G.S. Singhvi, J.
1. The petitioners, who are engaged in the manufacture of milk products in their factories/units located in the State of Punjab, have challenged the notices issued by the respondents requiring them to pay purchase tax on milk under the Punjab General Sales Tax Act, 1948 (hereinafter referred to as 'the 1948 Act') for the period commencing from April 1, 1996.
2. The facts necessary for deciding the issues, which arise in these petitions, are that petitioner, M/s. Nestle India Limited, is procuring milk, which is used as raw material for manufacturing of various types of food products, from the 'milk shed area' covering 6,060 square kilometers consisting of about 600 villages in and around Moga. It is carrying out large scale extension work among milk producers to help them to develop better cattle and milk yields by educating them in better farm practices and educate them to modernise their system so that they can supply large quantity of good quality milk and thereby earn higher profits. During 1995-96 the petitioner incurred an expenditure of Rs. 2.5 crores for the purpose of carrying out the activities to support the farmers. This amount was raised to Rs. 6 crores during 1996-97. The details of the expenses incurred by the petitioner are given below :
'Activities April 95 April 96March 96 March 97-----------------------------------------------------------------------Milkotesters - Nos. 25 50Sunehha (qtrly. magazine) - Nos. 3,000 10,000Milking machines - Nos. Nil 4Solar geysers - Nos. (For utensil cleaning) Nil 6Farm coolers - Nos. and allied equipment 39 109Discounted sale shops - Nos. 20 57-----------------------------------------------------------------------Actual expenditure - Milk DistrictDevelopment in crores of rupees 2.5 6.00.'-----------------------------------------------------------------------
3. Petitioner, M/s. Milk Food Limited, has been purchasing milk from 'milk shed area' covering 650 villages in and around District Patiala for manufacture of ghee, different types of milk powders-skimmed milk powder, whole milk powder, infant milk food, dairy whitener and yogurt. The company has been carrying out large scale extension work among the milk producers which include installation of better equipments in the 'milk shed area' near production centre like chilling tanks, generator, diesel engine sets, mono block pumps. During 1995-96 it spent Rs. 2.25 lacs on these items and in the financial year 1996-97 the company incurred an expenditure of Rs. 13.50 lacs (approximately).
4. Petitioner, M/s. Smithkline Beecham Consumer Health Care Limited is having a factory at Nabha for manufacture of malted milk food powder. For this purpose milk is purchased from the 'milk shed area' covering about 806 villages in and around Nabha. During 1995 it spent Rs. 6 lacs on various activities undertaken for the benefit of farmers and milk producers. This amount increased to Rs. 18,11,000 in 1996 and Rs. 22,69,000 during 1997.
5. Petitioner, M/s. Roadmaster Foods Limited, is engaged in the manufacture of milk products in its unit situated at Kotkapura, District Faridkot.
6. All the petitioners are registered as dealers under the 1948 Act and the Central Sales Tax Act, 1956 and till March 31, 1996 they have been paying purchase tax on milk in terms of section 4-B of the 1948 Act.
7. The farmers of Punjab in general and milk producers in particular have been demanding abolition of purchase tax on milk on the ground that their counterparts in the States of Rajasthan, Haryana, Uttar Pradesh, Andhra Pradesh and Gujarat, etc., are not subjected to such tax. Their demand has been receiving attention of the Government of Punjab and the issue of abolition of purchase tax on milk was examined at different levels. On February 26, 1996 the then Chief Minister of Punjab, Shri H. S. Brar, while addressing dairy farmers at State Level Milk Day function at Ludhiana, made a public announcement to abolish purchase tax on milk. This announcement was given wide publicity by various English and vernacular newspapers. The public declaration of the Chief Minister was followed by a similar announcement by the then Finance Minister, who, on March 30, 1996 in the course of his budget speech in the Legislative Assembly, stated that the Government has decided to abolish purchase tax on milk with effect from April 1, 1996. This also received due publicity in the press. In order to give effect to the policy decision taken by the Government, the Financial Commissioner (Taxation), Punjab, wrote memo dated April 26, 1996 to the Excise and Taxation Commissioner, who in turn, addressed a letter dated May 8, 1996 to all the Deputy Assistant Excise and Taxation Commissioners and the Deputy Collectors (Enforcement) in the State conveying the Government's decision. In that letter, it was also indicated that necessary notifications are under process and likely to be issued shortly. The officers were directed to take necessary action accordingly. In view of these developments, the petitioners submitted their quarterly returns for the period from April 1, 1996 to June 30, 1996 with a specific stipulation that purchase tax on milk is not being deposited from April 1, 1996 in view of the press statements of the Chief Minister and the Finance Minister and letters/circulars issued by the department and in view of the assurance given by the Excise and Taxation Commissioner. Similar returns were filed for next three quarters ending on March 31, 1997. The respondents neither rejected the quarterly returns filed by the petitioners nor they initiated action against the petitioners for their alleged failure to deposit the amount of purchase tax along with the quarterly returns. Similarly, no action was initiated against the petitioners to levy penalty for alleged violation of the provisions of section 10 of the 1948 Act. However, in the month of July, 1997 the concerned Excise and Taxation Officers issued the impugned notices to the petitioners requiring them to pay the amount of purchase tax for whole of the year 1996-97 which, according to the officers, were outstanding against the petitioners. Having failed to persuade the respondents to drop the proceedings for recovery of purchase tax, the petitioners have sought the court's intervention and have prayed that the impugned notices and demands be quashed.
