* IN HIGH COURT OF DELHI AT NEW DELHI Judgment reserved on: 14.01.2020 Judgment delivered on: 02.03.2020 + W.P.(C) 505/2020 & CM APPL. 1328/2020 M/S. HERO MOTOCORP LTD ..... Petitioner Through: Mr. S. Ganesh, Senior Advocate with Ms.Priyanka Rathi, Ms. Ashwini Chandrasekaran and Mr. Rohit Arora, Advocates. versus UNION OF INDIA & ORS ..... Respondents Through: Mr. Amit Bansal, Mr. Aman Rewaria, Ms. Vipasha Mishra and Mr. Akhil Kulshrestha, Advocates for respondents No.2 and 5. CORAM: HON'BLE MR. JUSTICE VIPIN SANGHI HON'BLE MR. JUSTICE SANJEEV NARULA JUDGMENT SANJEEV NARULA, J. Brief Facts 1. Petitioner is engaged in business of manufacturing of two wheelers in State of Uttarakhand. It was operating and registered under Central Excise Act, 1944. With introduction of Goods and Services W.P.(C.) No. 505/2020 Page 1 of 35 Signature Not Verified Digitally Signed By:SAPNA SETHI Signing Date:05.03.2020 11:41:00 Tax ( GST ) w.e.f. 01.07.2017, it now has registration under said Central and State GST Acts. 2. In year 2002, special packages of incentives were announced to promote industrial development in State of Uttarakhand. In pursuance thereto, 1st Respondent- Union of India through 4th Respondent- Ministry of Commerce & Industry issued Office Memorandum dated 07.01.2003, detailing package of incentives. fiscal incentive provided under memorandum included 100% ab inito Central Excise Duty Exemption to new industrial units for period of 10 years from date of commencement of commercial production. relevant extract of Office Memorandum/Policy read as under: "3.1 Fiscal Incentives to new Industrial Units and to existing units on their substantial expansion: (1) New industrial units and existing industrial units on their substantial expansion as defined, set up in Growth Centres, Industrial Infrastructure Development Centres (IIDCs), Industrial Estates, Export Processing Zones, Theme Parks (Food Processing Parks, Software Technology Parks, etc.) as stated in Annexure-I and other areas as notified from time to time by Central Government, are entitled to: (a) 100% (hundred percent) outright excise duty exemption for period of 10 years from date of commencement of commercial production. (b) 100% income tax exemption for initial period of five years and thereafter 30% for companies and 25% for other than companies for further period of five years for entire states of Uttaranchal and Himachal Pradesh from date of commencement of commercial production. W.P.(C.) No. 505/2020 Page 2 of 35 Signature Not Verified Digitally Signed By:SAPNA SETHI Signing Date:05.03.2020 11:41:00 (II) All New Industries in notified location would be eligible for capital investment subsidy @ 15% of their investment in plant & machinery, subject to ceiling of Rs. 30 lakh. existing units will also be entitled to this subsidy on their substantial expansion, as defined. (III) Thrust Sector Industries as mentioned in Annexure-II are entitled to similar concessions as mentioned in para 3 (I) & (II) above in entire state of Uttarakhand and Himachal Pradesh without any area restrictions." 3. In line with objective of above noted memorandum and in order to implement incentive scheme, Central government, on being satisfied that it is necessary in public interest, issued Notification No. 50/2003- C.E, dated 10.06.2003 (hereinafter referred to as exemption notification ) in exercise of powers conferred by sub-section (1) of Section 5A of Central Excise Act, 1944 (1 of 1944) read with sub-section (3) of Section 3 of Additional Duties of Excise (Goods of Special Importance) Act, 1957 (58 of 1957) and sub-section (3) of Section 3 of Additional Duties of Excise (Textiles and Textile Articles) Act, 1978 (40 of 1978). This notification exempted certain goods from whole of duty of excise, or additional duty of excise, as case may be, leviable thereon under any of said Acts, in respect of certain industrial units located in State of Uttarakhand (earlier Uttaranchal) and Himachal Pradesh. notification also provided that exemption shall apply to industrial units for period not exceeding 10 years from date of publication of notification in Official Gazette or from date of commencement of commercial production, whichever is later. 4. Since Petitioner s unit qualified for exemption under W.P.(C.) No. 505/2020 Page 3 of 35 Signature Not Verified Digitally Signed By:SAPNA SETHI Signing Date:05.03.2020 11:41:00 aforementioned notification, it established new industrial unit for manufacture of motor vehicles at Haridwar, Uttarakhand and commenced commercial production in its industrial unit from 07.04.2008 and continued to avail benefits of exemption notification till 01.07.2017. 5. Then, Constitution 101st Amendment Act, 2016 was enacted by Parliament to introduce Goods and Services Tax. said Act conferred concurrent taxing powers on Union as well as States including Union Territories. In this regard, Article 246A was inserted, making special provision with respect to levy of GST, by both Union as well as States. Article 269A was inserted to provide for levy of IGST on inter-state transactions exclusively by Union. Post aforesaid constitutional amendments, GST and IGST Act were enacted by Parliament and SGST Acts were enacted by various State legislatures for their respective States for levy of GST. 6. Petitioner migrated under new GST regime and is now required to pay CGST and IGST under provisions of Goods and Services Tax (GST) regime in respect of intra-state, and also inter-state supplies made from Uttarakhand unit. Immediately thereafter, CGST rules came into force on 18.07.2017 and Notification No. 21/2017-CE was issued by Respondent No.1 rescinding various area-based exemption notifications, including exemption notification no. 50/2003-CE with effect from 01.07.2017. Due to rescission of exemption notification, beneficial incentives granted to petitioner, ceased to continue w.e.f. 01.07.2017. W.P.(C.) No. 505/2020 Page 4 of 35 Signature Not Verified Digitally Signed By:SAPNA SETHI Signing Date:05.03.2020 11:41:00 7. Since withdrawal of exemption notifications caused financial hardships, negative impact thereof was discussed in second GST Council meeting held on 30.09.2016, and Respondent No.1- Union of India in recognition of hardships faced by industries and conforming to recommendations of GST Council, decided that it would provide budgetary support to eligible units for residual exemption period by way of part reimbursement of GST, paid by unit, limited to Central Government s share of CGST and/or IGST retained after devolution of part of these taxes to States. Accordingly, in consonance with recommendations of GST Council, on 05.10.2017, Central Government notified Budgetary Support Scheme providing reimbursements of Central Government s share of cash component of CGST and IGST i.e. 58% of CGST and 29% of IGST, in lieu of exemption provided under exemption notification. 8. In these circumstances, Petitioner has preferred present writ petition before us under Article 226 of Constitution of India to seek direction to Respondent No. 1 to grant complete exemption by way of reimbursement of amount of Central Goods and Services Tax (CGST) and Integrated Goods and Services Tax (IGST) for residual period of exemption notification dated 10.06.2003, that granted 100% exemption on excise duty and adherence of Industrial Policy. Submissions on behalf of Petitioner 9. We have heard learned counsels for parties at length at admission stage itself. Mr. S. Ganesh, learned senior counsel for W.P.