In Brief
Essar Steel Ltd. (now Arcelor Mittal Nippon Steel India Limited) purchased Natural Gas and Naphtha with exemption from purchase tax under a state incentive scheme for eligible industries. The company then sold these materials to Essar Power Limited (an ineligible power-generating company) for electricity generation, which it then purchased and used in manufacturing. The Supreme Court held that the exemption required the eligible unit itself to use the raw materials, not transfer them to others. Transferring materials to an ineligible entity defeated the scheme's purpose and breached the required declaration. The Court rejected the principle of promissory estoppel in tax matters, noting exemptions are statutory concessions requiring strict compliance. Penalty was upheld as the company deliberately circumvented eligibility rules to benefit an ineligible third party.",
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