V.D. Misra, C.J.
1. This judgment will dispose of Writ Petitions Nos. 232 of 1978, 81, 85 and 129 of 1979 since a common question of law has been raised by the petitioners.
2. Section 42 of the Himachal Pradesh General Sales Tax Act (referred to as the Act) empowers the State Government to issue a notification exempting, amongst others, small-scale industries from the payment of tax under this Act on the purchase or sale of any goods subject to such conditions as may be specified by the notification. The Government of Himachal Pradesh issued notification (annexure PA) dated 27th May, 1974, granting exemption from payment of sales/ purchase tax to the small-scale industries with effect from 12th April, 1971. The relevant conditions laid down in the notification were these :
(1) that there shall not be charged sales/purchase tax from the small-scale industries which were in existence and registered with the Industries Department as such on 12th April, 1971, for a period of three years from that date;
(2) that the exemption from payment of sales/purchase tax in the case of small-scale industries which came into being and are registered with the Industries Department as such after 12th April, 1971, would be applicable for a period of 5 years commencing from the date of their coming into existence ;
(3) that the small-scale industries registered as such with the Industries Department who deal partly in the manufacture of goods and partly otherwise, would be entitled to avail the sales/purchase tax holiday in respect of such goods as are purchased by them for the purpose of manufacture for sale in Himachal Pradesh ;
(4) that no holiday from Central sales tax would be available to small-scale industries under the Central Sales Tax Act, 1956 ;
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(7) that the holiday from the sales/purchase tax will be subject to the filing of certificate of genuineness with the assessing authority concerned by 30th April, each year, granted by the Director of Industries, Himachal Pradesh, under his signature.
3. It may be noticed that conditions Nos. (5) and (6) were deleted by a notification dated 5th April, 1976.
4. The Government also issued various brochures inviting persons to set up industries in Himachal Pradesh and highlighting the incentives to the entrepreneurs. The relevant para of one of the brochures may be reproduced with advantage:
Realising the importance of industrialisation the State Government is now pursuing a dynamic policy of industrialisation and is offering a large number of attractive incentives to the prospective entrepreneurs. The Central Government has also offered a number of concessions for backward regions so as to remove the regional imbalances prevailing in the country. Setting up of industries, therefore, in Himachal Pradesh today is a very attractive proposition. The following are the various incentives, concessions and facilities that are available to the entrepreneurs :
Central Government scheme.
Incentives provided by the State Government to new/existing industries in H. P.
2. to 8...
9. Sales/Purchase tax: No sales/purchase tax will be charged from the small-scale industries set up after 12th April, 1971, registered with the Industries Department, Himachal Pradesh, for a period of 5 years from the date on which such industry starts production. Industries desiring exemption of sales/purchase tax should get themselves registered with the Industries Department.
5. The result was that various persons, including the petitioners, submitted project reports.
6. We may notice the facts of C. W. P. No. 232 of 1978 only since the facts of all other petitions are somewhat similar. The petitioner, Kundan Lal Ahuja, submitted a project report for starting small-scale industrial unit for the manufacture and preparation of butter, pure ghee and for grinding whole spices to powdered form, viz., turmeric, chillies, black pepper, coriander, etc., and getting the same packed in small polythene packs. Thereafter loans of over rupees two lacs were raised from various resources by the petitioner. Necessary machinery was purchased and a factory was set up. Production was started in December, 1974. Certificate of registration of small-scale industrial unit by the Director of Industries as also the certificate of eligibility by the District Industries Officer, Simla, was granted on 28th December, 1974, to the petitioner.
