Shiva Coke Industries Vs State of Assam (Guwahati High Court)
Guwahati High Court, in the case of Shiva Coke Industries vs. State of Assam, addressed the application of promissory estoppel against the state government. The court examined a situation where the state’s Industrial Policy promised benefits to industries, but conflicting views within government departments created obstacles for businesses. The petitioners, various coke industries, had established units and commenced production, receiving necessary clearances from various departments. However, they faced difficulties obtaining eligibility certificates due to a subsequently invalidated rule and conflicting reports about their operational status.
The court noted that the industries had acted on the state’s promises, investing substantially and changing their positions to their detriment. The court emphasized that the state government, including its various departments, must act consistently. One department (Finance), after examining the books of accounts, had assessed the industries for sales tax, implicitly acknowledging their operational status. Simultaneously, another department (Industries) claimed the units were non-functional, leading to the rejection of eligibility certificates. This contradiction, the court held, was unacceptable.
The court relied on the doctrine of promissory estoppel, which prevents the government from going back on its promises if a party has relied on them to their detriment, unless there are overriding public interest concerns. The court cited Vadilal Chemicals Ltd. vs. State of A.P., where the Supreme Court emphasized that the state must speak in one voice. Just as in Vadilal, the Guwahati HC stressed that different departments cannot hold contradictory positions regarding the same industry. The court found no evidence of mala fide intent or undue advantage taken by the industries.
The court quashed the orders rejecting the eligibility certificates and remanded the matter to the State Level Committee. It directed the committee to grant the certificates, acknowledging the industries’ entitlement to benefits under the Industrial Policy. The court clarified that the benefits should not be denied based on subsequent closure or non-operation throughout the policy period. Regarding other writ petitions challenging assessments, the court upheld the assessments due to the lack of explicit provisions for exemptions during the certificate application process. However, it clarified that once the eligibility certificates are granted, the industries will be entitled to consequential tax benefits, including refunds or adjustments.
FULL TEXT OF THE JUDGMENT/ORDER OF GAUHATI HIGH COURT
