THE STATE OF UTTAR PRADESH vs. M/S BIRLA CORPORATION LIMITED

1 REPORTABLE IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO.1579 OF 2019 State of Uttar Pradesh & Anr.      … Appellant(s) Versus M/s. Birla Corporation Limited       … Respondent(s) WITH CIVIL APPEAL NO.1580 OF 2019 J U D G M E N T A.M. Khanwilkar, J. The seminal question involved in both these appeals is about 1. the   power   of   the   State   to   rescind   the   notification   providing   for rebate in respect of tax payable under the Uttar Pradesh Trade Tax Act, 1948  (for  short,  “the  1948 Act”) and  thus  withdrawing the facility even in respect of industrial units, which had commenced Signature Not Verified Digitally signed by CHARANJEET KAUR Date: 2019.11.20 18:03:33 IST Reason: production and had complied with the conditions for grant of such th rebate in terms of Notification dated 27  February, 1998. 2 Briefly stated, the appropriate authority, in exercise of power 2. th under Section 5 of the 1948 Act issued notification dated 18  June, 1997, to declare the goods having fly ash contents of 10% or more by weight to be notified goods for the purpose of Section 5, and to grant   a   rebate   of   25%   in   respect   of   the   goods   having   fly   ash contents between 10 to 30% by weight and a rebate of 50% in respect of   the  goods   having   fly   ash  contents   exceeding  30% by weight   on   the   tax   levied   under   the   Act   in   the   districts   notified thereunder.     In   due   course,   the   feedback   received   by   the Government   was   that   neither   any   new   industrial   unit   was established within the State nor the consumption of the fly ash had increased by the existing units.   Resultantly, there was no extra disposal/consumption of fly ash which was being produced by the thermal power stations situated within the State of Uttar Pradesh. In other words, the avowed objective for issuing the notification to extend   rebate   did   not   fructify.     In   light   of   such   feedback,   the th appropriate authority issued fresh notification dated 27  February, 1998   bearing   No.T.I.F­2­592/XI­9(226)94­U.P.Act­15­48­Order­98 to rescind the earlier notification and instead to grant a rebate of 3 25% in respect of the goods having fly ash contents between 10% to 30% by weight and a rebate of 50% in respect of the goods having fly ash contents exceeding 30% by weight on the tax levied under the Act in the districts mentioned thereunder, subject to certain conditions.  The said notification reads thus: “[S. No. 1289] Notification No.T.I.F – 2­592/XI­9(226)94­U.P. Act­  15­48­Order­98, dated 27.02.1998 Whereas, the State Government is satisfied that it is expedient in the public interest so to do: Now, therefore, in exercise of the powers under Section 5 of the Uttar Pradesh Trade Tax Act, 1948 (U.P. Act No. XV of 1948), read with section 21 of the Uttar   Pradesh   General   Clauses   Act,   1904   (U.P.   Act No.1 of 1904), the Governor, with effect from March 1, 1998 is pleased: (a)  to   rescind   the   Notification   No.TT­2­1885/XI­ 9(226)/94­UP­Act­15­48   Order­97,   dated   June   18, 1997; (b)  to grant a rebate of twenty five percent on goods having fly­ash contents between ten to thirty percent by weight and a rebate of fifty percent on the goods having   fly­ash   contents   exceeding   thirty   percent   by weight on the tax levied under the Act in the district mentioned in column­2 Annexure given below for the period mentioned in column­3 of the said Annexure subject to the following condition:­ CONDITIONS (i)  such   goods   shall   be   manufactured   in   a   unit established in the area mentioned in coloumn­2 of the Annexure; 4 (ii)  such goods shall be manufactured by using fly­ ash   purchased   or   received   from   the   thermal   power stations situated on Uttar Pradesh; (iii)  the dealer claiming rebate under this notification shall keep records in which following informations will be shown: (a) date; (b) name of thermal power stations from which fly­ash is purchased or received; (c) weight of fly­ash; (d) name of manufactured goods; (e) weight of manufactured goods; (f) weight   of   fly­ash   used   in manufacturing of such goods; (g) weight   of   other   goods   used   in manufacture of such goods; (iv)  the   total   weight   of   manufactured   goods   and percentage of fly­ash used, should be mentioned on goods of packing of such goods as far as possible. ANNEXURE

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Explanation:­  The verification of percentage of fly­ash used by fly­ash based industries shall be made of the basis of Government orders issued in this behalf from time to time.” 6 3. This notification came to be issued with intent to promote and encourage the industrial activities in the identified backward and underdeveloped areas.  This notification, however, was assailed in two   writ   petitions   filed   before   the   High   Court   of   Judicature   at Allahabad   (for   short,   ‘the   High   Court’).     The   challenge   was essentially   on   the   ground   that   the   conditions   specified   in   the notification   resulted   in   causing   discriminatory   treatment   to   the producers   and   suppliers   of   the   sale   product   imported   from neighbouring States as opposed to the goods manufactured and produced   in   the   State   of   Uttar   Pradesh.     Such   dispensation contravened the constitutional provisions of Articles 301 and 304(a) th of the Constitution of India.  The High Court vide order dated 29 January,   2004   upheld   the   said   challenge.     The   State   of   Uttar Pradesh carried the matter in appeal against the said decision of the High Court, which eventually culminated with the judgment of this Court, affirming the challenge, in  State of Uttar Pradesh & 1 Ors.   vs.   Jaiprakash Associates Limited .   This Court held that rebate of tax granted by the State Government only to the cement 1  (2014) 4 SCC 720 7 manufacturing units using fly ash as raw material in the units established in the districts of the State of Uttar Pradesh, is violative of   the   provisions   contained   in   Articles   301   and   304(a)   of   the Constitution of India.  