UNION OF INDIA & ORS. versus M/S UNICORN INDUSTRIES on 19 September 2019

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SUPREME COURT REPORTS

[2019] 12 S.C.R.

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UNION OF INDIA & ORS.

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M/S UNICORN INDUSTRIES

(Civil Appeal No. 7432 of 2019)

SEPTEMBER 19, 2019

[ARUN MISHRA, M. R. SHAH AND B. R. GAVAI, JJ.]

Doctrines– Doctrine of Promissory Estoppel – When cannotbe invoked – Appellant vide notification dated 09.09.2003,Cexempted certain goods from the payment of excise duty – Bynotification dated. 25.04.2007, earlier notifications issued wereamended with the result that pan masala, tobacco, manufacturedtobacco substitutes and plastic carry bags of less than 20 micronswere no longer entitled for exemption from the excise duty–Respondent in the Civil Appeal arising out of SLP (C) No.36926 ofD2012, approached the High Court of Sikkim by way of Writ Petition – Allowed – Respondent in the Civil Appeal Nos.2345 and 2346 of2017, approached the High Court of Gauhati – Writ Petitiondismissed by Single Judge vide order dated. 10.12.2010 – Writappeals allowed – Held: Exemption granted, even when theEnotification granting exemption prescribes a particular period tillwhich it is available, can be withdrawn by the State, if it is foundthat such withdrawal is in the public interest– Larger public interestwould outweigh the individual interest, if any – In such case, eventhe doctrine of promissory estoppel would not come to the rescue ofFthe persons claiming exemptions and compel the State not to resilefrom its promise, if the act of the State is found to be in public interest– Scientific research conducted by Experts in the field has foundthat the consumption of pan masala with tobacco as well as panmasala sans tobacco is hazardous to health – It was further foundthat the percentage of teenagers consuming the hazardous productGwas very high and as such exposing large chunk of young populationof the country to the risk of oral cancer – Taking into considerationthis aspect, if the State has decided to withdraw the exemptiongranted for manufacture of such products, it is not understood asto how it can be said to be not in the public interest – Withdrawal of H

the exemption to the pan masala with tobacco and pan masala sanstobacco is in the larger public interest – Doctrine of promissoryestoppel could not have been invoked in the present matter –Judgments passed by the High Court of Sikkim and Appellate Benchof the Gauhati High Court set aside – Order passed by Single Judgedated. 10.12.2010 upheld – Central Excise Act, 1944 – s.5A –Additional Duties of Excise (Goods of Special Importance) Act,1957 – s.3 – Additional Duties of Excise (Textiles and Textile Articles)Act, 1978 – s.3(3) – Central Excise Tariff Act, 1985 – CENVATCredit Rules, 2002 – Finance Act, 2003 – s.154 – Excise Duty.

Allowing the appeals, the Court

HELD: 1.1 The issue raised in these appeals is no moreres integra. The exemption granted, even when the notificationgranting exemption prescribes a particular period till which it isavailable, can be withdrawn by the State, if it is found that such awithdrawal is in the public interest. In such a case, the largerpublic interest would outweigh the individual interest, if any. Insuch a case, even the doctrine of promissory estoppel would notcome to the rescue of the persons claiming exemptions andcompel the State not to resile from its promise, if the act of theState is found to be in public interest. [Paras 12, 19 and 25][279-F; 283-E; 285-G-H]

1.2 A judicial notice can be taken of the fact that by variousscientific studies on betel quid and substitutes, tobacco and theirsubstitutes, i.e., pan masala with tobacco and without tobacco,these products have been found to be one of the main causes fororal cancer. By a scientific research conducted by Experts in thefield, it has been found that the consumption of pan masala withtobacco as well as pan masala sans tobacco is hazardous to health.It has further been found that, the percentage of teenagersconsuming the hazardous product was very high and as suchexposing a large chunk of young population of this Country tothe risk of oral cancer. Taking into consideration this aspect, ifthe State has decided to withdraw the exemption granted formanufacture of such products, it cannot be understood as to howit can be said to be not in the public interest. [Paras 26, 31][285-A; 290-D-E]

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272SUPREME COURT REPORTS

A1.3 The legislative policy as reflected in Section 154 of theFinance Act, 2003 was to withdraw the exemption granted to themanufacturers of cigarettes as well as pan masala with tobaccoand that too with retrospective effect. Apart from the fact that, itis a common knowledge that tobacco is highly hazardous, thelegislative intent was also unambiguous. In these circumstances,Bthe finding of the High Court that the withdrawal of exemptionfor tobacco products was not in the public interest, to say theleast is shocking. The approach of the Appellate Bench of theHigh Court was totally unsustainable. The withdrawal of theexemption to the pan masala with tobacco and pan masala sansCtobacco is in the larger public interest. As such, the doctrine ofpromissory estoppel could not have been invoked in the presentmatter. The State could not be compelled to continue theexemption, though it was satisfied that it was not in the publicinterest to do so. The larger public interest would outweigh anindividual loss, if any. The appeals are allowed. The judgmentsDand orders passed by the Appellate Bench of the Gauhati HighCourt dated 20.04.2016 and 25.05.2016 are quashed and setaside. The Order passed by the Single Judge dated 10.12.2010dismissing the writ petitions is upheld. [Paras 35, 36 and 39][292-A-D, F]

EKasinka Trading v. Union of India (1995) 1 SCC 274 :[1994] 4 Suppl. SCR 448;STO v. Shree Durga Oil Mills(1998) 1 SCC 572 : [1997] 6 Suppl. SCR 488;ShrijeeSales Corpn. v. Union of India (1997) 3 SCC 398 :[1996] 10 Suppl. SCR 888; State of Rajasthan v.FMahaveer Oil Industries (1999) 4 SCC 357 : [1999] 2SCR 798;Shree Sidhbali Steels Ltd. v. State of U.P.(2011) 3 SCC 193 : [2011] 3 SCR 134;DG of ForeignTrade v. Kanak Exports (2016) 2 SCC 226 : [2015] 15SCR 287 – relied on.

