State Cannot Retrospectively Withdraw Purchase Tax Subsidy; Sugar Mills Entitled to Full Five Years: Madras HC

The Madras High Court ruled that the State cannot retrospectively withdraw purchase tax subsidies granted to sugar mills, such as Ponni Sugars. The case emphasized the principle of legitimate expectation and protection of vested rights, underscoring that subsidies granted for a fixed term cannot be withdrawn arbitrarily without sufficient justification. The court observed that the sugar mills had relied on official notifications and commenced commercial operations based on the expectation of subsidies, making abrupt withdrawal unfair and unjust. The ruling protects sugar mills’ entitlement to subsidies for the entire notified period, maintaining stability and policy consistency in subsidy regimes for the sector.