Page 60 - GSTL_16 April 2020_Vol 35_Part 3

274 GST LAW TIMES [ Vol. 35
had issued Notification under Section 25(1) of the Customs Act, 1962 in
“public interest” granting exemption from whole of the customs duty on
import of PVC resin. This notification was to remain in force till 31-3-1981.
However, even before the said date, by another Notification dated 16-10-
1980, the full exemption from customs duty was withdrawn and it was re-
duced to the exemption from customs duty as is in excess of 40% ad valorem.
The importer had contended that relying on the exemption Notification
dated 15-3-1979, it had placed orders for the import of PVC resins on the
understanding that the commodity was totally exempt from customs duty,
the Government must be held bound by the representations contained in
the Notification dated 15-3-1979 and the Government was estopped on the
basis of promissory estoppel to go back on its promise. The Government
justified the withdrawal of exemption on the ground that the Government
had issued Notification dated 15-3-1979 with a view to equalising sale pric-
es of the indigenous and the imported material and to make the commodity
available to the consumer at a uniform price, keeping in view the trends in
the supply of the material. Subsequently, it was realised that the interna-
tional prices of the product were falling and consequently, the import pric-
es had become lower than the ex-factory prices of the indigenous material.
Hence, it was decided in “public interest” to withdraw the exemption noti-
fication. This Court held that : (Kasinka Trading case, (1995) 1 SCC 274, SCC
286)
“19. ... the reasons given by the Union of India justifying withdraw-
al of the exemption notification, in our opinion, are not irrelevant to
the exercise of the power in ‘public interest’, nor are the same shown
to be insufficient to support the exercise of that power.”
107. The Court also observed the power to grant exemption from payment
of duty flows from the provisions of Section 25(1) of the Customs Act. The
power to exempt includes the power to modify or withdraw the same. Such
an exemption by its very nature is susceptible of being revoked or modified
or subjected to other conditions. The supersession or revocation of an ex-
emption notification in the public interest is an exercise of the statutory
power of the State under the law itself as is obvious from the language of
Section 25 of the Act, but also from the General Clauses Act under which
the authority has the power to issue a notification has the undoubted power
to rescind or modify the notification in a like manner. The Court also exam-
ined the case of the appellant-petitioners that relying upon the Notification
dated 15-3-1979, they had acted and the Government could not be permit-
ted to go back on its assurance otherwise they would be put to huge loss.
The Court dealt with this contention in the following words :
“22. .. The courts have to balance the equities between the parties
and indeed the courts would bind the Government by its promise “to
prevent manifest injustice or fraud”.
The Court also quoted with approval the following observations from Mal-
hotra & Sons v. Union of India, AIR 1976 J&K 41 :
‘22. .. ’16 ... The courts will only bind the Government by its promis-
es to prevent manifest injustice or fraud and will not make the Gov-
ernment a slave of its policy for all times to come when the Govern-
ment acts in its governmental, public or sovereign capacity.’
108. The above decision in Kasinka Trading case. (1995) 1 SCC 274, was fol-
lowed by this Court in Shrijee Sales Corpn. v. Union of India, (1997) 3 SCC
398, where also the same notifications were considered. In that case also,
the appellant-petitioners had alleged that they would not have imported
PVC resin without the exemption as that would have been unviable and
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