GDarshan Oils (P) Ltd. v. Union of India (1995) 1 SCC345 : [1994] 5 Suppl. SCR 278;Pappu Sweets andBiscuits v. Commr. Of Trade Tax, U.P. (1998) 7 SCC228 : [1998] 2 Suppl. SCR 119;Commr. of Customs v.

Dilip Kumar & Co. (2018) 9 SCC 1 : [2018] 7 SCR1191; M/s Motilal Padampat Sugar Mills Co. Ltd. v.State of Uttar Pradesh and Ors. (1979) 2 SCC 409 :[1979] 2 SCR 641; Union of India & Ors. v. GodfreyPhilips India Ltd. & Ors. (1985) 4 SCC 369 : [1985] 3Suppl. SCR 123;Pawan Alloys & Casting Pvt. Ltd. v.U.P. State Electricity Board & Ors. (1997) 7 SCC 251 :[1997] 3 Suppl. SCR 266 – referred to.

Research Paper titled “Alert for an epidemic of oralcancer due to use of the betel quid substitutes gutkhaand pan masala: A review of agents and causativemechanisms”-Mutagenesis Vol. 19 No. 4; Study Papertitled “Smokeless Tobacco and Its Adverse Effects on-Hematological Parameters: A Cross-Sectional Study”Advances in Preventive Medicine 2019; Study Reporttitled “A review on Harmful Effects of Pan Masala”-Indian Journal of Cancer (October-December 2015)Volume 52, Issue 4 – referred to.

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Case Law Reference

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Case Law Reference

[1994]4 Suppl. SCR 448[1994] 5 Suppl. SCR 278[1997] 6 Suppl. SCR 488[1996] 10 Suppl. SCR 888[1999] 2 SCR 798[2011] 3 SCR 134[2015] 15 SCR 287[1998] 2 Suppl. SCR 119[2018] 7 SCR 1191[1979] 2 SCR 641[1985] 3 Suppl. SCR 123[1997] 3 Suppl. SCR 266

ACIVIL APPELLATE JURISDICTION: Civil Appeal No. 7432of 2019.

From the Judgment and Order dated 11.05.2012 of the HighCourt of Sikkim at Gangtok in Writ Petition (C) No. 22 of 2007.

With

BCivil Appeal Nos. 2345, 2346 of 2017.

Dhruv Aggarwal, Dr. Ashok Saraf, Nakul Dewan, Balbir Singh,Guru Krishan Kumar, K. V. Viswanathan, S. Ganesh, Tarun Gulati, Sr.Advs., Ms. Nisha Bagchi, Rupesh Kumar, Ms. Aruna Gupta, DharmendraGupta, B. K. Prasad, Shriram P. Pingle, Gangdeep Sharma, M. L. Lahoty,CPaban K. Sharma, Anchit Sripat, Himanshu Shekhar, Vishal Gupta,M/s. AP & J Chambers, Kaushik Choudhary, Mukunda Rao, PawanshreeAgrawal, K. J. John, M/s. K J John & Co. Ajoy K. Roy, Shantanu Tyagi,Ms. Nandita Chauhan, Ravinder Nijhawan, S. S. Shroff, Rahul Narayan,Shashwat Goel, Ajoy K. Roy, Ajay Aggarwal, Ms. Mallika Joshi, IshanNarain, Rajan Narain, Ms. Kavita Jha, Ms. Swati Agarwal, PawanshreeDAgrawal, Ms. Devika Jain, Kumar Visalaksh, Udit Jain, Mahfooz A.Nazki, Rana Ranjit Singh, Vivek Kumar Singh, Ms. Akanksha Singh,Shuvodeep Roy, Kabir Shankar Bose, Satropp Das, Ms. Neelima Tripathi,Ms. Gunjan Singh, K. V. Mohan, Vishal Gupta, Sumeet Sharma,Diviyanshu Gupta, Rakesh Sinha, Partha Sil, Parthiv K. Goswami, IshanBisht, Vivek Gupta, Ms. Palak Mahajan, Ms. Diksha Rai, RaghvendraEKumar, Ms. Aruna Mathur, Sunil Murarka, Kunal Chatterji,Ms. Maitrayee Banerjee, Supratik Sarkar, V. Lakshmikumaran,Ms. Charanya Lakshmikumaran, Aditya Bhattacharya, Mrs. IshitaMathur, Ms. Apeksha Mehta, Ms. Monica Kasturi, R. Parthasarthy,Kshitij Vaibhav, Ms. Bina Gupta, Ms. Sheona Taqvi, R. Jawahar Lal,Siddharth Bawa, Shaymal Anand, Mayank Kshirsagar, Nikhil Singhvi,FMohit Seth, Ms. Sonia Dubey, Obhirup Ghosh, M/s. Legal Option, GauravJuneja, Aayush Jain, M/s. Khaitan & Co., V. K. Sidharthan, RamendraLal Auddy, B. Krishna Prasad, M/s. Arputham Aruna & Co., SatyaMitra, Ms. Hemantika Wahi, Gopal Singh, Advs. for the appearing parties.

The Judgment of the Court was delivered by GB. R. GAVAI, J.

1. Leave granted in S.L.P.(C) No. 36926 of 2012.

2. The question of law that arises for consideration in these appealsis, ‘as to whether, by invoking the doctrine of promissory estoppel, canthe Union of India be estopped from withdrawing the exemption frompayment of Excise Duty in respect of certain products, which exemptionH

is granted by an earlier notification; when the Union of India finds thatsuch a withdrawal is necessary in the public interest.