8. The principal ground on which the petitioners have challenged the impugned notices/demands is that the policy declaration made by the Chief Minister on February 26, 1996 to abolish purchase tax on milk and the subsequent actions taken by the department to issue circulars to the competent authorities to take action in accordance with the decision of the Government amounts to a promise/representation made to the petitioners and other assessees that purchase tax will not be levied on milk and as the petitioners have acted upon the said promise and have changed their position, the respondents are stopped from going back from the promise made by them and force the petitioners to pay purchase tax on milk. They have pleaded that the conduct of the respondents to accept the returns filed by the petitioners without paying purchase tax gave rise to a legitimate expectation that the respondents will complete the process of implementing their decision to abolish the purchase tax, with effect from April 1, 1996 and, therefore, they cannot change their stance and take action prejudicial to the property rights and interests of the petitioners.
9. In the written statements filed by the respondents, the contents of which are common in all the cases, it has been averred that the petitioners cannot avoid their liability to pay purchase tax in accordance with the provisions of the 1948 Act because notification under section 6 of the 1948 Act was not issued for abolition of the purchase tax. The respondents have also pleaded that the so-called declaration made by the Chief Minister cannot preclude the respondents from enforcing the provisions of law relating to levy and collection of purchase tax.
10. S/Shri J. K. Sibal and M. L. Sarin, Senior Advocates and Shri Raman Prashar, Advocate, appearing for the petitioners invoked the doctrine of promissory estoppel/equitable estoppel and argued that the policy decision taken by a duly elected Government is binding on the respondents and the mere change of party in power cannot be a valid ground to withdraw a promise made to the public upon which a major segment of society has acted upon. Shri Sibal and Shri Sarin invited our attention to the newspapers cutting the minutes of the meeting held on June 26, 1996 under the Chairmanship of the Chief Minister and the letters written by the functionaries of the Government to show that a well considered and firm decision had been taken by the Government to abolish the purchase tax on milk and, therefore, the respondents cannot give a go-by to the said decision and enforce recovery of purchase tax against the petitioners. Learned counsel also invited the court's attention to the advertisement issued by the Government headed by the present Chief Minister, Shri Prakash Singh Badal, to show that even the present Government is taking credit of having abolished purchase tax on milk. Learned counsel submitted that the Government should not be allowed to play fraud on the public by making recovery of purchase tax from the petitioners and simultaneously, take political mileage by saying that it has abolished the purchase tax. The learned Deputy Advocate-General argued that the doctrine of promissory estoppel is not available to the petitioners because notification under section 6 of the 1948 Act was not issued to implement the declaration made by the then Chief Minister. Mrs. Tuli submitted that the decision taken by the Government in the year 1996 is contrary to the Business Rules and as such, it cannot be enforced by issuance of a writ of mandamus. She pointed out that the revenue loss likely to be suffered by the Government due to the abolition of purchase tax on milk is about Rs. 11 crores and, therefore, the present Government has rightly decided not to give effect to the previous decision of abolishing the purchase tax.
11. Before dealing with the respective submissions made at the Bar, we consider it imperative to notice some more facts, which are borne out from the record produced by the learned Deputy Advocate-General :
(i) After the public declaration was made by the Chief Minister on February 26, 1996 for abolition of purchase tax, the then Finance Minister of Punjab, Dr. Kewal Krishan, in his budget speech made on March 30, 1996 in Punjab Legislature announced that in principle the Government has taken a decision to abolish the purchase tax with effect from April 1, 1996 in accordance with the declaration made by the Chief Minister.
(ii) In pursuance of the speech of the Finance Minister, the Financial Commissioner (Taxation) and Secretary to Government, Punjab wrote memo No. 4/ 61/91-ET-II (VII)/2080 dated April 26, 1996 to the Excise and Taxation Commissioner, Punjab requesting him to send proposal along with the financial implications involved therein.
(iii) The Excise and Taxation Commissioner, Punjab, issued circular letter No. T-1-96/9399-2420 dated May 8, 1996 to the Deputy Excise and Taxation Commissioners, the Assistant Excise and taxation Commissioners and the Deputy Collectors (Enforcement). The Financial Commissioner (Co-operation), Punjab, wrote D.O. No. PSF/Accounts/18924 dated June 14, 1996 to the Financial Commissioner (Taxation) that issuance of the notification for giving effect to the decision to abolish purchase tax on milk may be expedited.
