R. Jayasimha Babu, J.:— The petitioner is a sugar mill which went into commercial production in January, 1989. By that time it went into commercial production, the scheme concerning the grant of concessions and benefits under the State's sales tax for new sugar mills had undergone a change.

2. The order of the Government in G.O.Ms No. 989, Industries (MID 1) Department dated September 1, 1988, brought about the change in the pre-existing scheme. Under the scheme as it existed prior to 1988, the Government had been granting waiver of purchase tax for a period of five years from the date of commencement of commercial production of the sugar mills. It had granted such waiver to sugar mills in the co-operative sector as also in the private sector; the first of such orders having been made in G.O.Ms No. 1294 Industries Department, dated October 24, 1975 the benefit of that order being confined to sugar factories in co-operative and public sectors. In that order of the year 1975, a reference had been made to recommendations of the committee that had been constituted by the Government of India to go into the question of viability of sugar factories of 1, 250 tons crush per day (TCD) established at a high cost, which included the recommendation for remission of purchase tax on cane. That order stated that the Government had accepted the recommendations and had decided to grant relief in the form of annual subsidy equivalent to the quantum of purchase tax on cane due from those sugar factories, for a period of five years from the date of their going into production.

3. The Government's policy with regard to the licensing of new sugar factories having been subsequently changed and sugar mills in the private sector also allowed to come up, a private sugar mill known as “Ponni Sugars and Chemicals Limited”, was established and that mill after commencing commercial production, sought similar subsidy for a period of five years. Government initially granted it for a period of two years, but subsequently revised to five years. That was done in the year 1984. Three years later, in 1987, similar subsidy was granted to another sugar mill in the private sector, Bannari Amman Sugar Mills Ltd., after it started commercial production.

4. In the Government Order of September 1, 1988 those three orders, viz., of the years 1975, 1984 and 1987 were referred to. It was thereafter stated that the Government had reviewed the existing scheme of grant of subsidy of purchase tax with respect to the new sugar mills in the context of new sugar mills which have been licensed in the seventh plan period which would be coming up both in co-operative and in the private sectors in the next two years. It went on to state that for general industrial development, the Government have sanctioned a scheme of interest-free sales tax loan for an initial period with certain ceilings on loans, both annual and for the entire period of assistance. It then referred to the fact that the scheme was being modified to one of tax deferral and that in order to bring about unity in the type of assistance given to the industrial units, the purchase tax subsidy scheme for the sugar industries be modified to one of deferral of purchase tax. Para 2 of the order of September 1, 1988 sets out the new scheme thus:

“In partial modification of the orders issued in G.Os read above, the Government direct that the purchase tax payable by newly established sugar mills be deferred for a period of four years, subject to modifications as announced from time to time, from the date of commencement of production, subject to the following ceiling:

Capacity of the mills Ceiling for a year Ceiling for four years (Rs. in lakhs) 1,250/1,500 TCD 70.00 240.00 2,500 TCD 125.00 440.00

The above ceiling will however be restricted to the purchase tax leviable for the cane actually drawn from the reserved areas. The purchase tax deferred for 1st, 2nd, 3rd and 4th year will be collected without interest in the 5th, 6th, 7th and 8th year respectively. The above assistance of purchase tax deferral is also subject to the condition that it will not be applicable in a year if a mill declares dividend during the year and the deferment will be restricted within the period of four years from the date of commencement of production to only those years in which dividend is not declared. No subsidy will be granted hereafter to any new sugar mills.”

5. In the case of mills already established and to whom purchase tax subsidy had been granted in the earlier Government Orders in the years 1975, 1984 and 1987, the subsidy scheme was to continue subject to the ceiling of 70 lakhs per year for mills with a TCD capacity of 1, 250 to 1, 500, and with a further ceiling of Rs. 300 lakhs for four years. For mills with TCD capacity of 2, 500 and above, the ceiling per year was Rs. 125 lakhs with a ceiling of Rs. 550 lakhs for four years.

6. As noticed earlier, the petitioner commenced commercial production in January, 1989, after the Government Order dated September 1, 1988, had brought about a change in the scheme of assistance to the sugar mills, and which had taken effect. The petitioner has admittedly received all the benefits provided for in the revised scheme under the Government Order of September 1, 1988.

7. The petitioner's grievance is that the assistance should not have been restricted to what is provided in the Government Order dated September 1, 1988, but should have been similar to that given to Ponni Sugars & Chemicals Ltd., and Bannari Amman Sugar Mills Ltd. which had commenced commercial production in the years 1984 and 1986 respectively. It was contended that the promoter of the petitioner-company was a non-resident Indian who had responded to the invitation given by the then Chief Minister of the State to nonresident Indians to establish new industries in their home State, and that in response to that call, he, along with others, had held discussions with the ministers and other officers of the Government, at which, they had been made aware of the policy then prevailing in the State and they had thereafter floated the petitioner-company to set up new sugar mill at a cost of Rs. 21 crores. The contribution of NRI is said to be about Rs. 3 crores to the equity capital of Rs. 9 crores. It is contended that the policy, as it prevailed at the time the non-resident Indians held discussions with the ministers and officers of the Government, is a policy, which should continue to govern this petitioner-industry, as according to the petitioner, the industry itself came to be established by relying on the policy prevailing at the time of such discussion.

8. The case so pleaded does not establish any estoppel against the State nor does it establish a case of legitimate expectation. The fact that prevailing policy had been made known does not result in a promise not to change that policy. Communicating the existing policy also does not, on that score alone, give rise to a legitimate expectation that that policy will not change.

