Holding

The State cannot retrospectively rescind the 1998 rebate notification; the 2004 notification has no effect on vested rights accrued, and the respondents are entitled to the rebate for the period prescribed in the 1998 notification.

Summary

The State of Uttar Pradesh rescinded a 1998 notification that granted a tax rebate to cement manufacturers using fly ash, by issuing a 2004 notification. Birla Corporation Ltd. and Jai Prakash Associates Ltd., which had set up units and begun production before the 2004 rescission, claimed that the rebate entitlement for the ten‑year period under the 1998 notification was a vested right. The Supreme Court examined whether the State, under Section 5 of the Uttar Pradesh Trade Tax Act, 1948 and the General Clauses Acts, could retrospectively withdraw the rebate, and whether the doctrine of promissory estoppel or a claim of supervening public interest could justify such withdrawal. The Court held that the statutory provisions do not empower the executive to rescind a rebate with retrospective effect, that the 2004 notification cannot affect accrued rights, and that the State failed to meet the rigorous burden of proving supervening public interest. Consequently, the respondents are entitled to the rebate for the period prescribed in the 1998 notification, subject to verification of refund claims. The appeals filed by the State were dismissed.

Issues considered

The scope of power under Section 5 of the Uttar Pradesh Trade Tax Act, 1948 to rescind a tax rebate notification with retrospective effect.
Whether the doctrine of promissory estoppel applies to the State's withdrawal of the rebate facility.
Whether the State can justify the rescission on the ground of supervening public interest and the burden of proof attached thereto.
Whether the 2004 notification can be construed as having retrospective or retroactive effect, thereby infringing vested rights.
Entitlement of the respondents to claim refund of the rebate for the ten‑year period and the relevance of unjust enrichment.

Legislation cited

Central Sales Tax Act, 1956s. 8(5)
General Clauses Act, 1897s. 21
Uttar Pradesh General Clauses Act, 1904s. 21
Uttar Pradesh Trade Tax Act, 1948s. 5, s. 5(2)

Subjects

tax rebatepromissory estoppelsupervening public interestvested rightsretrospective legislationUttar Pradesh Trade Tax Actfly ashenvironmental policyindustrial incentives

Judgment

128 [2019]
SUPREME COURT 14 S.C.R. 128
REPORTS [2019] 14 S.C.R.

A STATE OF UTTAR PRADESH & ANR.
v.
M/S. BIRLA CORPORATION LIMITED
(Civil Appeal No. 1579 of 2019)
B NOVEMBER 20, 2019
[A. M. KHANWILKAR AND DINESH MAHESHWARI, JJ.]
Uttar Pradesh Trade Tax Act, 1948: s. 5 – Rebate of tax on
certain purchases or sale – Notification providing for rebate on tax
– Power of the State to rescind the Notification – On facts, issuance
C
of notification dated 27.02.1998 by State Government whereby
exemption available to Cement Manufacturing units using fly ash
in State of UP – State issuing Notification dated 14.10.2004,
rescinding the earlier Notification – Challenge to, by the industrial
units who had commenced production complying with the conditions
D for grant of rebate in terms of Notification dated 27.02.1998,
entitling them to avail rebate of tax facility for ten years – Writ
petition partly allowed to the extent petitioner’s entitlement for tax
exemption for the period available under original notification –
On appeal, held: Stand of the State Government about the
supervening public interest qua the respondents and similarly placed
E
persons cannot be accepted – Notification dated 14.10.2004 can
have no application to the settled enforceable right accrued to
industrial units who fulfill all other conditions specified in the
notification dated 27.02.1998, having commenced commercial
production of the specified goods before 14.10.2004 – Notification
F dated 14.10.2004 cannot be construed as having retrospective or
retroactive effect to whittle down the accrued rights in favour of
such industrial units – Thus, the respondents and similarly placed
persons entitled to rebate for the relevant period prescribed in the
notification dated 27.02.1998 – Respondents to pursue their claim
for refund of the rebate amount for the relevant period.
G
Dismissing the appeals, the Court
HELD : 1.1. It is well established that the Court would not
act on mere ipse dixit of the Government and must insist on a

H
128
STATE OF UTTAR PRADESH & ANR. v. M/S. BIRLA 129
CORPORATION LIMITED

highly rigorous standard of proof in discharge of its burden by A
the Government. [Para 23] [150-F]
1.2. On a bare reading of section 5 of the Uttar Pradesh
Trade Tax Act, 1948, it is evident that there is no express authority
given to the Executive to issue notification for “withdrawing or
rescinding the rebate facility” from a date prior to the date of B
notification. Section 5(2) merely constrict that power only for
“allowing” rebate with effect from a date prior to the date of
notification. That does not include, by necessary implication or
otherwise, power to “withdraw” or “rescind” the rebate from a
date prior to the date of the notification [Para 25] [151-C-D]
C
1.3. Section 21 of the 1897 Act also will be of no avail.
Section 21 of the 1904 Act, is pari materia to the above provision
and will be of no avail for withdrawing the rebate from a date
prior to the date of the notification. The plain language of the
notification dated 14th October, 2004, itself expressly rescinds
notification dated 27th February, 1998 with effect from 14th D
October, 2004. There is no express or tacit intent manifested
from this notification, so as to construe it as bestowing power to
withdraw the rebate facility with effect from a date prior to the
date of notification as such. On this finding, nothing more is
required to be said as the concomitant of this finding would E
necessarily be that all the industrial units set up after 27th
February, 1998 and before 14th October, 2004 which had
commenced commercial production, must continue to qualify for
rebate for specified term mentioned in notification dated 27th
February, 1998, subject to fulfilling all other conditions specified
therein. [Para 26, 27] [151-E, G-H; 152-A] F

1.4 In the case of BCL, the rebate ought to continue up to
13th December, 2008 and in the case of JPAL, up to 17th
September, 2014. Any other interpretation of the impugned
notification dated 14th October, 2004, would entail in giving
retrospective or retroactive effect thereto. That is not predicated G
by Section 5 of the 1948 Act or the impugned notification itself.
Having said this, it would necessarily follow that the challenge to
the notification on the ground of being hit by doctrine of promissory

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130 SUPREME COURT REPORTS [2019] 14 S.C.R.

A estoppel need not detain this Court any further. Similarly, the
argument regarding the circumstances in which the Government
could stave off from the dispensation under notification dated
27th February, 1998 has become irrelevant. [Para 28] [152-B-C]
1.5 The dominant intent behind notification dated 27th
B February, 1998 was to invite the investors to set up industrial
unit in the designated areas within the State of Uttar Pradesh
which were known to be underdeveloped or backward areas and
more importantly to address the environmental issue because of
the fly ash generated by the thermal power stations situated in
Uttar Pradesh and incidentally to generate job opportunities and
C employment to the locals. It is one thing to argue that because
of the interpretation given to the notification dated 27th February,
1998 by the High Court and affirmed by this Court, the industrial
units situated in the neighbouring States may not be able to fulfill
the underlying intent behind the notification dated 27th February,
D 1998 in its letter and spirit. That is not the plea of the State.
Furthermore, it is undeniable that the thermal power stations in
the State of Uttar Pradesh are still operational and are generating
fly ash in the same manner and quantity as was happening in
February, 1998, if not more. It is also indisputable that the
industrial units set up in furtherance of the promise or
E representation made in the notification dated 27th February, 1998
which had commenced commercial production in respect of
specified goods before 14th October, 2004, would continue to
achieve the same objective as is specified in the notification dated
27th February, 1998. In that, the concerned manufacturing units
F continue to manufacture specified goods by using fly ash purchased
or produced from the thermal power stations situated within the
State. As long as that activity is continued until the term specified
under the notification dated 27th February, 1998, namely ten years
from the date of commencement of commercial production, there
is no tangible reason nor it is open to contend that the dominant
G purpose underlying notification dated 27th February, 1998 had
ceased to exist or had become irrelevant in any manner, much
less there are supervening circumstances qua such units which
are so overwhelming that it would be inequitable for the State