(iv) The matter regarding issuance of notification to abolish purchase tax on milk and to rationalise sales tax rates on milk products was discussed in a meeting presided over by the then Chief Minister, Shri H. S. Brar, and attended by the Finance Minister, the Minister for Housing and Urban Development and Excise and Taxation, the Minister of State for Public Health and Co-operation, the Financial Commissioner (Taxation), the Financial Commissioner (Co-operation), the Secretary, Finance (Expenditure), the Excise and Taxation Commissioner and the Managing Director, Milkfed. The extract of the minutes of meeting are reproduced below :
'It was informed by the Financial Commissioner (Co-operation) that the Honourable Chief Minister, Punjab, has already decided in principle to abolish the purchase tax on milk meant for manufacturing of milk products and a circular has already been issued by the Excise and Taxation Department No. T-I/96/2421 dated May 8, 1996 in pursuance of the assurance given by Honourable Chief Minister, Punjab while addressing a public meeting on February 26, 1996 organised by Milk Plant, Ludhiana. Honourable Chief Minister further clarified that this was also assured by late S. Beant Singh, the then Chief Minister during a similar meeting held at Ludhiana on March 24, 1995.
It was decided that as the Department of Excise and Taxation has already abolished the purchase tax on milk meant for manufacturing of milk products, the milk plants may not deposit purchase tax for the quarter ending June, 1996. Financial Commissioner (Taxation) further assured that notification in this regard will be issued in a day or two and this will be effective from 1st April, 1996.'
The concession announced by the Finance Minister during the budget speech were placed before the Council of Ministers of Punjab in its meeting held on August 21, 1996. In the proposal prepared for the said meeting it was mentioned that by abolition of purchase tax on milk the State exchequer will suffer loss to the tune of Rs. 6.30 crores. On other 7 items, the loss was assessed at Rs. 7 crores. In the memorandum placed before the Council of Ministers, it was clearly mentioned that proposal made by the Administrative Department to abolish purchase tax on milk, etc., has been approved by the Finance Department vide its ID No. 5/18/96-4FE-7/1963 dated November 7, 1996. The note also contained a stipulation that the proposals contained in the memorandum has been approved by the Chief Minister, Punjab as Minister-in-charge of the Excise and Taxation Department. The Council of Ministers approved the proposal for abolition of the purchase tax, etc. The draft notifications for giving effect to the concession announced by the Finance Minister during budget session were prepared by the Department of Excise and Taxation. But the final notifications were not issued in spite of the requests made by the Financial Commissioner and Secretary (Co-operation) to the Financial Commissioner (Taxation) vide his letters dated December 16, 1996 and February 24, 1997.
(v) After the change of party in power, the Financial Commissioner (Taxation) prepared a note dated March 4, 1997 and sought the advice of the Legal Remembrancer whether the decisions taken by the previous Government should be implemented or not.
(vi) Thereafter fresh proposals were prepared and placed before the new Council of Ministers on June 4, 1997 indicating that the total revenue loss will be to the tune of Rs. 11 crores if the decision taken by the previous Government to abolish purchase tax on milk was implemented. On June 4, 1997, the new Council of Ministers decided to confirm the decision in respect of items like dhoop agarbatti, kum-kum, kirpan, pen and ball-pen but the decision regarding abolition of purchase tax on milk was abandoned. Thereafter draft notification dated July 9, 1997 was issued for grant of exemption to the four items with effect from April 1, 1996.
12. In the background of these facts, it is to be seen whether the doctrine of promissory/equitable estoppel can be invoked by the petitioners to question the levy of purchase tax with effect from April 1, 1996. According to the learned Deputy Advocate-General, the petitioners cannot rely upon the declaration made by the Chief Minister and even the decision taken by the Council of Ministers because notification abolishing purchase tax on milk was not issued in accordance with the Act of 1948. She submitted that the issuance of notification under section 6(1) constitutes a condition precedent for grant of exemption from payment of purchase tax and as no such notification was issued after April 1, 1996, the petitioners are bound to pay the same in terms of section 4-B read with sections 5 and 10 of the 1948 Act. She further argued that in view of the decision of the Council of Ministers taken in its meeting held on June 4, 1997, the petitioners cannot seek enforcement of the previous decision taken by the Cabinet on August 21, 1996 because the same was not formalised in accordance with the Rules of Business. Shri J. K. Sibal and Shri Sarin submitted that the issuance of notification for grant of exemption was merely a ministerial act which remained to be performed by the respondents to formalise the abolition of purchase tax and the absence of such notification cannot be made a ground to force the petitioners to pay the purchase tax after they had acted on the promise/representation made by the Government and had spent lacs and crores of rupees in furtherance of the extension programmes meant for the benefit of the farmers and milk producers.