The Court further declared that notification, therefore, would also apply to the cement manufacturing units of the neighbouring States who were using fly ash as raw material. th  4. After the decision of the High Court dated 29 January, 2004, the appropriate authority was advised to rescind the Notification th dated 27  February, 1998.  The Principal Secretary of the Tax and Registration Department processed the proposal for rescinding the said   notification   and   submitted   for   comments   of   Council   of Ministers which read thus: “CONFIDENTIAL COMMENTS FOR THE HONORABLE COUNCIL OF MINISTERS. SUB:   Repealing   the   exemption   (rebate)   available   to units based on fly ash Industries established in certain districts have been granted exemption on tax  levied under   the  Act  for eight,   ten,   twelve   years   vide   Govt.   Notification No.vya.ka./592/gyarah­9(226)/94, dated 27 February 1997, under Section 5 of the Trade Tax Act on the following grounds:­ 8 (a)  Where the content of fly ash is 10% to 30% of the total weight of goods – 25% rebate on tax. (b)  Where the content of fly ash is more than   30%   of   the   total   weight   of   goods ­50% rebate on the tax. 2. Accordingly under Section 8 (5) of the Central Sales Tax   Act,   by   the   Govt.   Notification   No.vya.ka/­2­ th 593/gyaraha­9   (226)94,   dated   27   February   1998, similar   rebate   has   been   allowed.   A   condition   was prescribed in the above notifications that such goods shall be manufactured within the units established in the area mentioned in column No.2 of the annexure and such goods shall be manufactured from Fly Ash purchased from or received from the thermal power stations situated in Uttar Pradesh. Above notifications were challenged before the Hon’ble High Court by the writ petition. 3. Commissioner, Trade Tax has informed that in the writ   petitions   No.957/99M/sBela   Cement   Ltd.   Vs. State and writ petition No.958/99 M/s Jai Prakash Industries Vs State, Bench of the Hon’ble High Court has by the order dated 29.1.2004 declared the above conditions   mentioned   in   the   notification   as unconstitutional.   It   has   also   been   mentioned   that effect of the above judgment shall be that henceforth facility of rebate will not only be available to the above types   of  industrial  units   situated  in  Uttar   Pradesh only, but above rebate shall also be available to the unit situated outside the Uttar Pradesh.   It is also apprised that in regard to above, Addl. Advocate General   has   given   the   legal   opinion   that considering   the   revenue   loss   being   caused   in future above notifications can be repealed. In case above   notifications   have   to   be   repealed   from retrospective effect then the same can be done by way of an ordinance. In accordance with the legal opinion   tendered   by   the   Hon’ble   Add.   Advocate General, a recommendation has made to proceed further expeditiously .  9 4. It appears that the main objective of providing the rebate   vide   the   above   notifications   was   that   the Industrial units of the Uttar Pradesh should utilize more and more fly ash available for disposal in the state, in view of the above rebates. In the light of above judgment of the Hon’ble High Court, now above rebate   shall   also   be   available   to   the   unit   situated outside the state.  Therefore it deems to be fit that above   notifications   should   be   repealed.   In   this regard   the   proposal   of   Commissioner   Trade   Tax seems to be proper. 5.   Therefore   it   is   proposed   that   notifications issued under section 5 of the Trade Tax Act and Section 8 (5) of Central Sales Tax Act, related to rebate applicable to industries based on the fly ash should be repealed.  6.  Finance department has expressed the consent to the above proposal. 7.  Law department has expressed the view that it had been advised by the Add. Advocate General that to prevent the revenue loss notification dated 22.7.1998 can be repealed. In view of the above the   proceedings   for   repealing   the   impugned notifications is legally possible.   8. Honorable Minister has examined these comments. 9. Order of the Hon’ble Cabinet is prayed for on the Para 5 above. Sd/­ (Rita Sinha) Principal Secretary Tax & Registration Department File No.9 (63)/2001 Lucknow dated 19 August, 2004”                   (emphasis supplied) 5. The appropriate authority of the State eventually took decision on  the  said   proposal,   as   a   result   of   which   a   notification   dated 10 th 14   October,   2004   came   to   be   issued   rescinding   the   earlier th notification dated 27  February, 1998.  The said notification reads thus :­  “ NOTIFICATION No.KA.NI.­2­2996/XI­9(63)/2001­Act,   74­56   Order   – (38) 2004 Dated Lucknow : : October 14, 2004 WHEREAS,   the   State   Government   is   satisfied that it is expedient so to do in public interest. Now, therefore, in exercise of the powers sub­ section (5) of Section 8 of the Central Sales Tax Act, 1956 (Act No.74 of 1956) read with Section 21 of the General Clauses Act, 1897 (Act No.10 of 1897)   the Governor  is  pleased   to  rescind,  with   effect  from October   14,   2004 ,   the   government   notification No.T.I.F   –   2­593/X­9(226)/94­Act­74­56­Order­98, dated February 27, 1998.” (emphasis supplied) 6. This   notification   is   the   subject   matter   of   challenge   in   the present proceedings.  7. The respondents in the respective appeals preferred separate writ petitions asserting that because of the representation made to th the stake holders vide notification dated 27  February, 1998, they had commenced production of the specified goods and complied with the requisite conditions provided under the said notification entitling them to avail rebate of the Uttar Pradesh Tax facility.  They 11 had commenced commercial production before coming into effect of th the impugned notification on 14   October, 2004. However, due to coming into effect of stated notification they have been denied of the rebate which they could have earned for ten years.    