Promissory Estoppel: Last Hope for Fading Excise Exemptions?

Author:Mr Tarun Jain
Profession:Lakshmi Kumaran & Sridharan
 
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"When one person has, by his declaration, act or omission, intentionally caused or permitted another person to believe a thing to be true and to act upon such belief, neither he nor his representative shall be allowed, in any suit or proceeding between himself and such person or his representative, to deny the truth of that thing." [Section 115, Indian Evidence Act]

'Promissory Estoppel', as an equitable principle, has been in vogue in judicial systems for long. Intended to counter the evading tendencies and insist upon parties to perform the promises made, the principle of promissory estoppel relieves the parties aggrieved from such breach of promises. The embodiment of this equitable principle in Section 115 is a reflection of legislative despise for such inequitable conduct and its intent to enforce all such retracted promises.

The doctrine of 'promissory estoppel', thus, gains thrust and comes to the rescue of destitute litigants suffering from the denuding and frivolous representations made to them and suffering on such account. Does this imply that even the Government is bound to fulfill its commitments and promises made or is this principle confined only to transactions between private parties? This important question has often tested the judicial system and despite umpteen decisions to this regard, the tussle continues.

To put the topic in perspective, let us deal with real life illustrations and test our proposition. In the recent past various area-based Notifications had been issued by the Ministry of Finance whereby exemption from the payment of excise duty was granted to the assessees upon fulfillment of the conditions specified therein. Development of identified backward areas and promotion of industrial activity therein being the underlying premise, these Notifications provided exemption for specified periods to the assessees complying with the prescribed conditions. North-East, Uttranchal, Himachal Pradesh, Sikkim, Jammu & Kashmir were some of these areas wherefore the Notifications were issued granting the exemption of excise duty.

Lured by these promises on the part of the Central Government waiving the collection of excise duty, many industrial and production houses established/relocated their manufacturing units in these areas. The establishment or relocation, however, was not without cost. Non-availability of skilled man-power, lack of natural or industrial resources required for manufacturing processes, absence of logistics network,...

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