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STATE OF UTTAR PRADESH & ANR. v. M/S. BIRLA 131
CORPORATION LIMITED

Government to be bound by the promise given in notification A
dated 27th February, 1998. [Para 29] [152-F-H; 153-A-D]
1.6 The judgment rendered by the High Court and affirmed
by this Court in interpreting the notification dated 27th February,
1998, at best, may have given rise to some logistical issues for
the State including financial implications regarding future revenue B
loss. That ground cannot be invoked as supervening public
interest in reference to the activities of the industrial units who
qualify the conditions specified in notification dated 27th February,
1998 in all other respects and had commenced commercial
production of the specified product before 14th October, 2004.
Indubitably, an enforceable right had accrued to and crystalised C
in favour of such industrial units which could not be truncated or
snapped unless the dominant purpose for which the notification
dated 27th February, 1998 came to be issued had ceased to exist,
namely generation of fly ash by the thermal power stations situated
within the State and consumption of that fly ash by the industrial D
units established within the designated areas of the State as per
the specified quantity to become entitled for rebate for the
duration mentioned therein. The question of future revenue loss
would not arise as the industrial units established in the
neighbouring States would not be eligible to avail of the rebate
because of rescinding the earlier notification. Suffice it to observe E
that the argument about future revenue loss cannot be invoked
against the industrial units who had already established and
commenced production after 27th February, 1998 and before 14th
October, 2004. For, it can be safely presumed that the policy
makers were fully conscious about the so–called loss of future F
revenue due to rebate to those units when they had issued
notification dated 27th February, 1998. That ground cannot be
set up against the industrial units who qualify in all other respect
under the notification dated 27th February, 1998 and have made
substantial investment running into crores much less as being
supervening public interest, as is being placated by the State in G
these proceedings. This is clearly an afterthought plea, which by
no standards can stand the test of judicial scrutiny. It is well
established that the Court is obliged to insist for a highly rigorous

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132 SUPREME COURT REPORTS [2019] 14 S.C.R.

A standard of proof in the discharge of the burden and onus upon
the State to justify its action as supervening public interest.
[Para 30] [153-E-H; 154-A-C]
1.7 The impugned notification dated 14th October, 2004
can have no application to the settled enforceable right accrued
B to industrial units who fulfill all other conditions specified in the
notification dated 27th February, 1998, having commenced
commercial production of the specified goods before 14th October,
2004. The stand of the State Government about the supervening
public interest qua the respondents and similarly placed persons
is rejected. The notification dated 14th October, 2004 cannot be
C construed as having retrospective or retroactive effect to whittle
down the accrued rights in favour of such industrial units.
[Para 31] [154-D-E]
1.8 The grievance of the appellant that the High Court has
not elaborately dealt with the argument of supervening public
D interest justifying the issuance of notification dated 14th October,
2004 is disposed of because, the argument of the respondents
are convincing that no material fact has been pleaded in the
response filed before the High Court or in the present
proceedings by the State Government in that regard. [Para 32]
E [154-G]
1.9 The State Government was permitted to articulate the
reasons which it did in the written submissions. The said reasons
are analysed and are of the considered opinion that the same
singularly or taken together would be of no avail to the State
F Government, to justify the application of the impugned notification
dated 14th October, 2004, to industrial units already set up
which had commenced commercial production of the specified
goods in the designated areas before 14th October, 2004.
[Para 33] [154-H; 155-A-B]

G 1.10. A priori, the respondents and similarly placed persons
would be entitled to rebate for the relevant period prescribed in
the notification dated 27th February, 1998 which would continue
to remain in vogue until the expiry of the specified period, namely,
ten years. In the case of BCL up to 13th December, 2008 and in
the case of JPAL up to 17th September, 2014 respectively. The
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STATE OF UTTAR PRADESH & ANR. v. M/S. BIRLA 133
CORPORATION LIMITED

amount of rebate, however, would depend on the verification of A
their refund claim pending before the concerned authorities and
would be subject to just exceptions including the principle of
unjust enrichment. The respondents should be able to
substantiate that the amount claimed by them has not been passed
on to their consumers. Only then, they would be entitled for
B
refund. The competent authority may verify the claim for refund
of each of the respondent(s) in accordance with law and pass
appropriate orders, including about the interest for the relevant
period. [Para 34] [155-B-D]
State of Jammu & Kashmir v. Trikuta Roller Flour Mills
Pvt. Ltd. & Anr. (2018) 11 SCC 260 ; Sales Tax Officer C
& Anr. v. Shree Durga Oil Mills & Anr. (1998) 1 SCC
572 – distinguished.
State of Uttar Pradesh & Ors. v. Jaiprakash Associates
Limited (2014) 4 SCC 720 ; Shree Digvijay Cement Co.
Ltd. & Anr. v. Union of India & Anr. (2003) 2 SCC D
614 ; Kazi Lhendup Dorji v. Central Bureau of
Investigation & Ors. (1994) Suppl. 2 SCC 116 ;
Industrial Infrastructure Development Corporation
(Gwalior) Madhya Pradesh Limited v. Commissioner of
Income Tax, Gwalior, Madhya Pradesh (2018) 4 SCC E
494 ; MRF Limited, Kottayam v. Assistant Commissioner
(Assessment) Sales Tax & Others (2006) 8 SCC 702 ;
Southern Petrochemical Industries Co. Ltd. v. Electricity
Inspector & ETIO & Others (2007) 5 SCC 447 ;
Pournami Oil Mills & Ors. v. State of Kerala & Anr.
(1986) Suppl. SCC 728 ; Director General of Foreign F
Trade & Anr. v. Kanak Exports & Anr. (2016) 2 SCC
226 ; M/s. Motilal Padampat Sugar Mills Co. Ltd. v.
State of Uttar Pradesh & Others (1979) 2 SCC 409 ;
Manuelsons Hotels Pvt. Ltd. v. State of Kerala & Others
(2016) 6 SCC 766 ; State of Bihar & Others v. Kalyanpur G
Cement Limited (2010) 3 SCC 274 ; Lok Prahari
Through Its General Secretary v. State of Uttar Pradesh
& Others (2018) 6 SCC 1 – referred to.

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134 SUPREME COURT REPORTS [2019] 14 S.C.R.

A Case Law Reference
(2014) 4 SCC 720 referred to Para 3
(2003) 2 SCC 614 referred to Para 16
1994 Suppl. (2) SCC 116 referred to Para 17
B (2018) 4 SCC 494 referred to Para 17
(2006) 8 SCC 702 referred to Para 18
(2007) 5 SCC 447 referred to Para 18
1986 Suppl. SCC 728 referred to Para 18
C
(2016) 2 SCC 226 referred to Para 18
(1979) 2 SCC 409 referred to Para 19
(2016) 6 SCC 766 referred to Para 19
(2010) 3 SCC 274 referred to Para 21
D
(2018) 6 SCC 1 referred to Para 21
(2018) 11 SCC 260 distinguished Para 35
(1998) 1 SCC 572 distinguished Para 35
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 1579
E
of 2019.
From the Judgment and Order dated 16.04.2010 of the High Court
of Judicature at Allahabad, Lucknow Bench in Writ Petition No. 6176
(MB) of 2004.
F With
Civil Appeal No. 1580 of 2019.
Ms. Aishwarya Bhati, Sr. Adv., Chitrangada R., Nitin Choudhary
P., Damodar Solankhi, B. Dash, Ms. Tanuja Patra, Bhakti Vardhan Singh,
Advs. for the Appellant.
G
S.K. Bagaria, S.B. Upadhyay, Sr. Advs., Praveen Kumar,
Kumar Ajit Singh, Pawan Upadhyay, Ms. Anisha Upadhyay, Nishant
Kumar, Sarvjit Pratap Singh, Ms. Sharmila Upadhyay, Advs. for the
Respondents.