In the case of respondent in Civil Appeal No. 1579/2019 ­ 8. M/s. Birla Corporation Limited (for short, ‘the BCL’), the factory was set up by the said respondent at Raibareli and it had commenced th commercial  production  from   14   December,   1998.    As   the   said respondent had complied with all the conditions specified in the th notification dated 27  February, 1998, it availed the rebate facility th th from 14  December, 1998 until 13  October, 2004.  It could have continued to avail of that facility for a period of ten years, i.e., upto th 13   December, 2008, but that arrangement has been disrupted because   of   the   issuance   of   the   impugned   notification   dated th 14  October, 2004.  In other words, denial of rebate to respondent­ th th BCL is for the period from 14   October, 2004 to 13   December, 2008.  9. In the case of respondent in Civil Appeal No. 1580/2019 ­ M/s. Jai Prakash Associates Limited (for short, ‘the JPAL’), it was 12 operating its factory outside the State and because of the condition th specified   in   the   notification   dated   27   February,   1998,   had challenged the said notification which, as aforesaid, was upheld by the   High   Court   and   later   by   this   Court.     In   terms   of   the   said decision, this respondent could have continued with its business and also avail of the rebate but for the impugned notification issued th on                   14  October, 2004.  However, despite the said respondent (JPAL) having succeeded before the High Court in Writ th Petition No.958 (Tax) of 1999 vide judgment dated 29   January, 2004, out of abundant precaution, it decided to set up a factory of th its own in the area specified in the notification dated 27  February, 1998, to avoid any further controversy or dispute regarding tax rebate   facility.     In   furtherance   of   that   decision,   after   seeking necessary   approvals,   the   said   respondent   (JPAL)   commenced commercial production in the factory set up in the notified area in th the State of Uttar Pradesh w.e.f 18  September, 2004 and in terms th of the notification dated              27  February, 1998, in vogue, became entitled to avail rebate facility for a period of ten years, i.e., th up to 17  September, 2014.  However, because of the intervening 13 th notification dated 14   October, 2004, the said respondent (JPAL) has been denied of that facility even though it had invested almost over Rs. 100 crores to set up a new factory within the notified area in the State of Uttar Pradesh.   In this background, both the respondents filed separate writ 10. petitions before the High Court asserting that the State could not have resiled from the promise or representation it had made in th terms of notification dated 27  February, 1998, and the impugned th notification dated 14   October, 2004, therefore, suffered from the vice of being violative of promissory estoppel.  It was asserted that the State, in exercise of its executive power, cannot resile from the promise it had made by inviting setting up of industry within the designated areas in the State of Uttar Pradesh and in the process, withdraw the rebate facility with retrospective effect.  That could be done only by the legislature by enacting a law in that behalf or by issuing ordinance as was suggested in the note submitted to the Council of Ministers referred to above.  It was also asserted that, in th fact, the notification, as issued on 14  October, 2004, specified that the same would come into effect from the date it is issued.  There is 14 no indication whatsoever that the intention behind issuing the said notification was to withdraw the facility of stake holders who had already set up their industrial units and commenced commercial th production prior to 14  October, 2004.  The thrust of the challenge th was   that   the   decision   to   rescind   the   notification   dated   27 February,   1998   was   to   discontinue   the   rebate   to   industry   that th would be   set  up   on  and   from   14   October,  2004   and   to  other industrial   units   in   the   neighbouring   States   on   account   of   the decision   of   the   High   Court.     However,   that   decision   cannot   be implemented or enforced against the industries which had already commenced commercial production within the designated areas in th the State of Uttar Pradesh after                   27   February, 1998 but th before 14  October, 2004.  Taking any other view would result in th giving retrospective or retroactive effect to the notification dated 14 October, 2004.  That is impermissible in law. 11. The writ petitioners had also contended that in any case, the State   Government   had   failed   to   make   out   a   case   of   inevitable supervening circumstances warranting cancellation and withdrawal of the rebate facility with retrospective effect.  The fact that the High 15 Court decided the issue against the State and extended the benefit to other industrial units in the neighbouring States, by itself cannot be the basis much less a supervening circumstance to justify the act of resiling from the commitment flowing from the notification th dated    27  February, 1998. 12. The appellant­State had resisted the writ petitions by filing affidavit before the High Court.  The stand taken by the State before the High Court essentially was that the State had power to rescind th its   notification   dated   27   February,   1998   and   withdraw   rebate facility   to   all   industrial   units   because   of   the   supervening circumstances.  The emphasis to invoke that power was essentially because   of   the   judgment   of   the   Allahabad   High   Court   dated th 29  January, 2004 and the inability of the State to verify the claims of the industrial units in the neighbouring States which was beyond the territorial jurisdiction of the State authorities.   The High Court vide impugned judgment, in the first place 13. held that the State had given assurance about the rebate on the specified goods produced in the designated areas within the State on complying with other conditions specified in notification dated 16 th 27   February,   1998.     It  then   proceeded   to   hold   that   the   State Government in the Indian context and the Indian jurisprudence was amenable   to   the   doctrine   of   promissory   estoppel   like   any   other private   party   or   individual.     