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TMI Blog2023 (9) TMI 631X X X X Extracts X X X X X X X X Extracts X X X X ..... gita Pradhan, Deputy Solicitor General of India assisted by Ms Natasha Pradhan, Advocate for the respondents JUDGMENT (Bhaskar Raj Pradhan, J.) 1. The two writ petitions are taken up for consideration. W.P. (C) No. 20 of 2022 has been preferred by Zydus Wellness Products Limited while W.P. (C) No. 27 of 2022 has been preferred by Alkem Laboratories Limited. 2. In the case of Zydus Wellness Products Limited, on 28th February 2019, Zydus Wellness-Sikkim - a Partnership Firm, was converted into Zydus Nutritions Limited, pursuant to sub-section (2) of section 7 of the Companies Act, 2013 and Rule 18 of the Companies (Incorporation) Rules, 2014. Thereafter, on 4th June, 2019, Zydus Nutritions Limited changed its name to Zydus Wellness Products Limited pursuant to Rule 29 of the Companies (Incorporation) Rules, 2014. Zydus Wellness Products Limited seeks budgetary support under the "Scheme of Budgetary Support dated 05.10.2017" (the Budgetary Support Scheme), for the "residual period" for which Zydus Wellness Sikkim was entitled to exemption under Notification No. 20/2007-C dated 25.4.2007. 3. In the case of Alkem Laboratories Limited, in October 2019, Unit-V was transferred by way ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provisions are to be construed strictly as regards the applicability thereof to the case of the assessee but once it is found that the same is applicable, it is required to be interpreted liberally. He relied upon P.R. Prabhakar vs. CIT, Coimbatore (2006) 6 SCC 86, TATA Iron & Steel Co. Ltd. vs. State of Jharkhand (2005) 4 SCC 272 and Government of India vs. Indian Tobacco Association (2005) 7 SCC 396. He also relied upon various judgments of the Supreme Court on how exemption notifications ought to be interpreted: Commissioner of Customs (Imports), Mumbai vs. Tullow India Operations Ltd. (2005) 13 SCC 789, Assistant Commissioner (CT) LTU & Anr. vs. Amara Raja Batteries Ltd. (2009) 8 SCC 209, Commissioner of Customs (Preventive), Gujarat vs. Reliance Petroleum Limited and Bajaj Tempo Ltd. (2008) 7 SCC 220, and Bajaj Tempo Ltd., Bombay vs. Cit, Bombay City III Bombay (1992) 3 SCC 78. 8. The learned Deputy Solicitor General of India submitted that Zydus Wellness Products Limited came into existence after change in its constitution from partnership firm to private limited company. Unit to be declared as an "eligible unit" under the Budegtary Support Scheme is synonymous with the comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unsel for the petitioners have also referred to several judgment of various High Courts and Tribunals in support of their contentions. This Court has examined all of them. None of these judgments relate to the Budgetary Support Scheme. None of the ratios laid down would apply to the facts of the present writ petitions. The judgments of the Supreme Court cited with regard to interpretation of exemption notification are well settled pronouncements. The Budgetary Support Scheme is only a concession and not an exemption. The Budgetary Support Scheme would also however be liable to be strictly construed keeping in mind the intention of the Government of India for providing the budgetary support to "eligible units". 12. In Dana India Pvt. Ltd. (supra), the petitioner entered into a slump sale agreement with M/s Axles India Limited to take over and operate as a growing concern the Axles business from the latter, w.e.f., 1.7.2011 and they wished to continue to avail exemption under Central Excise Notification by which exemption was being availed by Axles India Limited. The High Court allowed the writ petition in view of the circular issued by the Central Board of Excise & Customs (CBEC) a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion filed for budgetary support under this scheme with reference to: (a) Central Excise registration number, for the premises of the eligible manufacturing unit, as it existed prior to migration to GST; or (b) GST registration, for the premises as a place of business, where manufacturing activity under exemption notification no.49/2023-CE dated 10.6.2003-CE and 50/2003-CE dated 10.6.2003 were being carried prior to 01.07.2017 and the unit was not registered under Central Excise." 