCC 193
7 (2016) 2 SCC 226
8 (1998) 7 SCC 228
9 (2018) 9 SCC 1
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submitted that, it is only on account of the representation given by the
Union of India and the State Governments that the industries established
in the notified areas of Sikkim as well as Assam would be entitled for
100% exemption from central excise, the writ petitioners before the
High Court had established the industries in such remote areas. It is
submitted that, the exemption notifications were issued in view of the
industrial policy of the Union of India as well as the State Governments
that on account of backwardness in these areas, the industrialisation in
these areas should be promoted so that the economic development takes
place. It is submitted that, only on the assurance of the Central as well
as the State Governments, the writ petitioners have invested huge amount
and, as such, now the Union of India could not be permitted in law to
resile from the assurance given by them to the writ petitioners. It is
submitted that, considering these principles, the Sikkim High Court and
the Appellate Bench of the Gauhati High Court have granted relief to
the writ petitioners. It is submitted that, this Court has consistently held
that, if a party changes its position to its detriment, on account of a
promise given by the other party, the other party cannot be permitted to
resile from such a promise. It is submitted that the doctrine of promissory
estoppel is equally applicable to the State and its functionaries. Reliance
in this respect is placed on the following judgments of this Court. M/s
Motilal Padampat Sugar Mills Co. Ltd. vs. State of Uttar Pradesh and
Ors.10, Union of India & Ors. Vs. Godfrey Philips India Ltd. & Ors.11
and Pawan Alloys & Casting Pvt. Ltd. vs. U.P. State Electricity Board
& Ors.12.
12. The issue raised in these appeals is no more res integra. This
Court in a catena of decisions has considered the issue with regard to
inapplicability of the doctrine of promissory estoppel, when the larger
public interest demands so. We will refer, in brief, to the earlier judgments
of this Court.
13. In the case of Kasinka Trading (supra), this Court was
considering the case of the appellant, who were manufacturing certain
products, requiring PVC resin as one of the raw materials for its
manufacturing process. By Notification No. 66 dated 15.03.1979 issued
under Section 25 of the Customs Act, 1962 which is pari materia with
Section 5A of the Central Excise Act, the PVC resin was exempted
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11 (1985) 4 SCC 369
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from basic import duty. The exemption was to be effective till 31.03.1981.
However, by Notification No. 205 dated 16.10.1980 issued under Section
25 of the Customs Act, the exemption granted earlier came to be
withdrawn. A challenge similar to the one which is raised herein was
raised before this Court. This Court observed thus:
"12. It has been settled by this Court that the doctrine of
promissory estoppel is applicable against the Government also
particularly 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 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
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 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 aspects
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 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,
assurance or representation."
(emphasis supplied)
14. It could thus be seen that, this Court has clearly held that the
doctrine of promissory estoppel cannot be invoked in the abstract and
the courts are bound to see all aspects including the objective to be
achieved and the public good at large. It has been held that while
considering the applicability of the doctrine, the courts have to do equity
and the fundamental principle of equity must forever be present in the
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mind of the Court while considering the applicability of the doctrine. It
has been held that the doctrine of promissory estoppel must yield when
the equity so demands and when 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, assurance or
representation. After considering the earlier judgments on the issue, which
have been heavily relied upon by the assesses, this Court has observed
thus:
"21. The power to grant exemption from payment of duty, additional
duty etc. under the Act, as already noticed, flows from the
provisions of Section 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 are subject to levy of customs duty etc.
as items not leviable to such duty. It only suspends the
levy and collection of customs duty, etc., wholly or 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 revocation of an exemption notification in
the "public interest" is an exercise of the statutory power
of the 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."