3. Since the factual position as well as the question of law arisingin the present three appeals are common, they are heard together anddisposed of by this common judgment. The appellant, Union of India, inexercise of powers conferred by sub-section (1) of Section 5A of theCentral Excise Act, 1944 (1 of 1994) (hereinafter referred to as the“Central Excise Act”) read with sub-section (3) of Section 3 of theAdditional Duties of Excise (Goods of Special Importance) Act, 1957(58 of 1957) and sub-section (3) of Section 3 of the Additional Duties ofExcise (Textiles and Textile Articles) Act, 1978 (40 of 1978), being satisfiedthat it is necessary in the public interest, by Notification No. 71 of 2003dated 09.09.2003, exempted the goods specified in the First Scheduleand the Second Schedule to the Central Excise Tariff Act, 1985 (5 of1986) other than the goods specified in Annexure-I to the said Notification,from the payment of duties under the said statutes. The notificationprovided that so much of the duty of excise or additional duty of excise,as the case may be, leviable thereon under any of the said Acts as wasequivalent to the amount of duty paid by the manufacturer of the saidgoods, other than the amount of duty paid by utilisation of CENVATcredit under the CENVAT Credit Rules, 2002, was exempted. Thisexemption was available to the units located in Industrial Growth Centreor Industrial Infrastructure Development Centre or Export PromotionIndustrial Park or Industrial Estate or Industrial Area or CommercialEstate or Scheme Area, as the case may be, in the State of Sikkim, asspecified in Annexure-II appended to the said notification. A procedurewas also prescribed under the said notification for availing the benefit ofexemption. Annexure-I thereto provides the list of the products whichwere not entitled for exemption. Clause 1 of the said Annexure readsthus:

“1. Tobacco and Tobacco products including Cigarettes/Cigars/ Gutkha”

Similar notifications were issued by the Union of India beingNotification Nos. 32 of 1999-CE and 33 of 1999-CE dated 08.07.1999insofar as the State of Assam is concerned.

4. By Notification No. 21 of 2007-CE dated 25.04.2007, the earliernotifications issued by it were amended. The effect of the amendmentwas that the product ‘pan masala’ falling under Chapter 21 of the FirstSchedule of the Central Excise Tariff Act, 1985, the goods falling underChapter 24 of said First Schedule, i.e., tobacco and manufactured tobaccosubstitutes and plastic carry bags of less than 20 microns were included A

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Ain the negative list and as such were no longer entitled for exemptionfrom the excise duty. Being aggrieved by the said notification, therespondent, namely, Unicorn Industries in the Civil Appeal arising out ofSpecial Leave Petition (C) No. 36926 of 2012, approached the HighCourt of Sikkim by way of Writ Petition (C) No. 22 of 2007. The HighCourt of Sikkim vide its judgment and order dated 11.05.2012 allowedBthe writ petition and held that the petitioner therein was entitled toexemption from payment of excise duty on the manufacture of panmasala from its unit situated in the State of Sikkim for a period of 10years from the date of commencement of the commercial production,i.e., 27.06.2006.C5. Similarly, the respondent in Civil Appeal No. 2346 of 2017,namely, M/s Dharampal Satyapal Ltd., which was a manufacturer ofpan masala with tobacco and other tobacco products, approached theGauhati High Court by way of a petition bearing No. PW(C) 749 of2010. The said petition was with regard to withdrawal of exemption inrespect of pan masala with tobacco. The Single Judge of the GauhatiDHigh Court vide judgment and order dated 10.12.2010 found no substancein the petition and as such dismissed the petition. Being aggrieved thereby,the said respondent filed Writ Appeal No. 81 of 2011 before the AppellateBench of Gauhati High Court. Vide the judgment and order dated20.04.2016, the Appellate Bench of the High Court allowed the appeal;set aside the judgment and order passed by the Single Judge datedE10.12.2010 and quashed Notification No. 11 of 2007-CE dated01.03.2007. It further directed the Investment Appraisal Committee togive an opportunity of hearing to the appellant before it (respondentherein) so that it can prove the amount it had actually invested in thespecified items for availing the benefits under the earlier notificationsFand further directed that if the appellant proves that it had actually investedthe amount, the respondent authorities shall refund to the appellant somuch of the excise duty to which the appellant therein would be entitledas per the earlier notifications.

6. The respondent in Civil Appeal No. 2345 of 2017, namely, M/sDharampal Satyapal Ltd., had also filed another petition being Writ PetitionG(C) No. 749 of 2010 insofar as its product ‘pan masala without tobacco’,is concerned. The same was also dismissed by the learned Single Judgeof the Gauhati High Court vide the common judgment and order dated10.12.2010. It appears that the appeal arising from the said petition beingWrit Appeal No. 223 of 2011 was separately heard by another AppellateH

Bench of the Gauhati High Court. However, noticing that the writ appealarising out of the order of the Single Judge regarding the product of theappellant therein, i.e., ‘pan masala containing tobacco’ was alreadyallowed by the Appellate Bench of the High Court by Order dated20.04.2016, the said writ appeal was also allowed, by the judgment andorder dated 25.05.2016 thereby setting aside the Order passed by thelearned Single Judge in Writ Petition (C) No. 749 of 2010 so also theNotification dated 25.04.2007. The respondent therein was directed torefund the excise duty component to the appellant as is admissible underthe law.

7. Being aggrieved by the aforesaid judgments and orders, onepassed by the Sikkim High Court in the writ petition and the other twopassed by the Gauhati High Court in the writ appeals, the Union of Indiais before this Court.

8. Mr. Dhruv Agrawal, learned senior counsel appearing on behalfof the appellants, submits that both, the Sikkim High Court as well as theAppellate Benches of the Gauhati High Court have grossly erred inallowing the writ petition and the writ appeals of the assessees. It issubmitted that, though the Union of India had specifically contendedbefore both the High Courts that the 2007 Notifications were issued inthe public interest, the same has not been considered. It is submitted thatthe Union of India, in exercise of its delegated powers, is alwaysempowered to modify and withdraw the exemptions granted by it underthe earlier notification(s). It is submitted that the Union of India, takinginto consideration the public interest, that the consumption of pan masalawith tobacco or pan masala without tobacco is hazardous to the humanhealth and, therefore, for curbing its consumption, had issued the 2007Notifications thereby including pan masala in Chapter 21 and all productscontained in Chapter 24, i.e., tobacco and manufactured tobaccosubstitutes, in the negative list. It is submitted that, after taking intoconsideration that the 2007 Notification was issued in public interest, theSikkim High Court ought not to have interfered with it. He furthersubmitted that the reasoning given by the Sikkim High Court that panmasala is not hazardous and, therefore, the 2007 Notification cannot besaid to be in the public interest is totally erroneous. It is further submittedthat while doing so, the Sikkim High Court has assumed the role of anexpert in the field and, therefore, travelled beyond its jurisdiction.

