The Supreme Court’s answer is in a firm ‘No’ again to the legal question posed to it in the judgment of the case- Union of India & Others v. M/s Unicorn Industries, 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 is granted by an earlier notification; when the Union of India finds that such a withdrawal is necessary in the public interest”.
The reiteration of the settled view came through the 32-page judgment delivered on September 19, 2019, by a 3-judge bench of the Apex-court consisting of Justice Arun Mishra, Justice M.R. Shah and Justice Bhushan Gavai.
It has been pointed out in the judgment that the issue raised through these 3 appeals is no more undecided (res integra). The Supreme Court has considered the issue and answered it in several decisions, holding the doctrine of promissory estoppel not applicable to the cases, when the larger public interest demands so.
In the judgment of the case- Kasinka Trading v. Union of India –(1995) 1 SCC 274, the 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 applicability of this doctrine, the courts have to do equity and the fundamental principles of equity must forever be present in the mind of the Court. This doctrine 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 public authority to its promise, assurance or representation.
The Court has also held 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”. Such an exemption by its very nature is susceptible of being revoked or modified or subjected to other conditions. It has been 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. 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.
Supreme Court has 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 satisfaction of the Government that a change in the policy was necessary in the public interest. Where the Govt. acts in public interest and neither any fraud or lack of bona fides is alleged and 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 HC dismissing the petitions.
In the judgment of the case –S.T.O. v. Shree Durga Oil Mills-(1998) 1 SCC 572, it has been held that when withdrawal of 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.
The Supreme Court has observed in its decision of the case- Shrijee Sales Corporation v. Union of India-(1997) 3 SCC 398 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.
The Supreme Court has reiterated the position that where public interest warrants, the principle of promissory estoppel cannot be invoked. Observing this, said challenge came to be rejected.
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 i8nterest, if any. 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 to do so.
The Court has stated that it has no hesitation to hold that 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 this 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 appellant –Union of India amended the earlier notifications issued by it , through the Notification No. 21 of 2007-CE of April 25, 2007. 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 the said First Schedule –tobacco and manufactured tobacco substitutes and plastic carry bags of less than 20 microns were included in the negative list and as such were no longer entitled for exemption from the Excise Duty. In view of this, all three appeals were found deserving to be allowed.
In response to challenge posed to this amendment by M/s Unicorn Industries, Sikkim HC allowed its writ petition on May 11, 2012 holding that the petitioner was entitled to exemption from payment of excise duty on manufacture of ‘pan masala’ in its Sikkim unit for ten years from June 27, 2006- the date of commencement of commercial production there.
In result, the Supreme Court allowed Union Government’s three appeals – one against the Sikkim HC’s and other two against Gauhati HC division bench’s orders after quashing and setting aside the impugned orders and judgments passed by the two HCs.