(emphasis supplied)
15. It could thus be seen that, it has been held by this Court that
an exemption notification does not make the items which are subject to
levy of customs duty etc. as items not leviable to such duty. It only
suspends the levy and collection of customs duty etc. subject to such
conditions as may be laid down in the "public interest". It has further
been held that, such an exemption by its very nature is susceptible of
being revoked or modified or subjected to other conditions. It has been
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held that the supersession or revocation of an exemption notification in
the public interest is an exercise of the statutory power by the State
under the law itself. It has further been held that 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.
16. This Court, after considering the objections that the exemption
could not be withdrawn prior to the date prescribed in the notification
granting exemption has observed thus:
"23. The appellants appear to be under the impression that even
if, in the altered market conditions the continuance of the exemption
may not have been justified, yet, Government was bound to
continue it to give extra profit to them. That certainly was not the
object with which the notification had been issued. 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 not
interfere with the fiscal policy where the Government acts
in "public interest" and neither any fraud or lack of bona
fides 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."
(emphasis supplied)
17. It has been observed, that 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. It has been held that, where the
Government acts in public interest and neither any fraud or lack of bona
fides is alleged much less established, it would not be appropriate for this
Court to interfere with the same. Ultimately, this Court came to the
conclusion that the withdrawal of the exemption was in the public interest
and, therefore, refused to interfere with the order of the Delhi High
Court dismissing the petitions.
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18. In the case of Shree Durga Oil Mills (supra), the Government
of Orissa had withdrawn the sales tax exemption which was granted
earlier under the Orissa Sales Tax Act, 1947. Considering a similar
challenge, while reversing the judgment and order of the High Court,
this Court observed thus:
"21. Moreover withdrawal of notification was done in public
interest. The Court will not interfere with any action taken by the
Government in public interest. Public interest must override any
consideration of private loss or gain.
23. In the instant case, it has been stated on behalf of the State
that various notifications granting sales tax exemptions to the
dealers resulted in severe resource crunch. On reconsideration
of the financial position, it was decided to limit the scope of the
earlier exemption notifications issued under Section 6 of the Orissa
Sales Tax Act. Because of this new perception of the economic
scenario of the State, the scope of the earlier notifications had to
be restricted. They were first abrogated altogether on 20-5-1977.
Thereafter, it was decided to grant exemption at a limited scale.
24. In our opinion, the plea of change of policy trade on the basis
of resource crunch should have been sufficient for dismissing the
respondent's case based on the doctrine of promissory estoppel.
Public interest demanded modification of the earlier IPR."
19. It could thus be seen that, it has been held that when withdrawal
of the exemption is in public interest, the public interest must override
any consideration of private loss or gain. In the said case, the change in
policy and withdrawal of the exemption on the ground of severe resource
crunch have been found to be a valid ground and to be in public interest.
20. A similar issue came up for consideration before the Bench
consisting three Judges of this Court in the case of Shrijee Sales
Corporation (supra). The notification which came up for consideration
was similar with the notifications that fell for consideration in the case of
Kasinka Trading (supra). While considering the argument that when the
notification prescribes a period during which the exemption would be
available, such an exemption cannot be withdrawn till the end of the
period prescribed, this Court observed thus:
"7. The next question is whether the fact that the Notification
No. 66 mentioned the period during which it was to remain in
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force, would make any difference to the situation. In other words,
could it be said that an exemption notified without specifying the
period within which the exemption would remain in force, would
be withdrawn in public interest but not the one in which a period
has been so specified? Once public interest is accepted as
the superior equity which can override individual equity,
the principle should be applicable even in cases where a
period has been indicated. The Government is competent to
resile from a promise even if there is no manifest public interest
involved, provided, of course, no one is put in any adverse situation
which cannot be rectified. To adopt the line of reasoning in
Emmanuel Ayodeji Ajayi v. Briscoe, (1964) 3 All ER 556, quoted
in M.P. Sugar Mills [Motilal Padampat Sugar Mills Co. Ltd. v.