On   that   finding,   the   High   Court th concluded that the notification issued on 14  October, 2004 cannot stand the test of judicial scrutiny qua the claim of the industrial units which were already established within the designated area in the State and had commenced commercial production of the stated th goods before         14  October, 2004.  It also rejected the stand taken by the State Government that it was justified in doing so because of supervening public interest and resultantly allowed the writ petitions preferred by the concerned respondents herein.  The conclusion recorded by the High Court reads thus:­ “ SUMMARY 121.   Supervening   public   interest   may   not   be established merely by pleading in the counter affidavit. It shall not be sufficient to meet out the requirement of law.   The   supervening   public   interest   should   be adjudged on the basis of material placed by the State Government   during   the   course   of   judicial   review. Nothing has been brought on record to establish as to what   prompted   the   government   to   revoke   earlier notification more so when the situation has not been changed   and   flyash   remain   an   ecological   hazard release by thermal power stations.  17 122.   Since,   before   issuance   of   the   impugned notification   the   petitioner   had   started   production establishing   the   factory   in   Tanda,   the   principle   of promissory   estopple   attracted   in   view   of   catena   of judgement   of   Hon’ble   Supreme   Court   particularly Kalyanpur Cement Ltd (supra) as well as world wide settled proposition of law, it shall be fitness of thing and   to   maintain   the   people’s   confidence   in   the administration, ordinarily government should be abide by its assurance or promise and person should not be deprived of the benefit available from such assurance, in case it acted on. Though the government has got right to change its policy but that too is subject to judicial review and the courts have got ample power to ensure that because of change of policy fundamental or   statutory   rights   of   the   citizen   is   not   infringed. Equitable   relief   under   the   principle   of   promissory estopple may be given by courts for the ends of justice. 123.   The   impugned   notification   should   be   given prospective   effect   with   regard   to   tax   rebate.   Thus, industries   which   were   established   relying   upon   the assurance  given in the  notification  dated 27.2.1998 and started production are entitled for tax rebate for the   period   which   they   were   entitled   at   the   time   of production   or   before   the   issuance   of   impugned notification. 124.   In   view   of   above,   writ   petition   deserves   to   be allowed partly and petitioner seems to be entitled for benefit of tax exemption in view of original notification dated 27.2.1998. However, keeping in view the law on the subject that government has got right to change the   policy   on   one   hand   and   on   the   other   hand, petitioner’s   right   may   be   protected   by   applying   the impugned notification prospectively, the right available under   the   principle   of   promissory   estoppel   may   be protected   by   applying   the   impugned   notification prospectively. The prayer for quashing the impugned notification   is   refused   and   the   relief   is   moulded accordingly. O R D E R 125.  The writ petition is allowed in part to the extent petitioner’s   entitlement   for   tax   exemption   for   the 18 period available under the original notification dated 27.2.1998.   Accordingly,   a   writ   in   the   nature   of mandamus is issued directing the opposite parties to provide tax exemption to the petitioner industry from the date of production for the period of entitlement under original notification dated 27.2.1998. Writ petition is allowed in part. Cost easy.” 14. The State of Uttar Pradesh has assailed the decision of the High   Court.     The   argument   canvassed   on   behalf   of   the   State concedes the legal position that even if the State Government is bestowed with the executive power to withdraw the rebate facility, it is obliged to justify before the court of law that the circumstances were   so   overwhelming   that   it   will   be   inequitable   to   hold   the Government bound by the promise.   In other words, the  intent th behind  the   impugned   notification  dated   14   October,   2004   was replete with supervening public interest.  To buttress that, the State has relied upon following reasons, stated to be supervening public interest: “i). The judgment dated 29.01.2004 of Allahabad High Court in the earlier round of litigation by the same petitioners and others had quashed condition No.1 of notification dated 27.02.1998, by which Units situated outside the State of U.P. were also made entitled to the tax rebate. This judgment was subsequently affirmed by   this   Hon’ble   Court   vide   its   judgment   dated 12.04.2004   reported   in   (2014)   4   SCC   720   titled   as 19 State of U.P. & Ors. Vs Jai Prakash Associated Ltd. etc. etc.   ii).   The   effect   of   the   judgment   nullified   the   public interest in granting the tax rebate. iii).  State had no territorial jurisdiction to ascertain fly ash   consumption   and   source   of   Units   operating outside the State of U.P. iv).  Utilization  of  fly   ash was promoted  in terms  of Government of India Notifications dated 14.09.1999 & 27.08.2003, as also directions given by Hon’ble Delhi High Court in a PIL from 2003 to 2005. State was taking all steps for disposal of fly ash by promoting its use. v). Future revenue loss.” 15. It is then urged that the High Court has not carefully analysed each of these reasons, much less the impact of all the reasons taken   together   justifying   the   exercise   of   power   to   rescind   the notification providing for rebate facility.   It is also contended that the decisions  pressed  into  service  by the  respondents   would be applicable to ordinary situation where the principle of promissory estoppel has been invoked by the State Government but the same will   have   no   application   to   the   notification   under   consideration which was the outcome of supervening public interest.   