Case: State Of Punjab  Vs. M/S.Nestle India Ltd.&amp;Anr

Such a course would render the mandatory provisions of the enactment meaningless and superfluous. Where the field is occupied by an enactment, the executive has to act in accordance therewith, particularly where the provisions are mandatory in nature. There is no room for any administrative action or for doing the thing ordained by the statute otherwise than in accordance therewith. Where, of course, the matter is not governed by a law made by a competent legislature, the executive can act in its executive capacity since the executive power of the State extends to matters with respect to which the legislature of a State has the power to make laws (Article 162 of the Constitution). The proposition urged by the learned counsel for the appellant falls foul of our constitutional scheme and public interest. It would virtually mean that the rule of promissory estoppel can be pleaded to defeat the provisions of law where the said rule, it is well settled, is not available against a statutory provision. The Sanctity of law and the sanctity of the mandatory requirement of the law cannot be allowed to be defeated by resort to rules of estoppel. None of the decisions cited by the learned counsel say that where an act is done in violation of a mandatory provision of a statute, such act can still be made a foundation for invoking the rule of promissory/ equitable estoppel. Moreover, when the Government acts outside its authority, as in this case, it is difficult to say that it is acting within its ostensible authority." (p. 657-658) 44. It would appear that these observations are in conflict with the earlier and subsequent pronouncements of the law on promissory estoppel. Chandrasekhara Aiyar, J held that the representation was enforceable despite the accident that the grant was invalid inasmuch as it was contrary to statute. M.P. Sugar Mills (supra) had said that the promise was enforceable against the Government despite the requirement of Article 299 of the Constitution. Similarly, Century Spinning (supra) held that despite the requirement of the statute prescribing the manner and form to grant exemption from payment of octroi, a promise not made in that manner or form could be enforced in equity. Then again in Godfrey Philips (supra), the Court directed an exemption to be granted on the basis of the principles of promissory estoppel even though Rule 8 of the Central Excise Rules 1944 required exemption to be granted by notification. 45. Of course, the Government cannot rely on a representation made without complying with the procedure prescribed by the relevant statute, but a citizen may and can compel the Government to do so if the factors necessary for founding a plea of promissory estoppel are established. Such a proposition would not fall foul of our constitutional scheme and public interest. On the other hand, as was observed in Motilal Sugar Mills, case and approved in the subsequent decisions: "It is indeed the pride of constitutional democracy and rule of law that the Government stands on the same footing as a private individual so far as the obligation of the law is concerned: the former is equally bound as the latter. It is indeed difficult to see on what principle can a Government, committed to the rule of law, claim immunity from the doctrine of promissory estoppel." 46. None of these decisions have been considered in ITC Bhadrachalam Paperboards vs. Mandal Revenue Officer (supra) except for a brief reference to Chandrasekhara Aiyar, Js judgment which was explained away as not being an authority for the proposition that even where the Government has to and can act only under and in accordance with a statute - an act done by the Government in violation thereof can be treated as a presentation to found a plea of promissory estoppel. But that is exactly what the learned Judge had said. 47. In any event judicial discipline requires us to follow the decision of the larger Bench (General Manager, Telecome vs. A. Srinivasa Rao and others (1997(8) SCC 767: Commissioner of Income Tax, Bihar vs. Trilok Nath Mehrotra and others (1998(2) SCC 289). The facts in the present case are similar to those of prevailing in Godfrey Philips (supra). There too, as we have noted earlier, the statutory provisions require exemption to be granted by notification. Nevertheless, the Court having found that the essential pre-requisites for the operation of promissory estoppel had been established, directed the issuance of the exemption notification. 48. The appellants have been unable to establish any overriding public interest which would make it inequitable to enforce the estoppel against the State Government. The representation was made by the highest authorities including the Finance Minister in his Budget Speech after considering the financial implications of the grant of the exemption to milk. It was found that the overall benefit to the states economy and the public would be greater if the exemption were allowed. The respondents have passed on the benefit of that exemption by providing various facilities and concessions for the upliftment of the milk producers. This has not been denied. It would, in the circumstances, be inequitable to allow the State Government now to resile from its decision to exempt milk and demand the purchase tax with retrospective effect from 1st April 1996 so that the respondents cannot in any event re-adjust the expenditure already made. The High Court was also right when it held that the operation of the estoppel would come to an end with the 1987 decision of the Cabinet. 