7. On 5th July, 1978, a Gazette notification 'in supersession of this department notification of even number dated 27th May, 1974, and 5th April, 1976, and in exercise of the powers conferred under Section 6 of the Himachal Pradesh General Sales Tax Act, 1968, with a view to provide incentive to the small-scale industries in Himachal Pradesh, the Governor of Himachal Pradesh is pleased to levy the sales tax on the terms and conditions hereunder prescribed, with immediate effect' was issued. -
8. The conditions relevant for our purposes are these :
(i) that a general sales tax shall be levied on the products manufactured by new small-scale industrial units at the rate of 2 per cent for the first five years and at the rate of 4 per cent for the next five years in respect of goods leviable to general sales tax at the rate of 7 per cent. In the case of goods leviable to general sales tax at the rate of more than 7 per cent, sales tax will be payable at the rate of 3 per cent for the first five years and 5 per cent for the next five years;
(ii) that small-scale industrial units which have availed holiday from sales/ purchase tax under the notification, referred to above, shall be eligible to concessional rate of tax at 4 per cent on goods leviable at the general rate of 7 per cent and 5 per cent on goods leviable at the rate of more than 7 per cent for a further period of five years ;
In case a small scale-industrial unit is enjoying tax holiday under the original scheme, such unit will pay sales tax at the rate of 2 per cent in case of goods leviable at the rate of 7 per cent and 3 per cent in case of goods leviable at the rate of more than 7 per cent for the remaining period of tax holiday...;
(v) that the concession shall be available when the articles manufactured are sold exclusively by manufacturers themselves.
9. It is obvious that sales tax holiday granted by the notification dated 27th May, 1974, has been taken away and the petitioners are now required to pay tax for the remaining period of tax holiday.
10. Soon thereafter another notification dated 28th July, 1978, was published. It was : 'In exercise of the powers conferred by Sub-section (1) of Section 42 of the Himachal Pradesh General Sales Tax Act, 1968, the Governor, Himachal Pradesh, with a view to provide incentive to such small-scale industries, which are leviable of general sales tax at less than 7 per cent, is pleased to grant exemption from the payment of sales/purchase tax to the eligible small-scale industries subject to the following conditions, with immediate effect:-
(1) that the exemption from the payment of sales/purchase tax in the case of such small-scale industries would be applicable for a period of 5 years commencing from the date of their coming into existence subject to the condition that they are registered with the Industries Department;
(2) that such small-scale industries registered with the Industries Department, who deal partly in the manufacture of goods and partly otherwise would be entitled to avail the sales/purchase tax holiday in respect of such goods as are purchased by them for the purpose of manufacture for sale in Himachal Pradesh ;
(3) that the above concession shall be admissible only to those small-scale industries which are registered under the Himachal Pradesh General Sales Tax Act and comply with its provisions ;
(4) that the small-scale industry must continue to function for a period for which the concession has been availed, failing which it shall pay tax for the remaining period, equal to the amount which would have been paid during the said exempted period but for such exemption ;
(5) that the concession shall be available when the articles manufactured are sold exclusively by manufacturers themselves ;
(6) that the concession shall not be open for finished goods imported by the small-scale industrial units .for resale in the Pradesh; and
(7) that the concession detailed above will be subject to the filing of certificate of genuineness with the assessing authority concerned by 30th April, every year, granted by the Director of Industries, Himachal Pradesh, under his signature.
11. It may at this stage be noticed that the petitioner was manufacturing goods on which general sales tax at the rate of more than 7 per cent is leviable. This notification inter alia required a manufacturer already enjoying tax holiday to sell his goods himself only before he could claim the concession. Thus curbs were placed on the tax holiday.
12. Representations were made by the petitioners against these notifications but no action was taken by the State Government. According to the return filed by the State, representation 'is still under consideration'.
13. As a consequence of the notifications dated 5th July, 1978, and 28th July, 1978, the present four writ petitions challenging these notifications have been filed on the ground, inter alia, that the Government is estopped on the principles of equitable estoppel from backing out from the first notification granting incentives and alluring the petitioners into investing huge sums of money and establishing their factories.