H
STATE OF UTTAR PRADESH & ANR. v. M/S. BIRLA 135
CORPORATION LIMITED

The Judgment of the Court was delivered by A
A. M. KHANWILKAR, J.
1. The seminal question involved in both these appeals is about
the power of the State to rescind the notification providing for rebate in
respect of tax payable under the Uttar Pradesh Trade Tax Act, 1948
(for short, “the 1948 Act”) and thus withdrawing the facility even in B
respect of industrial units, which had commenced production and had
complied with the conditions for grant of such rebate in terms of
Notification dated 27th February, 1998.
2. Briefly stated, the appropriate authority, in exercise of power
under Section 5 of the 1948 Act issued notification dated 18th June, 1997, C
to declare the goods having fly ash contents of 10% or more by weight
to be notified goods for the purpose of Section 5, and to grant a rebate of
25% in respect of the goods having fly ash contents between 10 to 30%
by weight and a rebate of 50% in respect of the goods having fly ash
contents exceeding 30% by weight on the tax levied under the Act in the D
districts notified thereunder. In due course, the feedback received by
the Government was that neither any new industrial unit was established
within the State nor the consumption of the fly ash had increased by the
existing units. Resultantly, there was no extra disposal/consumption of
fly ash which was being produced by the thermal power stations situated
within the State of Uttar Pradesh. In other words, the avowed objective E
for issuing the notification to extend rebate did not fructify. In light of
such feedback, the appropriate authority issued fresh notification dated
27th February, 1998 bearing No.T.I.F-2-592/XI-9(226)94-U.P.Act-15-
48-Order-98 to rescind the earlier notification and instead to grant a
rebate of 25% in respect of the goods having fly ash contents between F
10% to 30% by weight and a rebate of 50% in respect of the goods
having fly ash contents exceeding 30% by weight on the tax levied under
the Act in the districts mentioned thereunder, subject to certain conditions.
The said notification reads thus:
“[S. No. 1289] G
Notification No.T.I.F – 2-592/XI-9(226)94-U.P. Act-15-48-Order-
98, dated 27.02.1998
Whereas, the State Government is satisfied that it is expedient
in the public interest so to do:
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136 SUPREME COURT REPORTS [2019] 14 S.C.R.

A Now, therefore, in exercise of the powers under Section 5 of
the Uttar Pradesh Trade Tax Act, 1948 (U.P. Act No. XV of
1948), read with section 21 of the Uttar Pradesh General Clauses
Act, 1904 (U.P. Act No.1 of 1904), the Governor, with effect
from March 1, 1998 is pleased:
B (a) to rescind the Notification No.TT-2-1885/XI-9(226)/94-UP-
Act-15-48 Order-97, dated June 18, 1997;
(b) to grant a rebate of twenty five percent on goods having fly-
ash contents between ten to thirty percent by weight and a rebate
of fifty percent on the goods having fly-ash contents exceeding
C thirty percent by weight on the tax levied under the Act in the
district mentioned in column-2 Annexure given below for the period
mentioned in column-3 of the said Annexure subject to the following
condition:-
CONDITIONS
D (i) such goods shall be manufactured in a unit established in the
area mentioned in coloumn-2 of the Annexure;
(ii) such goods shall be manufactured by using fly-ash purchased
or received from the thermal power stations situated on Uttar
Pradesh;
E
(iii) the dealer claiming rebate under this notification shall keep
records in which following informations will be shown:
(a) date;
(b) name of thermal power stations from which fly-ash is
F purchased or received;
(c) weight of fly-ash;
(d) name of manufactured goods;
(e) weight of manufactured goods;
G (f) weight of fly-ash used in manufacturing of such goods;
(g) weight of other goods used in manufacture of such goods;
(iv) the total weight of manufactured goods and percentage of
fly-ash used, should be mentioned on goods of packing of such
goods as far as possible.
H
STATE OF UTTAR PRADESH & ANR. v. M/S. BIRLA 137
CORPORATION LIMITED [A. M. KHANWILKAR, J.]

ANNEXURE A
S er ia l N am e of D ist ri ct P eri od for
N u m b er w h i ch t h e
r e ba t e w i ll be
al l ow ed
1 2 3
1 B a n da , H a m irp u r, Ja lau n , M a h o b a, Tw el ve Ye a rs
Jh a n si, L a litp u r a n d S h a h u ji N a ga r. B
2 A l m o ra , C h a m o li, B a ges h w a r, Tw el ve yea r s
D eh ra du n , Fa t eh pu r , J au n p u r,
K a n pu r (D eh a t ), N a in ita l, P a u ri
G a rh w a l, Pi th o ra g arh , S u lta n p u r,
C h a m p a w a t, Te h ri Ga rh w al , U d h am
S i ng h N a g ar, U tt a r Ka s h i a nd G ro w t h
C en t re.
3. ( i) Th e D is tric t of A za m g a rh , Te n Y ea rs C
A m b edk a r- N a ga r, B eh ra ich , Ba l lia ,
B a ra ba n k i, B a sti , B a da u n ,
B u la nd sh ah r, D e o ri a, Et ah , Et a w a h ,
F a iz a ba d , F ar ru k hab a d , G h a zip u r,
G on d a, H ard oi , M a in p u ri, M a t h u ra ,
M a u , M o ra da b a d, Pa d ra u n a , Pi ll i bh it ,
Pr a ta p ga rh , Ra i ba re illi , R a m p u r,
S h a h ja h a n p u r , S i dh a ra t h N a g a r,
S i ta pu r, U n n a o, K a u sh a m bh i , D
Jy ot i ba - Ph u l e Na g a r, M ahamaya
N a ga r a n d S h ra v a sti .
( ii) T h e a rea of A l la h a ba d D is tri ct i n Te n Y ea rs
S o u th o f t h e r ive r J am u n a a nd
co n flu e n t Ga n ga (E x clu ding t h e a r ea
i n clu d ed unde r M un i ci pa l
C o rp o ra t io n , A ll a h a ba d) .
( iii) Th e Ta j T r ap ez iu m A rea Te n Y ea rs E
( iv) G reat e r N o i da In d u s t ria l Te n Y ea rs
D ev el o p m en t A rea
Th e D is tri ct s of A g ra ( ex c lu din g Ta j
Tr a p ezi u m a r e a), A li ga r h ( ex clu d in g
Ta j Tra p ez iu m a r ea ), A l la h a ba d
( ex clu d i ng t h e a r ea in s o u t h o f ri ver s
Ja m u na a n d co n f lu en t Ga n ga bu t
i n clu d in g t he a rea i n cl u de d u n de r F
M u n icip a l Co rp or a ti on A ll a h a ba d) ,
B a re illy , B h a do h i, B ij n or , F ir oz a ba d
( ex clu d i ng T aj T ra p ez iu m a rea ) ,
G h az i a ba d (e xc lu d in g G rea t er N o ida
In d u str ia l D eve lo pm e n t A rea ) ,
G or a kh p u r , H a ri dw ar , K a n p ur
( Na g a r) , L a kh i m p u r K h e ri , Lu ck n o w ,
M a h a ra j ga n j, M eer u t, M u z a ffa rn a g a r,
S a h a ra n p u r , V a ra n a si , G a u ta m Bu dh G
N a ga r , C ha n d a u li , M i rz a pu r and
S o n bh a d ra

Explanation:- The verification of percentage of fly-ash used
by fly-ash based industries shall be made of the basis of
Government orders issued in this behalf from time to time.”
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138 SUPREME COURT REPORTS [2019] 14 S.C.R.