9. In matters of economic policy, the Government enjoys the greatest possible latitude subject only to the overall requirements, to which it is required to conform under the provisions of the Constitution. Economic policies are necessarily subject to change, as the policy appropriate to a given environment will not be suitable in a changed scenario. Ideology also plays a part in the formulation of the policy. The Government, therefore, cannot be held to be powerless to change policy once a policy has been formulated.

10. The Government order of September 1, 1988 refers to the fact that a number of co-operative and private sugar mills were to come up in the next two years, that the policy which had been adopted with respect to sugar mills till then was different from the policy that had been adopted with reference to other industries, that a need had been felt to bring about uniformity in that policy; and as a result, the Government was henceforth adopting a scheme of deferment of tax, rather than the one for waiver or the grant of subsidy. Even such deferral was to be up to a particular ceiling, annual and overall, and for a specified period.

11. In the counter-affidavit filed on behalf of the State, it has been stated, inter alia, that the purchase tax as well as subsidy commitment of the Government in respect of the three sugar mills which had been commissioned during the sixth plan period was estimated at about 9.60 crores and that if such a scheme were to be continued for the seventh plan period for all the sugar mills to be established in the period, revenue loss would be Rs. 19.20 crores. It is also stated that during the seventh plan period from 1985-86 to 1989-90, six more sugar mills had started their commercial production, one in the co-operative sector and five in the private sector. of these, four sugar mills commenced commercial production after the issuance of the Government order in 1988 and two had commenced commercial production earlier.

12. The desire on the part of the Government to minimise it's revenue loss, having regard to the magnitude of the amount involved, by itself, constituted sufficient public interest justifying the change in the scheme.

13. The change in the policy even with reference to the financial position of the petitioner cannot be said to be so adverse that the petitioner's very existence was dependant upon continuance of a policy of subsidy. The figure furnished by the petitioner shows that the total income of the petitioner in the first year of production in 1989-90 was Rs. 2,075 lakhs, its gross profit is Rs. 527 lakhs, and after meeting interest and finance charges of Rs. 250 lakhs and depreciation of Rs. 214 lakhs; the company still had a profit. It was only after the credit of Rs. 237 lakhs to the investment allowance reserve that the bottom line became one of loss. In the third year of production, i.e, in the year 1991-92, the company made a profit of Rs. 373 lakhs after depreciation, interest and finance charges. In that year and in the succeeding year, no amount was credited to the investment allowance reserve. The net profit for the year 1991-92 was Rs. 373 lakhs. In the succeeding year 1992-93, the net profit was Rs. 312 lakhs. It is evident that the company has done quite well, the unit having been in a position to declare a dividend by the very third year.

14. Learned counsel for the petitioners invited our attention to certain passages in “The Law Relating to Estoppel by Representation by Spencer Bower and Turner and “Judicial Review of Administrative Action” by De Smith, Woolf and Jowell. Having perused those passages, we do not think that the facts of this case near the standard required to be met before the principles of promissory estoppel or the concept of legitimate expectation can be invoked.

15. As already noticed, there was no promise by the State to the petitioner at any point of time that it's policy of giving subsidy to the new sugar mills would continue till such time as the petitioner commences commercial production. No document has been produced by the petitioner. All that has been averred is that the existing policy was made known to the non-resident Indian group, which discussed the possibility of establishing a unit in Tamil Nadu. Merely informing the persons about what exists as the policy is not the same as giving a promise that there will be no change to that policy till petitioner set up a mill and commenced commercial production. It cannot also be said that there could be. any legitimate expectation on the part of the petitioner by reason of the policy being what it was at the time the project was conceived. In order to cast a burden on the State to give a hearing before changing the policy or before the State could be compelled to follow the policy that prevailed earlier, much more than what the petitioner has been able to show, is required to be established.

16. It was then submitted by counsel that the petitioner has been dealt with in a hostile manner and has been discriminated against, when compared to two sugar mills, viz., one in the cooperative sector and one in the private sector, which were established in the seventh plan period, but had been allowed the benefit of the subsidy scheme. The reference to the seventh plan period by the State in its counter was obviously made with a view to show the amount of subsidy that would have to be given if the said subsidy were to be continued for whole of the seventh plan period. The seventh plan period merely provided the framework within which an estimate of the likely outgo was made. As vested rights could not be taken away, the Government had no option but to permit two sugar mills, one in the co-operative sector and the other in the private sector, which had commenced commercial production prior to 1988 to continue to enjoy the benefits already given. The State had not discriminated among sugar mills established after 1988, all of them having been treated uniformly and all of them having been given the same benefits. There has been no hostile discrimination against the petitioner.

17. Reference was made by counsel to the decision of the apex Court in Choksi Tube Company Ltd. v. Union of India reported in (1998) 77 ECR 88 (SC). In that case, the Supreme Court held that where the customs authority had exercised discretion in favour of one importer but had refused to grant a similar benefit to another importer and the Government had made no attempt to file counteraffidavit in the Supreme Court to defend their case, and no reason was forthcoming to justify the difference in treatment, exemption should be granted to the petitioner in that case as well. The ratio of that decision is not attracted to the facts of this case. We do not, therefore, find any merit in this petition. The Special Taxation Tribunal has rightly rejected the claim of the petitioner. The writ petition is dismissed.

18. Writ petition dismissed