Case Law (SC) -- Doctrine of legitimate expectations -- In this case issue relates to restriction of tax holiday subsequently by amending definition of Manufacture. Appellant inter-alia also claim the benefit on the basis of the doctrine of legitimate expectation. There was divergence of opinion between judges and matter referred to CJI. In the decision written by HMJ Krishna Murari, there is summary of the doctrine of legitimate expectations. Hon'ble Justice is of the opinion that for a democratic state to function on the principles of equality and justice, the state must be ruled, not by its ruler, but by the law. In such a circumstance, to prevent such a contamination of the rule of law, the application of the doctrine of legitimate expectation becomes most important. If a state is allowed to make promises, and rescind the same without justification or explanation, it would lead to a situation wherein every action of the statewould be bereft of accountability, and every person governed by the laws of this country would live in a state of fear and unrest, causing a chilling effect on the civil liberties of the people.

The scope and limitations of the doctrine of legitimate expectations:-

I. The expectation must be reasonable: The expectation of the individual or group must be reasonable and not based on any arbitrary or irrational grounds. The expectation must be based on  an established practice or a clear promise made by the public authority. 

II. The expectation must be based on a clear representation: The expectation must be based on a clear and unambiguous representation made by the public authority. 

III. The representation must be made by an authorized person: The representation must be made by an authorized person or body within the public authority. The authority must have the power and competence to make such a representation. 

IV. The representation must be legitimate: The representation made by the public authority must be legitimate and not against any law or policy. It must also not be against any public interest or public policy. 

V. The public interest must be demonstrated: If a legitimate expectation is being taken away by way of a modification to an existing policy on grounds of public interest, such public interest must be demonstrated by the said modification. 

VI. Public Interest must supersede change in policy: In cases where a legitimate expectation is being taken away by way of a modification to policy, such modification must not be antithesis to public policy, and if such a modification runs counter to public interest, the remedy of legitimate expectation would become exercisable. 

VII. The expectation must be based on a legitimate interest: The expectation must be based on a legitimate interest of the individual or group. It must not be based on any vested interest or personal gain. 

VIII. The expectation must be protected: Once a legitimate expectation is created, it must be protected and not arbitrarily or capriciously withdrawn by the public authority. The public authority must provide a reasonable opportunity for the individual or group to be heard before any decision is taken to withdraw or modify the expectation.

K.B.TEA PRODUCT PVT.LTD. vs. COMMERCIAL TAX OFFICER,SILIGURI CA NO. 2297/2011 dated 12.05.2023

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