In a significant ruling on February 14, 2025, the Supreme Court upheld the Goa Government's decision to recover previously granted electricity tariff rebates from several industrial companies, reinforcing the state's authority to withdraw or modify economic incentives when public interest demands.

The case centered on the Goa Government's 1991 Notification, which offered a 25% rebate on electricity tariffs to industrial units. This rebate scheme was rescinded on March 31, 1995. However, some industrial units that had applied for power before this date, but received supply afterward, contended they were still entitled to the rebate.

Further complicating matters, the government issued amending notifications in 1996, seemingly extending the rebate benefits. These amendments were later declared void ab initio by the Bombay High Court in 2001, a decision upheld by the Supreme Court. Subsequently, the Goa Government enacted the Goa (Prohibition of Further Payments and Recovery of Rebate Benefits) Act, 2002, mandating the recovery of rebates wrongly granted under the 1996 amendments.

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The appellants argued that the government's demand notices for recovery were illegal, asserting that the principle of promissory estoppel bound the government to provide the promised rebates. The Supreme Court rejected this argument, emphasizing that public interest supersedes private commercial interests, thereby limiting the applicability of promissory estoppel against government actions.

The Court referenced the case of Pawan Alloys & Casting (P) Ltd. v. UP SEB (1997) 7 SCC 251, where it upheld the withdrawal of incentives by the UP State Electricity Board before the expiry of the rebate period, reinforcing that promissory estoppel cannot be strictly enforced to override public interest.

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In its judgment, the Supreme Court stated:

"We have no doubt in our minds that the High Court was right in holding that the appellant-companies before it are not entitled to the rebate and the impugned demand notices do not suffer from any vice including that of illegality."

This ruling underscores the government's prerogative to retract or alter economic incentives when such actions are necessary to protect public finances, even if it means overriding previous commitments to private entities.

Case Title: PUJA FERRO ALLOYS P LTD. VS. STATE OF GOA AND ORS. (and connected matters)