9. Insofar as the Gauhati High Court is concerned, the learnedsenior counsel submitted that the learned Single Judge of the Gauhati AB

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AHigh Court had rightly dismissed the writ petitions, finding that in theconflict between the interest of an individual and the public interest,individual interest should give way to the larger public interest. It issubmitted that, the Appellate Bench of the Gauhati High Court in itsjudgment dated 20.04.2016 has grossly erred in interfering with thereasoned order passed by the learned Single Judge. It is submitted that,Bin the said appeal, the product that fell for consideration before theAppellate Bench of the High Court was Zarda scented tobacco and panmasala containing tobacco. It is submitted that, the products containingtobacco are indisputably hazardous to health and, therefore, theNotification which withdraws exemption granted for the manufactureof the said products is undoubtedly in the larger public interest. However,Coverlooking this aspect, the appeals have been allowed. It is submittedthat insofar as the other appeal is concerned, the another Appellate Benchhas only relied upon the judgment by the earlier Appellate Bench andhas observed that the only distinction in both the matters was that in theearlier matter, the issue was with regard to pan masala containing tobacco Dand in the matter before them, the issue was with regard to pan masalawithout tobacco and with these observation allowed the appeal.

10. The learned senior counsel relied on the following judgmentsof this Court in the cases of Kasinka Trading vs. Union of India[1], DarshanOils (P) Ltd. vs. Union of India[2], STO vs. Shree Durga Oil Mills[3], ShrijeeESales Corpn. vs. Union of India[4], State of Rajasthan vs. Mahaveer OilIndustries[5], Shree Sidhbali Steels Ltd. vs. State of U.P.[6], DG of ForeignTrade vs. Kanak Exports[7], Pappu Sweets and Biscuits vs. Commr. OfTrade Tax, U.P.[8] and Commr. of Customs vs. Dilip Kumar & Co.[9],.

11. Shri Balbir Singh and Shri Nakul Dewan, learned senior counselFappearing on behalf of the respondents, have supported the impugnedjudgments and orders. It is submitted that, the Sikkim High Court as wellas the Appellate Benches of the Gauhati High Court have rightly reliedupon the doctrine of promissory estoppel and allowed the appeals. It is 1 (1995) 1 SCC 274G2 (1995) 1 SCC 3453 (1998) 1 SCC 5724 (1997) 3 SCC 3985 (1999) 4 SCC 3576 (2011) 3 SCC 1937 (2016) 2 SCC 2268 (1998) 7 SCC 228H9 (2018) 9 SCC 1

submitted that, it is only on account of the representation given by theUnion of India and the State Governments that the industries establishedin the notified areas of Sikkim as well as Assam would be entitled for100% exemption from central excise, the writ petitioners before theHigh Court had established the industries in such remote areas. It issubmitted that, the exemption notifications were issued in view of theindustrial policy of the Union of India as well as the State Governmentsthat on account of backwardness in these areas, the industrialisation inthese areas should be promoted so that the economic development takesplace. It is submitted that, only on the assurance of the Central as wellas the State Governments, the writ petitioners have invested huge amountand, as such, now the Union of India could not be permitted in law toresile from the assurance given by them to the writ petitioners. It issubmitted that, considering these principles, the Sikkim High Court andthe Appellate Bench of the Gauhati High Court have granted relief tothe writ petitioners. It is submitted that, this Court has consistently heldthat, if a party changes its position to its detriment, on account of apromise given by the other party, the other party cannot be permitted toresile from such a promise. It is submitted that the doctrine of promissoryestoppel is equally applicable to the State and its functionaries. Reliancein this respect is placed on the following judgments of this Court. M/sMotilal Padampat Sugar Mills Co. Ltd. vs. State of Uttar Pradesh andOrs.[10], Union of India & Ors. Vs. Godfrey Philips India Ltd. & Ors.[11]and Pawan Alloys & Casting Pvt. Ltd. vs. U.P. State Electricity Board& Ors.[12].

12. The issue raised in these appeals is no more res integra. ThisCourt in a catena of decisions has considered the issue with regard toinapplicability of the doctrine of promissory estoppel, when the largerpublic interest demands so. We will refer, in brief, to the earlier judgmentsof this Court.

13. In the case of Kasinka Trading (supra), this Court wasconsidering the case of the appellant, who were manufacturing certainproducts, requiring PVC resin as one of the raw materials for itsmanufacturing process. By Notification No. 66 dated 15.03.1979 issuedunder Section 25 of the Customs Act, 1962 which is pari materia withSection 5A of the Central Excise Act, the PVC resin was exempted 10 (1979) 2 SCC 409

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Afrom basic import duty. The exemption was to be effective till 31.03.1981.However, by Notification No. 205 dated 16.10.1980 issued under Section25 of the Customs Act, the exemption granted earlier came to bewithdrawn. A challenge similar to the one which is raised herein wasraised before this Court. This Court observed thus:

B“12. It has been settled by this Court that the doctrine ofpromissory estoppel is applicable against the Government alsoparticularly where it is necessary to prevent fraud or manifestinjustice. The doctrine, however, cannot be pressed into aid tocompel the Government or the public authority “to carry out arepresentation or promise which is contrary to law or which wasCoutside the authority or power of the officer of the Governmentor of the public authority to make”. There is preponderance ofjudicial opinion that to invoke the doctrine of promissory estoppelclear, sound and positive foundation must be laid in the petitionitself by the party invoking the doctrine and that bald expressions,without any supporting material, to the effect that the doctrine isDattracted because the party invoking the doctrine has altered itsposition relying on the assurance of the Government would not besufficient to press into aid the doctrine. In our opinion, thedoctrine of promissory estoppel cannot be invoked in theabstract and the courts are bound to consider all aspectsEincluding the results sought to be achieved and the publicgood at large, because while considering the applicabilityof the doctrine, the courts have to do equity and thefundamental principles of equity must for ever be presentto the mind of the court, while considering the applicabilityof the doctrine. The doctrine must yield when the equity soFdemands if it can be shown having regard to the facts andcircumstances of the case that it would be inequitable tohold the Government or the public authority to its promise,assurance or representation.”