In other words, general principle of promissory estoppel and vested/accrued rights have no application to a case of supervening public interest.   20 16. Lastly, it is urged that even if the writ petitioners­respondents herein were to succeed, the entitlement of rebate would depend on the fact whether the respondents have themselves paid the amount claimed and have not passed on the burden to their consumers in full or in part, as the case may be.   The claim for refund as a th consequence of applicability of the notification dated 27  February, 1998 for   the  specified   period  would   depend   on  establishing  the foundational   fact   that   the   respondents   had   not   passed   on   the commensurate tax burden to their consumers.   To buttress the above submissions, reliance has been placed on the decisions of this Court in   State of Jammu & Kashmir   vs.   Trikuta Roller 2 ;   vs. Flour  Mills   Pvt.   Ltd.  &  Anr. Sales  Tax   Officer  &  Anr.   3 Shree Durga Oil Mills & Anr. ; and  Shree Digvijay Cement Co. 4 Ltd. & Anr.  vs.  Union of India & Anr.   .  Per contra, the respondents would adopt the reasons given by 17. the High Court for sustaining their challenge to notification dated th 14   October,   2004.     It   is   urged   that   the   notification   dated 2  (2018) 11 SCC 260 3  (1998) 1 SCC 572 4  (2003) 2 SCC 614 21 th 14  October, 2004 cannot be construed as having retrospective or retroactive effect and apply to the units which had already been set th up and commenced commercial production prior to 14   October, 2004.  Section 5 of the 1948 Act does not confer any power on the executive to rescind the existing notification with retrospective or retroactive effect.   In absence of express power invested in that behalf, it is not open to the executive to do so either in terms of Section 5 of the 1948 Act or Section 21 of the General Clauses Act, 1897 (for short, “the 1897 Act”) or Section 21 of the Uttar Pradesh General Clauses Act, 1904 (for short, “the 1904 Act”).  Section 5(2) of the 1948 Act reinforces the submission of the respondents that the   legislature   has   not   invested   any   authority   in   the   State   or executive to give retrospective or retroactive effect to its notification, rescinding the  existing notification unlike sub­section  (2),  which expressly provides for allowing rebate with effect from a date prior to the notification. There is no express, much less, implicit or tacit authority   in   the   executive   to   issue   a   notification   having retrospective or retroactive effect.  In support of this plea, reliance is placed on the decisions of this Court in   Kazi Lhendup Dorji   vs. 22 5 Central   Bureau   of   Investigation   &   Ors.   and   Industrial Infrastructure   Development   Corporation   (Gwalior)   Madhya Pradesh   Limited   vs.   Commissioner   of   Income   Tax,   Gwalior, 6 .   Madhya Pradesh 18. It is urged that in the present case, an enforceable right had accrued in favour of the respondent(s) under the notification dated th 27   February,   1998   to   avail   the   benefit   of   rebate   for   its   full th th eligibility period up to 13   December, 2008 and 17   September, 2014   respectively.       That   right   could   not   be   interdicted   and th disrupted by virtue of the impugned notification dated 14  October, 2004.   It  is not a case  where the   legislature  has  intervened to interdict that right, but it is being done by a notification by an authority   who   is   not   empowered   to   issue   notification   having retrospective or retroactive effect.  The respondents are relying on the   decisions   of   this   Court   which   has   taken   the   view   that   the notifications cannot apply to units already set up prior to their issuance.     (See   MRF   Limited,   Kottayam   vs.   Assistant 5  1994 Suppl. (2) SCC 116 6  (2018) 4 SCC 494 23 7 Commissioner   (Assessment)   Sales   Tax   &   Others ;   Southern vs.   Petrochemical Industries Co. Ltd.   Electricity Inspector & 8 ETIO & Others ; and   Pournami Oil Mills & Ors.   vs.   State of 9 .  In support of the argument that the subordinate Kerala & Anr. ) th legislation such as the notification dated 14  October, 2004 cannot have retrospective or retroactive effect, reliance is placed on the exposition   in   Director   General   of   Foreign   Trade   &   Anr.   vs. 10 .   Kanak Exports & Anr. 19. While   dealing   with   the   argument   of   the   State   regarding supervening or overwhelming public interest, it is urged that the High Court was right in observing that the State Government had failed to make out any case to justify the impugned notification th dated            14  October, 2004 on that principle.  To buttress that submission, our attention was invited to the relevant portion of the pleadings before the High Court in the form of writ petition and affidavits of both sides.  Relying on the dictum in the cases of  M/s. Motilal   Padampat   Sugar   Mills   Co.   Ltd.   vs.   State   of   Uttar 7  (2006) 8 SCC 702 8  (2007) 5 SCC 447 9  1986 Suppl. SCC 728 10  (2016) 2 SCC 226  24 11 Pradesh & Others  and  Manuelsons Hotels Pvt. Ltd.  vs.  State 12 , it is urged that there is heavy burden on the of Kerala & Others State to show that the public interest is so supervening and so overwhelming that it would be inequitable to hold the Government bound by the promise.  It is urged that facade has been created by the State Government for the first time before this Court about supervening   public   interest.   In   any   case,   the   reasons   stated   in support thereof cannot stand the test of judicial scrutiny, inasmuch th as, the notification dated 27  February, 1998 and the stand taken by the State Government on affidavits filed before the High Court in support   of   the   said   notification   in   the   first   round   of   litigation, clearly, were founded on the assertion that the object for grant of rebate was to promote use of fly ash generated from thermal power stations   in   Uttar   Pradesh   and   utilization   of   the   fly   ash   in manufacture of goods to be produced by the industry set up in the designated areas mentioned in the said notification.  