(C.) No. 505/2020 Page 5 of 35 Signature Not Verified Digitally Signed By:SAPNA SETHI Signing Date:05.03.2020 11:41:00 Petitioner argues that action taken pursuant to promise made by Government, manifested vide policy contained in notification dated 07.01.2003, followed by exemptions provided by exemption notification, confers vested right in favour of Petitioner. He elucidated that object of afore-noted policy decision and exemption notification was to grant incentive for promoting investment and industrial development in State of Uttarakhand by granting complete exemption from excise duty for period of 10 years from date of commencement of commercial production. This is evident from Office Memorandum No. 1(10)/2001- NER dated 07.01.2003 issued by Respondent No. 1 which provides that new industrial units and existing industrial units on their substantial expansion, as defined, are entitled to 100% outright excise duty exemption for period of 10 years from date of commencement of commercial production . He argues that, even though said exemption notification uses words for period not exceeding 10 years , period of exemption has to be understood in line with office memorandum/ policy statement. He submits even though GST enactments have taken place of, inter alia, Central Excise laws with effect from 01.07.2017, burden of GST should have been relieved for residual balance of period of 10 years, i.e, benefit of exemption notification should have been available to petitioner till 06.04.2018. Mr. Ganesh has placed reliance on decision of Supreme Court in State of Bihar and Ors. Vs. Supraphat Steel and Ors., (1999) 1 SCC 31, to advance his submission that exemption notification was issued by Government to carry out objectives of policy decisions taken in industrial policy itself, and in W.P.(C.) No. 505/2020 Page 6 of 35 Signature Not Verified Digitally Signed By:SAPNA SETHI Signing Date:05.03.2020 11:41:00 case notification is found to be repugnant to industrial policy declared in government resolution, then said notification must be held to be bad to that extent, meaning thereby, that declared policy decision would take precedence over statutory exemption notification. 10. Mr. Ganesh also placed strong reliance upon judgment of Supreme Court in Manuelsons Hotels Private limited Vs. State of Kerala and Ors., (2016) 6 SCC 766, to advance his submission on principle of promissory estoppel. He argued that where Government holds out promise which has been acted upon, subject to certain restrictions, such as overriding public interest, government cannot resile from such promise and it will have to adhere to doctrine of Promissory Estoppel . In this perspective, he also relied upon recent judgment of High Court of Bombay in case of K.M Refineries and Infraspace (P) Ltd. Vs. State of Maharashtra, 2019 SCC OnLine Bom 1485, wherein Court held that reduction under Incentive Scheme in name of new policy of GST, was clearly not permissible and Incentive Scheme that was in operation on date of issuance of Eligibility Certificate would have to be enforced against State. It was held that State should modify Incentive Scheme in such way that it is consistent with new tax structure and does not result in reducing or restricting benefits which have been conferred upon industrial unit, like that of Petitioner, under Incentive Scheme. 11. Mr. Ganesh also argued that in previous tax regime, exempted taxes were in respect of Central Indirect Taxes. Therefore, first W.P.(C.) No. 505/2020 Page 7 of 35 Signature Not Verified Digitally Signed By:SAPNA SETHI Signing Date:05.03.2020 11:41:00 Respondent should have either granted total exemption from CGST and IGST in exercise of its statutory powers under respective charging Acts or, alternatively, grant full budgetary support instead of limiting it to 58% of cash payments of CGST and 29% of IGST paid to industrial Units. He argued that rationale behind aforesaid limited budgetary support being devolution of taxes on goods and services to States as per recommendation of 14th Finance Commission, is totally irrelevant and immaterial consideration. This aspect is of no consequence or relevance to assesee, who pays entire amount of tax to Central Government. first Respondent has obligation to issue exemption notification under relevant provisions of Acts. Submissions on behalf of Respondent 12. Mr. Amit Bansal, learned counsel on behalf of Respondent has countered these submissions and defended withdrawal of exemption notification and introduction of limited budgetary support. He argued that first contention of petitioner that policy will override exemption notification is not correct, as words of notification are clear in providing that said exemption will be granted for period not exceeding 10 years , and therefore, exemption could be provided for maximum period of 10 years i.e. it could be lesser than 10 years. In view of above, there is no bar in suspending exemption before period of 10 years has expired in respect of particular beneficiary. He further submits that Office Memorandum dated 07.01.2003 relied on by petitioner was meant for internal communication, and was not released in public W.P.(C.) No. 505/2020 Page 8 of 35 Signature Not Verified Digitally Signed By:SAPNA SETHI Signing Date:05.03.2020 11:41:00 domain. 13. According to Mr. Bansal, decision of Court in case of K.M Refineries (supra) cannot be applied to facts of present case as said decision was qua executive order, whereas, in present case, Petitioner is espousing principle of promissory estoppel qua legislative Act. In support of this submission, Mr. Bansal has further drawn attention of Court to proviso to section 174 (2) (c) of CGST Act. He contends that Notification No. 21/2017-CE dated 18.07.2017- whereby said exemption notification was rescinded, has not been challenged by Petitioner, and therefore, in view of these circumstances, concession grated by exemption notification cannot be claimed as vested right in light of proviso to Section 174(2) (c) of CGST Act. Discussion and Decision 14. We have heard submissions of learned counsels and given our due consideration to matter. Petitioner had acted upon assurance given by Respondent and incurred liability by mobilizing resources and making substantial investments which, in turn, led to economic growth and development in State of Uttarakhand. Now, with change in indirect tax laws, Petitioner s submission is that State could not resile from promise or alter its position, and withdraw exemptions which would negatively impact financial position of Petitioner. Petitioner wants this court to hold first Respondent to promise it had demonstrably made by way of exemption notification. central question that arises for our consideration in present petition is as to whether Respondents W.P.(C.) No. 505/2020 Page 9 of 35 Signature Not Verified Digitally Signed By:SAPNA SETHI Signing Date:05.03.2020 11:41:00 can be compelled to grant exemption from payment of GST and IGST to petitioner w.e.f from 1.07.2017 for balance residual period of 10 years. 15. mainstay of Petitioner s claim is exemption notification dated 10.06.2003 whereby Central Government granted exemptions from payment of Central Excise Duty for period of 10 years to units in State of Uttarakhand. Indisputably, said exemption notification was under Central Excise Act, 1944. With coming in force of GST regime, Central Excise Act, 1944 itself has been repealed. For that matter, entire indirect tax structure has been overhauled. Thus, right to exemption, pitched by Petitioner as vested right can be meaningfully appreciated only if we understand changes introduced with advent of GST laws. This would also help us understand if Petitioner has indeed suffered setback, as it has presented before us. 16. Having regard to Constitutional Scheme with regard to tax structure that existed in country prior to promulgation of CGST and IGST Acts, same did not provide for any concurrent taxing powers to Union as well as States. powers of both governments under Union list and State list were clearly delineated. Therefore, in order to introduce goods and services tax, amendments to Constitution of India were inevitably required, with aim of conferring simultaneous powers on Parliament as well as State Legislature, including every Union Territory, to make laws for levying Goods and Services Tax on transaction of supply of goods, and services, or both. Thus, genesis of GST is 101st Constitution Amendment, W.P.