A 3. This notification came to be issued with intent to promote and
encourage the industrial activities in the identified backward and
underdeveloped areas. This notification, however, was assailed in two
writ petitions filed before the High Court of Judicature at Allahabad (for
short, ‘the High Court’). The challenge was essentially on the ground
that the conditions specified in the notification resulted in causing
B
discriminatory treatment to the producers and suppliers of the sale product
imported from neighbouring States as opposed to the goods manufactured
and produced in the State of Uttar Pradesh. Such dispensation
contravened the constitutional provisions of Articles 301 and 304(a) of
the Constitution of India. The High Court vide order dated 29th January,
C 2004 upheld the said challenge. The State of Uttar Pradesh carried the
matter in appeal against the said decision of the High Court, which
eventually culminated with the judgment of this Court, affirming the
challenge, in State of Uttar Pradesh & Ors. vs. Jaiprakash Associates
Limited 1. This Court held that rebate of tax granted by the State
Government only to the cement manufacturing units using fly ash as
D
raw material in the units established in the districts of the State of Uttar
Pradesh, is violative of the provisions contained in Articles 301 and 304(a)
of the Constitution of India. The Court further declared that notification,
therefore, would also apply to the cement manufacturing units of the
neighbouring States who were using fly ash as raw material.
E 4. After the decision of the High Court dated 29th January, 2004,
the appropriate authority was advised to rescind the Notification dated
27th February, 1998. The Principal Secretary of the Tax and Registration
Department processed the proposal for rescinding the said notification
and submitted for comments of Council of Ministers which read thus:
F “CONFIDENTIAL
COMMENTS FOR THE HONORABLE COUNCIL OF
MINISTERS.
SUB : Repealing the exemption (rebate) available to units based
on fly ash
G Industries established in certain districts have been granted
exemption on tax levied under the Act for eight, ten, twelve years
vide Govt. Notification No.vya.ka./592/gyarah-9(226)/94, dated
27 February 1997, under Section 5 of the Trade Tax Act on the
following grounds:-
1
H (2014) 4 SCC 720
STATE OF UTTAR PRADESH & ANR. v. M/S. BIRLA 139
CORPORATION LIMITED [A. M. KHANWILKAR, J.]

(a) Where the content of fly ash is 10% to 30% of the total A
weight of goods – 25% rebate on tax.
(b) Where the content of fly ash is more than 30% of the total
weight of goods -50% rebate on the tax.
2. Accordingly under Section 8 (5) of the Central Sales Tax Act,
by the Govt. Notification No.vya.ka/-2-593/gyaraha-9 (226)94, B
dated 27th February 1998, similar rebate has been allowed. A
condition was prescribed in the above notifications that such goods
shall be manufactured within the units established in the area
mentioned in column No.2 of the annexure and such goods shall
be manufactured from Fly Ash purchased from or received from C
the thermal power stations situated in Uttar Pradesh. Above
notifications were challenged before the Hon’ble High Court by
the writ petition.
3. Commissioner, Trade Tax has informed that in the writ petitions
No.957/99M/sBela Cement Ltd. Vs. State and writ petition D
No.958/99 M/s Jai Prakash Industries Vs State, Bench of the
Hon’ble High Court has by the order dated 29.1.2004 declared
the above conditions mentioned in the notification as
unconstitutional. It has also been mentioned that effect of the
above judgment shall be that henceforth facility of rebate will not
only be available to the above types of industrial units situated in E
Uttar Pradesh only, but above rebate shall also be available to the
unit situated outside the Uttar Pradesh. It is also apprised that
in regard to above, Addl. Advocate General has given the
legal opinion that considering the revenue loss being caused
in future above notifications can be repealed. In case above F
notifications have to be repealed from retrospective effect
then the same can be done by way of an ordinance. In
accordance with the legal opinion tendered by the Hon’ble
Add. Advocate General, a recommendation has made to
proceed further expeditiously.
G
4. It appears that the main objective of providing the rebate vide
the above notifications was that the Industrial units of the Uttar
Pradesh should utilize more and more fly ash available for disposal
in the state, in view of the above rebates. In the light of above
judgment of the Hon’ble High Court, now above rebate shall also
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140 SUPREME COURT REPORTS [2019] 14 S.C.R.

A be available to the unit situated outside the state. Therefore it
deems to be fit that above notifications should be repealed.
In this regard the proposal of Commissioner Trade Tax
seems to be proper.
5. Therefore it is proposed that notifications issued under
B section 5 of the Trade Tax Act and Section 8 (5) of Central
Sales Tax Act, related to rebate applicable to industries
based on the fly ash should be repealed.
6. Finance department has expressed the consent to the
above proposal.
C 7. Law department has expressed the view that it had been
advised by the Add. Advocate General that to prevent the
revenue loss notification dated 22.7.1998 can be repealed.
In view of the above the proceedings for repealing the
impugned notifications is legally possible.
D 8. Honorable Minister has examined these comments.
9. Order of the Hon’ble Cabinet is prayed for on the Para 5 above.
Sd/-
(Rita Sinha)
Principal Secretary
E Tax & Registration Department
File No.9 (63)/2001
Lucknow dated 19 August, 2004"
(emphasis supplied)
5. The appropriate authority of the State eventually took decision
F on the said proposal, as a result of which a notification dated 14th October,
2004 came to be issued rescinding the earlier notification dated 27th
February, 1998. The said notification reads thus :-
“NOTIFICATION
No.KA.NI.-2-2996/XI-9(63)/2001-Act, 74-56 Order – (38) 2004
G
Dated Lucknow : : October 14, 2004
WHEREAS, the State Government is satisfied that it is expedient
so to do in public interest.

H
STATE OF UTTAR PRADESH & ANR. v. M/S. BIRLA 141
CORPORATION LIMITED [A. M. KHANWILKAR, J.]

Now, therefore, in exercise of the powers sub-section (5) of A
Section 8 of the Central Sales Tax Act, 1956 (Act No.74 of 1956)
read with Section 21 of the General Clauses Act, 1897 (Act No.10
of 1897) the Governor is pleased to rescind, with effect from
October 14, 2004, the government notification No.T.I.F – 2-
593/X-9(226)/94-Act-74-56-Order-98, dated February 27, 1998.”
B
(emphasis supplied)
6. This notification is the subject matter of challenge in the present
proceedings.
7. The respondents in the respective appeals preferred separate
writ petitions asserting that because of the representation made to the C
stake holders vide notification dated 27th February, 1998, they had
commenced production of the specified goods and complied with the
requisite conditions provided under the said notification entitling them to
avail rebate of the Uttar Pradesh Tax facility. They had commenced
commercial production before coming into effect of the impugned D
notification on 14th October, 2004. However, due to coming into effect
of stated notification they have been denied of the rebate which they
could have earned for ten years.
8. In the case of respondent in Civil Appeal No. 1579/2019 - M/s.
Birla Corporation Limited (for short, ‘the BCL’), the factory was set up E
by the said respondent at Raibareli and it had commenced commercial
production from 14th December, 1998. As the said respondent had
complied with all the conditions specified in the notification dated 27th
February, 1998, it availed the rebate facility from 14 th December, 1998
until 13th October, 2004. It could have continued to avail of that facility
for a period of ten years, i.e., upto 13 th December, 2008, but that F
arrangement has been disrupted because of the issuance of the impugned
notification dated 14th October, 2004. In other words, denial of rebate to
respondent-BCL is for the period from 14th October, 2004 to 13 th
December, 2008.
9. In the case of respondent in Civil Appeal No. 1580/2019 - M/s. G
Jai Prakash Associates Limited (for short, ‘the JPAL’), it was operating
its factory outside the State and because of the condition specified in the
notification dated 27th February, 1998, had challenged the said notification
which, as aforesaid, was upheld by the High Court and later by this
Court. In terms of the said decision, this respondent could have continued
H
142 SUPREME COURT REPORTS [2019] 14 S.C.R.

