In a petition challenging Rajasthan Government’s decision to not extend benefits earlier promised under the state investment promotion scheme, after the rollout of the new tax regime, the High Court has issued the notice to the Centre, Rajasthan Government, and the GST Council.
In 2014, the Rajasthan Investment Promotion Scheme was announced to give entertainment tax exemption to multiplexes, water, and theme parks, among other sectors for seven years. There was the exemption from entry tax for companies making the investment of more than Rs 7.5 billion on capital goods.
A similar benefit was given in case of State Value Added Tax also in various sectors, to boost investments and create jobs. With the rollout of the Goods and Services Tax (GST), all these benefits have been taken away.
Though the State Budget, presented in February, announced the extension of these, no notification has come, said the people who have filed cases against the discontinuation of the scheme.
The businesses made investments on promises of the Government. They have legitimate expectations that these promises will continue, said Abhishek Rastogi partner with Khaitan & Co, the counsel for the petitioners.
“Any deviation by the state government will be tested in courts, based on the principle of promissory estoppel,” he added.
The principle of promissory estoppel means if a party changes position substantially on a promise, the other party can petition to enforce the promise, even if the essential elements of a contract are not present.