(C.) No. 505/2020 Page 10 of 35 Signature Not Verified Digitally Signed By:SAPNA SETHI Signing Date:05.03.2020 11:41:00 through which several amendments were introduced in Constitution of India. In this regard, 2014 Amendment Bill proposed insertion of new provisions i.e. Article 246A in Constitution. statement of objectives and reasons laid down rationale behind introduction of said provision in following words: Constitution is proposed to be amended to introduce goods and services tax for conferring concurrent taxing powers on Union as well as States including Union territory with Legislature to make laws for levying goods and services tax on every transaction of supply of goods or services or both. goods and services tax shall replace number of indirect taxes being levied by Union and State Governments and is intended to remove cascading effect of taxes and provide for common national market for goods and services. proposed Central and State goods and services tax will be levied on all transactions involving supply of goods and services, except those which are kept out of purview of goods and services tax. 17. Article 246A empowered both Centre and State to legislate and introduce goods and services tax. Another crucial amendment is insertion of Article 269A which fundamentally alters scheme of Finance provided in Chapter I of part XXII of Constitution. This is in fact, linked to Clause (2) of 246A and provides for levy and collection of tax in course of inter-state trade and its appropriation between Union and States. After amendment of Constitution, and along lines of recommendation of GST Council, Parliament in exercise of powers conferred under newly introduced articles, enacted Central Goods and Services Goods Act, 2017, Union Territories Goods and Service Tax, Act, 2017 and Integrated Goods and Services Act, 2017. Likewise, W.P.(C.) No. 505/2020 Page 11 of 35 Signature Not Verified Digitally Signed By:SAPNA SETHI Signing Date:05.03.2020 11:41:00 exercising powers under Clause (1) of Article 246A of Constitution, State Legislatures also enacted their respective State Goods and Service Tax Legislations. Thus, Article 246A can be termed as most significant amendment carried out by Constitutional Amendment Act, as result whereof, now both Parliament and State legislatures are competent to concurrently legislate with respect to Goods and Services Tax. dual GST structure which empowers Centre and States to levy and collect taxes through appropriate legislations is in conformity with constitutional schemes. 18. Under new taxing scheme, various central indirect taxes including Central Excise Duty and several State indirect taxes have been subsumed in GST. It is destination-based tax, - i.e. Goods and Services are taxed at point where they are consumed, and not at point of origin. Under GST law, place of supply of goods and services assumes significance. There are several noticeable differences between GST regime and previous one pertaining to levies, taxes, exemptions etc. Once such area is exemptions . Legislature has sought to prune exemptions that were provided by Government in previous regime. GST predicates on fact that there would be minimum exemptions. This was necessary in order to ensure that cascading of taxes is minimized and there is seamless transfer of Input Tax Credit, which is one of main cornerstones of GST law. In this changed scenario, Parliament being conscious of exemptions that were granted as incentives against investments through notification, while repealing earlier legislations, specifically provided that such incentives shall not continue as privileges, if W.P.(C.) No. 505/2020 Page 12 of 35 Signature Not Verified Digitally Signed By:SAPNA SETHI Signing Date:05.03.2020 11:41:00 notifications are rescinded on or after appointed date provided under Act. This objective has been embedded in Section 174 (2) (c) of CGSCT Act, which reads as under: 174. Repeal and saving. (1) Save as otherwise provided in this Act, on and from date of commencement of this Act, Central Excise Act, 1944 (1 of 1944) (except as respects goods included in entry 84 of Union List of Seventh Schedule to Constitution), Medicinal and Toilet Preparations (Excise Duties) Act, 1955 (16 of 1955), Additional Duties of Excise (Goods of Special Importance) Act, 1957 (58 of 1957), Additional Duties of Excise (Textiles and Textile Articles) Act, 1978 (40 of 1978), and Central Excise Tariff Act, 1985 (5 of 1986) (hereafter referred to as repealed Acts) are hereby repealed. (2) repeal of said Acts and amendment of Finance Act, 1994 (32 of 1994) (hereafter referred to as such amendment or amended Act , as case may be) to extent mentioned in sub-section (1) or Section 173 shall not (a) revive anything not in force or existing at time of such amendment or repeal; or (b) affect previous operation of amended Act or repealed Acts and orders or anything duly done or suffered thereunder; or (c) affect any right, privilege, obligation, or liability acquired, accrued or incurred under amended Act or repealed Acts or orders under such repealed or amended Acts: Provided that any tax exemption granted as incentive against investment through notification shall not continue as privilege if said notification is rescinded on or after appointed day ; or... (emphasis supplied) W.P.(C.) No. 505/2020 Page 13 of 35 Signature Not Verified Digitally Signed By:SAPNA SETHI Signing Date:05.03.2020 11:41:00 19. Consistent with objective envisioned at time of bringing in new law, Respondents vide notification No. 21/2017-CE dated 18.07.2017 rescinded various area-based exemption notifications including Notification No. 50/2003-CE which forms foundation of Petitioner s claim in present petition. As result, vide Notification dated 18.07.2017 read with Section 174 (2) (c) of CGST Act, Petitioner lost all privileges which it had in erstwhile regime. 20. However, stakeholders viz. Central and State Governments were conscious of fact that in previous regime, they had announced industrial and investment policies for promoting industrial growth and employment in industrially backward states. One of prominent features of framework of policies was to provide exemption from excise duty on goods produced in specified states. Similarly, some of States had also granted exemptions from VAT or deferment of VAT, inter alia, as part of their industrial promotion policies to specific areas within States or to specific industry. Insofar as Central Government is concerned, area based Central Excise Duty exemptions were applicable to certain states including State of Uttarakhand, with which we are presently concerned. Thus, agenda item was taken up in second GST Council Meeting held on 30.09.2016, regarding treatment of existing tax incentives scheme of Central and State Governments. said agenda was taken up and inputs of States were evaluated. extract of minutes of meeting of GST Council and conclusion with respect to above noted agenda item reads as under: W.P.