A with its business and also avail of the rebate but for the impugned
notification issued on 14th October, 2004. However, despite the said
respondent (JPAL) having succeeded before the High Court in Writ
Petition No.958 (Tax) of 1999 vide judgment dated 29th January, 2004,
out of abundant precaution, it decided to set up a factory of its own in
the area specified in the notification dated 27th February, 1998, to avoid
B
any further controversy or dispute regarding tax rebate facility. In
furtherance of that decision, after seeking necessary approvals, the said
respondent (JPAL) commenced commercial production in the factory
set up in the notified area in the State of Uttar Pradesh w.e.f 18th
September, 2004 and in terms of the notification dated 27th February,
C 1998, in vogue, became entitled to avail rebate facility for a period of ten
years, i.e., up to 17th September, 2014. However, because of the
intervening notification dated 14th October, 2004, the said respondent
(JPAL) has been denied of that facility even though it had invested almost
over Rs. 100 crores to set up a new factory within the notified area in
the State of Uttar Pradesh.
D
10. In this background, both the respondents filed separate writ
petitions before the High Court asserting that the State could not have
resiled from the promise or representation it had made in terms of
notification dated 27th February, 1998, and the impugned notification dated
14th October, 2004, therefore, suffered from the vice of being violative
E of promissory estoppel. It was asserted that the State, in exercise of its
executive power, cannot resile from the promise it had made by inviting
setting up of industry within the designated areas in the State of Uttar
Pradesh and in the process, withdraw the rebate facility with retrospective
effect. That could be done only by the legislature by enacting a law in
F that behalf or by issuing ordinance as was suggested in the note submitted
to the Council of Ministers referred to above. It was also asserted that,
in fact, the notification, as issued on 14th October, 2004, specified that
the same would come into effect from the date it is issued. There is no
indication whatsoever that the intention behind issuing the said notification
was to withdraw the facility of stake holders who had already set up
G their industrial units and commenced commercial production prior to 14th
October, 2004. The thrust of the challenge was that the decision to
rescind the notification dated 27th February, 1998 was to discontinue the
rebate to industry that would be set up on and from 14th October, 2004
and to other industrial units in the neighbouring States on account of the
H
STATE OF UTTAR PRADESH & ANR. v. M/S. BIRLA 143
CORPORATION LIMITED [A. M. KHANWILKAR, J.]

decision of the High Court. However, that decision cannot be implemented A
or enforced against the industries which had already commenced
commercial production within the designated areas in the State of Uttar
Pradesh after 27th February, 1998 but before 14th October, 2004. Taking
any other view would result in giving retrospective or retroactive effect
to the notification dated 14th October, 2004. That is impermissible in
B
law.
11. The writ petitioners had also contended that in any case, the
State Government had failed to make out a case of inevitable supervening
circumstances warranting cancellation and withdrawal of the rebate
facility with retrospective effect. The fact that the High Court decided
the issue against the State and extended the benefit to other industrial C
units in the neighbouring States, by itself cannot be the basis much less a
supervening circumstance to justify the act of resiling from the
commitment flowing from the notification dated 27th February, 1998.
12. The appellant-State had resisted the writ petitions by filing
affidavit before the High Court. The stand taken by the State before the D
High Court essentially was that the State had power to rescind its
notification dated 27th February, 1998 and withdraw rebate facility to all
industrial units because of the supervening circumstances. The emphasis
to invoke that power was essentially because of the judgment of the
Allahabad High Court dated 29th January, 2004 and the inability of the E
State to verify the claims of the industrial units in the neighbouring States
which was beyond the territorial jurisdiction of the State authorities.
13. The High Court vide impugned judgment, in the first place
held that the State had given assurance about the rebate on the specified
goods produced in the designated areas within the State on complying F
with other conditions specified in notification dated 27 th February, 1998.
It then proceeded to hold that the State Government in the Indian context
and the Indian jurisprudence was amenable to the doctrine of promissory
estoppel like any other private party or individual. On that finding, the
High Court concluded that the notification issued on 14 th October, 2004
cannot stand the test of judicial scrutiny qua the claim of the industrial G
units which were already established within the designated area in the
State and had commenced commercial production of the stated goods
before 14th October, 2004. It also rejected the stand taken by the State
Government that it was justified in doing so because of supervening
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144 SUPREME COURT REPORTS [2019] 14 S.C.R.

A public interest and resultantly allowed the writ petitions preferred by the
concerned respondents herein. The conclusion recorded by the High
Court reads thus:-
“SUMMARY
121. Supervening public interest may not be established merely
B by pleading in the counter affidavit. It shall not be sufficient to
meet out the requirement of law. The supervening public interest
should be adjudged on the basis of material placed by the State
Government during the course of judicial review. Nothing has been
brought on record to establish as to what prompted the government
C to revoke earlier notification more so when the situation has not
been changed and flyash remain an ecological hazard release by
thermal power stations.
122. Since, before issuance of the impugned notification the
petitioner had started production establishing the factory in Tanda,
D the principle of promissory estopple attracted in view of catena of
judgement of Hon’ble Supreme Court particularly Kalyanpur
Cement Ltd (supra) as well as world wide settled proposition of
law, it shall be fitness of thing and to maintain the people’s
confidence in the administration, ordinarily government should be
abide by its assurance or promise and person should not be deprived
E of the benefit available from such assurance, in case it acted on.
Though the government has got right to change its policy but that
too is subject to judicial review and the courts have got ample
power to ensure that because of change of policy fundamental or
statutory rights of the citizen is not infringed. Equitable relief under
F the principle of promissory estopple may be given by courts for
the ends of justice.
123. The impugned notification should be given prospective effect
with regard to tax rebate. Thus, industries which were established
relying upon the assurance given in the notification dated 27.2.1998
G and started production are entitled for tax rebate for the period
which they were entitled at the time of production or before the
issuance of impugned notification.
124. In view of above, writ petition deserves to be allowed partly
and petitioner seems to be entitled for benefit of tax exemption in
H
STATE OF UTTAR PRADESH & ANR. v. M/S. BIRLA 145
CORPORATION LIMITED [A. M. KHANWILKAR, J.]

