Report No. 108

2.15. Excise Commission v. Ram Kumar.-

In 1969, auctions were held in U.P. for grant of licences to sell country liquor. At the time of the auction no announcement was made that the exemption from sales-tax in respect of sales of country liquor granted under a notification issued in 1959 under section 4 of the U.P. Sales Tax Act, 1948, would or would not be withdrawn. The respondent in one of the appeals was one of the highest bidders. When the 1959-notification was withdrawn, with the result that his sales became subject to the imposition of sales, tax, he contended that the 1959-notification operated as estoppel. Rejecting the contention, the Court observed:1

"It is now well settled by a catena of decisions that there can be no question of estoppel against the government in the exercise of its legislative, sovereign or executive powers."

The Court also relied on the following passage:2

"It is too late in the day to urge that the government is just another private litigant, for the purpose of charging it with liability, when it takes over a business theretofore conducted by private enterprise or engages in competition with private ventures. Whatever the form in which the government functions, anyone entering into an arrangement with the government takes the risk of having accurately ascertained that he who purports to act for the government stays within the bounds of his authority ... And this is so even though, as here, the agent himself may have been, unaware of the limitations upon his authority ... 'Men must turn square corners when they deal with the government' does not reflect a callous outlook. It merely expresses the duty of all courts to observe the conditions defined by Congress for charging the public treasury."

1. AIR 1976 SC 2237 (2241).

2. Federal Crop Insurance Corp. v. Merrill, (1947) 332 US 380.