14. The Government does not deny the facts. They, however, insist that the notifications in question are perfectly valid. It is averred that 'the Government is competent to revise its policy from time to time according to the need of the hour and can grant/withdraw exemption or levy concessional rate of tax'. It is also stated that the industries can avail only that concession which is actually given by the Government.
15. At this stage we may refer to one more fact. The notification dated 27th May, 1974, had expressly stated that no exemption was being granted from the Central sales tax. The State Government thereafter levied the Central sales tax on the petitioners and others enjoying the tax holiday. This was challenged. A Division Bench of this Court in Himachal Conductors Ltd. v. Deputy Excise and Taxation Commissioner, H.P. I.L.R.  H.P. 1, struck down the levy. The State filed Special Leave Petition No. 1712 of 1978 before the Supreme Court challenging the decision of this Court which was dismissed on 16th October, 1978.
16. The returns filed by the State do not tell us why the State decided to go back on its promise. The relevant part of the return has already been quoted by us. We, therefore, asked the learned counsel for the State to apprise us of the policy of the Government why the impugned notifications were issued taking away the exemptions granted by the first notification. He could not tell us. We also asked him to show us the records. After the arguments had concluded, records were sent to us. The relevant pages of the record, as directed by us, were duly flagged. These pages do not enlighten us about the policy. We are, however, given to understand that having lost the case in the High Court the Government decided to take recourse to Section 6 to levy the tax to get some revenues from the petitioners and other persons who were similarly placed.
17. The ambit of 'promissory estoppel' came up for consideration before the Supreme Court in Union of India v. Anglo Afghan Agencies A.I.R. 1968 S.C. 718 (referred to as Indo-Afghan Agencies in the later judgments of the Supreme Court). In this case the Textile Commissioner published a scheme called the Export Promotion Scheme providing incentives to exporters of woollen goods. This scheme was extended to exports of woollen goods to Afghanistan. It was represented that the exporters will be entitled to import raw materials of the total amount equal to 100 per cent of the f. o. b. value of the exports. However, this was denied to M/s. Anglo Afghan Agencies. The court held thus :
We hold that the claim of the respondents is appropriately founded upon the equity which arises in their favour as a result of the representation made on behalf of the Union of India in the Export Promotion Scheme, and the action taken by the respondents acting upon that representation under the belief that the Government would carry out the representation made by it. On the facts proved in this case, no ground has been suggested before the court for exempting the Government from the equity arising out of the acts done by the exporters to their prejudice relying upon the representation....
* * *...even though the case does not fall within the terms of Section 115 of the Evidence Act, it is still open to a party who has acted on a representation made by the Government to claim that the Government shall be bound to carry out the promise made by it, even though the promise is not recorded in the form of a formal contract as required by the Constitution.'
18. Again the same question came up for consideration before the Supreme Court in Century Spinning and . v. Ulhasnagar Municipal Council A.I.R. 1971 S.C. 1021. In that case the municipality had passed a resolution giving 'a concession to the existing factories by exempting them from the payment of octroi for a period of 7 years from the date of levy of octroi tax and by exempting new factories from the payment of the octroi tax for a period of 7 years from the date of their establishment as recommended by the Government'. However, on 24th December, 1968, the municipality sought to levy octroi duty and to recover from the petitioner-company octroi duty amounting to Rs. 15 lakhs per annum. The court held that the following observations made by Denning, J., in Robertson v. Minister of Pensions  1 K.B. 227 applied in India :
The Crown cannot escape by saying that estoppels do not bind the Crown for that doctrine has long been exploded. Nor can the Crown escape by praying in aid the doctrine of executive necessity, that is, the doctrine that the Crown cannot bind itself so as to fetter its future executive action.
