TMI Blog2021 (2) TMI 829X X X X Extracts X X X X X X X X Extracts X X X X ..... s earlier granted inasmuch as the Budgetary Support for specified goods manufactured by the eligible Unit is 58 per cent of CGST and 29 per cent of IGST paid through debit in cash ledger account maintained by the Unit after full utilization of the input Tax Credit of the Central Tax and Integrated Tax. The Petitioner in W.P.(C) No.41/2015, W.P.(C) No.08/2017, W.P.(C) No.27/2017 and W.P.(C) No.40 of 2017 had in sum and substance, the same grievances. Promissory Estoppel has been agitated previously, as also in this Writ Petition. In W.P.(C) No.41/2015, the challenge to the impugned Notifications therein was for the reason that the benefit of exemption was sought to be reduced to the prescribed percentage of value addition amount i.e. 56 per cent applicable to pharmaceutical products mentioned in the respective Notifications and applicable Chapter. In the instant Petition, it is contended that the amount of Budgetary Support under the Scheme for specified goods manufactured by the eligible Unit is specified as the sum total of 58 per cent of the Central Tax paid through debit in cash ledger account maintained by the Unit after full utilization of the input Tax Credit of the Central T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e respective Fiscal Statutes, including Central Excise original Notification No.56/2003-C.E., dated 25.06.2003. By this Notification, 100 per cent duty exemption was granted to the goods specified in the Schedule thereto, manufactured and cleared from a Unit located in Sikkim from so much of the duty of Excise leviable under the Central Excise Act, 1944 and other allied Acts as is equivalent to the amount of duty paid by the manufacturer of the goods other than the amount of duty paid by utilization of CENVAT Credit under the CENVAT Credit Rules, 2002 for a period of ten years from the date of commencement of commercial production. 1.(c) On 01.04.2007, the Respondent No.1 notified the North East Industrial and Investment Promotion Policy, 2007 ( Industrial Policy, 2007 ) thereby discontinuing the Industrial Policy of 2003. The Industrial Policy of 2007 also covered the State of Sikkim and inter alia provided that the new Units and existing Units which go in for substantial expansion and commence commercial production within ten years of the date of Notification of the said Policy, would be eligible for incentives for a period of ten years from the date of commencement of commerc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion No.21/2017-C.E., dated 18.07.2017, the Respondent No.1 rescinded Notifications No.20/2007-C.E., dated 25.04.2007 and 56/2003-C.E., dated 25.06.2003. 1.(g) In continuation of the earlier Industrial Policies as well as Excise Notifications to exempt the levy of Central Excise duty on the Goods manufactured and sold from the Units in the State of Sikkim, the Central Government provided for Budgetary Support Schemes for such Units under the GST regime. The Budgetary Support Scheme is applicable to the Units which were eligible for drawing benefits under the earlier Excise Duty Exemption/Refund Schemes and was applicable for the remaining period out of the total period not exceeding ten years, from the date of commencement of commercial production as specified under the erstwhile Notification. The amount of Budgetary Support under the Scheme for specified goods manufactured by the eligible Unit is specified as the sum total of 58 per cent of the Central Tax paid through debit in cash ledger account maintained by the Unit after full utilization of the input Tax Credit of the Central Tax and Integrated Tax and 29 per cent of the Integrated Tax paid through debit in cash ledger acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n fact, the Petitioner has availed benefits extended by the Government under the Budgetary Support Scheme for various periods from July, 2017 through December, 2017 and after availing the benefits, they have filed the instant Writ Petition which is arbitrary and bad in law, on which ground alone the Petition deserves a dismissal. Moreover, the full benefit in respect of the share of the Central Revenue is being granted to the Petitioner and they have been availing of the said benefit from the Department. Hence, for the aforestated reasons, the Writ Petition is liable to be rejected. 3. The Respondent No.3 chose not to file any Counter-Affidavit. 4. A Rejoinder was filed to the Counter-Affidavit of Respondents No.1 and 2 which, while reiterating the facts stated in the Petition, emphasized that the Respondents No.1 and 2 have not cited the public interest which necessitated the curtailment of benefits promised to the Petitioner under the erstwhile law. 5.