Arijit Pasayat, J. - (1.) These two appeals involve identical questions and, therefore, are disposed of by this common judgment after noticing the factual position, so far as they are relevant. The appellants question correctness of the judgment rendered by a Division Bench of the Madras High Court which held that the withdrawal of benefits extended to the appellants as subsidy was in order. The appellants questioned legality of the G.O.Ms No. 989 dated 1.9.1988 directing discontinuance of purchase tax exemption in case of mills which exceeded the ceiling of Rs. 300 lakhs during the period of five years, and Government letter dated 28.12.1988 which made the aforesaid G.O.Ms. No. 989 of 1.9.1988 operative retrospectively from 1.4.1988. Initially the writ petitions were filed before the High Court, but after constitution of the Tamil Nadu Taxation Special Tribunal (hereinafter referred to as the Tribunal) the writ petitions were transferred to the Tribunal which held that on application of the principles of promissory estoppel and legitimate expectation, the withdrawal of benefit was not sustainable in law. The State questioned correctness of the judgment before the High Court which, as noted above, held the G.O.Ms. and the Govt. letter to be valid, reversing the conclusions arrived at by the Tribunal. The judgment forms subject matter of challenge in these appeals.
(2.) In support of the appeals the primary stands raised by the appellants are: 1. The doctrines of promissory estoppel and legitimate expectation were applicable to the facts of the case. There was no material to show existence of any overriding public interest to rule out application of the aforesaid doctrines there was no scope for retrospective withdrawal. In any event, before withdrawal of the benefits, no opportunity of hearing was granted. The High Court erroneously came to hold that the State Government had not filed any counter. The materials which were produced before the High Court and on the basis of which it was decided that the decision of the Government is in order were not even pleaded in the pleadings and during arguments. The appellants were taken by surprise by production of materials which were not even disclosed to the appellants. The contents of the files which were produced before the High Court and on which reliance was placed to hold against the appellants are not known to the appellants. In other words, there was clear violation of the principles of natural justice. The Governments letter dated 28.12.1888 refers to some decision, but in the absence of any authentication as required under Article 166 of the Constitution of India, 1950 (in short the Constitution) the same is ineffective. In any event, the retrospective withdrawal of the benefit on the basis of an executive decision is impermissible.
(3.) In response, learned counsel for the respondent-State submitted that the appellants have failed to adduce any evidence or material to show that they were in any way induced by any governmePonni ntal action to set up industries. In fact, the Government of Tamil Nadu vide G.O.Ms. No. 1284 dated 24.10.1875 granted exemption from purchase tax on sugarcane in favour of sugar mills established in "co-operative and public sectors" in the form of annual subsidy equivalent to purchase tax on sugarcane. There was no scope for any mis understanding that it applied to any private sector participation in the sphere of sugar manufacturing. The commercial productions were started in case of appellants in C.A. No. 8606/2002 i.e. Ponni Sugars (Erode) Ltd. v. Govt. of Tamil Nadu and Ors. on 27.1.1984 and in C.A. 8605/2002 i.e. Bannari Amman Sugars Ltd. v. Commercial Tax Officer and Ors. on 22.1.1986. The appellants only made representation to Government subsequently claiming exemption at par with the cooperative and public sector mills. As there was no inducement or assurance, the question of any promissory estoppel did not arise. So far as legitimate expectation aspect is concerned, it is too well known that the benefit extended can be withdrawn and with this knowledge if the units are set up, the principle of legitimate expectation does not apply. The High Court recorded the following findings on the factual aspects. (1) The respondents have established their units prior to the Government orders granting the subsidy and they have no vested right to claim exemption. (2) No inducement was made in the Government orders to establish the units. (3) The respondents have not acted on the basis of the Government Orders for establishing the units. (4) The grant of subsidy is a concession and the Government has got good reasons for modifying the scheme in public interest. (5) No prejudice is caused to the respondents since the scheme was intended to make the units viable and the modified scheme provides for safeguards to that extent, (6) The Order granting subsidy can be withdrawn in public interest. The Government has exercised their right to modify the scheme in the interest of public revenue. ;