That was done to address the environmental issues confronting the State in the concerned   areas   and   also   to   provide   employment   and   job 11  (1979) 2 SCC 409  12  (2016) 6 SCC 766 25 opportunities to the locals due to setting up of industries in the designated areas within the State of Uttar Pradesh.  Admittedly, the generation of fly ash in thermal power stations in Uttar Pradesh has continued   unabated   causing   serious   health   hazards   in   the neighbourhood, turning fertile lands into barren lands.   Notably, th the new industry set up in the designated areas after 27  February, th 1998 and before 14  October, 2004 is using the fly ash generated in thermal   power   stations   in   Uttar   Pradesh.   Thus,   the   newly established   industry   would   continue   to   achieve   the   object   and intent behind the said notification, which has not ceased to exist and is still relevant.  In such a situation, it is incomprehensible as to how the principle of supervening public interest could be invoked by   the   State   much   less   of   such   magnitude   that   it   would   be impossible for the State to hold or be bound by the promise made th by it in notification dated 27   February, 1998.   The only reason recorded in the proposal for issuing the impugned notification dated th 14  October, 2004, as can be discerned from the note submitted by the Principal Secretary of the concerned Department to the Council of Ministers, mentions only about the fall out of the judgment of the 26 th High Court dated 29   January, 2004.   The apprehension of the State that it would not be in a position to verify the factual basis to deal   with   the   claims   of   the   industries   operating   from   the neighbouring States has already been considered and negated by this Court in the previous round, which finding will continue to operate against the State.    20. The respondents have distinguished the decisions pressed into service by the appellant in the  Trikuta Roller Flour Mills P. Ltd. (supra) and  Shree Durga Oil Mills  (supra) being decisions on the facts of the concerned case.  In the former case, the Court upheld the stand of the State of supervening public interest because of the unravelling of fraudulent transactions and bogus refund claims by non­existent traders who had neither filed the returns nor deposited any   taxes.     In   the   latter   case,   the   Court   opined   that   the   writ petitioners   had   not   given   essential   foundational   facts   nor   had challenged the vires of the relevant notification for grant of any relief as claimed by them.  The Court also noted that the concerned notification did not grant exemption but it merely promised that orders will be issued laying down the mode of administering the 27 concessions and incentives by the departments concerned and more importantly   that,   before   the   unit   of   the   writ   petitioner   started th production on 19  March, 1980, the earlier notification was already th abrogated on 20   May, 1977.   It is submitted that in the facts of that case, no relief could be granted to the writ petitioner nor it could be allowed to challenge the authority of the executive for having abrogated the earlier notification.   21. In addition, the respondents would rely on the exposition in 13   vs.     to State of Bihar & Others Kalyanpur Cement Limited urge that the doctrine of promissory estoppel applies to notifications th such as the impugned notification dated 14  October, 2004.  It is th further urged that the notification dated 14  October, 2004 violates not only the principle of promissory estoppel but also is arbitrary and hit by Article 14 of the Constitution of India.  Reliance has been placed   on   the   decision   in   Lok   Prahari   Through   Its   General 14 Secretary   vs.   State of Uttar Pradesh & Others .   Lastly, it is contended that the argument of unjust enrichment has been raised for   the   first   time   before   this   Court   and   ought   not   to   be 13  (2010) 3 SCC 274 14  (2018) 6 SCC 1 28 countenanced.   That would be a matter for consideration in the refund proceedings which are still pending for decision before the concerned authority.  The respondents submit that the appeals be dismissed being devoid of merits.  We have heard Ms. Aishwarya Bhati, learned senior counsel 22. appearing   for   the   State   and   Mr.   S.K.   Bagaria   and   Mr.   S.B. Upadhyay, learned senior counsel appearing for the respondents.  23. After cogitating over the rival submissions, it becomes evident that   the   parties   have   proceeded   on   the   premise   that   the   State Government or the Executive is competent to rescind the earlier notification   and   the   doctrine   of   promissory   estoppel   can   be   no impediment in that behalf.  That, however, is hedged or laced with condition that the burden is upon the Government to show that it acted in furtherance to public interest in issuing such a notification otherwise than in accordance with the promise and that the public interest is so overwhelming that it would be inequitable to hold the Government bound by the promise.  It is well established that the Court would not act on mere  ipse dixit  of the Government and must insist on a highly rigorous standard of proof in discharge of its 29 burden by the Government.  Resultantly, it is not necessary for us to dilate on the precedents pressed into service by the respondents on the application of doctrine of promissory estoppel of the State Government like any other private party or individual.   Before   we   proceed   further,   it   would   be   apposite   to   extract 24. Section 5 of the 1948 Act.  The same reads thus :­ “5. Rebate of tax on certain purchases or sale.— (1) Where the State Government is satisfied that it is expedient in the public interest so to do, it may by notification,   and   subject   to   such   conditions   and restrictions as may be specified therein, allow a rebate up to the full amount of tax levied on any specified point on— (a) The sale or purchase of any goods, or (b) The sale or purchase of such goods, by such persons or class of persons as may be specified in the said notification. (2) The rebate under sub­section (1) may be allowed with   effect   from   a   date   prior   to   the   date   of   the notification.” 25. On a bare reading of this provision, it is evident that there is no express authority given to the Executive to issue notification for “withdrawing or rescinding the rebate facility” from a date prior to the date of notification.   Section 5(2) merely constrict that power only for “allowing” rebate with effect from a date prior to the date of 30 notification.   That does not include, by necessary implication or otherwise, power to “withdraw” or “rescind” the rebate from a date prior to the date of the notification.   Section 21 of the 1897 Act also will be of no avail.  The same 26. reads thus :­

