A government is bound by its promise to grant incentives to an industrial unit if the unit has acted upon the promise to its detriment.

Satyeshwar Roy, J.

1. Petitioner No. 1, the company, set up an industrial unit at Adityapur for the manufacture of steel wire ropes in coils. The unit went into production on 21st March, 1979. The petitioners, petitioner No. 2 is a share holder of petitioner No. 1, have prayed for appropriate writ for commanding the respondents to grant exemption to petitioner No. 1 from sales tax in respect of purchase of raw materials made by it for its Adityapur industrial unit for a period of ten years from 21st March, 1979. Prayer has also been made for quashing annexure 11 order dated 24th November, 1979, passed by respondent No. 1 by which the petitioner was granted exemption from the levy of general sales tax, special sales tax or purchase tax up to the period of 31st March, 1979.

2. The petitioners case is that on 29th September, 1973, the Government of Bihar in the Department of Industry and Technical Education adopted a resolution, which was duly published in the Bihar Gazette, to grant various incentives for establishment of new large and medium industry in the State- of Bihar in private sector. It was, inter alia, resolved in that resolution that during the initial period of production the Government would grant exemption from sales tax on all purchase of raw materials needed in the process of manufacture for a period of ten years from the date the unit went into production and exemption from multi-point sales tax at the first stage of sales from the manufacturer for a period of ten years from the date the unit went into production. Relying upon this resolution as contained in annexure 1 petitioner No. 1 took steps for setting up an industrial unit at Adityapur. It applied to the Government of India for an industrial licence for the manufacture of steel wire ropes in coils in that Unit. The Government of India granted letter of intent dated 26th July, 1976, to petitioner No. 1. It obtained loans both in Indian currency and foreign exchange from different financial institutions including banks. The Adityapur Industrial Area Development Authority (A.I.A.D.A.) allotted land to petitioner No. 1. It thereafter established and set up the industry in 1977-78. Petitioner No. 1 wrote the Industrial Development Commissioner, Bihar, after furnishing him various details and informations in respect of the unit, to confirm that the industrial unit would get the necessary exemptions from sales tax besides other incentives. These letters are annexures 5, 5/A and 5/B. By annexure 6 the Industry Department, Bihar, informed petitioner No. 1 that it would get various incentives announced from time to time and required it to make application in the prescribed form for sales tax incentives. By annexure 7, letter dated 21st February, 1979, petitioner No. 1 made the required application.

The Government of Bihar issued a notification on 18th March, 1977, under the Bihar Sales Tax Ordinance exempting the owners of new medium and large industries from the levy of the general sales tax and special sales tax or purchase tax on raw materials for a period of five years from the date the industry started its production as contained in annexure 8. The unit was also registered under the Bihar Sales Tax Act. It was accepted as a large industry. The unit went into production on 21st March, 1979. By annexure 11, respondent No. 1 being satisfied that petitioner No. 1 was entitled to exemption as notified by annexure 8 held that in terms of annexure 8 it was entitled to exemption from the sales tax up to 31st March, 1979. It accordingly ordered that exemption certificate would remain operative up to 31st March, 1979. By annexure 12 dated 30th January, 1980, petitioner No. 1 wrote to the Industry Department to issue necessary instructions to the concerned department for issuing an exemption certificate under the Sales Tax Act for a period of ten years as per annexure 1. The respondents, however, declined to allow the benefit and insisted that tax must be paid on