(C.) No. 505/2020 Page 14 of 35 Signature Not Verified Digitally Signed By:SAPNA SETHI Signing Date:05.03.2020 11:41:00 Agenda Item 3: Treatment of existing tax incentive schemes of Central and State Governments 25. Secretary to Council explained that Central and State governments had given various incentives of Central Excise and Value Added Tax (VAT) and Central Sales Tax (CST). He pointed out that in GST regime, such incentives could not be continued as supplies would need to be made on payment of tax in order to permit flow of tax to destination state. Therefore, decision would need to be arrived at regarding treatment of such tax incentive schemes under GST regime. He observed that one option could be to 'grandfather' such schemes and provide for budgetary apportionment in State and Central budgets for reimbursing tax paid to those units which enjoyed tax exemption up to specified period. However, while 'grandfathering' any such scheme, it would need to be kept in mind that unlike VAT and CST which were origin-based taxes, GST was destination-based tax and unconditional reimbursement scheme could lead to double outf1ow for origin-state - one by way of transfer of tax to destination State and other by way of reimbursement to supplier. Therefore, States would need to be careful while devising any reimbursement scheme and care could be taken that such reimbursement was limited for supplies made within State. 26. Hon'ble Deputy Chief Minister of Gujarat alluded to examine possible legal complications. Secretary to Council pointed out that agenda note contained certain judgements of Hon'ble Supreme Court as per which principle of promissory estoppel would not apply in case where there was supervening public equity. 27. Hon'ble Minister from Tamil Nadu stated that Centre should not give budgetary support to only few States that were classified as Special Category States for tax incentive schemes maintained by them. Hon'ble Minister from Assam strongly objected to line of argument presented by Hon'ble Minister from Tamil Nadu and stated that small states should get help from Centre. He pointed out that for last 70 years, oil and natural gas were being taken out of Assam which was used for benefit of all States. He pointed out that for small States to exist, Centre W.P.(C.) No. 505/2020 Page 15 of 35 Signature Not Verified Digitally Signed By:SAPNA SETHI Signing Date:05.03.2020 11:41:00 should help them; otherwise smaller States might wither away. Chairperson stated that no compensation was to be paid by Centre to any State for reimbursements relating to tax incentive schemes and that States would need to make their own budgetary provisions for same. 28. Hon'ble Minister from Uttarakhand stated that Government of lndia had given area-based exemption for 10 years and that such exemptions were to continue up to 2020. She observed that Centre must reimburse such units for Central taxes as jobs of more than one lakh workers were at stake. Hon'ble Minister from Jammu and Kashmir stated that his State was in similar situation as Uttarakhand. Chairperson observed that once incentive schemes were withdrawn, taxes paid would be accounted for in Consolidated Fund of India and 42% of amount would be devolved to States. Centre, therefore, could be expected to only reimburse units out of remaining 58% of fund which was not part of devolution and States would also need to correspondingly reimburse such units out of share of revenue received through devolution. 29. Council approved following- (i) All entities exempted from payment of indirect tax under any existing tax incentive scheme shall pay tax in GST regime. (ii) decision to continue with any incentive given to specific industries in existing industrial policies of States or through any schemes of Central Government, shall be with concerned State or Central Government. (iii) In case State or Central Government decides to continue any existing exemption/incentive/deferral scheme, then it shall be administered by way of reimbursement mechanism through budgetary route, modalities for which shall be worked out by concerned State/Centre. 30. In conclusion, after discussing with members, Chairperson stated that next meeting of Council would be held on 18th , 19th and 20th October 2016. main agenda for W.P.(C.) No. 505/2020 Page 16 of 35 Signature Not Verified Digitally Signed By:SAPNA SETHI Signing Date:05.03.2020 11:41:00 that meeting would be rate structure under GST along with other residual agenda items from previous meeting. 31. meeting ended with vote of thanks to Chair. 21. above extract indicates that Council reiterated and maintained that under GST regime, exemptions cannot continue. However, in spirit of helping affected units to tide over troubled times, it was inter-alia resolved that in case, State or Central Government decides to continue any existing exemptions/incentives/deferral schemes, it would be administrated by way of re-imbursement mechanism through budgetary route. In line with recommendations of GST Council, Respondent No.1 then framed Budgetary Support Scheme for eligible manufacturing units located in States like Jammu & Kashmir, Uttarakhand, Himachal Pradesh and North Eastern States including Sikkim. relevant portion of Budgetary Support Scheme reads as under: F. No. 10(1)/2017-DBA-II/NER.- In pursuance of decision of Government of India to provide budgetary support to existing eligible manufacturing units operating in States of Jammu & Kashmir, Uttarakhand, Himachal Pradesh and North Eastern States including Sikkim under different Industrial Promotion Schemes of Government of India, for residual period for which each of units is eligible, new scheme is being introduced. new scheme is offered, as measure of goodwill, only to units which were eligible for drawing benefits under earlier excise duty exemption/refund schemes but has otherwise no relation to erstwhile schemes. 1. 2 Units which were eligible under erstwhile Schemes and were in operation through exemption notifications issued by Department of Revenue in Ministry of Finance, as listed under para 2 below would be considered eligible under this scheme. All such notifications have ceased to apply w.e.f 01.07.2017 and stands W.P.(C.) No. 505/2020 Page 17 of 35 Signature Not Verified Digitally Signed By:SAPNA SETHI Signing Date:05.03.2020 11:41:00 rescinded on 18.07.2017 vide notification no. 21/2017 dated 18.07.2017. scheme shall be limited to tax which accrues to Central Government under Central Goods and Service Act, 2017 and Integrated Goods and Services Act, 2017, after devolution of Central tax or Integrated tax to States, in terms of Article 270 of Constitution. 3. SHORT TITLE AND COMMENCEMENT 3.1 scheme shall be called Scheme of Budgetary Support under Goods and Services Tax (GST) Regime to units located in State of Jammu & Kashmir, Uttarakhand, Himachal Pradesh and North Eastern States including Sikkim. said Scheme shall come into operation w.e.f.01.07.2017 for eligible unit (as defined in para 4.1) and shall remain in operation for residual period (as defined in para 4. 3) for each of eligible unit in respect of specified goods (as defined in para 4.2 ). overall scheme shall be valid upto 30.06.2027. 3.2 OBJECTIVE: GST Council in its meeting held on 30.09.2016 had noted that exemption from payment of indirect tax under any existing tax incentive scheme of Central or State Governments shall not continue under GST regime and concerned units shall be required to pay tax in GST regime. Council left it to discretion of Central and State Governments to notify schemes of budgetary support to such units. Accordingly, Central Government in recognition of hardships arising due to withdrawal of above exemption notifications has decided that it would provide budgetary support to eligible units for residual period by way of part reimbursement of Goods and Services Tax, paid by unit limited to Central Government's share of CGST and/or IGST retained after devolution of part of these taxes to States. x x x 5. 