27. Section 21 of the 1904 Act, is pari materia   to   the   above provision  and  will  be  of  no  avail  for  withdrawing  the  rebate from  a  date  prior  to  the  date  of  the  notification.   In  the present case, it   is   not   necessary   to   dilate   further   on   this th aspect   as         the plain language of the notification dated 14 October, 2004, reproduced above in paragraph 5, itself expressly th th rescinds notification dated 27  February, 1998 with effect from 14 October, 2004.  There is no express or tacit intent manifested from this   notification,   so   as   to   construe   it   as   bestowing   power   to 31 withdraw the rebate facility with effect from a date prior to the date of notification as such.  On this finding, nothing more is required to be said as the concomitant of this finding would necessarily be that th all the industrial units set up after 27  February, 1998 and before th 14  October, 2004 which had commenced commercial production, must continue to qualify for rebate for specified term mentioned in th notification dated 27  February, 1998, subject to fulfilling all other conditions specified therein.  28. In   the   case   of   BCL,   the   rebate   ought   to   continue   up   to th th 13  December, 2008 and in the case of JPAL, up to 17  September, 2014.  Any other interpretation of the impugned notification dated th 14   October,   2004,   would   entail   in   giving   retrospective   or retroactive effect thereto.  That is not predicated by Section 5 of the 1948 Act or the impugned notification itself.   Having said this, it would necessarily follow that the challenge to the notification on the ground of being hit by doctrine of promissory estoppel need not detain   us   any   further.     Similarly,   the   argument   regarding   the circumstances in which the Government could stave off from the 32 th dispensation   under   notification   dated   27   February,   1998   has become irrelevant. 29. Assuming that we need to examine the reasons offered by the State   Government   to   justify   the   impugned   notification   dated th 14  October, 2004 of supervening public interest, it is noticed from the pleadings exchanged by the parties before the High Court or for that matter before this Court that the dominant reason weighed with the State Government to rescind the earlier notification was th the effect of the decision of the High Court dated 29  January, 2004 and the logistical issues confronting the State in implementation of that decision, including the financial implications for the future State Revenue.   For proper analysis of the plea so taken by the th State, we must go back to the intent behind notification dated 27 February, 1998.  The dominant intent was to invite the investors to set up industrial unit in the designated areas within the State of Uttar Pradesh which were known to be underdeveloped or backward areas and more importantly to address the  environmental issue because of the fly ash generated by the thermal power stations situated   in   Uttar   Pradesh   and   incidentally   to   generate   job 33 opportunities and employment to the locals.  It is one thing to argue that because of the interpretation given to the notification dated th 27  February, 1998 by the High Court and affirmed by this Court, the industrial units situated in the neighbouring States may not be th able to fulfill the underlying intent behind the notification dated 27 February, 1998 in its letter and spirit.  That is not the plea of the State. Furthermore, it is undeniable that the thermal power stations in the State of Uttar Pradesh are still operational and are generating fly ash in the same manner and quantity as was happening in February,   1998,   if   not   more.     It   is   also   indisputable   that   the industrial   units   set   up   in   furtherance   of   the   promise   or th representation made in the notification dated 27   February, 1998 which   had   commenced   commercial   production   in   respect   of th specified   goods   before   14   October,   2004,   would   continue   to achieve the same objective as is specified in the notification dated th 27   February, 1998.   In that, the concerned manufacturing units continue to manufacture specified goods by using fly ash purchased or produced from the thermal power stations situated within the State.  As long as that activity is continued until the term specified 34 th under the notification dated 27  February, 1998, namely ten years from the date of commencement of commercial production, there is no tangible reason nor it is open to contend that the dominant th purpose   underlying   notification   dated   27   February,   1998   had ceased to exist or had become irrelevant in any manner, much less there are supervening circumstances qua such units which are so overwhelming that it would be inequitable for the State Government th to   be   bound   by   the   promise   given   in   notification   dated   27 February, 1998.    30. Indeed, the judgment rendered by the High Court and affirmed th by this Court in interpreting the notification dated 27   February, 1998, at best, may have given rise to some logistical issues for the State including financial implications regarding future revenue loss. That ground cannot be invoked as supervening public interest in reference to the activities of the industrial units who qualify the th conditions specified in notification dated 27  February, 1998 in all other respects and had commenced commercial production of the th specified   product   before   14   October,   2004.   