view of original notification dated 27.2.1998. However, keeping A
in view the law on the subject that government has got right to
change the policy on one hand and on the other hand, petitioner’s
right may be protected by applying the impugned notification
prospectively, the right available under the principle of promissory
estoppel may be protected by applying the impugned notification
B
prospectively. The prayer for quashing the impugned notification
is refused and the relief is moulded accordingly.
ORDER
125. The writ petition is allowed in part to the extent petitioner’s
entitlement for tax exemption for the period available under the C
original notification dated 27.2.1998. Accordingly, a writ in the
nature of mandamus is issued directing the opposite parties to
provide tax exemption to the petitioner industry from the date of
production for the period of entitlement under original notification
dated 27.2.1998.
D
Writ petition is allowed in part. Cost easy.”
14. The State of Uttar Pradesh has assailed the decision of the
High Court. The argument canvassed on behalf of the State concedes
the legal position that even if the State Government is bestowed with the
executive power to withdraw the rebate facility, it is obliged to justify E
before the court of law that the circumstances were so overwhelming
that it will be inequitable to hold the Government bound by the promise.
In other words, the intent behind the impugned notification dated 14 th
October, 2004 was replete with supervening public interest. To buttress
that, the State has relied upon following reasons, stated to be supervening
public interest: F
“i). The judgment dated 29.01.2004 of Allahabad High Court in
the earlier round of litigation by the same petitioners and others
had quashed condition No.1 of notification dated 27.02.1998, by
which Units situated outside the State of U.P. were also made
entitled to the tax rebate. This judgment was subsequently affirmed G
by this Hon’ble Court vide its judgment dated 12.04.2004 reported
in (2014) 4 SCC 720 titled as State of U.P. & Ors. Vs Jai Prakash
Associated Ltd. etc. etc.

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146 SUPREME COURT REPORTS [2019] 14 S.C.R.

A ii). The effect of the judgment nullified the public interest in granting
the tax rebate.
iii). State had no territorial jurisdiction to ascertain fly ash
consumption and source of Units operating outside the State of
U.P.
B iv). Utilization of fly ash was promoted in terms of Government
of India Notifications dated 14.09.1999 & 27.08.2003, as also
directions given by Hon’ble Delhi High Court in a PIL from 2003
to 2005. State was taking all steps for disposal of fly ash by
promoting its use.
C v). Future revenue loss.”
15. It is then urged that the High Court has not carefully analysed
each of these reasons, much less the impact of all the reasons taken
together justifying the exercise of power to rescind the notification
providing for rebate facility. It is also contended that the decisions pressed
into service by the respondents would be applicable to ordinary situation
D
where the principle of promissory estoppel has been invoked by the
State Government but the same will have no application to the notification
under consideration which was the outcome of supervening public interest.
In other words, general principle of promissory estoppel and vested/
accrued rights have no application to a case of supervening public
E interest.
16. Lastly, it is urged that even if the writ petitioners-respondents
herein were to succeed, the entitlement of rebate would depend on the
fact whether the respondents have themselves paid the amount claimed
and have not passed on the burden to their consumers in full or in part,
F as the case may be. The claim for refund as a consequence of applicability
of the notification dated 27th February, 1998 for the specified period
would depend on establishing the foundational fact that the respondents
had not passed on the commensurate tax burden to their consumers. To
buttress the above submissions, reliance has been placed on the decisions
of this Court in State of Jammu & Kashmir vs. Trikuta Roller Flour
G Mills Pvt. Ltd. & Anr.2; Sales Tax Officer & Anr. vs. Shree Durga
Oil Mills & Anr.3; and Shree Digvijay Cement Co. Ltd. & Anr. vs.
Union of India & Anr. 4.
2
(2018) 11 SCC 260
3
(1998) 1 SCC 572
4
H (2003) 2 SCC 614
STATE OF UTTAR PRADESH & ANR. v. M/S. BIRLA 147
CORPORATION LIMITED [A. M. KHANWILKAR, J.]

17. Per contra, the respondents would adopt the reasons given by A
the High Court for sustaining their challenge to notification dated 14 th
October, 2004. It is urged that the notification dated 14th October, 2004
cannot be construed as having retrospective or retroactive effect and
apply to the units which had already been set up and commenced
commercial production prior to 14th October, 2004. Section 5 of the
B
1948 Act does not confer any power on the executive to rescind the
existing notification with retrospective or retroactive effect. In absence
of express power invested in that behalf, it is not open to the executive
to do so either in terms of Section 5 of the 1948 Act or Section 21 of the
General Clauses Act, 1897 (for short, “the 1897 Act”) or Section 21 of
the Uttar Pradesh General Clauses Act, 1904 (for short, “the 1904 Act”). C
Section 5(2) of the 1948 Act reinforces the submission of the respondents
that the legislature has not invested any authority in the State or executive
to give retrospective or retroactive effect to its notification, rescinding
the existing notification unlike sub-section (2), which expressly provides
for allowing rebate with effect from a date prior to the notification. There
is no express, much less, implicit or tacit authority in the executive to D
issue a notification having retrospective or retroactive effect. In support
of this plea, reliance is placed on the decisions of this Court in Kazi
Lhendup Dorji vs. Central Bureau of Investigation & Ors. 5 and
Industrial Infrastructure Development Corporation (Gwalior)
Madhya Pradesh Limited vs. Commissioner of Income Tax, E
Gwalior, Madhya Pradesh6.
18. It is urged that in the present case, an enforceable right had
accrued in favour of the respondent(s) under the notification dated 27 th
February, 1998 to avail the benefit of rebate for its full eligibility period
up to 13th December, 2008 and 17th September, 2014 respectively. That
right could not be interdicted and disrupted by virtue of the impugned F
notification dated 14th October, 2004. It is not a case where the legislature
has intervened to interdict that right, but it is being done by a notification
by an authority who is not empowered to issue notification having
retrospective or retroactive effect. The respondents are relying on the
decisions of this Court which has taken the view that the notifications
G
cannot apply to units already set up prior to their issuance. (See MRF
Limited, Kottayam vs. Assistant Commissioner (Assessment) Sales
Tax & Others7; Southern Petrochemical Industries Co. Ltd. vs.
5
1994 Suppl. (2) SCC 116
6
(2018) 4 SCC 494
7
(2006) 8 SCC 702 H
148 SUPREME COURT REPORTS [2019] 14 S.C.R.

A Electricity Inspector & ETIO & Others8; and Pournami Oil Mills &
Ors. vs. State of Kerala & Anr.9). In support of the argument that the
subordinate legislation such as the notification dated 14th October, 2004
cannot have retrospective or retroactive effect, reliance is placed on the
exposition in Director General of Foreign Trade & Anr. vs. Kanak
Exports & Anr.10.
B
19. While dealing with the argument of the State regarding
supervening or overwhelming public interest, it is urged that the High
Court was right in observing that the State Government had failed to
make out any case to justify the impugned notification dated 14th October,
2004 on that principle. To buttress that submission, our attention was
C invited to the relevant portion of the pleadings before the High Court in
the form of writ petition and affidavits of both sides. Relying on the
dictum in the cases of M/s. Motilal Padampat Sugar Mills Co. Ltd.
vs. State of Uttar Pradesh & Others11 and Manuelsons Hotels Pvt.
Ltd. vs. State of Kerala & Others12, it is urged that there is heavy
D burden on the State to show that the public interest is so supervening
and so overwhelming that it would be inequitable to hold the Government
bound by the promise. It is urged that facade has been created by the
State Government for the first time before this Court about supervening
public interest. In any case, the reasons stated in support thereof cannot
stand the test of judicial scrutiny, inasmuch as, the notification dated 27th
E February, 1998 and the stand taken by the State Government on affidavits
filed before the High Court in support of the said notification in the first
round of litigation, clearly, were founded on the assertion that the object
for grant of rebate was to promote use of fly ash generated from thermal
power stations in Uttar Pradesh and utilization of the fly ash in
F manufacture of goods to be produced by the industry set up in the
designated areas mentioned in the said notification. That was done to
address the environmental issues confronting the State in the concerned
areas and also to provide employment and job opportunities to the locals
due to setting up of industries in the designated areas within the State of
Uttar Pradesh. Admittedly, the generation of fly ash in thermal power
G stations in Uttar Pradesh has continued unabated causing serious health
8
(2007) 5 SCC 447
9
1986 Suppl. SCC 728
10
(2016) 2 SCC 226
11
(1979) 2 SCC 409
12
H (2016) 6 SCC 766
STATE OF UTTAR PRADESH & ANR. v. M/S. BIRLA 149
CORPORATION LIMITED [A. M. KHANWILKAR, J.]

