Summary
The Bench divided over withdrawal of tea-blending units’ sales-tax holiday after amendment of the statutory definition of manufacture. Both judges rejected a vested-right claim. Shah J. would dismiss the appeals because continuing eligibility ceased under the amended statute; Murari J. would allow them on legitimate expectation, finding no demonstrated public-interest justification for defeating the promised benefit. The matters were to be placed before the Chief Justice; neither proposed merits disposal prevailed.
Issues
- Whether the tax-holiday certificates created a vested right unaffected by the amendment excluding tea blending from manufacture.
- Whether legitimate expectation could protect the promised exemption despite the statutory change.
- Whether the State had to demonstrate an overriding public-interest justification for withdrawing the benefit.
Provisions considered
- Sections 2(17) and 39(1), read with the 2001 amendment, West Bengal Sales Tax Act, 1994Shah J. treated continuing manufacturer status as indispensable to the tax holiday and would deny exemption after tea blending was excluded from 1 August 2001. Murari J. agreed that no vested right arose but would protect the promised duration through legitimate expectation. (¶¶ Shah J.: 2.1, Shah J.: 2.6, Shah J.: 7, Shah J.: 8.1, Shah J.: 8.2, Shah J.: 8.3, Shah J.: 8.4, Shah J.: 9, Murari J.: 2, Murari J.: 4, Murari J.: 7, Murari J.: 8, Murari J.: 36, Murari J.: 37, Murari J.: 38, Murari J.: 43, Murari J.: 46)
- Article 14, Constitution of IndiaMurari J. rooted legitimate expectation in non-arbitrariness, fair treatment and the rule of law. He distinguished it from promissory estoppel and would require demonstrated public interest to justify defeating the expectation in this case. This reasoning was one side of the split, not a majority holding. (¶¶ Murari J.: 13, Murari J.: 14, Murari J.: 15, Murari J.: 16, Murari J.: 23, Murari J.: 25, Murari J.: 26, Murari J.: 27, Murari J.: 28, Murari J.: 29, Murari J.: 30, Murari J.: 31, Murari J.: 32, Murari J.: 33, Murari J.: 35, Murari J.: 41, Murari J.: 42, Murari J.: 43, Murari J.: 44)
Held
- Common ground: Murari J. expressly agreed with Shah J.’s conclusion rejecting a vested right to the exemption. Their disagreement concerned legitimate expectation and the consequent relief, not whether the certificates had created an immutable vested entitlement. (¶¶ Shah J.: 8, Shah J.: 8.3, Murari J.: 7, Murari J.: 8)
- Shah J. would dismiss the appeals. Section 39 exempted sales of goods manufactured by the dealer; once the amendment excluded tea blending from manufacture, the appellants ceased to satisfy that continuing condition. He regarded loss of the benefit from 1 August 2001 as prospective, treated the entitlement as an existing rather than vested right, and rejected promissory estoppel against the statute. (¶¶ Shah J.: 8.1, Shah J.: 8.2, Shah J.: 8.3, Shah J.: 8.4, Shah J.: 8.5, Shah J.: 9)
- Murari J. would allow the appeals. He distinguished public-law legitimate expectation, grounded in Article 14 and the rule of law, from promissory estoppel. In his view a statutory or policy change did not automatically exclude scrutiny where a competent authority had created a clear, reasonable expectation; overriding public interest could defeat that expectation but had to be demonstrated. (¶¶ Murari J.: 14, Murari J.: 15, Murari J.: 16, Murari J.: 23, Murari J.: 24, Murari J.: 25, Murari J.: 26, Murari J.: 27, Murari J.: 28, Murari J.: 29, Murari J.: 30, Murari J.: 31, Murari J.: 32, Murari J.: 33, Murari J.: 34, Murari J.: 35)
- Applying that approach, Murari J. considered the promised tax holiday to have induced investment and establishment of the units. He found that the State had not furnished an appropriate public-interest justification for the change and would direct continuation of the benefit for its originally promised period. That direction remained his proposed disposition and was not a unanimous grant of exemption. (¶¶ Murari J.: 36, Murari J.: 37, Murari J.: 38, Murari J.: 39, Murari J.: 40, Murari J.: 41, Murari J.: 42, Murari J.: 43, Murari J.: 44, Murari J.: 45, Murari J.: 46)
- Because the judges differed in reasoning and result on legitimate expectation, the matters were to be placed before the Chief Justice of India. The split did not finally allow or dismiss these appeals or establish either competing position as a majority ruling.
Result
Split decision; matters to be placed before the Chief Justice of India. Shah J. would dismiss the appeals; Murari J. would allow them on legitimate expectation. No final majority merits disposal.