2 above 58% has been fixed taking into consideration that at present Central Government devolves 42% of taxes on goods W.P.(C.) No. 505/2020 Page 18 of 35 Signature Not Verified Digitally Signed By:SAPNA SETHI Signing Date:05.03.2020 11:41:00 and services to States as per recommendation of 14th Finance Commission (emphasis supplied) 22. Under aforesaid Scheme, for remaining period, units can only claim refund of taxes pertaining to just Union Government s share of CGST (58%) and IGST (29%). Petitioner is peeved that units that were eligible in various exemption notifications under erstwhile regime have been granted only partial benefit as against 100% benefit. It contends that policy decision arrived at vide Office Memorandum dated 07.01.2003, entitles them to grant complete benefit under Budgetary Support Scheme. In our view there is fundamental fallacy in contention. We do not perceive that Petitioner has any vested right to be entitled to budgetary support of entire CGST and IGST. industrial policy of Respondent No.1 to grant area-based exemption has undergone complete change. Consequently, exemption granted under Central Excise Exemption Notification giving effect to said policy has also lost its relevance and is no longer in force. We cannot now selectively concentrate on benefits under policies that are no longer in vogue. comprehensive picture can be grasped only if exercise is undertaken of evaluation of taxes post GST. new law entitles Petitioner input tax credit of all taxes and cross utilization thereof which was not position back in day. 23. In India, where taxation has been subject to both State and Central legislations, exemptions were also granted under one or several taxation laws, both by State and Central Government. Exemption in simple terms is act of providing immunity from liability to pay tax. Anything W.P.(C.) No. 505/2020 Page 19 of 35 Signature Not Verified Digitally Signed By:SAPNA SETHI Signing Date:05.03.2020 11:41:00 that is exempt under tax law means that entity is not to be subject to tax by Government authorities. purpose for granting these exemptions was often to achieve objective of attracting investments, or promoting trade and industry. In instant case, we are concerned with area-based exemptions which were extended to industries under scheme of Central Governments. Para 3.1 of Office Memorandum/policy, extracted above, does indeed indicate intention to grant benefit to new industrial units such as that of petitioner. This was implemented through exemption notification issued by Central Government allowing 100% excise duty exemption. This position continued till introduction of Constitution 101st Amendment Act, 2016 which sought to fundamentally and radically change indirect tax regime in India. In fact, it was way back in 2009 when Task Force on GST deliberated on future of area-based exemptions under GST and recommended that area based exemptions should not continue under GST. relevant extract of Report of Task Force on GST dated 15th December 2009 is reproduced herein below: q. Area- Based Exemptions 2.68. Under CENVAT, industries set up in North East, Jammu & Kashmir, Sikkim, Uttaranchal and Himachal Pradesh (hereinafter referred to as specified areas ) enjoy exemption from payment of CENVAT. This area based exemption creates economic distortions and affect economic viability of units located in non- exempt areas. They are difficult to administer and prone to misuse. Moreover, durability of investment attracted by such measures beyond exemption period is also doubtful. 2.69. Prime Minister s Economic Advisory Council, which had W.P.(C.) No. 505/2020 Page 20 of 35 Signature Not Verified Digitally Signed By:SAPNA SETHI Signing Date:05.03.2020 11:41:00 recently examined issue of area based exemption in context of its impact on pharmaceutical industry, has observed that:- policy of granting area based exemptions was ill advised. It created host of distortions. We have to design and introduce subterfuges to neutralize those distortions. But such subterfuges make tax administration needlessly clumsy and complex and run counter to our declared policy of simplifying tax system. There is clearly case for revisiting whole issue of area based tax exemptions. If their premature withdrawal is not possible for political and business reasons, at minimum such incentives should not be extended to fresh areas and ones already in force should be extinguished when their applicability ends. 2.70. Further, existing exemption for Uttranchal and Himachal has been objected to by many States. In particular, Chief Ministers of Haryana, Uttar Pradesh and Punjab have often expressed their opposition to such exemptions as these had effect of diverting industries to Himachal Pradesh and Uttranchal. 2.71. Para 3.3.2.(viii) of draft of Approach to 11th Five Year Plan has also commented on undesirability of area based exemptions. To quote :- existing incentive programmes such as those available for North East, J&K, Himachal Pradesh and Uttranchal need to be reviewed with view to assessing their impact on industrialization in these regions. extension of excise duty exemption to Himachal and Uttranchal has had adverse impact on industrial investments in both North Eastern region and adjacent States. Consideration would need to be given to restricting these incentives to only hilly areas or to replacing these incentives by special programme for roadways and railway development in these States. 2.72. area based exemptions erode tax base. revenue foregone on account of area-based exemptions is estimated to be Rs. 8,073 crores in 2007-08. 2.73 Further, case for providing area based exemption is W.P.(C.) No. 505/2020 Page 21 of 35 Signature Not Verified Digitally Signed By:SAPNA SETHI Signing Date:05.03.2020 11:41:00 extremely weakened in face of our recommendation for sharp reduction in combined rates of CGST and SGST and ease of compliance through combined transaction reporting and payment Form No. GST-I. 2.74. In view of above, we recommend that area based exemption in respect of CENVAT should not be continued under GST framework. In case it is considered necessary to provide support to industry for balanced regional development, it would be appropriate to provide direct investment linked cash subsidy. (emphasis supplied) 24. GST has now enabled seamless flow of input tax credits across chain. Central Excise Duty exemptions did not envisage exemption from VAT, which is now available as input tax credit on account of being subsumed in GST and credit thereof is now available for payment of duty. Similarly, VAT exemptions did not envisage exemption from service tax and excise duty, which is now available as input credit on account of being subsumed in GST. In this changed scenario, Government has decided to grandfather incentives that were given to specific industry under existing industrial policy of States, or through scheme of Government. new tax structure and merging of indirect taxes and mechanism provided for input tax credit of state taxes that were earlier part of State and Central Legislations has now resulted in completely new tax which is known as GST. Therefore, Petitioner s argument that policy decision of 2003 still holds field and can be enforced against Government as promise, to our understanding is not correct. 100% tax exemption under industrial policy was envisaged under previous regime. policy can no longer be invoked and therefore, exemption W.P.