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14. It could thus be seen that, this Court has clearly held that thedoctrine of promissory estoppel cannot be invoked in the abstract andthe courts are bound to see all aspects including the objective to beachieved and the public good at large. It has been held that whileconsidering the applicability of the doctrine, the courts have to do equityHand the fundamental principle of equity must forever be present in the mind of the Court while considering the applicability of the doctrine. Ithas been held that the doctrine of promissory estoppel must yield whenthe equity so demands and when it can be shown having regard to thefacts and circumstances of the case, that it would be inequitable to holdthe Government or the public authority to its promise, assurance orrepresentation. After considering the earlier judgments on the issue, whichhave been heavily relied upon by the assesses, this Court has observedthus:

“21. The power to grant exemption from payment of duty, additionalduty etc. under the Act, as already noticed, flows from theprovisions of Section 25(1) of the Act. The power to exemptincludes the power to modify or withdraw the same. The liabilityto pay customs duty or additional duty under the Act arises whenthe taxable event occurs. They are then subject to the payment ofduty as prevalent on the date of the entry of the goods. Anexemption notification issued under Section 25 of the Act had theeffect of suspending the collection of customs duty. It does notmake items which are subject to levy of customs duty etc.as items not leviable to such duty. It only suspends thelevy and collection of customs duty, etc., wholly or partiallyand subject to such conditions as may be laid down in thenotification by the Government in “public interest”. Suchan exemption by its very nature is susceptible of beingrevoked or modified or subjected to other conditions. Thesupersession or revocation of an exemption notification inthe “public interest” is an exercise of the statutory powerof the State under the law itself as is obvious from thelanguage of Section 25 of the Act. Under the GeneralClauses Act an authority which has the power to issue anotification has the undoubted power to rescind or modifythe notification in a like manner.”

15. It could thus be seen that, it has been held by this Court thatan exemption notification does not make the items which are subject tolevy of customs duty etc. as items not leviable to such duty. It onlysuspends the levy and collection of customs duty etc. subject to suchconditions as may be laid down in the “public interest”. It has furtherbeen held that, such an exemption by its very nature is susceptible ofbeing revoked or modified or subjected to other conditions. It has been AB

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Aheld that the supersession or revocation of an exemption notification inthe public interest is an exercise of the statutory power by the Stateunder the law itself. It has further been held that under the GeneralClauses Act an authority which has the power to issue a notification hasthe undoubted power to rescind or modify the notification in a like manner.

B16. This Court, after considering the objections that the exemptioncould not be withdrawn prior to the date prescribed in the notificationgranting exemption has observed thus:

“23. The appellants appear to be under the impression that evenif, in the altered market conditions the continuance of the exemptionmay not have been justified, yet, Government was bound toCcontinue it to give extra profit to them. That certainly was not theobject with which the notification had been issued. The withdrawalof exemption “in public interest” is a matter of policy andthe courts would not bind the Government to its policydecisions for all times to come, irrespective of theDsatisfaction of the Government that a change in the policywas necessary in the “public interest”. The courts, do notinterfere with the fiscal policy where the Government actsin “public interest” and neither any fraud or lack of bonafides is alleged much less established. The Governmenthas to be left free to determine the priorities in the matterEof utilisation of finances and to act in the public interestwhile issuing or modifying or withdrawing an exemptionnotification under Section 25(1) of the Act.”

17. It has been observed, that the withdrawal of exemption inFpublic interest is a matter of policy and the courts would not bind theGovernment to its policy decisions for all times to come, irrespective ofthe satisfaction of the Government that a change in the policy wasnecessary in the public interest. It has been held that, where theGovernment acts in public interest and neither any fraud or lack of bonaGfides is alleged much less established, it would not be appropriate for thisCourt to interfere with the same. Ultimately, this Court came to theconclusion that the withdrawal of the exemption was in the public interestand, therefore, refused to interfere with the order of the Delhi HighCourt dismissing the petitions.

18. In the case of Shree Durga Oil Mills (supra), the Governmentof Orissa had withdrawn the sales tax exemption which was grantedearlier under the Orissa Sales Tax Act, 1947. Considering a similarchallenge, while reversing the judgment and order of the High Court,this Court observed thus:

“21. Moreover withdrawal of notification was done in publicinterest. The Court will not interfere with any action taken by theGovernment in public interest. Public interest must override anyconsideration of private loss or gain.

23. In the instant case, it has been stated on behalf of the Statethat various notifications granting sales tax exemptions to thedealers resulted in severe resource crunch. On reconsiderationof the financial position, it was decided to limit the scope of theearlier exemption notifications issued under Section 6 of the OrissaSales Tax Act. Because of this new perception of the economicscenario of the State, the scope of the earlier notifications had tobe restricted. They were first abrogated altogether on 20-5-1977.Thereafter, it was decided to grant exemption at a limited scale.

24. In our opinion, the plea of change of policy trade on the basisof resource crunch should have been sufficient for dismissing therespondent’s case based on the doctrine of promissory estoppel.Public interest demanded modification of the earlier IPR.”

19. It could thus be seen that, it has been held that when withdrawalof the exemption is in public interest, the public interest must overrideany consideration of private loss or gain. In the said case, the change inpolicy and withdrawal of the exemption on the ground of severe resourcecrunch have been found to be a valid ground and to be in public interest.