13. We have thoughtfully considered the respective contentions. In order to decide whether the basic ingredients for applying the doctrine of promissory estoppel are available in this case or not, we consider it proper to recapitulate some of the salient and admitted facts which have emerged from the pleadings of the parties and the record produced by Mrs. Tuli. These are :
(a) the then Chief Minister of the State had made a public announcement on February 26, 1996 for abolition of purchase tax on milk;
(b) the Finance Minister of the State had in his budget speech dated March 30, 1996 made on the floor of the Legislative Assembly declared that the purchase tax shall be abolished with effect from April 1, 1996;
(c) the Financial Commissioner (Taxation) wrote letter dated April 26, 1996 to the Excise and Taxation Commissioner, Punjab, conveying the Government's decision to abolish purchase tax on milk with effect from April 1, 1996 and the Excise and Taxation Commissioner issued circular letter dated May 8, 1996 to all the concerned authorities conveying the Government's decision about the abolition of purchase tax on milk;
(d) in the meeting held on June 27, 1996 under the Chairmanship of the Chief Minister, which was attended by the Finance Minister and the Excise and Taxation Minister, apart from the various Financial Commissioners, the decision to abolish the purchase tax on milk was reiterated and it was decided to issue formal notification in a day or two;
(e) the Finance Department formally approved the proposal of the Administrative Department to abolish purchase tax on milk and the Council of Ministers, in its meeting held on August 21, 1996 formalised that decision;
(f) acting on the declaration made by the Chief Minister in the meeting dated February 26, 1996 and the announcement made by the Finance Minister the budget speech dated March 30, 1996 in the Legislative Assembly and the letter circulated by the Financial Commissioner (Taxation) and the Excise and Taxation Commissioner, Punjab, the petitioners and other manufacturers of milk products as well as the milk producers diverted the funds available at their disposal. The petitioners used a substantial part of the saving for the benefit of the farmers and milk producers and did not collect the element of purchase tax. They also gave higher price for purchases made from the milk producers;
(g) the Excise and Taxation Department and the assessing authorities accepted the returns filed by the petitioners without payment of purchase tax;
(h) nobody objected to the filing of returns without payment of purchase tax even though no formal notification had been issued;
(i) nobody in the Government denied or controverted the news items appearing in the press regarding the abolition of purchase tax;
(j) the present Government issued advertisement (annexure P. 18) enclosed with C.W.P. No. 9974 of 1997 claiming credit of having abolished purchase tax on milk.
14. This shows that the Government had not only taken a conscious decision to abolish purchase tax on milk keeping in view the larger public interest of milk producers, the same was effectively implemented by the executive machinery of the State by circulating it among the concerned authorities who accepted the quarterly returns filed by the petitioners and others without depositing purchase tax and no action was taken against any assessee for recovery of purchase tax from April 1, 1996. On their part, the petitioners offered more remunerative prices to the milk producers and invested substantial amount saved due to the abolition of the purchase tax for the benefit of farmers and milk producers in their respective 'milk shed areas'. The petitioner, M/s. Nestle India Limited, spent about Rs. 3.5 crores more than what was spent (Rs. 2.5 crores) in the previous year. Similarly, other petitioners incurred enhanced expenditure for conferring larger benefits to the farmers and milk producing community of the villages. If the Government had not made declaration about abolition of purchase tax on milk and the executive machinery had not acted in a particular manner and the returns filed by the petitioners had not been accepted, the petitioners may not have incurred huge expenses which they did during 1996-97. Therefore, we are inclined to agree with Shri Sibal and Shri Sarin that the doctrine of promissory/equitable estoppel should be invoked for restraining the Government from changing its decision to abolish purchase tax with retrospective effect to the disadvantage of the petitioners.
15. In law, the doctrine of promissory estoppel represents a principle of equity evolved by the courts to prevent injustice. The correct principle underlying the doctrine of promissory estoppel is that where one party has by his words or conduct made to the other a clear and unequivocal promise which is intended to create legal relation or affect a legal relationship to arise in future, knowing or intending that it would be acted upon by the other party to whom the promise is made and it is, in fact, so acted upon by the other party, the promise would be binding on the party making it and he would not be entitled to go back upon it if it would be inequitable to allow him to do so having regard to the dealings which have taken place between the parties. The doctrine of promissory estoppel has also been applied against the Government and the argument based on executive necessity has been categorically negatived. Thus, where the Government makes a promise knowing or intending that it would be acted upon by the promisee and in fact, the promisee relying on it alters its position, the Government would be held bound by the promise and the promise would be enforceable against the Government at the instance of the promisee. However, in such matters the doctrine of promissory estoppel must yield when the equity so requires. If it can be shown by the Government that having regard to the facts of the case, it would be inequitable to bind the Government to the promise made by it, the court would not raise an equity in favour of the promisee and enforce the promise against the Government. Likewise, in cases in which the Government changed its policy in larger public interest and establishes before the court that it would be against the public interest to enforce the promise, the court may relieve the Government of its obligation to fulfil the promise.
16. The principle of promissory estoppel was for the first time applied by the apex Court in Collector of Bombay v. Municipal Corporation of the City of Bombay AIR 1951 SC 469. The facts giving rise to this case were that in 1865 the Government of Bombay called upon the predecessor in title of the Municipal Corporation of Bombay to remove old markets from a certain site and vacate it and on the application of the Municipal Commissioner, the Government passed a resolution approving and authorising the grant of another site to the municipality. The resolution further stated that :
'the Government do not consider any rent should be charged to the municipality as the markets will be, like other public buildings, for the benefit of the whole community.'