(C.) No. 505/2020 Page 22 of 35 Signature Not Verified Digitally Signed By:SAPNA SETHI Signing Date:05.03.2020 11:41:00 notifications issued implementing said policy also have lost mandate. Merely because Government has acknowledged difficulties faced by industrial units and introduced Budgetary Support Scheme, it cannot be said that Petitioners as matter of right, are entitled to insist that support should be on entire fiscal benefits that were originally envisaged under 2003 policy. Budgetary Support Scheme under GST, is not in lieu of exemptions that were granted under previous fiscal incentives schemes for providing exemptions under Central Excise Act, 1944 and other such legislations. Just because, Respondents have acknowledged that units located in States of Jammu & Kashmir, Uttarakhand, Himachal Pradesh and North East including Sikkim should be granted Budgetary Support Scheme as measure of goodwill for residual period for which each of units was earlier eligible, it cannot be held that that support is in lieu of exemptions. Recognizing hardships arising out to withdrawal of exemptions notifications cannot be understood or categorized as admission of any such right in favour of Petitioner. 25. Even otherwise, Respondents acknowledgment cannot vest right in favour of Petitioner, if they did not have such right in law. We also do not perceive that Petitioners have acquired vested right in terms of policy. fiscal benefits promised in return for making investments in State of Uttarakhand were privileges which were granted under law that no longer holds field. rights and obligations that were flowing under tax regime originated from tax structure that existed when policy was framed. Such obligations cannot stay alive, if legislation itself has undergone complete overhaul by advent of introduction of GST W.P.(C.) No. 505/2020 Page 23 of 35 Signature Not Verified Digitally Signed By:SAPNA SETHI Signing Date:05.03.2020 11:41:00 legislations. Therefore, Budgetary Support Scheme cannot said to be in contravention of fiscal incentive policies or promise made by Respondent No.1 at time of introducing area-based exemptions. In previous tax regime, taxes were being levied on different incidents, such as manufacturing in case of levy of excise duty. This is no longer relevant consideration. GST is destination based tax, area based exemptions, under GST regime have entirely different dimensions and therefore, for this reason, there are no area-based exemptions envisaged under GST regime. Government has, instead, provided necessary support to industry for its economic development and has grandfathered incentive Scheme. 26. Now let us also examine as to whether Budgetary Support Scheme reveals half hearted approach of Respondent No.1, as has been sought to be projected by Petitioner. Respondent No.1 is giving Budgetary Support Scheme to extent of 58% on premise that, to that extent, share is devolved upon Central Government and remaining 42% is apportioned to State Government and, likewise, in case of IGST, Budgetary Support Scheme is restricted to Central Government s share of 29%. aforesaid figures are recommendations of 14 th Finance Commission. We do not find anything irrational or arbitrary with respect to partial tax budgetary support. Firstly, Budgetary Support is not exemption under Act. rationale of providing support to extent of Central Government s share of CGST and IGST is also based on reasoning which cannot be questioned by Petitioner. Article 279A of Constitution provides that GST Council shall make recommendations to W.P.(C.) No. 505/2020 Page 24 of 35 Signature Not Verified Digitally Signed By:SAPNA SETHI Signing Date:05.03.2020 11:41:00 Union and States, inter alia, on issues relating to special provision with respect to States of Arunachal Pradesh, Assam, Jammu & Kashmir, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Himachal Pradesh and Uttarakhand. GST Council in its meeting held on 30.09.2016, left it to discretion of Central Government and State Government to notify schemes of Budgetary Support to units where erstwhile schemes were in operation on 18.07.2017. Accordingly, Central Government provided Budgetary Support to eligible units for residual period by way of part re-imbursement of goods and service tax paid by unit, limited to Central Government s share of CGST and IGST retained after devolution of part of these taxes to States. apportionment of tax between Central and States has also undergone complete reorganisation. In this regard, we may specifically mention that under Clause (1) of Article 269A of Constitution of India, Goods and Services Tax on supplies in course of inter-state trade or commerce shall be levied and collected by Government of India and such tax shall be apportioned between Union and States in manner as may be provided by Parliament by law on recommendations of GST Council. This has been operationalized by levy of tax under IGST Act. Since entire gamut of taxation has been completely restructured, we fail to understand as to how Petitioner is claiming, as matter of right, that Central Government should bear burden and also give Budgetary support to extent of entire tax, irrespective of fact that portion thereof is passed on to States. If submissions of Petitioner were to be accepted, it would mean that Central Government would not only not W.P.(C.) No. 505/2020 Page 25 of 35 Signature Not Verified Digitally Signed By:SAPNA SETHI Signing Date:05.03.2020 11:41:00 pocket any tax from Petitioner, it would also be out of pocket to extent collected tax devolves upon States. States are not bound to take cut on tax collected from Petitioner under any statute or any equitable principle such as promissory estoppel. 27. Finance Commission s Reports, which are recommendations in terms of Article 280 (3) (a) of Constitution, are recommendations of Finance Commission regarding, inter alia, sharing of Union Tax Revenue. said 14th Finance Commission s Report is valid for period of five years from 1st April 2015 till 31st March 2020. Finance Commission Report does provide for tax devolution of 42% to State. Mr. Ganesh has argued that sharing of Revenue existed even in erstwhile regime and, therefore, that cannot be rationale behind restriction of budgetary support to extent of Central Government share therein. We however, do not agree with this contention of Mr. Ganesh. Firstly, for reason, that it is not for Petitioner to question sharing of Revenues that have been recommended by Finance Commission. Secondly, rationale for fixing 58% has reasonable nexus to support extended under Scheme of Budgetary Support and same to our mind does not call for any judicial intervention. 28. Mr. Ganesh, while advancing his arguments, had also reasoned that all erstwhile duties such as central excise duty, service tax etc. which were levied by Central Government before enactment of GST legislations, have been subsequently replaced by CGST under existing GST law and likewise, all duties levied by State Government in W.P.(C.) No. 505/2020 Page 26 of 35 Signature Not Verified Digitally Signed By:SAPNA SETHI Signing Date:05.03.2020 11:41:00 erstwhile tax regime have been replaced by SGST in present tax regime. This is completely wrong proposition as under dual GST model, both Centre and States concurrently levy and collect tax on supply of goods and services. This leads to consolidation of tax base and better administration. We fail to comprehend in what way Petitioner has equated erstwhile excise duty and other duties levied by Central Government in erstwhile regime with existing CGST, as two tax regimes are completely different. It is not case that erstwhile duties levied by Centre have been replaced by CGST. 29. Now let us also examine case law that has been relied upon by Petitioner in support of his submissions. Reliance placed on decision of Court in K.M Refineries (supra) is misplaced. We agree with submissions of Mr. Bansal in this regard that in K.M Refineries (supra), Court was dealing with only executive order. As opposed to it, in present case, exemption from excise duty has been taken away by legislative fiat of Parliament. 