20. A similar issue came up for consideration before the Benchconsisting three Judges of this Court in the case of Shrijee SalesCorporation (supra). The notification which came up for considerationwas similar with the notifications that fell for consideration in the case ofKasinka Trading (supra). While considering the argument that when thenotification prescribes a period during which the exemption would beavailable, such an exemption cannot be withdrawn till the end of theperiod prescribed, this Court observed thus:

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Aforce, would make any difference to the situation. In other words,could it be said that an exemption notified without specifying theperiod within which the exemption would remain in force, wouldbe withdrawn in public interest but not the one in which a periodhas been so specified? Once public interest is accepted asthe superior equity which can override individual equity,Bthe principle should be applicable even in cases where aperiod has been indicated. The Government is competent toresile from a promise even if there is no manifest public interestinvolved, provided, of course, no one is put in any adverse situationwhich cannot be rectified. To adopt the line of reasoning inCEmmanuel Ayodeji Ajayi v. Briscoe, (1964) 3 All ER 556, quotedin M.P. Sugar Mills [Motilal Padampat Sugar Mills Co. Ltd. v.State of U.P., (1979) 2 SCC 409, even where there is no suchoverriding public interest, it may still be within the competence ofthe Government to resile from the promise on giving reasonablenotice which need not be a formal notice, giving the promisee aDreasonable opportunity of resuming his position, provided, of course,it is possible for the promisee to restore the status quo ante. If,however, the promisee cannot resume his position, the promisewould become final and irrevocable.”

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21. It could thus be seen that this Court observed that once publicinterest is accepted as a superior equity which can override an individualequity, the same principle should be applicable in such cases where theperiod is prescribed.

22. The another three Judges Bench of this Court in the case ofFMahavir Oil Industries (supra) has taken a similar view. In the case ofShree Sidhbali Steels Ltd. (supra), this Court was considering the questionwith regard to validity of the notification which withdrew 33.33% of thehill development rebate, on the total amount of electricity bill, grantedunder the earlier notification. This Court while considering the similarchallenge observed thus:G

“33. Normally, the doctrine of promissory estoppel is being appliedagainst the Government and defence based on executive necessitywould not be accepted by the court. However, if it can be shownby the Government that having regard to the facts as they havesubsequently transpired, it would be inequitable to hold the H

Government to the promise made by it, the court would not raisean equity in favour of the promisee and enforce the promiseagainst the Government. Where public interest warrants, theprinciples of promissory estoppel cannot be invoked. TheGovernment can change the policy in public interest.However, it is well settled that taking cue from this doctrine, theauthority cannot be compelled to do something which is not allowedby law or prohibited by law. There is no promissory estoppel againstthe settled proposition of law. Doctrine of promissory estoppelcannot be invoked for enforcement of a promise made contraryto law, because none can be compelled to act against the statute.Thus, the Government or public authority cannot be compelled tomake a provision which is contrary to law.”

23. It could thus be seen that, this Court again reiterated the positionthat where public interest warrants, the principle of promissory estoppelcannot be invoked. Observing the aforesaid, the said challenge, as raisedby the petitioner, came to be rejected.

24. In the case of Kanak Exports (supra), this Court again whileconsidering the challenge for withdrawal of incentives to the exportersof some specified items held that, the incentive scheme in question wasin the nature of concession or incentive which was a privilege of theCentral Government. It was for the Government to take a decision togrant such a privilege or not. Grant of exemption, concession or incentiveand modification thereof are the matters in the domain of public decisionsof the Government. It further reiterated that when the withdrawal ofsuch incentives was shown to have been done in public interest, thecourts would not tinker with the policy decisions. This Court, afterconsidering the materials on record as a matter of fact, held thatwithdrawal of exemption was in the public interest.

25. It could thus be seen that, it is more than well settled that theexemption granted, even when the notification granting exemptionprescribes a particular period till which it is available, can be withdrawnby the State, if it is found that such a withdrawal is in the public interest.In such a case, the larger public interest would outweigh the individualinterest, if any. In such a case, even the doctrine of promissory estoppelwould not come to the rescue of the persons claiming exemptions andcompel the State not to resile from its promise, if the act of the State isfound to be in public interest.

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A26. A judicial notice can be taken of the fact that by variousscientific studies on betel quid and substitutes, tobacco and theirsubstitutes, i.e., pan masala with tobacco and without tobacco, theseproducts have been found to be one of the main causes for oral cancer.A detailed study has been considered by three Experts, namely, UrmilaNair, Helmut Bartsch and Jagadeesan Nair in the Division of ToxicologyBand Cancer Risk Factors, German Cancer Research Centre (DKFZ),Heidelberg, Germany. The research paper is titled as “Alert for anepidemic of oral cancer due to use of the betel quid substitutes gutkhaand pan masala: a review of agents and causative mechanisms[13]”. Afterconsidering the entire material in detail and considering the various earlierCstudies, the paper observes thus:

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“Perspectives

Banning of gutkha and pan masala has been stronglyadvocated by oncologists as a preventive measure to reduce oralcavity cancers. Recently, a number of States in India have bannedthe manufacture and sale of both products and this should reducethe incidence rate. Similar regulations regarding other health-impairing tobacco products which have been on the market forcenturies, together with cigarettes and bidis (an indigenous smokingproduct), should also be reinforced.

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However, for those who are addicted to these products orare already affected by premalignant lesions, educationalinterventions to encourage stopping the habit are essential.Additionally, chemopreventive interventions are being explored.Retinoids, NSAIDS and green tea are among the promising agents(Garewal, 1994; IUSHNCC, 1997; Papadimitrakopoulou andHong, 1997; Lin et al., 2002a). Although a large percentage oflesions did respond to treatment, recurrence after terminating thechemopreventive regime was also observed (Sankaranarayananet al., 1997), perhaps due in part to continuation of the addictivehabit.

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As with all cancers, early diagnosis is important forsuccessful treatment of oral cancer, as its prognosis is still verypoor. There is, nowadays, a strong drive to apply proteomicstechnology to molecular diagnosis of cancer. Expression profilingof tumour tissues, molecular classification of tumours and G

H13 Mutagenesis Vol. 19 No. 4

identification of markers to allow early detection, sensitive diagnosisand effective treatment are now being explored for oral cancers.Genes with significant differences in expression levels betweennormal, dysplastic and tumour samples have been reported andthis should help in better understanding the progression of oralsquamous cell carcinoma (Kuo et al., 2002; Leethanakul et al.,2003).