hazards in the neighbourhood, turning fertile lands into barren lands. A
Notably, the new industry set up in the designated areas after 27th
February, 1998 and before 14th October, 2004 is using the fly ash
generated in thermal power stations in Uttar Pradesh. Thus, the newly
established industry would continue to achieve the object and intent behind
the said notification, which has not ceased to exist and is still relevant.
B
In such a situation, it is incomprehensible as to how the principle of
supervening public interest could be invoked by the State much less of
such magnitude that it would be impossible for the State to hold or be
bound by the promise made by it in notification dated 27th February,
1998. The only reason recorded in the proposal for issuing the impugned
notification dated 14th October, 2004, as can be discerned from the note C
submitted by the Principal Secretary of the concerned Department to
the Council of Ministers, mentions only about the fall out of the judgment
of the High Court dated 29th January, 2004. The apprehension of the
State that it would not be in a position to verify the factual basis to deal
with the claims of the industries operating from the neighbouring States
D
has already been considered and negated by this Court in the previous
round, which finding will continue to operate against the State.
20. The respondents have distinguished the decisions pressed into
service by the appellant in the Trikuta Roller Flour Mills P. Ltd. (supra)
and Shree Durga Oil Mills (supra) being decisions on the facts of the
concerned case. In the former case, the Court upheld the stand of the E
State of supervening public interest because of the unravelling of
fraudulent transactions and bogus refund claims by non-existent traders
who had neither filed the returns nor deposited any taxes. In the latter
case, the Court opined that the writ petitioners had not given essential
foundational facts nor had challenged the vires of the relevant notification F
for grant of any relief as claimed by them. The Court also noted that the
concerned notification did not grant exemption but it merely promised
that orders will be issued laying down the mode of administering the
concessions and incentives by the departments concerned and more
importantly that, before the unit of the writ petitioner started production
on 19th March, 1980, the earlier notification was already abrogated on G
20th May, 1977. It is submitted that in the facts of that case, no relief
could be granted to the writ petitioner nor it could be allowed to challenge
the authority of the executive for having abrogated the earlier notification.

H
150 SUPREME COURT REPORTS [2019] 14 S.C.R.

A 21. In addition, the respondents would rely on the exposition in
State of Bihar & Others vs. Kalyanpur Cement Limited13 to urge
that the doctrine of promissory estoppel applies to notifications such as
the impugned notification dated 14th October, 2004. It is further urged
that the notification dated 14th October, 2004 violates not only the principle
of promissory estoppel but also is arbitrary and hit by Article 14 of the
B
Constitution of India. Reliance has been placed on the decision in Lok
Prahari Through Its General Secretary vs. State of Uttar Pradesh
& Others14. Lastly, it is contended that the argument of unjust enrichment
has been raised for the first time before this Court and ought not to be
countenanced. That would be a matter for consideration in the refund
C proceedings which are still pending for decision before the concerned
authority. The respondents submit that the appeals be dismissed being
devoid of merits.
22. We have heard Ms. Aishwarya Bhati, learned senior counsel
appearing for the State and Mr. S.K. Bagaria and Mr. S.B. Upadhyay,
D learned senior counsel appearing for the respondents.
23. After cogitating over the rival submissions, it becomes evident
that the parties have proceeded on the premise that the State Government
or the Executive is competent to rescind the earlier notification and the
doctrine of promissory estoppel can be no impediment in that behalf.
That, however, is hedged or laced with condition that the burden is upon
E the Government to show that it acted in furtherance to public interest in
issuing such a notification otherwise than in accordance with the promise
and that the public interest is so overwhelming that it would be inequitable
to hold the Government bound by the promise. It is well established that
the Court would not act on mere ipse dixit of the Government and must
F insist on a highly rigorous standard of proof in discharge of its burden by
the Government. Resultantly, it is not necessary for us to dilate on the
precedents pressed into service by the respondents on the application of
doctrine of promissory estoppel of the State Government like any other
private party or individual.
24. Before we proceed further, it would be apposite to extract
G
Section 5 of the 1948 Act. The same reads thus :-
“5. Rebate of tax on certain purchases or sale.—(1) Where
the State Government is satisfied that it is expedient in the public
13
(2010) 3 SCC 274
14
H (2018) 6 SCC 1
STATE OF UTTAR PRADESH & ANR. v. M/S. BIRLA 151
CORPORATION LIMITED [A. M. KHANWILKAR, J.]

interest so to do, it may by notification, and subject to such A
conditions and restrictions as may be specified therein, allow a
rebate up to the full amount of tax levied on any specified point
on—
(a) The sale or purchase of any goods, or
(b) The sale or purchase of such goods, by such persons or class B
of persons as may be specified in the said notification.
(2) The rebate under sub-section (1) may be allowed with effect
from a date prior to the date of the notification.”
25. On a bare reading of this provision, it is evident that there is no C
express authority given to the Executive to issue notification for
“withdrawing or rescinding the rebate facility” from a date prior to the
date of notification. Section 5(2) merely constrict that power only for
“allowing” rebate with effect from a date prior to the date of notification.
That does not include, by necessary implication or otherwise, power to
“withdraw” or “rescind” the rebate from a date prior to the date of the D
notification.
26. Section 21 of the 1897 Act also will be of no avail. The same
reads thus :-
“21. Power to issue, to include power to add to, amend,
E
vary or rescind notifications, orders, rules or bye-laws—
Where, by any Central Act or Regulations a power to issue
notifications, orders, rules or bye-laws is conferred, then that power
includes a power, exercisable in the like manner and subject to
the like sanction and conditions (if any), to add to, amend, vary or
rescind any notifications, orders, rules or bye-laws so issued.” F
27. Section 21 of the 1904 Act, is pari materia to the above provision
and will be of no avail for withdrawing the rebate from a date prior
to the date of the notification. In the present case, it is not
necessary to dilate further on this aspect as the plain language of the
notification dated 14th October, 2004, reproduced above in paragraph 5, G
itself expressly rescinds notification dated 27th February, 1998 with effect
from 14th October, 2004. There is no express or tacit intent manifested
from this notification, so as to construe it as bestowing power to withdraw
the rebate facility with effect from a date prior to the date of notification
as such. On this finding, nothing more is required to be said as the
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152 SUPREME COURT REPORTS [2019] 14 S.C.R.

