M/S.K.B.TEA PRODUCT PVT.LTD. . vs COMMERCIAL TAX OFFICER,SILIGURI . — C.A. No. 2297/2011

Summary of M/S K.B. Tea Product Pvt. Ltd. v. Commercial Tax Officer, Siliguri (C.A. No. 2297/2011) Court Decision: The Supreme Court of India issued a split verdict. Justice M.R. Shah dismissed all appeals, while Justice Krishna Murari allowed them, creating a significant divergence on the doctrine of legitimate expectation. Key Facts: - K.B. Tea Products set up manufacturing units relying on a 1998 tax holiday for "blending of tea" under West Bengal Sales Tax Act, 1994 - In 2001, "blending of tea" was removed from the definition of "manufacture," ending the tax exemption - The company challenged this removal, claiming legitimate expectation and vested rights Main Legal Issue: Whether an amendment removing tax holiday benefits violates the doctrine of legitimate expectation when the company relied on prior statutory assurances. Justice M.R. Shah's View (Dismissal): The amendment prospectively withdrew an "existing right" (not a "vested right"). Tax exemptions are policy decisions not subject to judicial review unless arbitrary. Once the definition changed, the company ceased to qualify. Justice Krishna Murari's View (Allowance): The doctrine of legitimate expectation applies to statutory changes when no public interest justification is demonstrated. The state must show why removing promised benefits serves public interest. Here, no such justification existed, making the amendment arbitrary and violating Article 14 fairness principles. This case analysis is maintained by casestatus.in based on publicly available court records.