DNA aneuploidy in oral leukoplakia in Caucasian tobaccousers has been found to signal a very high risk for subsequentdevelopment of oral squamous cell carcinomas and associatedmortality (Sudbo and Reith, 2003; Sudbo et al., 2004). A riskassessment model to predict progression of premalignant lesionsthat includes histology and a score combining chromosomalpolysomy, expression and loss of heterozygosity on 3p or 9p hasalso been described (Lee et al., 2000; Rosin et al., 2002). Oncediagnosed, these premalignant lesions could be treated at a muchearlier stage by chemo preventive agents, surgery, chemotherapyand/or intense radiotherapy to prevent new lesions andpremalignant lesions from progressing to invasive cancer.

Conclusions

Gutkha and pan masala have flooded the Indian market ascheap and convenient BQ substitutes and become popular acrossall age groups wherever this habit is practised. There is sufficientevidence that chewing of tobacco with lime, BQ with tobacco,BQ without tobacco and areca nut are carcinogenic in humans(IARC, 1985, 2004). These evaluations in conjunction with theavailable evidence on the BQ substitutes gutkha and pan masalaimplicates them as potent carcinogenic mixtures that can causeoral cancer. Additionally, these products are addictive and enhancethe early appearance of OSF, especially so in young users whocould be more susceptible to the disease. Although recently somecurbs have been put on the manufacture and sale of these products,urgent action needs be taken to permanently ban gutkha and panmasala, together with the other well-established oral cancer-causing tobacco products. Finally, as the consequences of thesehabits are significant and likely to intensify in the future, an emphasison education aimed at reducing or eliminating the use of theseproducts as well as home-made preparations should beaccelerated.”

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A27. Recently, the Department of Oral Medicines and Radiology,Dental Institute, Rajendra Institute of Medical Sciences, Ranchi hasthrough its experts, namely, Anjani Kumar Shukla, Tanya Khaitan,Prashant Gupta and Shantala R. Naik conducted a study on the subject“Smokeless Tobacco and Its Adverse Effects on HematologicalParameters: A Cross-Sectional Study[14]”. The study paper consideredBthe consumption of smokeless tobacco (SLT) in various forms in Indiasuch as pan (betel quid) with tobacco, zarda, pan masala, khaini, arecanut. After conducting an in-depth analysis, the paper concludes andrecommends as under”

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“Conclusion and Recommendation

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SLT use has severe adverse effects on hematological parameters.The present study might serve as an early diagnostic tool in anysystemic diseases and be helpful in spreading awareness on thedeleterious effect in the populace consuming SLT. Timelyintervention among students can prevent the initial experimentationsDwith tobacco from developing into addiction in adulthood. Peopleshould be counselled to avoid all habits of tobacco and undergonicotine replacement therapy along with antioxidants. Knowledgeand awareness about systemic and oral ill effects of tobacco shouldbe spread through tobacco control programs in the pursuit for atobacco-free world.”

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28. It was sought to be argued on behalf of the manufacturers ofpan masala without tobacco, that the pan masala without tobacco standson a different pedestal than the pan masala with tobacco. It was soughtto be argued that, pan masala without tobacco cannot be considered tobe hazardous to health. The Department of Head and Neck Surgery,FTata Memorial Hospital, Mumbai through its experts Garg A, ChaturvediP. Mishra A. and Datta S. had conducted a study on “A review onHarmful Effects of Pan Masala[15]”. It is to be noted that this study is of‘pan masala without tobacco’. It will be apposite to refer to the followingobservations of the said report:

G“Policy Issues Concerning Pan Masala

Pan masala use is rampant in India by all the sections andage groups of the society. It has emerged as a major cause of oralcancer in India. National Family Health Survey-2 showed that 14 Advances in Preventive Medicine 2019

15 Indian Journal of Cancer (October-December 2015) Volume 52, Issue 4

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21% of people over 15 years of age consumed PM or tobacco.Study in the state of Tamil Nadu showed that the age at whichpeople start consuming areca nut products ranges from 12 to 70years. 58% of the subjects chewed the products more than twicea day. Advertising tobacco products including PM containingtobacco is banned in India since May 1, 2004. To bypass this bantobacco companies are advertising PM ostensibly without tobacco,heavily in all forms of media. PM is surrogate for tobacco productsas the money spent on marketing, and advertising is many timesof the revenue generated from the sale of PM. In Mumbai afterthe ban on PM and gutka the sale has come down and thepercentage of users quitting and reducing the habit was 23.53%and 55.88% respectively. The main reason of quitting and reductionin consumption was non availability of these products. In spite ofthe ban gutka was still available but in different forms or atincreased cost. Strict law in the form of Cigarettes and otherTobacco Products Act 2003 has been made in India, but theenforcement and compliance is lax. There is a need for strongenforcement and compliance of laws throughout the country. Thegenotoxic, carcinogenic properties and numerous other harmfuleffects of PM need immediate and strict action by the governmenton PM without tobacco as it has banned PM with tobacco. Theconsumers should also be made aware of the harmful effects ofPM as they are under a false impression that it is not harmful.

“Conclusion

Pan masala is widely used across all the strata of societyand is freely available in many parts of the country. It iscarcinogenic, genotoxic, and has harmful effects on the oral cavity,liver, kidneys and reproductive organs. Government action isimmediately required to restrict the consumption and to make thepeople aware about its harmful effects.”

29. The study which has been conducted in 2004, found that gutkhaand pan masala have been one of the major causes of oral cancer. TheOncologists as early as in 2004 had strongly advocated banning of gutkhaand pan masala. They further find that banning the manufacture andsale of these products would reduce oral cancer incidence rates. It isfound that gutkha and pan masala have flooded the Indian markets andbecome popular amongst all age groups. It is observed that pan masalawith tobacco as well as without tobacco have been found to be having a AB

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Apotent carcinogenic mixtures that can cause oral cancer. It further foundthat, these products are an addictive and enhance the early appearanceof oral sub-mucous fibrosis (OSMF). It is especially so in the youngusers who could be more susceptible to the disease.