17. The municipal corporation gave up the site on which the old markets were situated and spent a sum of Rs. 17 lakhs in erecting and maintaining markets on the new site. In 1940 the Collector of Bombay assessed the new site to land revenue and the municipal corporation thereupon filed a suit for a declaration that the order of assessment was ultra vires and it was entitled to hold the land for ever without payment of any rent. The High Court of Bombay held that the Government had lost its right to assess the land in question by reason of the equity arising on the facts of the case in favour of the municipal corporation and there was thus a limitation on the right of the Government to assess under section 8 of the Bombay City Land Revenue Act. In the appeal filed by the Collector, the majority judges of the apex Court held that the Government was not, under the circumstances of the case, entitled to assess land revenue on the land in question, because the municipal corporation had taken possession of the land in terms of the Government resolution and had continued in such possession openly, uninterruptedly and of right for over seventy years and thereby acquired the limited title it had been prescribing for during the period, that is to say, the right to hold the land in perpetuity free of rent. Chandrasekhara Aiyer, J., agreed with the conclusion reached by the majority but rested his decision on the doctrine of promissory estoppel. He pointed out that the Government could not be allowed to go back on the representation made by it and stressed the point in the form of an interrogation by asking :
'if we do so, would it not amount to our countenancing the perpetration of what can be compendiously described as legal fraud which a court of equity must prevent being committed'?
He observed that 'even if the resolution of the Government amounted merely to the holding out of a promise that no rent will be charged in the future, the Government must be deemed in the circumstances of this case to have bound themselves to fulfil it. Whether it is the equity recognised in Ramsden's case (1866) LR 1 (HL) 129 or it is some other form of equity, is not of much importance. Courts must do justice by the promotion of honesty and good faith, as far as it lies in their power'.
18. The next case in which the doctrine of promissory estoppel was enforced by the apex Court had gone in appeal against the judgment of this Court dated February 2, 1967 rendered in C.W.P. No. 1947 of 1965 (Anglo Afghan Agencies v. Union of India). The petitioner in that case had acted on the export promotion scheme issued by the Central Government and exported woollen garments to Afghanistan and claimed import entitlement certificate for the full f.o.b. value of the goods exported as provided in the scheme. Having failed to persuade the competent authority to give it the benefit of the scheme, the petitioner approached the High Court which upheld its claim and rejected the argument raised on behalf of the Government that the promissory estoppel cannot be invoked against it. The contention based on the doctrine of executive necessity and the plea that the discretion of the Government cannot be fettered by applying the principle of promissory estoppel were also rejected. While affirming the judgment of the High Court in Union of India v. Anglo Afghan Agencies AIR 1968 SC 718, their Lordships of the Supreme Court held as under :
'The Import Trade Policy was evolved to facilitate the mechanism of the Act and the orders issued thereunder. Even granting that the Import Trade Policy notifications were issued in exercise of the power under section 3 of the Imports and Exports (Control) Act, 1947, the order authorised the making of executive or administrative instructions as well as legislative directions. It is not the form of the order, the method of its publication or the source of its authority, but its substance, which determines its true character. Granting that it was executive in character, the courts have the power in appropriate cases to compel performance of the obligations imposed by the schemes upon the departmental authorities. It could not be said that the executive necessity releases the Government from honouring its solemn promises relying on which citizens have acted to their detriment. Under the constitutional set up, no person may be deprived of his right or liberty except in due course of and by authority of law; if a member of the executive seeks to deprive a citizen of his right or liberty otherwise than in exercise of power derived from the law - common or statute - the courts will be competent to, and indeed would be bound to protect the rights of the aggrieved citizen .....
Even assuming that the provisions relating to the issue of trade notices offering inducement to the prospective exporters were in character executive, the Union Government and its officers were not entitled at their mere whim to ignore the promises made by the Government. It could not be said that the Textile Commissioner was the sole judge of the quantum of import licence to be granted to an exporter, and that the courts were powerless to grant relief, if the promised import licence was not given to an exporter who had acted to his prejudice relying upon the representation. Hence, the persons aggrieved because of the failure to carry out the terms of the scheme were entitled to seek resort to the court and claim that the obligation imposed upon the Textile Commissioner by the scheme be ordered to be carried out.'
Rejecting the argument that the Government is not bound by the representation made by it to the public the apex Court held :
'Under our jurisprudence the Government is not exempt from liability to carry out the representation made by it as to its future conduct and it cannot on some undefined and undisclosed ground of necessity or expediency fail to carry out the promise solemnly made by it, nor claim to be the judge of its own obligation to the citizen on an ex parte appraisement of the circumstances in which the obligation has arisen.'