(i) Learned Counsel Mr. V. Lakshmi Kumaran for the Petitioner, while relying and reiterating the averments made in the Petition, contended that if the value addition norms were met, then even under the said Scheme, the manu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ves 42 per cent of the Taxes on goods and services to the State as per the recommendations of the 14th Finance Commission. That, even prior to the GST regime, the Central Government was sharing the revenue of Central Excise duty in the same proportion with the State Governments and at the time of introduction of the exemption Notification in 2003, the Centre was sharing 29.5 per cent of the Central Taxes with the States. However, the Petitioner was promised and granted 100 per cent exemption from Excise duty and it was not restricted to 70.5 per cent of the Tax payable. Hence, when the promises were made, the Parliament was well aware of its obligation to share the revenue with the States. That, the position under the GST Scheme is no different than the position under the erstwhile Central Excise regime, whereby the Taxes were shared by virtue of Article 270(1) of the Constitution. The justification put forward by the Respondents on misuse of previous Scheme, something that was specifically noted and was made the basis of the Judgment in V.V.F. Limited (supra), is wholly without merit and ex facie unsustainable. That, the Exemption granted to it under the erstwhile Notification ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to be expedient in public interest and in the interest of revenue by the Central Government. In view of the above grounds, the present Petition deserves no consideration and is liable to be dismissed. 7. Learned Government Advocate for the State-Respondent No.3, in his arguments, contended that the distribution of Revenue Tax in accordance with the recommendation of the Finance Commission in the proportion of 58 per cent to the Union and 42 per cent to the States, is a recommendation involving all States in the Indian Union and does not pertain to the State of Sikkim alone. Of the 42 per cent which is distributed to the State, the share of the State of Sikkim is less than 0.5 per cent and in this view of the matter, it would be wholly erroneous to extrapolate the number of 42 per cent on the recommendation, if any, to be made to the Petitioner without taking into reference the share of the State of Sikkim which is less than 0.5 per cent. That, the CGST is a Central Tax and liability exacted by the Union. The Union is solely responsible for the refund of the same and any liability, if so found by this Court, would be irrational without any fundamentals or any law. 8. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Units for the manufacture of P P Medicaments falling under Serial No.11 of the Schedule to the Notification No.56/2003-C.E., dated 25.06.2003. In the meanwhile, Office Memorandum dated 01.04.2007, was issued notifying the Industrial Policy, 2007, which also granted 100 per cent Excise duty exemption as provided in the Industrial Policy, 2003. That, however, the Industrial Policy, 2007, specifically provided that the new Industrial Units which commenced production within ten years of the said Memorandum, would be eligible for the incentive thereunder. In line with the Industrial Policy, 2007, Notification No.20/2007-C.E., dated 25.04.2007, was issued whereby the Petitioner s goods were exempted from so much of the duty of Excise leviable thereon as is equivalent to the amount of duty paid by the manufacturer of goods other than the amount of duty paid by utilization of CENVAT Credit. In the year 2008, the earlier notified 100 per cent Excise duty exemption was significantly curtailed by issuing two amending impugned Notifications No.21/2008 and 20/2008 supra, by which the benefit of exemption was limited to the certain prescribed percentage of value addition i.e. 56 per cent applic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urtailment or withdrawal. (vi) The Respondents (in the Writ Petitions under consideration then) while defending their action, claimed that a different mechanism was devised in public good and that the impugned Notification No.20/2008-C.E., dated 27.03.2008, does not deviate from the 100 per cent policy. This was sought to be explained by placing two separate calculations of Re-Credit/Refund under Area Based Exemption Notification. That, the Petitioner had started availing credit of the amount of duty paid other than by way of utilization of CENVAT Credit under the CENVAT Credit Rules, 2004 at the rate of 56 per cent right from the beginning. That, the Petitioner started paying Central Excise duty from the Personal Ledger Account with effect from August, 2009, by which time, the impugned Notifications No.21/2008, dated 27.03.2008 and 36/2008, dated 10.06.2008, were already in existence and the Respondent No.1 was empowered under Section 5A of the Central Excise Act, 1944, to grant exemption from duty of Excise if the Government was satisfied that it was necessary and in public interest so to do by a Notification in the Official Gazette. That, the Petitioner was duly entitled to c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... once declared by the Industrial Policy, 2007 and as put into operation by Notification No. 20/2007 was hugely reduced to only 56% that too only on the value addition undertaken in the manufacture of the said goods. Simply put value addition is the amount by which the value of any good is increased at each stage of its production, exclusive of initial cost. Whereas in the original Notification No. 20/2007, the exemption on payment of excise duty was referable to the excise duty payable on the finished goods in the impugned Notification No. 20/2008 the excise duty was restricted to the quantum of value addition only. This surely was something not promised vide the Industrial Policy, 2007 and Notification No. 20/2007. (x) This Court further expressed its agreement with the views of the High Court of Gujarat in Sal Steel Limited vs. Union of India (2010) 260 ELT 158 (Guj), Reckitt Benckiser (supra), Unicorn Industries (supra), Motilal Padampat Sugar Mills Co. Ltd. vs. State of Uttar Pradesh and Others (1979) 2 SCC 409 and Pawan Alloys and Casting Pvt. Ltd., Meerut vs. U.P. State Electricity Board and Others (1997) 7 SCC 251 and at Paragraph 87 concluded, as follows; 87. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he excise duty exemption as promised therein. Consequently impugned Notification Nos.20/2008 and 38/2008 are liable to be quashed to the extent they curtail and whittle down the 100% excise duty exemption benefit as promised vide Notification No.20/2007 and is hereby quashed. All impugned orders/ demand notices/show cause notices which are against the aforestated declarations of law are also quashed. (emphasis supplied) 10.(i) As already stated, against the Judgment of this Court dated 21.11.2017, the Union of India was in appeal before the Hon ble Supreme Court along with Judgments of various other High Courts on similar issues. The Hon ble Supreme Court, while considering the Civil Appeals arising out of the various impugned Judgments, observed in the case of Sikkim, that the High Court had quashed and set aside Notification No.20 of 2008-C.E., dated 27.03.2008, Notification No.36 of 2008-C.E., dated 10.06.2008 and Notification No.38 of 2008-C.E., dated 10.06.2008, on the ground that the same were against the principle of Promissory Estoppel and the Union of India. (ii) Before the Hon ble Supreme Court, the Union of India inter alia agitated that there was rampant misu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which has been quashed and set aside by the High Court being notification No. 16 of 2008 dated 27.03.2008 can be said to be clarificatory in nature and can it be said that it takes away the vested right conferred pursuant to the earlier notification of 2001 and whether the same can be made applicable retrospectively and whether the same has been issued in the public interest and whether the same is hit by the Doctrine of Promissory Estoppel? 11. While considering the aforesaid questions and before considering the nature of the subsequent notification of 2008, few decisions of this Court on retrospectivity/clarificatory/applicability of promissory estoppel in the fiscal statute are required to be referred to, which are as under: 11.1 In the case of Kasinka Trading (supra), in paragraphs 12, 20 and 23, it is observed and held as follows: 12. It has been settled by this Court that the doctrine of promissory estoppel is applicable against the Government also particularly where it is necessary to prevent fraud or manifest injustice. The doctrine, however, cannot be pressed into aid to compel the Government or the public authority to carry out a representation or promi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itioners that the industry would be exempted from sales tax for a particular number of initial years but when the State sought to levy the sales tax it was held by this Court that it was precluded from doing so because of the categorical representation made by it to the petitioners through letters in writing, who had relied upon the same and set up the industry. 23. The appellants appear to be under the impression that even if, in the altered market conditions the continuance of the exemption may not have been justified, yet, Government was bound to continue it to give extra profit to them. That certainly was not the object with which the notification had been issued. The withdrawal of exemption in public interest is a matter of policy and the courts would not bind the Government to its policy decisions for all times to come, irrespective of the satisfaction of the Government that a change in the policy was necessary in the public interest . The courts, do not interfere with the fiscal policy where the Government acts in public interest and neither any fraud or lack of bona fides is alleged much less established. The Government has to be left free to determine the priorit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the principle of promissory estoppel may be applicable against the Government. But the determination of applicability of promissory estoppel against public authority/Government hinges upon balance of equity or public interest . In case there is a supervening public interest, the Government would be allowed to change its stand; it would then be able to withdraw from representation made by it which induced persons to take certain steps which may have gone adverse to the interest of such persons on account of such withdrawal. Once public interest is accepted as the superior equity which can override individual equity, the aforesaid principle should be applicable even in cases where a period has been indicated for operation of the promise. .. 12. Now, so far as the decisions relied upon by the learned counsel appearing on behalf of the respective original writ petitioners-respondents herein are concerned, once it is held that the subsequent notifications/industrial policies impugned before the respective High Court are clarificatory in nature and it does not take away any vested rights conferred under the earlier notifications/industrial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... try without actual production being carried out and in absence of actual receipt of goods. ii) Reporting of bogus production by such units in these areas where actual production takes place elsewhere in the country. iii) Over valuation of goods resulting in availment of excess credit by buyers. iv) Goods are supplied by manufacturers, importers to these units without issuance of sales invoice and these are backed by bogus sale invoices issued by traders who do not undertake actual supply of goods. The actual supplier of these goods issue bogus duty paid invoices to other manufacturers