17. Paragraph 4.3 defined residual period as follows: "4.3 "Residual period" means the remaining period out of the total period not exceeding 10 years, from the date of commencement of commercial production, as specified under the relevant notification listed in paragraph 2, during which the eligible unit would have been eligible to avail exemption for the specified goods. The documentary evidence regarding date of commercial production shall be submitted in terms of para 5.7." 18. Paragraph 2.3 provides that Notification No.20/2007-CE dated 25.4.2007 as amended from time to time was the scheme which was in operation on 18.7.2017 in the State of Sikkim. 19. As paragraph 4.3 which defines "residual ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under the Input Tax Credit Rules, 2017, to the Assistant Commissioner or Deputy Commissioner of Central Taxes, as the case may be, by the 15th day of the succeeding month after end of quarter after payment of tax relating to the quarter to which the claim relates. 7.2. The Assistant Commissioner or Deputy Commissioner of Central Taxes, as the case may be, after such examination of the application as may be necessary, shall sanction reimbursement of the budgetary support. The sanctioned amount shall be conveyed to the applicant electronically. The PAO, CBEC will sanction and disburse the recommended reimbursement of budgetary support." 23. Paragraph 5.8 defines "manufacture" as any change(s) in the physical object resulting in transformation of the object into a distinct article with a different name or bringing a new object into existence with a different chemical composition or integral structure. 24. As the Budgetary Support Scheme has been issued under the Goods and Services Tax Regime to the units located in, inter alia, the State of Sikkim, it would be relevant to consider some of the provisions of the CGST Act, 2017). 25. Section 2(72) defines the word "manufacture" as u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elf under section 22 of the CGST Act, 2017. Admittedly, all the "persons" at different points of time did so. 31. The respondents have filed their counter-affidavits. In the case of Zydus Wellness Products Limited, it is contended that on its conversion from a partnership entity to a company limited by shares on 28.02.2019 they were not clear as to whether it could be considered as "eligible unit" and accordingly a reference was made to Central Board of Indirect Taxes and Customs (CBIC). The matter was examined by DIPP, Ministry of Commerce in consultation with CBIC and it was decided that as per guidelines of the Budgetary Support Scheme, if any unit undergoes for relocation, expansion and change of ownership, it will not be eligible under the Budgetary Support Scheme. The CBIC, therefore, opined that Zydus Nutritions Limited (later Zydus Wellness Products Limited) was not eligible for Budgetary Support Scheme. 32. Similarly, in the case of Alkem Laboratories Limited, it was also held that if any unit undergoes relocation, expansion and change of ownership, it will not be eligible under the scheme of budgetary support. Accordingly, the CBIC had also opined that Alkem Laboratori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sted prior to migration to GST or GST registration for the premises as a place of business where manufacturing activities under the exemption notification no.49/2003-CE dated 10.06.2003 and 50/2003-CE dated 10.06.2003 were being cleared. This was definitely related to the manufacturer or the "person" registered. The definition of "residual period" also relates to the remaining period out of the total period not exceeding ten years from the date of commercial production. The documentary evidence regarding date of commercial production in terms of paragraph 5.7 also relates to the option filed by the manufacturer at the relevant point of time for availing the exemption notification. This would thus mean the date of commercial production of Zydus Wellness-Sikkim the partnership firm and Cachet Pharmaceuticals Private Limited and not the present petitioners. 38. Under the CGST Act, 2017, it is the "person" as defined under section 2(84) who is liable to the tax thereunder. Consequently, the Budgetary Support Scheme which is limited to the tax which accrues to the Central Government under the CGST Act, 2017 and IGST Act, 2017 is liable to be paid by the "person". Reading the definition ..... X X X X Extracts X X X X X X X X Extracts X X X X
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