19. Motilal Padampat Sugar Mills Co. Ltd. v. State of Uttar Pradesh  44 STC 42 (SC); AIR 1979 SC 621, is a case which is parallel to the cases of the petitioners on facts as well as in law. The appellant in that case was engaged in manufacture and sale of sugar. On October 10, 1968 a news item was published in the National Herald in which it was stated that the State of Uttar Pradesh had decided to give exemption from sales tax for a period of three years under section 4-A of the U.P. Sales Tax Act, 1948, to all new industrial units in the State with a view to enabling them to come on firm footing in developing stage. The news item was published on the basis of statement made by the then Secretary, Industries Department of the Government. In view of that statement the petitioner had desired to set up a hydrogenation plant for manufacture of vanaspati and sought for confirmation whether it will be entitled to sales tax holiday for three years. The Director of Industries confirmed that there will be no sales tax for three years on finished products. Thereafter, the appellant took steps to establish unit. However, in January, 1970 the Government went back from the assurance held out to the appellant and declared that the new vanaspati units will be granted partial concession in the payment of sales tax. The appellant tried to reason out with the Government for total exemption from payment of sales tax but failed to persuade it. Therefore, it filed writ petition in the High Court by invoking the doctrine of promissory estoppel. The same was dismissed. In appeal, their Lordships of the Supreme Court reversed the judgment of the High Court and upheld the claim of the appellant. After noticing English and American precedents on the doctrine of promissory estoppel and various decisions of the apex Court including the often quoted decision in Union of India v. Anglo Afghan Agencies AIR 1968 SC 718, the Supreme Court held that the representation made to the petitioner by the Secretary, Industries Department and the Chief Secretary of the State was a representation made on behalf of the Government that exemption would be granted from the payment of tax to the newly set up industries and it amounted to a promise made to the petitioner and the same was binding on the Government. The principle of law laid down in that case reads thus :
'The law may, therefore, now be taken to be settled as a result of this decision, that where the Government makes a promise knowing or intending that it would be acted on by the promisee and, in fact, the promisee, acting in reliance on it, alters his position, the Government would be held bound by the promise and the promise would be enforceable against the Government at the instance of the promisee, notwithstanding that there is no consideration for the promise and the promise is not recorded in the form of a formal contract as required by article 299 of the Constitution. It is elementary that in a republic governed by the rule of law, no one, howsoever high or low, is above the law. Every one is subject to the law as fully and completely as any other and the Government is no exception. 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. Can the Government say that it is under no obligation to act in a manner that is fair and just or that it is not bound by considerations of 'honesty and good faith' Why should the Government not be held to a high 'standard of rectangular rectitude while dealing with its citizens' There was a time when the doctrine of executive necessity was regarded as sufficient justification for the Government to repudiate even its contractual obligations, but, let it be said to the eternal glory of this Court, that this doctrine was emphatically negatived in the Indo-Afghan Agencies' case AIR 1968 SC 718 and the supremacy of the rule of law was established. It was laid down by this Court that the Government cannot claim to be immune from the applicability of the rule of promissory estoppel and repudiate a promise made by it on the ground that such promise may fetter its future executive action. If the Government does not want its freedom of executive action to be hampered or restricted, the Government need not make a promise knowing or intending that it would be acted on by the promisee and the promisee would alter his position relying upon it. But if the Government makes such a promise and the promisee acts in reliance upon it and alters his position, there is no reason why the Government should not be compelled to make good such promise like any other private individual ....... But it is necessary to point out that since the doctrine of promissory estoppel is an equitable doctrine, it must yield when the equity so requires. If it can be shown by the Government that, having regard to the facts as they have subsequently transpired, it would be inequitable to hold the Government to the promise made by it, the court would not raise an equity in favour of the promisee and enforce the promise against the Government. The doctrine of promissory estoppel would be displaced in such a case because, on the facts, equity would not require that the Government should be held bound by the promise made by it. When the Government is able to show that, in view of the facts which have transpired since the making of the promise, public interest would be prejudiced if the Government were required to carry out the promise, the court would have to balance the public interest in the Government carrying out a promise made to a citizen which has induced the citizen to act upon it and alter his position and the public interest likely to suffer if the promise were required to be carried out by the Government and determine which way the equity lies. It would not be enough for the Government just to say that public interest requires that the Government should not be compelled to carry out the promise or that the public interest would suffer if the Government were required to honour it. The Government cannot, as Shah, J., pointed out in the Indo-Afghan Agencies' case  2 SCR 366; AIR 1968 SC 718, claim to be exempt from the liability to carry out the promise 'on some indefinite and undisclosed ground of necessity or expediency', nor can the Government claim to be the sole judge of its liability and repudiate it 'on an ex parte appraisement of the circumstances' ...... Mere claim of change of policy would not be sufficient to exonerate the Government from the liability; the Government would have to show what precisely is the changed policy and also its reason and justification so that the court can judge for itself which way the public interest lies and what the equity of the case demands ..... The burden would be upon the Government to show that the public interest in the Government acting otherwise than in accordance with the promise is so overwhelming that it would be inequitable to hold the Government bound by the promise and the court would insist on a highly rigorous standard of proof in the discharge of this burden. But even where there is no such overriding public interest, it may still be competent to the Government to resile from the promise 'on giving reasonable notice, which need not be a formal notice, giving the promisee a reasonable opportunity of resuming his position' provided of course it is possible for the promisee to restore status quo ante. If, however, the promisee cannot resume his position, the promise could become final and irrevocable.
'20. In Gujarat State Financial Corporation v. Lotus Hotels Pvt. Ltd. AIR 1983 SC 848, the Supreme Court affirmed the decision of the Gujarat High Court which had invoked the doctrine of promissory estoppel to compel a public authority like the Gujarat State Financial Corporation to fulfil the promise made by it to the respondent to provide loan for execution of the project setting up a 4 Star hotel.