who take credit based on such invoices without receipt of goods. Therefore, the Government came out with the impugned notifications/industrial policies that the refund of excise duty shall be provided on actual and calculated on the basis of actual value addition. On a fair reading of the earlier notifications/ industrial policies, it is clear that the object of granting the refund was to refund the excise duty paid on genuine manufacturing activities. The intention would not have been that irrespective of actual manufacturing/ manufacturing activities and even if the goods are not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve benefit of refund of the excise duty paid on the goods manufactured only on paper or in fact not manufactured at all. As the purpose of the original notifications/incentive schemes was being frustrated by such unscrupulous manufacturers who had indulged in different types of tax evasion tactics, the subsequent notifications/industrial policies have been issued allowing refund of excise duty only to the extent of duty payable on the actual value addition made by the manufacturers undertaking manufacturing activities in these areas which is absolutely in consonance with the incentive scheme and the intention of the Government to provide the excise duty exemption only in respect of genuine manufacturing activities carried out in these areas. 14.3 As observed hereinabove, the subsequent notifications/industrial policies do not take away any vested right conferred under the earlier notifications/industrial policies. Under the subsequent notifications/industrial policies, the persons who establish the new undertakings shall be continue to get the refund of the excise duty. However, it is clarified by the subsequent notifications that the refund of the excise duty shall be on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on establishing the new undertakings and they do not take away any vested rights conferred under the earlier notifications/industrial policies and therefore cannot be said to be hit by the doctrine of promissory estoppel, the same is to be applied retrospectively and they cannot be said to be irrational and/or arbitrary. (emphasis supplied) Learned Counsel for the Petitioner has admitted that the Hon ble Supreme Court, while examining the reduction in Excise duty exemption benefits, held that the subsequent Notifications were merely clarificatory in nature and did not take away any vested right and had, in fact, been issued in the larger public interest to prevent misuse and to achieve the original object and purpose of the incentive/exemption. 11. On a meticulous scrutiny of the pleadings before us and from a careful consideration of the facts canvassed by Learned Counsel for the parties, it goes without saying that the issues raised in the previous Writ Petitions determined by this Court vide Judgment dated 21.11.2017, are identical to the issues raised in the instant Writ Petition viz. W.P.(C) No.47 of 2018, the only distinguishing factor being that the Notificati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt of CGST paid from electronic cash ledger and the refund of 50 per cent of the IGST paid from electronic cash ledger. In fact, it was the submission of Learned Counsel for the Petitioner in I.A. No.02 of 2019, before this Court, that the subject matter in the SLP(s) supra dealt with the same issue as in the instant Writ Petition. It is relevant to notice that the Order of this Court, dated 17.09.2019, in the said I.A., reads inter alia as follows; Heard on I.A. No.02 of 2019 which is an application filed by the Petitioner, i.e., Sun Pharma Laboratories Limited, bringing on record subsequent developments relating to the subject-matter of WP(C) No.47 of 2018, which was finally heard on 03-09-2019 and Judgment reserved. It is submitted by Learned Counsel for the Petitioner that the Respondents No.1 and 2 filed SLP(C) Nos.10257 of 2018, 10253 of 2018, 12148 of 2018 and 12496 of 2018, before the Hon ble Supreme Court, against the Judgment of this Court dated 21-11-2017 in WP(C) Nos. 41 of 2015, 8 of 2017, 27 of 2017 and 40 of 2017. That, the said Appeals have been heard by the Hon ble Supreme Court and Judgment is reserved in those matters. As the subject-matter in the SLP( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and what is binding is the principle underlying a decision. A judgment of the Court has to be read in the context of questions which arose for consideration in the case in which the judgment was delivered. An obiter dictum as distinguished from a ratio decidendi is an observation by the Court on a legal question suggested in a case before it but not arising in such manner as to require a decision. Such an obiter may not have a binding precedent as the observation was unnecessary for the decision pronounced, but even though an obiter may not have a binding effect as a precedent, but it cannot be denied that it is of considerable weight. The law which will be binding under Article 141 would, therefore, extend to all observations of points raised and decided by the Court in a given case. So far as constitutional matters are concerned, it is a practice of the Court not to make any pronouncement on points not directly raised for its decision. The decision in a judgment of the Supreme Court cannot be assailed on the ground that certain aspects were not considered or the relevant provisions were not brought to the notice of the Court .. (emphasis supplied) 15. In conclus ..... 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