Indubitably,   an enforceable right had accrued to and crystalised in favour of such 35 industrial units which could not be truncated or snapped unless th the   dominant   purpose   for   which   the   notification   dated   27 February,  1998 came  to be  issued  had  ceased to  exist,  namely generation of fly ash by the thermal power stations situated within the State and consumption of that fly ash by the industrial units established  within the  designated  areas  of  the  State  as  per the specified quantity to become entitled for rebate for the duration mentioned therein.  The question of future revenue loss would not arise as the industrial units established in the neighbouring States would not be eligible to avail of the rebate because of rescinding the earlier notification. Suffice it to observe that the argument about future revenue loss cannot be invoked against the industrial units th who had already established and commenced production after 27 th February, 1998 and before            14  October, 2004.  For, it can be safely presumed that the policy makers were fully conscious about the so­called loss of future revenue due to rebate to those th units when they had issued notification dated 27  February, 1998. That ground cannot be set up against the industrial units who th qualify   in   all   other   respect   under   the   notification   dated   27 36 February, 1998 and have made substantial investment running into crores much less as being supervening public interest, as is being placated   by   the   State   in   these   proceedings.     This   is   clearly   an afterthought plea, which by no standards can stand the test of judicial scrutiny. It is well established that the Court is obliged to insist for a highly rigorous standard of proof in the discharge of the burden and onus upon the State to justify its action as supervening public interest.  31. Having said this, it must necessarily follow that the impugned th notification dated 14  October, 2004 can have no application to the settled enforceable right accrued to industrial units who fulfill all th other conditions specified in the notification dated 27   February, 1998, having commenced commercial production of the specified th goods before 14   October, 2004.   In other words, we reject the stand   of   the   State   Government   about   the   supervening   public interest qua the respondents herein and similarly placed persons. th The notification dated 14   October, 2004 cannot be construed as having   retrospective   or   retroactive   effect   to   whittle   down   the accrued rights in favour of such industrial units.  37 32. In this view of the matter, it is unnecessary to dilate on the precedents   pressed   into   service   to   buttress   the   argument   that doctrine   of   promissory   estoppel   applies   or   not   to   the   State Government or about the power of the State Government to rescind the earlier notification whereunder rebate under Section 5 of the 1948 Act had become due and payable to the eligible industrial units.   We also dispose of the grievance of the appellant that the High   Court   has   not   elaborately   dealt   with   the   argument   of supervening public interest justifying the issuance of notification th dated 14   October, 2004.   We say so because, we are convinced with the argument of the respondents that no material fact has been pleaded in the response filed before the High Court or in the present proceedings by the State Government in that regard.  33. Nevertheless,   we   had   permitted   the   State   Government   to articulate the reasons which it did in the written submissions as referred to in paragraph 14 above.   We have analysed the said reasons and are of the considered opinion that the same singularly or taken together would be of no avail to the State Government, to th justify   the   application   of   the   impugned   notification   dated   14 38 October,   2004,   to   industrial   units   already   set   up   which   had commenced commercial production of the specified goods in the th designated areas before 14  October, 2004.   A priori, the respondents and similarly placed persons would 34. be   entitled   to   rebate   for   the   relevant   period   prescribed   in   the th notification  dated   27   February,   1998   which   would   continue to remain in vogue until the expiry of the specified period, namely, ten th years. In the case of BCL up to 13  December, 2008 and in the case th of JPAL up to      17  September, 2014 respectively.  The amount of rebate, however, would depend on the verification of their refund claim   pending   before   the   concerned   authorities   and   would   be subject   to   just   exceptions   including   the   principle   of   unjust enrichment.  The respondents should be able to substantiate that the   amount   claimed   by   them   has   not   been   passed   on   to   their consumers.     Only   then,   they   would   be   entitled   for   refund.  The competent authority may verify the claim for refund of each of the respondent(s) in accordance with law and pass appropriate orders, including about the interest for the relevant period.  39 35. We are in agreement with the respondents that the decisions in     (supra) and   Trikuta Roller Flour Mills P. Ltd. Shree Durga Oil Mills   (supra) turn on the facts of the concerned cases.   The dictum in those cases will have no application to the fact situation of the present case in light of our above analysis.   Similarly, the observations made by this Court in the earlier round of proceedings cannot come in the way of the respondents to pursue their claim for refund   of   the   rebate   amount,   for   the   relevant   period.   That   be decided in accordance with law.  36. In view of the above, these appeals must fail.  Hence, the same are dismissed with observations.   There shall be no order as to costs. All pending applications are also disposed of.  .………………………..,….. J. (A.M. Khanwilkar)   .………………………..,….. J. (Dinesh Maheshwari) New Delhi; November 20, 2019.