21. Union of India v. Godfrey Philips India Ltd. AIR 1986 SC 806, is a case in which the respondents, who are manufacturing cigarettes, claimed exemption from excise duty on value of corrugated fibre board containers in which the cigarettes were delivered at factory gate by invoking the doctrine of promissory estoppel. The appellants invoked the theory of executive necessity to oppose the plea based on the doctrine of promissory estoppel. They also pleaded that the petitioner cannot invoke the doctrine of promissory estoppel because the Central Government has not issued notification under rule 8(1) of the Central Excise Rules, 1944. A three Judges Bench of the apex Court reiterated the principles laid down in Union of India v. Anglo Afghan Agencies AIR 1968 SC 718;  2 SCR 366 and Motilal Padampat Sugar Mills Co. Ltd. v. State of Uttar Pradesh  44 STC 42 (SC); AIR 1979 SC 621 and further held as under :
'There can therefore be no doubt that the doctrine of promissory estoppel is applicable against the Government in the exercise of its governmental, public or executive functions and the doctrine of executive necessity or freedom of future executive action cannot be invoked to defeat the applicability of the doctrine of promissory estoppel .........
We may now turn to examine the facts in the light of the law discussed by us. Here a representation was undoubtedly made by the Central Board of Excise and Customs and approved and accepted by the Central Government, that the cost of corrugated fibre boards containers would not be includible in the value of the cigarettes for the purpose of assessment to excise duty. The respondents acted upon this representation and continued the use of corrugated fibre board containers for packing the cartons/outers of cigarettes and did not recover from the wholesale dealers the amount of excise duty attributable to the cost of such corrugated fibre board containers during the period 24th May, 1976 to 2nd November, 1982. It would be most inequitable to allow the excise authorities to assess excise duty on the basis that the value of the cigarettes manufactured by the respondents should include the cost of corrugated fibre board containers, when it was clearly represented by the Central Board of Excise and Customs in response to the submission made by the Cigarette Manufacturers' Association - and this representation was approved and accepted by the Central Government - that the cost of corrugated fibre board containers would not be includible in the value of the cigarettes for the purpose of assessment of excise duty. Of course, this representation could operate to create promissory estoppel only if it was within the competence of the Central Board of Excise and Customs and the Central Government to make good such representation and the exclusion of the cost of corrugated fibre board containers from the value of the cigarettes was not contrary to law. We think that the Central Government had power under rule 8, sub-rule (1) of the Rules to issue a notification excluding the cost of corrugated fibre board containers from the value of the cigarettes and thereby exempting the cigarettes from that part of the excise duty which would be attributable to the cost of corrugated fibre board containers. So also the Central Board of Excise and Customs had power under rule 8, sub-rule (2) to make a special order in the case of each of the respondents granting the same exemption, because it could legitimately be said that, having regard to the representation made by the Cigarette Manufacturers' Association, there were circumstances of an exceptional nature which required the exercise of the power under sub-rule (2) of rule 8. The Central Government and the Central Board of Excise and Customs were therefore clearly bound by promissory estoppel to exclude the cost of corrugated fibre board containers from the value of the goods for the purpose of assessment of excise duty for the period 24th May, 1976 to 2nd November, 1982.'
22. If the principles laid down in the above mentioned decisions are applied to the facts of these cases, we do not find any difficulty in invoking the doctrine of promissory estoppel for holding that the respondents are bound to implement their decision not to charge purchase tax on milk. The declaration by the Chief Minister followed by the announcement of the Finance Minister on the floor of the Legislative Assembly, the circular letters issued by the Financial Commissioner (Taxation) and the Excise and Taxation Commissioner, the approval by the Finance Department of the proposal of the Administrative Department to abolish the purchase tax and the final decision by the Council of Ministers on August 21, 1996 to approve the proposal for abolition of purchase tax on milk amounts to an unequivocal promise/representation made by the Government to the public in general and the milk producers and the petitioners in particular that the purchase tax will not be levied on milk with effect from April 1, 1996. The absence of a formal notification which, in our Opinion, in the facts of these cases, was no more than a ministerial act which remained to be performed, cannot be made basis for allowing the respondents to wriggle out of the promise made to the milk producers and the petitioners. On their part, the petitioners acted upon the promise made by the Government and invested huge amount in the projects involving welfare of the milk producers of their respective 'milk shed areas'. They also did not make purchase tax as a part of the price of their products. The assessing authorities had also acted on the understanding that the purchase tax is not payable by the petitioners and they accepted the returns without insisting on the deposit of purchase tax. Thus, all the necessary ingredients which must be satisfied for applying the doctrine of promissory estoppel against the Government are found present in these cases. The argument that the Council of Ministers has reversed the previous decision in its meeting dated June 4, 1997 and, therefore, the promise made in the year 1996 should not be enforced completely ignores one of the fundamentals of the democratic system of governance, namely, that a decision taken by the Government keeping in view the interest of a large segment of the society, i.e., the milk producers which was intended to give a boost to the production of milk and benefit the agricultural industry as a whole may be open to revision by the subsequent Government for future but there can be no justification to relieve the Government from its obligation to fulfil the promise made not to charge purchase tax with effect from April 1, 1996. In other words the decision taken by the Council of Ministers on June 4, 1997 can legitimately be enforced with effect from the date of the decision and the petitioners can be required to pay the purchase tax on milk with effect from that date but they cannot be compelled to pay purchase tax with retrospective effect from April 1, 1996. Likewise, the plea of the respondents that the previous decision should be ignored because of the likely adverse financial effect on the revenue of the State cannot be accepted because while taking the decision to approve the proposal for abolition of purchase tax the Council of Ministers had taken into consideration that the likely loss of revenue was to the tune of Rs. 6.30 crores. To us, it appears that this small loss of revenue had outweighed the benefits which the agricultural community was going to get by abolition of purchase tax on milk. Therefore, the very same reason cannot be pressed for avoiding fulfillment of the promise made in the year 1996. It is indeed, a pity that on the one hand the present Government is contesting the claim of the petitioners that the promise made earlier should be enforced but at the same time it is trying to take political mileage by issuing advertisement in the press that the purchase tax has been abolished. However, this is a matter on which we do not wish to dilate further.
