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2020 (3) TMI 292 - DELHI HIGH COURTContinuation of area Based Exemption under GST regime as granted under central excise - doctrine of promissory estoppel - benefit of N/N. 50/2003- C.E, dated 10.06.2003 - establishment of new industrial unit - complete exemption by way of reimbursement of the amount of Central Goods and Services Tax (CGST) and Integrated Goods and Services Tax (IGST) for the residual period of exemption notification. HELD THAT:- The Petitioners have acquired vested right in terms of the policy. The fiscal benefits promised in return for making investments in the State of Uttarakhand were privileges which were granted under law that no longer holds the field. The rights and the obligations that were flowing under the tax regime originated from the tax structure that existed when the policy was framed. Such obligations cannot stay alive, if the legislation itself has undergone a complete overhaul by advent of introduction of GST legislations. Therefore, the Budgetary Support Scheme cannot said to be in contravention of the fiscal incentive policies or promise made by Respondent No.1 at the time of introducing area-based exemptions - In the previous tax regime, taxes were being levied on different incidents, such as ‘manufacturing’ in the case of the levy of excise duty. This is no longer a relevant consideration. GST is a destination based tax, the area based exemptions, under the GST regime have entirely different dimensions and therefore, for this reason, there are no area-based exemptions envisaged under the GST regime. Government has, instead, provided the necessary support to the industry for its economic development and has grandfathered the incentive Scheme. Whether the Budgetary Support Scheme reveals the half hearted approach of Respondent No.1, as has been sought to be projected by the Petitioner? - HELD THAT:- There are no irrational or arbitrary with respect to partial tax budgetary support. Firstly, the Budgetary Support is not an exemption under the Act. The rationale of providing support to the extent of Central Government’s share of CGST and the IGST is also based on the reasoning which cannot be questioned by the Petitioner. Article 279A of the Constitution provides that the GST Council shall make recommendations to the Union and States, inter alia, on issues relating to special provision with respect to the States of Arunachal Pradesh, Assam, Jammu & Kashmir, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Himachal Pradesh and Uttarakhand. The GST Council in its meeting held on 30.09.2016, left it to the discretion of the Central Government and State Government to notify schemes of Budgetary Support to units where the erstwhile schemes were in operation on 18.07.2017 - Accordingly, the Central Government provided the Budgetary Support to eligible units for the residual period by way of part re-imbursement of goods and service tax paid by the unit, limited to Central Government’s share of CGST and IGST retained after devolution of part of these taxes to the States. Whether the doctrine of promissory estoppel can be invoked against a legislative act, because in the present case, the government has clearly acted in accordance with the law laid down by the Parliament? - When the law itself has undergone a complete revision, can the doctrine of promissory estoppel still be invoked, in light of Section 174(2) (c) of the CGST Act? - HELD THAT:- The plea of promissory estoppel cannot be enforced against an act done in accordance with the statutory provisions of law. Under Section 174 (2) (c) of the CGST Act, express provision has been made by the Parliament to provide that any tax exemption granted as an incentive against investment through a notification under, inter alia, the erstwhile Central Excise Act, shall not continue as a privilege if the said notification is rescinded, and in the present case, the notification which granted 100% excise duty exemption was, in fact, rescinded. Thus, in the absence of any challenge by the Petitioner to the rescission of the said notification which granted exemption or to the vires of the proviso to Section 174 (2) (c) of the CGST Act, no plea of promissory estoppel is maintainable. The language used in the proviso to Section 174 (2) (c) is clear and unequivocal, and leaves no room for a different interpretation. Petition dismissed.
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