30. decision of Court in Mannuelsons Hotels (supra), also, is not relevant to present case. To better appreciate findings of Supreme Court, it is necessary to understand factual matrix giving rise to this case. In this case, on 11.07.1986, G.O. was issued which accepted recommendations of Government of India, suggesting that tourism be declared as industry . Pursuant to aforesaid G.O, appellants began constructing hotel building which was completed in year 1991. In line with said G.O, Kerala Building Tax Amendment Act, 1990 was W.P.(C.) No. 505/2020 Page 27 of 35 Signature Not Verified Digitally Signed By:SAPNA SETHI Signing Date:05.03.2020 11:41:00 passed w.e.f. from 06.11.1990 and Section 3-A was added, which granted Government power by notification in gazette to make exemption from payment of building tax under Act. However, no notification under Section 3-A was issued. Notice for fling returns under Kerala Building Tax Act was issued to appellants and this was contested by Appellants on ground that they were under no obligation to furnish any return under said Act as they were exempt from payment of building tax as per G.O and Section 3-A. By letter dated 06.02.1997, exemption promised by G.O of 1986 was denied to appellants stating that as Section 3-A had been omitted w.e.f. 01.03.1993, power to grant exemption had itself gone and, therefore, no such exemption could be given to appellants. Thus, issue for consideration before Court was that whether appellant was entitled to claim exemption from payment of property tax under Kerala Building Tax Act, 1975, as amended, as per Section 3-A, on ground of promissory estoppel. said Section 3-A came in force from 06.11.1990 and had been later omitted w.e.f. 01.03.1993. Court in this case noted in paragraph 36 as follows: 36 . This would make it clear that from 06.011.1990 to 01.03.1993, power to grant exemption from building tax was statutorily conferred by Section 3-A on Government. And we have seen that Statement of Objects and Reasons for introducing Section 3-A expressly states that said section was introduced in order to fulfil one of promises contained in G.O. dated 11-7-1986. We find that appellants, having relied on said G.O. dated 11-7-1986, had, in fact, constructed hotel building by 1991. It is clear, therefore, that non-issuance of notification under Section 3-A was arbitrary act of Government which must be remedied by application of doctrine of promissory estoppel, as has been held by us hereinabove. W.P.(C.) No. 505/2020 Page 28 of 35 Signature Not Verified Digitally Signed By:SAPNA SETHI Signing Date:05.03.2020 11:41:00 ministerial act of non-issue of notification cannot possibly stand in way of appellants getting relief under said doctrine for it would be unconscionable on part of Government to get away without fulfilling its promise. It is also admitted fact that no other consideration of overwhelming public interest exists in order that Government be justified in resiling from its promise. relief that must, therefore, be moulded on facts of present case is that for period that Section 3-A was in force, no building tax is payable by appellants. However, for period post-1-3-1993, no statutory provision for grant of exemption being available, it is clear that no relief can be given to appellants as doctrine of promissory estoppel must yield when it is found that it would be contrary to statute to grant such relief (emphasis supplied) 31. Thus, Mannuelson s case (supra) is clearly distinguishable on facts from present case before us. Noticeably, in Mannuelson s case (supra), decision was rendered on issue of promissory estoppel against action of Government, i.e, executive action, but, more importantly, this case also goes against Petitioner in as much as, Supreme Court while granting relief of promissory estoppel was also mindful of fact that in case where there is no statutory provision for grant of exemption, no relief can be given. In Paragraph 36 of judgment, Court notes that no mandamus could be issued to legislature to amend Kerala Building Tax Act, 1975, for that would necessarily involve judiciary in transgressing into forbidden field under constitutional scheme of separation of power. 32. Ergo, in view of proviso to Section 174 (2) (c) of CGST Act, issue that arises for our consideration is whether doctrine of promissory estoppel can be invoked against legislative act, because in W.P.(C.) No. 505/2020 Page 29 of 35 Signature Not Verified Digitally Signed By:SAPNA SETHI Signing Date:05.03.2020 11:41:00 present case, government has clearly acted in accordance with law laid down by Parliament. When law itself has undergone complete revision, can doctrine of promissory estoppel still be invoked, in light of Section 174(2) (c) of CGST Act? issue that arises in present petition has been firmly established in string of judgments and is no longer point which is untouched by dictum. 33. We may in this connection refer to decision of Supreme Court in case of Shree Sidhbali Steels Ltd. And Ors. Vs. State of U.P and Ors., (2011) 3 SCC 193. facts of this case were that new Industrial Policy dated 30.4.1990 was declared by State Government assuring grant of 33.33% hill development rebate on total amount of electricity bills to new entrepreneurs for period of 5 years. This period was extended by another period of 5 years to be made available to new industrial units set up till 31.3.1997. Vide Notifications dated 18.6.1998 and 25.1.1999, uniform tariffs of electricity were introduced whereby rebate so given was reduced to 17%. Post 2000, vide Notification dated 7.8.2000, new tariff was announced which completely withdrew hill development rebate. challenge to aforesaid notifications was turned down by two judge bench of Supreme Court in U.P. Power Corpn. Ltd. v. Sant Steels and Alloys (P) Ltd., (2008) 2 SCC 777, which took very restrictive view of Section 49 of Electricity (Supply) Act of 1948, stating that any notification issued thereunder can only be revoked or modified if express provision was made for such revocation under Section 49 itself. Further, such revocation could take place under General Clauses Act only if such withdrawal was in larger public interest, or if legislation was enacted by W.P.(C.) No. 505/2020 Page 30 of 35 Signature Not Verified Digitally Signed By:SAPNA SETHI Signing Date:05.03.2020 11:41:00 legislature authorising Government to withdraw benefit granted by notification. matter was referred to larger three judge bench in Shree Sidhbali Steels (supra) which overruled Sant Steels case (supra), stating that its interpretation of Section 49 of Electricity Supply Act was plainly incorrect, and that Sections 14 and 21 of General Clauses Act made it clear that power under said sections can be exercised from time to time and carries with it power to withdraw, modify, amend or cancel notifications earlier issued. Thus, while deciding case, one of questions that fell for consideration before three judge bench of Supreme Court was whether benefit given by statutory notification can be withdrawn by Government by another statutory notification under different statute and whether principle of promissory estoppel would be applicable to exercise of statutory powers. Court observed as under: 31. It is admitted position that Notification dated 28-6- 1996, granting rebate to industries set up in hill areas, was issued in exercise of powers conferred by Section 49 of Electricity (Supply) Act, 1948. By said notification rebate in electricity charges to extent of 33.33% was given to industries, which were set up in hill areas during specified period. It is also admitted position that thereafter, by Notifications dated 18-6-1998 and 25-1-1999, issued in exercise of powers conferred by Section 49 of Act of 1948, percentage of rebate granted by earlier notification was reduced to 17%. However, by Notification dated 7-8-2000 benefit, which was granted to industries set up in hill areas regarding rebate in electricity charges, was completely withdrawn. What is relevant to notice is that it is not in dispute that Notification dated 7-8-2000 withdrawing benefits granted earlier, was issued in exercise of powers conferred by Section 24 of Uttar Pradesh Electricity Reforms Act, 1999. abovementioned fact makes it evident that benefits, which W.P.