49. In the case before us, the power in the State Government to grant exemption under the Act is coupled with the word may - signifying the discretionary nature of the power. We are of the view that the State Governments refusal to exercise its discretion to issue the necessary notification abolishing or exempting the tax on milk was not reasonably exercised for the same reasons that we have upheld the plea of promissory estoppel raised by the respondents.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]18. The respondents are admittedly dealers within the meaning of the definition of the word under Section 2(d) of the Act. Every dealer is required to pay tax in the manner prescribed under Section 10 which requires furnishing of returns/ declarations by the dealer together with the receipt showing that the full amount of tax due from the dealer under the Act according to such returns had been paid in the prescribed manner. If there is failure to pay the tax in the manner prescribed, the dealer may be liable to pay penalty of a sum upto one and and a half times of the tax payable undern (6) of Section 10. The substance of section 10 has been detailed in Rules 20 to 25 of the Rules. Rule 20 provides for the furnishing of returns either quarterly or monthly. Rule 24 provides for the form in which such returns are to be filed. Rule 25 provides that all returns which are required to be furnished under the Rules shall be signed by the registered dealer or the agent, and shall be sent to the appropriate assessing authority... together with the treasury or bank receipt in proof of payment of the tax due." The Assessing Authority then passes an order of assessment on such return under Section 11 unless he is satisfied that the returns are not correct and complete19. Apart from the power to treat goods otherwise leviable to tax under the Act as tax free under Section 6(2), the State Government has the power under Section 31 to amend Schedule C itself and thereby remove goods from imposition of tax altogether23. The pleas raised by the parties for and against the operation of the doctrine of promissory estoppel are to be considered against the background of these statutory provisionsAlthough possession of the site was made over to the then Municipal Commissioner no formal grant was in fact executed as required by the applicable statute. Acting on the resolution, the Corporation spent considerable sums of money in building and improving the market and was in possession for 70 years during which period no revenue had been paid to or claimed by the Government30. As for its strengths it was said: that the doctrine was not limited only the cases where there was some contractual relationship or otherg legal relationship between the parties. The principle would be applied even when the promise is intended to create legal relations or affect a legal relationship which would arise in future. The Government was held to be equally susceptible to the operation of the doctrine in whatever area or field the promise is made, contractual, administrative or statutory43. Although the view expressed by two Judges in Jitrams case (supra) has been disapproved in Godfrey Phillips (supra), it was ostensibly resuscitated in ITC Bhadrachalam Paperboards vs. Mandal Revenue Officer, A.P. 1996(6) SCC 634. In that case the State Government had the power to remit assessment under section 7 of the Andhra Pradeshl Lands Assessment Act, 1963. Section 11 of that Act provided for exemption to be made by an order of the State Government which was required to be published in the Andhra Pradesh Gazette prior to which the order had to be laid on the table to the Legislature Assembly. The Court construed the provisions of the State Act and came to the conclusion that the nature of power under Section 11 did not amount to delegated legislation but conditional legislation48. The appellants have been unable to establish any overriding public interest which would make it inequitable to enforce the estoppel against the State Government. The representation was made by the highest authorities including the Finance Minister in his Budget Speech after considering the financial implications of the grant of the exemption to milk. It was found that the overall benefit to the states economy and the public would be greater if the exemption were allowed. The respondents have passed on the benefit of that exemption by providing various facilities and concessions for the upliftment of the milk producers. This has not been denied. It would, in the circumstances, be inequitable to allow the State Government now to resile from its decision to exempt milk and demand the purchase tax with retrospective effect from 1st April 1996 so that the respondents cannot in any eventt the expenditure already made. The High Court was also right when it held that the operation of the estoppel would come to an end with the 1987 decision of the Cabinet49. In the case before us, the power in the State Government to grant exemption under the Act is coupled with the word maysignifying the discretionary nature of the power. We are of the view that the State Governments refusal to exercise its discretion to issue the necessary notification abolishing or exempting the tax on milk was not reasonably exercised for the same reasons that we have upheld the plea of promissory estoppel raised by the respondents.