Doctrine of promissory estoppel can’t be invoked against Govt. where exemption is withdrawn

Case Details: Godrej Consumer Products Limited vs Union of India and others - [2023] 146 taxmann.com 111 (Jammu & Kashmir and Ladakh)

Judiciary and Counsel Details

• • Mohan Lal & Tashi Rabstan, JJ.
  • Pranav Kohli, Sr. Adv. Vineet Nagla & Arun Dev Singh, Advs. for the Petitioner.
  • Jagpaul Singh, Sr. CGSC Ms Pallavi Sharma & Ravinder Gupta for the Respondent.

Facts of the Case

The taxpayer is engaged in FMCG had a manufacturing unit eligible for exemption. They made the expansion with the impression that the exemption would continue in GST. Also, the new units were established post-GST era whose permission was already taken in pre-GST era.

The benefit of the Budgetary support scheme was rejected as the unit was established after the GST was implemented whereas the benefit of the scheme was available only where the unit was established pre-GST. The contention of the assessee that the approval was taken pre-GST era was not acceptable.

High Court Held

It was further held that the benefit of promissory estoppel would not be applicable in the case of withdrawal of exemption notification as the withdrawal of exemption in public interest is a matter of policy as in the exercise of the statutory power of the state under law. The court cannot bind the Government to its policies decision when the same is changed/revised/withdrawn in the nature of public interest. Court cannot interfere with fiscal policy where government acts in public interest unless fraud or lack of bona fide intention is established. Hence the said doctrine cannot be invoked in the present case.