30. The report further finds that, in the National Family HealthBSurvey-2, it has been found that 21% of people over 15 years of ageconsumed pan masala or tobacco. The report finds that, though advertisingtobacco products including pan masala containing tobacco is banned inIndia since 01.05.2004, to bypass this ban, tobacco companies areadvertising pan masala ostensibly without tobacco, heavily in all formsof media. It has been found that, after the ban on pan masala and gutkha,Cthe sale has come down. The 2016 report finds that, in Mumbai, afterthe ban on pan masala and gutkha, the sale has come down and thepercentage of users quitting and reducing the habit was 23.53% and55.88% respectively.

31. It could thus be seen that, by a scientific research conductedDby Experts in the field, it has been found that the consumption of panmasala with tobacco as well as pan masala sans tobacco is hazardous tohealth. It has further been found that, the percentage of teenagersconsuming the hazardous product was very high and as such exposing alarge chunk of young population of this Country to the risk of oral cancer.Taking into consideration this aspect, if the State has decided to withdrawEthe exemption granted for manufacture of such products, we fail tounderstand as to how it can be said to be not in the public interest.

32. The Sikkim High Court has observed that the appellant hereinhas been unable to establish any overriding public interest, which wouldmake the doctrine of promissory estoppel inapplicable. It has furtherFobserved that, the pan masala has not been declared as hazardous tohealth by any notification or order of the Government of India or theState Government. It found that, no material or scientific report hadbeen placed on record to demonstrate that the pan masala is a healthhazard. We find that the reasoning arrived at by the Sikkim High Courtis totally erroneous.G

33. Insofar as the Gauhati High Court is concerned, the learnedSingle Judge by an elaborate reasoning had found that the notificationsimpugned before it was in the public interest and further observed that inview of the overriding public interest, the doctrine of promissory estoppelcould not be invoked. Not only that, but the learned Single Judge in theHjudgment has specifically observed thus:

“Having regard to the background that had preceded thePolicy 2007 and the curtailment of the benefits of exemption earliergranted by the Policy 1997 through various instruments of law inthe form of Section 154 of the Finance Act 2003 read with Schedule9 thereto as well as the notifications under Section 5A of theCentral Excise Act and other related legislations it would be indefiance of logic to conclude that all these notwithstanding, withthe specific intention of excluding the industries engaged in themanufacture of goods under Chapter 24 and pan masala underChapter 21 of the First Schedule to the Tariff Act, 1985, thesewould still continue to avail the benefits/incentives under the Policy1997 only because the units concerned had commencedcommercial production on and from 31/3/2007.”

34. The learned Single Judge has also specifically observed in hisjudgment that the vires of Section 154 of the Finance Act, 2003 videwhich the exemption granted to the manufacturers of cigarette wasrescinded with retrospective effect, has been upheld by this Court in thecase of R.C. Tobacco (P) Ltd. and Another Vs. Union of India andAnother, reported in 2005(7)SCC 725. We are surprised at the approachof the Appellate Bench of the Gauhati High Court. It is pertinent to notethat the contention of the learned A.S.G. appearing on behalf of theUnion of India to the following effect have been specifically recordedby the Judges of the Appellate Bench of the High Court in paragraph 14of the judgment, which reads thus:

“that the legality of the withdrawal of the benefit granted tothe tobacco manufacturing units such as the appellant under the1997 Industrial Policy by Section 154 of the Finance Act, 2003was already upheld the Apex Court in R. C. Tobacco (P) Ltd. vs.Union of India, (2005)7 SCC 725.”

35. The Appellate Bench of the High Court observed that someof the notifications providing modalities for exemption were issuedsubsequent to the enactment of Section 154 of the Finance Act, 2003and, therefore, Section 154 of the Finance Act, 2003 has no relevance inthe said case. However, the Appellate Bench does not find it necessaryto even make a reference to the judgment of this Court which was reliedon by the learned Single Judge while dismissing the writ petitions andwhich is specifically put in service by the Union of India. We are unableto appreciate as to how the Appellate Bench of the Gauhati High Courtfinds that withdrawal of exemption in respect of ‘pan masala with tobacco’

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Ais not in the public interest. The legislative policy as reflected in Section154 of the Finance Act was to withdraw the exemption granted to themanufacturers of cigarettes as well as pan masala with tobacco andthat too with retrospective effect. Apart from the fact that, it is a commonknowledge that tobacco is highly hazardous, the legislative intent wasalso unambiguous. In these circumstances, the finding of the High CourtBthat the withdrawal of exemption for tobacco products was not in thepublic interest, to say the least is shocking. We find that the approach ofthe Appellate Bench of the High Court was totally unsustainable.

36. As already discussed hereinabove, we have no hesitation tohold that the withdrawal of the exemption to the pan masala with tobaccoCand pan masala sans tobacco is in the larger public interest. As such, thedoctrine of promissory estoppel could not have been invoked in the presentmatter. The State could not be compelled to continue the exemption,though it was satisfied that it was not in the public interest to do so. Thelarger public interest would outweigh an individual loss, if any. In thatview of the matter we find that the appeals deserve to be allowed.D

Civil Appeal arising out of S.L.P.(C) No. 36926 of 2012:

37. The appeal is allowed. The judgment and order passed by theHigh Court of Sikkim dated 11.05.2012 is quashed and set aside.

38. No order as to costs.

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Civil Appeal Nos. 2345 of 2017 and 2346 of 2017:

39. The appeals are allowed. The judgments and orders passedby the Appellate Bench of the Gauhati High Court dated 20.04.2016 and25.05.2016 are quashed and set aside. The Order passed by the learnedSingle Judge dated 10.12.2010 dismissing the writ petitions is upheld.

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40. No order as to costs.

Divya Pandey

Appeals allowed.

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