India: Doctrine of promissory estoppel cannot be invoked against legislative action (Supreme Court decision)

A Supreme Court decision concerning doctrine of promissory estoppel invoked against legislative action.

A Supreme Court decision concerning doctrine of promissory estoppel

The Supreme Court held that the doctrine of promissory estoppel cannot be invoked against legislative action withdrawing certain area-based excise tax exemptions.

The case is:  Hero Motocorp Ltd v. Union of India & Ors. 

Summary

Prior to the advent of the goods and services tax (GST), the government provided certain area-based exemptions, such as a 100% excise tax exemption for industrial units for ten years from the date on which such industrial units commenced commercial production. That exemption was partially withdrawn post-GST.

The taxpayer established a new industrial unit that qualified for the exemption, but was subsequently notified that the exemption was no longer available because of a change in law. The taxpayer first filed a suit in the High Court challenging the change in law, which was dismissed, and then pursued a suit before the Supreme Court.

Read an October 2022 report [PDF 410 KB] prepared by the KPMG member firm in India

 

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