(C.) No. 505/2020 Page 31 of 35 Signature Not Verified Digitally Signed By:SAPNA SETHI Signing Date:05.03.2020 11:41:00 were granted and/or curtailed in exercise of statutory powers, were subsequently withdrawn in exercise of another statutory power conferred by another statute, namely, Uttar Pradesh Electricity Reforms Act, 1999. In light of abovementioned facts, question whether principle of promissory estoppel would apply to exercise of statutory powers will have to be considered. 32. x x x 33. Where public interest warrants, principles of promissory estoppel cannot be invoked. Government can change policy in public interest. However, it is well settled that taking cue from this doctrine, authority cannot be compelled to do something which is not allowed by law or prohibited by law. There is no promissory estoppel against settled proposition of law. Doctrine of promissory estoppel cannot be invoked for enforcement of promise made contrary to law, because none can be compelled to act against statute. Thus, Government or public authority cannot be compelled to make provision which is contrary to law. (emphasis supplied) 34. In I.T.C Bhadrachalam Paperboards and Another Vs. Mandal Revenue Officer, A.P and Ors., (1996) 6 SCC 634, controversy was over applicability of exemption notification issued under Andhra Pradesh Non-agricultural Land Assessment Act, 1963. only mode of publication of such exemption order was publication in Andhra Pradesh Gazette. After such publication, orders granting exemption were required to be laid before Legislative Assembly. There was no other mode of publication prescribed. It is in that context Supreme Court found order of exemption granted in Government order, which was not published in Official Gazettes nor issued under any enactment was not enforceable. Supreme Court held that Government can act only in W.P.(C.) No. 505/2020 Page 32 of 35 Signature Not Verified Digitally Signed By:SAPNA SETHI Signing Date:05.03.2020 11:41:00 accordance with statute. One of submissions before Court was that even if it is held that publication of GOM in Gazette was mandatory and non-publication in Gazette as required would render it invalid, yet, GOMs could be treated as representation and promise and doctrine of promissory estoppel can be invoked to carry out such representation. Court while dealing with this submission holds in paragraph 30 as under: 30. It is submitted that by allowing Government to go back on such representation, appellant will be prejudiced. learned counsel also contended that where Government makes representation, acting within scope of its ostensible authority, and if another person acts upon such representation, Government must be held to be bound by such representation and that any defect in procedure or irregularity can be waived so as to render valid which would otherwise be invalid. counsel further submitted that allowing Government to go back upon its promise contained in GOMs No. 201 would virtually amount to allowing it to commit legal fraud. For proper appreciation of this contention, it is necessary to keep in mind distinction between administrative act and act done under statute. If statute requires that particular act should be done in particular manner and if it is found, as we have found hereinbefore, that act done by Government is invalid and ineffective for non-compliance with mandatory requirements of law, it would be rather curious if it is held that notwithstanding such non-compliance, it yet constitutes promise or representation for purpose of invoking rule of promissory/equitable estoppel. Accepting such plea would amount to nullifying mandatory requirements of law besides providing licence to Government or other body to act ignoring binding provisions of law. Such course would render mandatory provisions of enactment meaningless and superfluous. Where field is occupied by enactment, executive has to act in accordance therewith, particularly where provisions are mandatory in nature. There is no room for any W.P.(C.) No. 505/2020 Page 33 of 35 Signature Not Verified Digitally Signed By:SAPNA SETHI Signing Date:05.03.2020 11:41:00 administrative action or for doing thing ordained by statute otherwise than in accordance therewith. Where, of course, matter is not governed by law made by competent legislature, executive can act in its executive capacity since executive power of State extends to matters with respect to which legislature of State has power to make laws (Article 162 of Constitution). proposition urged by learned counsel for appellant falls foul of our constitutional scheme and public interest. It would virtually mean that rule of promissory estoppel can be pleaded to defeat provisions of law whereas said rule, it is well settled, is not available against statutory provision. sanctity of law and sanctity of mandatory requirement of law cannot be allowed to be defeated by resort to rules of estoppel. None of decisions cited by learned counsel say that where act is done in violation of mandatory provision of statute, such act can still be made foundation for invoking rule of promissory/equitable estoppel. Moreover, when Government acts outside its authority, as in this case, it is difficult to say that it is acting within its ostensible authority. (emphasis supplied) 35. Thus, what clearly emerges from decisions taken note of hereinabove is that plea of promissory estoppel cannot be enforced against act done in accordance with statutory provisions of law. Under Section 174 (2) (c) of CGST Act, express provision has been made by Parliament to provide that any tax exemption granted as incentive against investment through notification under, inter alia, erstwhile Central Excise Act, shall not continue as privilege if said notification is rescinded, and in present case, notification which granted 100% excise duty exemption was, in fact, rescinded. Thus, in absence of any challenge by Petitioner to rescission of said notification which granted exemption or to vires of proviso to Section 174 (2) (c) of CGST Act, no plea of promissory estoppel is W.P.(C.) No. 505/2020 Page 34 of 35 Signature Not Verified Digitally Signed By:SAPNA SETHI Signing Date:05.03.2020 11:41:00 maintainable. language used in proviso to Section 174 (2) (c) is clear and unequivocal, and leaves no room for different interpretation. 36. In view of aforesaid reasons we find no merit in this petition and dismiss same along with pending application. SANJEEV NARULA, J VIPIN SANGHI, J MARCH 02, 2020 Pallavi W.P.(C.) No. 505/2020 Page 35 of 35 Signature Not Verified Digitally Signed By:SAPNA SETHI Signing Date:05.03.2020 11:41:00 Hero Motocorp Ltd v. Union of India & Or