23. Before concluding, we consider it necessary to deal with the judgments relied upon by the learned Deputy Advocate-General.
24. In Excise Commissioner, U.P., Allahahad v. Ram Kumar AIR 1976 SC 2237, the Supreme Court held that there can be no question of estoppel against the Government in exercise of its legislative, sovereign or executive powers. This decision has been referred to and explained in Motilal Padampat Sugar Mills Co. Ltd. v. State of Uttar Pradesh  44 STC 42 (SC); AIR 1979 SC 621 and the same view has been reiterated in Union of India v. Godfrey Philips India Ltd. AIR 1986 SC 806.
25. In Delhi Cloth & General Mills Ltd. v. Union of India AIR 1987 SC 2414, their Lordships refused to invoke the doctrine of promissory estoppel on the ground that the letter on which the petitioner had based its claim contained a clear stipulation that decision contained therein was subject to review by Railway and, therefore, clear and unqualified assurance can be said to have been made to the appellant.
26. In Amrit Banaspati Co. Ltd. v. State of Punjab  85 STC 493 (SC); AIR 1992 SC 1075, in which the appellant had invoked the doctrine of promissory estoppel for claiming refund of the sales tax, their Lordships highlighted the distinction between exemption from tax to encourage industrialisation as against the claim for refund of tax and held that the court cannot enforce a decision taken by the Government against public policy.
27. In Kasinka Trading v. Union of India AIR 1995 SC 874, a two Judge Bench of the apex Court declined to invoke the doctrine of promissory estoppel to sustain the claim of the petitioner for continued grant of exemption from payment of customs duty. The appellant relied on the notification dated March 15, 1979 issued by the Central Government granting exemption from payment of customs duty on polyvinyl chloride resin for a period of two years. However, before the expiry of the time specified in the first notification, the Government issued withdrawal notification dated October 16, 1980. The appellant claimed that the Government could not withdraw the notification because it had placed orders for import of PVC resin on the understanding that it was totally exempt from customs duty. Their Lordships of the Supreme Court reiterated the principles laid down in earlier decisions and held as under :
'The supersession or revocation of an exemption notification, in the 'public interest', is an exercise of the statutory power of the State under the law itself as is obvious from the language of section 25 of the Act. Under the General Clauses Act an authority which has the power to issue a notification has the undoubted power to rescind or modify the notification in a like manner. From the very nature of power of exemption granted to the Government under section 25 of the Act, it follows that the same is with a view to enabling the Government to regulate, control and promote the industries and industrial production in the Country. Notification No. 66 of 1979 in our opinion, was not designed or issued to induce the appellants to import PVC resin. Admittedly, the said notification was not even intended as an incentive for import. The notification on the plain language of it was conceived and issued on the Central Government 'being satisfied that it is necessary in the public interest so to do'. Strictly speaking, therefore, the notification cannot be said to have extended any 'representation' much less a 'promise' to a party getting the benefit of it to enable it to invoke the doctrine of promissory estoppel against the State. It would bear repetition that in order to invoke the doctrine of promissory estoppel, it is necessary that the promise which is sought to be enforced must be shown to be an unequivocal promise to the other party intended to create a legal relationship and that it was acted upon as such by the party to whom the same was made. A notification issued under section 25 of the Act cannot be said to be holding out of any such unequivocal promise by the Government which was intended to create any legal relationship between the Government and the party drawing benefit flowing from of the said notification. It is, therefore, futile to contend that even if the public interest so demanded and the Central Government was satisfied that the exemption did not require to be extended any further, it could still not withdraw the exemption.'
28. These decisions, in our considered opinion, do not have any direct bearing on the questions raised in these petitions. The judgment in Kasinka Trading's case AIR 1995 SC 874, is clearly distinguishable because in that case the benefit of exemption available for the period up to the issuance of the second notification had not been withdrawn as is sought to be done in the present cases.
29. In the result, we allow the writ petitions and quash the impugned notices and demands issued by the respondents for levy of tax on the milk purchased by the petitioners from April 1, 1996 to June 4, 1997.
30. Writ petitions allowed.