1. Import of PVC resins under customs duty exemption notification — Subsequent withdrawal of exemption by Government — Challenge to the withdrawal notification. (Para 1 )
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1996 Supreme(SC) 2226
1997(1) Supreme 352
Supreme Court of India
A.M. Ahmadi, C.J.I., N.P. Singh and Sujata V. Manohar, JJ.
Shrijee Sales Corporation & Anr. -Appellants
versus
Union of India -Respondent
Civil Appeal No. 3000 of 1984
Decided on 20-12-1996
Counsel for the Parties :
For the Appellants : Soli J. Sorabjee, Sr. Advocate, Ms. Amrita, Ravinder Narain, Rajan Narain, Ms. Punita Singh, Ms. Sonu Bhatnagar, Arvind Verma, Advocates.
For the Respondent : M. Chandrashekharan, Additional Solicitor General, N.K. Bajpai, S.D. Sharma and V.K. Verma, Advocates.
Important Points
Important Point
Principle of promissory estoppel is applicable against the Govt. but in case there is a supervening public equity, the Govt. would be allowed to change its stand.
Principle of promissory estoppel is applicable against the Govt. but in case there is a supervening public equity, the Govt. would be allowed to change its stand.
Subject
Taxation - Customs Law
Act Referred
CUSTOMS ACT: S.25
CUSTOMS TARIFF ACT: Ch.39
CUSTOMS TARIFF ACT: Ch.39
Headnote
Promissory Estoppel Against Government-Is applicable against the Government-But in case there is a supervening public equity, the Govt. would be allowed to change its stand-Notification exempting customs duty on PVC-Subsequent notification withdrawing exemption-Appellants failing to disclose facts which could show existence of better equity in their favour-There was a supervening public interest-It should not be mandatory for the Govt. to give a notice before withdrawing exemption. (Paras 3 to 6 and 8)
Legal Category Hierarchy
Table of Contents
2. Government should be estopped from withdrawing customs duty exemption granted for a specific period as importers acted on that assurance. (Para 1 )
3. Promissory estoppel applies against Government unless supervening public interest exists; the Court must determine if such interest is overwhelming to justify resiling from a promise. (Para 3 , 4 , 6 )
4. Supervening public interest overrides individual equity in promissory estoppel claims against the Government, even where a specific period for the promise was indicated. (Para 3 , 7 , 8 )
5. Appeal dismissed. (Para 9 )
6. Is the principle of promissory estoppel applicable against the Government?
Yes, the principle of promissory estoppel is applicable against the Government. However, if there is a supervening public equity, the Government is permitted to change its stand and withdraw from representations that induced persons to take certain steps. (Para 3 )
7. Who determines whether the Government is exempt from a promise based on public interest?
The Court determines whether the Government should be held exempt from the liability of a promise. The Government bears the burden of proving that the public interest is so overwhelming that it would be inequitable to hold the Government bound by the promise. (Para 3 , 4 )
8. Does specifying a time period for an exemption prevent its withdrawal in the public interest?
No. Once public interest is accepted as the superior equity that can override individual equity, the principle applies even in cases where a specific period for the exemption was indicated. (Para 7 )
9. Is notice mandatory for the Government to resile from a promise when supervening public interest exists?
No. While the Government may generally resile from a promise by giving reasonable notice to allow the promisee to resume their position, such notice is not mandatory when a supervening public interest exists. (Para 7 , 8 )
Judgment
A.M. Ahmadi, CJI. - The present appeal impugns the judgment of the High Court of Delhi dated 16.3.1983 which dismissed the writ petition filed by the appellants challenging the Notification dated 16.10.1980 issued by the Government of India, Ministry of Finance, Department of Revenue, being Notification No. 205/T. No. 355/141/80-Cus I. (hereinafter referred to as "Notification No. 205"). This Notification was issued in supersession of an earlier Notification dated 15.3.1979 being Notification No. 66 Cus. dated 15.3.1979 G.S.R. (hereinafter referred to as "Notification No. 66"). By the first Notification No. 66, the Government gave exemption to imports of polyvinyl chlirode resins (PVC) falling within Chapter 39 of the First Schedule to the CUSTOMS TARIFF ACT , 1975 from the duty of customs leviable thereon specified in the first schedule. The relevant part of the Notification No. 66 is as under:
"In exercise of the powers conferred by sub-section (1) of Section 25 of the Customs Act, 1962 (52 of 1962), and in supersession of the Notification of Government of India in the Ministry of Finance, Department of Revenue, No. 145-Customs, dated the 27th July, 1980, the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts polyvinyl chloride resins, falling within Chapter 39 of the First Schedule to the CUSTOMS TARIFF ACT , 1975 (51 of 1975), when imported into India, from the whole of the duty of customs leviable thereon which is specified in the said First Schedule.
The Notification shall be in force upto and inclusive of the 31st March, 1981."
The case of the appellant is that on the faith of the solemn assurance given by the Government of India that no duty of customs would be leviable on the importation of PVC resins upto 31.3.1981, they entered into an arrangement for the import of PVC resin as an actual user with the U.P. Export Corporation, Kanpur and opened Letters of Credit against the foreign suppliers on 2.10.1980 and the goods arrived at the Bombay Port on 8.11.1980, However, the impugned Notification withdrawing the exemption from payment of customs duty was withdrawn on 16.10.1980. The relevant part of impugned Notification is as under:-
"In exercise of the powers conferred by sub-section (1) of Section 25 of the Customs Act, 1962 (52 of 1962) and in supersession of the Notification of the Government of India in the Ministry of Finance, Department of Revenue,. 66 Customs, dated 15th March, 1979, the Central Government being satisfied that it is necessary in the public interest so to do, hereby exempts polyvinyl chloride resins, falling within Chapter 39 of the First Schedule to the CUSTOMS TARIFF ACT , 1975 (51 of 1975), when imported into India, from so much of the duty of Customs leviable thereon which is specified in the said First Schedule as is in excess of forty per cent ad valorem.
(K. Chandramouli)
Under Secretary to the Govt. of India."
The appellants alleged that they imported the PVC resin on the assurance that there would be no customs duty imposed upon it and that but for this exemption, they would not have imported the PVC resin as that would have been uneconomical. They, therefore, contend that the Government should be estopped from withdrawing the benefit of Notification No. 66.
2. The impugned judgment of the High Court is quite brief. It relies entirely on a Full Bench decision of the same High Court in the case of Bombay Conductors and Electricals Ltd. And Another v. Government of India And Others1. The primary focus of the judgment in the case of Bombay Conductors (supra) was that imposition of taxes and withdrawal thereof are legislative functions and since there can be no estoppel against the legislature, the withdrawal Notification was not hit by the principles of estoppel. The impugned judgment, however, does not dispute that the doctrine of promissory estoppel can be attracted against the State. However, after an anal