19. Following its earlier decision in the Anglo Afghan Agencies' case A.I.R. 1968 S.C. 718, the Supreme Court observed further :
There is undoubtedly a clear distinction between a representation of an existing fact and a representation that something will be done in future. The former may, if it amounts to a representation as to some fact alleged at the time to be actually in existence, raise an estoppel, if another person alters his position relying upon that representation. A representation that something will be done in the future may result in a contract, if another person to whom it is addressed acts upon it. A representation that something will be done in future is not a representation that it is true when made. But between a representation of a fact which is untrue and a representation express or implied-to do something in future, there is no clear antithesis. A representation that something will be done in future may involve an existing intention to act in future in the manner represented. If the representation is acted upon by another person, it may, unless the statute governing the person making the representation provides otherwise, result in an agreement enforceable at law ; if the statute requires that the agreement shall be in a certain form, no contract may result from the representation and acting therefor but the law is not powerless to raise in appropriate cases an equity against him to compel performance of the obligation arising out of his representation.
Public bodies are as much bound as private individuals to carry out representations of facts and promises made by them, relying on which other persons have altered their position to their prejudice. The obligation arising against an individual out of his representation amounting to a promise may be enforced ex contractu by a person who acts upon the promise : when the law requires that a contract enforceable at law against a public body shall be in certain form or be executed in the manner prescribed by statute, the obligation if the contract be not in that form may be enforced against it in appropriate cases of equity.
20. Once more the Supreme Court had to deal with the question of promissory estoppel in Motilal Padampat Sugar Mills v. State of Uttar Pradesh (1979) 2 S.C.C. 409. The facts of this case are somewhat similar to the facts of the case with which we are concerned at the moment. In that case 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 Uttar Pradesh Sales Tax Act, 1948 (similar to Section 42 of the H. P. General Sales Tax' Act), to all new industrial units in the State. The appellant was assured by the Director of Industries about the sales tax holiday granted by the State. In view of the assurance the appellant put up a factory to manufacture vanaspati. However, within months of giving the assurance the State Government decided to give only partial concession of sales tax. After reviewing the case law, Bhagwati, J., speaking for the court, observed 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. Everyone is subject to the law as fully and completely as any other and the Government is no exception.
21. It was further observed that, 'whatever be the nature of the function which the Government is discharging, the Government is subject to the rule of promissory estoppel and if the essential ingredients of this rule are satisfied, the Government can be compelled to carry out the promise made by it'. The burden placed upon the Government to escape from the rule was explained thus :
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 determined 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-Ajghan Agencies' case A.I.R. 1968 S.C. 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'. If the Government wants to resist the liability, it will have to disclose to the court what are the subsequent events on account of which the Government claims to be exempt from the liability and it would be for the court to decide whether those events are such as to render it inequitable to enforce the liability against the Government. 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. It is only if the court is satisfied, on proper and adequate material placed by the Government, that overriding public interest requires that the Government should not be held bound by the promise but should be free to act unfettered by it, that the court would refuse to enforce the promise against the Government. The court would not act on the mere ipse dixit of the Government, for it is the court which has to decide and not the Government whether the Government should be held exempt from liability. This is the essence of the rule of law. 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 would become final and irrevocable.
22. It was, however, clarified that the doctrine of 'promissory estoppel' cannot be availed to permit a breach of the law nor it could be invoked to compel the Government or even a private party to do the act prohibited by the law. The doctrine could also not be used against the exercise of legislative power since the legislature can never be precluded from exercising the function by resorting to the doctrine of 'promissory estoppel'.
23. Applying the principles laid clown by the Supreme Court, we hold that the petitioners cannot be denied the sales tax holiday referred to in the notification dated 27th May, 1974, and be called upon to pay the sales tax in terms of the impugned notifications. As already stated, the Government has failed to show the overriding public interest due to which they decided to go back on their promise of the sales tax holiday. Indeed the Government have based their departure from the promise on their right to tax or grant exemption whenever they like. It is precisely this right which has been denied to them by the Supreme Court.
24. The result is that we allow all the petitions and direct the respondents not to levy the sales tax on the petitioners under the impugned notifications. The State will pay costs to the petitioners.