State of U.P., (1979) 2 SCC 409, even where there is no such
overriding public interest, it may still be within the competence of
the Government to resile from the promise on giving reasonable
notice which need not be a formal notice, giving the promisee a
reasonable opportunity of resuming his position, provided, of course,
it is possible for the promisee to restore the status quo ante. If,
however, the promisee cannot resume his position, the promise
would become final and irrevocable."
(emphasis supplied)
21. It could thus be seen that this Court observed that once public
interest is accepted as a superior equity which can override an individual
equity, the same principle should be applicable in such cases where the
period is prescribed.
22. The another three Judges Bench of this Court in the case of
Mahavir Oil Industries (supra) has taken a similar view. In the case of
Shree Sidhbali Steels Ltd. (supra), this Court was considering the question
with regard to validity of the notification which withdrew 33.33% of the
hill development rebate, on the total amount of electricity bill, granted
under the earlier notification. This Court while considering the similar
challenge observed thus:
"33. Normally, the doctrine of promissory estoppel is being applied
against the Government and defence based on executive necessity
would not be accepted by the court. However, if it can be shown
by the Government that having regard to the facts as they have
subsequently transpired, it would be inequitable to hold the
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Government to the promise made by it, the court would not raise
an equity in favour of the promisee and enforce the promise
against the Government. Where public interest warrants, the
principles of promissory estoppel cannot be invoked. The
Government can change the policy in public interest.
However, it is well settled that taking cue from this doctrine, the
authority cannot be compelled to do something which is not allowed
by law or prohibited by law. There is no promissory estoppel against
the settled proposition of law. Doctrine of promissory estoppel
cannot be invoked for enforcement of a promise made contrary
to law, because none can be compelled to act against the statute.
Thus, the Government or public authority cannot be compelled to
make a provision which is contrary to law."
(emphasis supplied)
23. It could thus be seen that, this Court again reiterated the position
that where public interest warrants, the principle of promissory estoppel
cannot be invoked. Observing the aforesaid, the said challenge, as raised
by the petitioner, came to be rejected.
24. In the case of Kanak Exports (supra), this Court again while
considering the challenge for withdrawal of incentives to the exporters
of some specified items held that, the incentive scheme in question was
in the nature of concession or incentive which was a privilege of the
Central Government. It was for the Government to take a decision to
grant such a privilege or not. Grant of exemption, concession or incentive
and modification thereof are the matters in the domain of public decisions
of the Government. It further reiterated that when the withdrawal of
such incentives was shown to have been done in public interest, the
courts would not tinker with the policy decisions. This Court, after
considering the materials on record as a matter of fact, held that
withdrawal of exemption was in the public interest.
25. It could thus be seen that, it is more than well settled that the
exemption granted, even when the notification granting exemption
prescribes a particular period till which it is available, can be withdrawn
by the State, if it is found that such a withdrawal is in the public interest.
In such a case, the larger public interest would outweigh the individual
interest, if any. In such a case, even the doctrine of promissory estoppel
would not come to the rescue of the persons claiming exemptions and
compel the State not to resile from its promise, if the act of the State is
found to be in public interest.
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26. A judicial notice can be taken of the fact that by various
scientific studies on betel quid and substitutes, tobacco and their
substitutes, i.e., pan masala with tobacco and without tobacco, these
products have been found to be one of the main causes for oral cancer.
A detailed study has been considered by three Experts, namely, Urmila
Nair, Helmut Bartsch and Jagadeesan Nair in the Division of Toxicology
and Cancer Risk Factors, German Cancer Research Centre (DKFZ),
Heidelberg, Germany. The research paper is titled as "Alert for an
epidemic of oral cancer due to use of the betel quid substitutes gutkha
and pan masala: a review of agents and causative mechanisms13". After
considering the entire material in detail and considering the various earlier
studies, the paper observes thus:
"Perspectives
Banning of gutkha and pan masala has been strongly
advocated by oncologists as a preventive measure to reduce oral
cavity cancers. Recently, a number of States in India have banned
the manufacture and sale of both products and this should reduce
the incidence rate.