A concomitant of this finding would necessarily be that all the industrial
units set up after 27th February, 1998 and before 14th October, 2004
which had commenced commercial production, must continue to qualify
for rebate for specified term mentioned in notification dated 27th February,
1998, subject to fulfilling all other conditions specified therein.
B 28. In the case of BCL, the rebate ought to continue up to
13th December, 2008 and in the case of JPAL, up to 17th September,
2014. Any other interpretation of the impugned notification dated 14 th
October, 2004, would entail in giving retrospective or retroactive effect
thereto. That is not predicated by Section 5 of the 1948 Act or the
impugned notification itself. Having said this, it would necessarily follow
C that the challenge to the notification on the ground of being hit by doctrine
of promissory estoppel need not detain us any further. Similarly, the
argument regarding the circumstances in which the Government could
stave off from the dispensation under notification dated 27 th February,
1998 has become irrelevant.
D 29. Assuming that we need to examine the reasons offered by the
State Government to justify the impugned notification dated 14th October,
2004 of supervening public interest, it is noticed from the pleadings
exchanged by the parties before the High Court or for that matter before
this Court that the dominant reason weighed with the State Government
E to rescind the earlier notification was the effect of the decision of the
High Court dated 29th January, 2004 and the logistical issues confronting
the State in implementation of that decision, including the financial
implications for the future State Revenue. For proper analysis of the
plea so taken by the State, we must go back to the intent behind notification
dated 27th February, 1998. The dominant intent was to invite the investors
F to set up industrial unit in the designated areas within the State of Uttar
Pradesh which were known to be underdeveloped or backward areas
and more importantly to address the environmental issue because of the
fly ash generated by the thermal power stations situated in Uttar Pradesh
and incidentally to generate job opportunities and employment to the
G locals. It is one thing to argue that because of the interpretation given to
the notification dated 27th February, 1998 by the High Court and affirmed
by this Court, the industrial units situated in the neighbouring States may
not be able to fulfill the underlying intent behind the notification dated
27th February, 1998 in its letter and spirit. That is not the plea of the
State. Furthermore, it is undeniable that the thermal power stations in
H
STATE OF UTTAR PRADESH & ANR. v. M/S. BIRLA 153
CORPORATION LIMITED [A. M. KHANWILKAR, J.]

the State of Uttar Pradesh are still operational and are generating fly A
ash in the same manner and quantity as was happening in February,
1998, if not more. It is also indisputable that the industrial units set up in
furtherance of the promise or representation made in the notification
dated 27th February, 1998 which had commenced commercial production
in respect of specified goods before 14th October, 2004, would continue
B
to achieve the same objective as is specified in the notification dated
27th February, 1998. In that, the concerned manufacturing units continue
to manufacture specified goods by using fly ash purchased or produced
from the thermal power stations situated within the State. As long as
that activity is continued until the term specified under the notification
dated 27 th February, 1998, namely ten years from the date of C
commencement of commercial production, there is no tangible reason
nor it is open to contend that the dominant purpose underlying notification
dated 27th February, 1998 had ceased to exist or had become irrelevant
in any manner, much less there are supervening circumstances qua such
units which are so overwhelming that it would be inequitable for the
D
State Government to be bound by the promise given in notification dated
27th February, 1998.
30. Indeed, the judgment rendered by the High Court and affirmed
by this Court in interpreting the notification dated 27th February, 1998, at
best, may have given rise to some logistical issues for the State including
financial implications regarding future revenue loss. That ground cannot E
be invoked as supervening public interest in reference to the activities of
the industrial units who qualify the conditions specified in notification
dated 27th February, 1998 in all other respects and had commenced
commercial production of the specified product before 14th October,
2004. Indubitably, an enforceable right had accrued to and crystalised in F
favour of such industrial units which could not be truncated or snapped
unless the dominant purpose for which the notification dated 27 th
February, 1998 came to be issued had ceased to exist, namely generation
of fly ash by the thermal power stations situated within the State and
consumption of that fly ash by the industrial units established within the
designated areas of the State as per the specified quantity to become G
entitled for rebate for the duration mentioned therein. The question of
future revenue loss would not arise as the industrial units established in
the neighbouring States would not be eligible to avail of the rebate because
of rescinding the earlier notification. Suffice it to observe that the
H
154 SUPREME COURT REPORTS [2019] 14 S.C.R.

A argument about future revenue loss cannot be invoked against the
industrial units who had already established and commenced production
after 27th February, 1998 and before 14th October, 2004. For, it can be
safely presumed that the policy makers were fully conscious about the
so-called loss of future revenue due to rebate to those units when they
had issued notification dated 27th February, 1998. That ground cannot
B
be set up against the industrial units who qualify in all other respect
under the notification dated 27th February, 1998 and have made substantial
investment running into crores much less as being supervening public
interest, as is being placated by the State in these proceedings. This is
clearly an afterthought plea, which by no standards can stand the test of
C judicial scrutiny. It is well established that the Court is obliged to insist
for a highly rigorous standard of proof in the discharge of the burden and
onus upon the State to justify its action as supervening public interest.
31. Having said this, it must necessarily follow that the impugned
notification dated 14th October, 2004 can have no application to the settled
D enforceable right accrued to industrial units who fulfill all other conditions
specified in the notification dated 27th February, 1998, having commenced
commercial production of the specified goods before 14th October, 2004.
In other words, we reject the stand of the State Government about the
supervening public interest qua the respondents herein and similarly placed
persons. The notification dated 14th October, 2004 cannot be construed
E as having retrospective or retroactive effect to whittle down the accrued
rights in favour of such industrial units.
32. In this view of the matter, it is unnecessary to dilate on the
precedents pressed into service to buttress the argument that doctrine
of promissory estoppel applies or not to the State Government or about
F the power of the State Government to rescind the earlier notification
whereunder rebate under Section 5 of the 1948 Act had become due
and payable to the eligible industrial units. We also dispose of the
grievance of the appellant that the High Court has not elaborately dealt
with the argument of supervening public interest justifying the issuance
G of notification dated 14th October, 2004. We say so because, we are
convinced with the argument of the respondents that no material fact
has been pleaded in the response filed before the High Court or in the
present proceedings by the State Government in that regard.
33. Nevertheless, we had permitted the State Government to
H articulate the reasons which it did in the written submissions as referred
STATE OF UTTAR PRADESH & ANR. v. M/S. BIRLA 155
CORPORATION LIMITED [A. M. KHANWILKAR, J.]

to in paragraph 14 above. We have analysed the said reasons and are of A
the considered opinion that the same singularly or taken together would
be of no avail to the State Government, to justify the application of the
impugned notification dated 14th October, 2004, to industrial units already
set up which had commenced commercial production of the specified
goods in the designated areas before 14th October, 2004.
B
34. A priori, the respondents and similarly placed persons would
be entitled to rebate for the relevant period prescribed in the notification
dated 27th February, 1998 which would continue to remain in vogue until
the expiry of the specified period, namely, ten years. In the case of BCL
up to 13th December, 2008 and in the case of JPAL up to 17th September,
2014 respectively. The amount of rebate, however, would depend on C
the verification of their refund claim pending before the concerned
authorities and would be subject to just exceptions including the principle
of unjust enrichment. The respondents should be able to substantiate
that the amount claimed by them has not been passed on to their
consumers. Only then, they would be entitled for refund. The competent D
authority may verify the claim for refund of each of the respondent(s) in
accordance with law and pass appropriate orders, including about the
interest for the relevant period.
35. We are in agreement with the respondents that the decisions
in Trikuta Roller Flour Mills P. Ltd. (supra) and Shree Durga Oil E
Mills (supra) turn on the facts of the concerned cases. The dictum in
those cases will have no application to the fact situation of the present
case in light of our above analysis. Similarly, the observations made by
this Court in the earlier round of proceedings cannot come in the way of
the respondents to pursue their claim for refund of the rebate amount,
for the relevant period. That be decided in accordance with law. F

36. In view of the above, these appeals must fail. Hence, the
same are dismissed with observations. There shall be no order as to
costs. All pending applications are also disposed of.

G
Nidhi Jain Appeals dismissed.

H