Promissory estoppel extends SEZ stamp-duty and registration-fee exemptions to pre-Ordinance leases.

Facts

The respondent-petitioners executed a lease deed dated 04.12.2003 in respect of land situated in a Special Economic Zone (“SEZ”) and paid stamp duty and registration fees on the transaction.

Source reference: p.2, paras. 2–4

The State Government had earlier issued Industries and Mines Department Resolution No. SEZ-2001-1456-G dated 19.07.2002 concerning the establishment of SEZs in Gujarat, which provided, inter alia, for exemption from stamp duty and registration fees.

Source reference: p.8, para. 8

The Gujarat Special Economic Zone Ordinance, 2004 was subsequently promulgated on 10.02.2004 and contained fiscal exemptions for approved SEZ units.

Source reference: p.2, para. 3; p.9, para. 10

The petitioners sought a declaration that the collection of stamp duty and registration fees was illegal and a direction for refund.

Source reference: p.2, para. 2

The learned Single Judge allowed the writ petition on 15.07.2013, holding that a lease constituted a transfer of an interest in land and that the petitioners could claim the benefit of the SEZ policy and the Ordinance notwithstanding that the lease deed preceded the Ordinance.

Source reference: p.3, para. 5; pp. 4–7, paras. 11–14

The State challenged that decision by way of the present intra-court appeal.

Source reference: no citation

Issues

1. Whether a lease of land in an SEZ constitutes a “transfer of land” or transfer of an interest in land so as to qualify for exemption from stamp duty and registration fees under the SEZ policy and the Gujarat Special Economic Zone Ordinance, 2004?

Source reference: pp. 3–5, para. 5; p.10, para. 13

2. Whether the petitioners, whose lease deed was executed on 04.12.2003, before the Ordinance came into force on 10.02.2004, could claim the benefit of the exemption on the basis of the State’s earlier SEZ policy, promissory estoppel, and legitimate expectation?

Source reference: pp. 2, 6–7, paras. 3–5; pp. 9–10, paras. 10–13

3. Whether denying the exemption to persons who executed lease deeds immediately before 10.02.2004, while granting it to those who executed deeds thereafter, would be discriminatory and inconsistent with the object of the SEZ policy?

Source reference: p.11, para. 14

Law Applied

The Court applied Sections 5 and 105 of the Transfer of Property Act, 1882, under which “transfer of property” includes an act by which property or an interest therein is conveyed, and a lease is a transfer of the right to enjoy immovable property.

Source reference: pp. 4–5, para. 5

It relied on Clause 6 of the State Government’s SEZ policy dated 19.07.2002, which granted exemption from stamp duty and registration fees, and Chapter VIII, Clause 21 of the Gujarat Special Economic Zone Ordinance, 2004, which provided fiscal exemptions for approved SEZ units.

Source reference: p.8, para. 8; p.2, para. 3

The Court further applied the doctrines of promissory estoppel and legitimate expectation, relying on Mahabir Vegetable Oils (P) Ltd. v. State of Haryana, (2006) 3 SCC 620, and Bannari Amman Sugars Ltd. v. Commercial Tax Officer, (2005) 1 SCC 625, which require a clear governmental representation, reliance, and alteration of position, subject to considerations of equity and public interest.

Source reference: pp. 6–7, para. 5

A purposive interpretation was adopted to advance the object of promoting industrial development and investment in SEZs.

Source reference: pp. 4–5, para. 5

Reasoning

The Court held that a lease is not merely a contractual permission but transfers an interest and the right to enjoy immovable property; therefore, it falls within the expression “transfer of land” when the SEZ exemption is construed purposively.

Source reference: pp. 4–5, paras. 11–12

The State’s SEZ policy had been issued on 19.07.2002 with the object of attracting investment and industrial development, and the later Ordinance was viewed as giving legislative form to that pre-existing policy.

Source reference: pp. 8–10, paras. 6–12

Since the petitioners had acted on the governmental policy and invested in establishing their unit, the State could not deny the promised fiscal benefit solely because the lease deed was executed before the Ordinance’s formal commencement.

Source reference: pp. 6–7, para. 5; p.10, para. 12

The Court also reasoned that a strict date-based exclusion would create hostile discrimination between similarly situated SEZ investors who executed deeds immediately before and after 10.02.2004, contrary to the policy’s economic and industrial objectives.

Source reference: p.11, para. 14

Holding

The appeal was dismissed as devoid of merit.

The Court affirmed the Single Judge’s conclusion that the lease transaction involved a transfer of an interest in land and that the petitioners were entitled to the SEZ-related exemption from stamp duty and registration fees, notwithstanding execution of the lease deed before 10.02.2004.

Source reference: pp. 10–11, paras. 13–16

The State was directed to process and pay the refund within six weeks from the appellate judgment; the original direction was for refund without interest.

Source reference: p.2, para. 2; p.11, paras. 15–16

No order as to costs was made.

Source reference: p.11, para. 16