TMI Blog2023 (9) TMI 1355X X X X Extracts X X X X X X X X Extracts X X X X ..... eimbursement of State GST on End User restriction by providing, inter alia, that if any ITC is claimed by recipient of the goods sold by an eligible industry, the eligible industry would not be entitled for reimbursement of SGST as promised in the Industrial Policy, 2016. In view of the Explanation inserted vide Notification dated 7th March, 2019, benefit of reimbursement of SGST would not be available to the petitioner at any cost. Petitioner has specifically pleaded that the Explanation inserted would make the entire benefit under the policy as nugatory and/or illusionary and, in fact, the benefit stipulated in I.P. 2016 has actually been made illusionary and nugatory for the petitioner, as the High Powered Committee which earlier sanctioned incentive to the petitioner, kept in abeyance its decision vide its subsequent decision dated 06.02.2023. In view of the facts mentioned hereinabove, the issue is answered in affirmative and it is declared that amendment carried out vide Notification dated 7th March, 2019, wherein Explanation has been inserted to Clause 7.5(aa) of I.P. 2016, is clearly without jurisdiction, without sanction of law and is also ultra vires I.P. 2016. Whether ev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ioner by the High Powered Committee on 6th January, 2022, reimbursement of SGST paid was not calculated on the basis of the expanded unit, but was calculated taking into consideration the entire unit i.e., the original and expanded unit of the Petitioner, which resulted into reduction of the claim of subsidy of the petitioner - The Respondent-State of Jharkhand is directed to calculate the incentive towards reimbursement of SGST paid to the petitioner keeping in view the expanded unit of the petitioner only, as the petitioner is maintaining separate books of account and, consequently, to sanction and disburse the amount claimed by the Petitioner. The amendment carried out vide Notification dated 7th March, 2019 is not sustainable and, accordingly, the decision of the High Powered Committee dated 17.02.2023 and the letter dated 30.12.2022 issued by Additional Commissioner, Commercial Taxes Department is quashed and the Respondents are directed to release the amount towards reimbursement of SGST subsidy to the Petitioner under I.P. 2016 for the period 2017-18 to 2022-23 within a period of three months from the date of receipt/production of the copy of this order. Application allowed. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the Petitioner s Industry. (iii) For issuance of further appropriate writ/order/direction for quashing/setting aside the decision contained in Memo No 393 dated 17.02.2023 (Annexure-15) of the High Power Committee headed by the Chief Secretary of Jharkhand, wherein it has been decided that Petitioner-Unit is not eligible for grant of SGST subsidy as per existing Standard Operating Procedure (for short SOP ) issued by Commercial Taxes Department, Jharkhand and, accordingly, decision was taken to keep the decision of the High Powered Committee dated 6th January, 2022 in abeyance by which subsidy of Rs. 53,17,97,670/-, as SGST subsidy was sanctioned in favour of the Petitioner. (iv) For issuance of further appropriate writ/order/direction for quashing/setting aside Letter dated 13.12.2022 (Annexure-16) issued by Additional Commissioner, Commercial Taxes Department (Respondent No.8) to the extent it relates to the Petitioner-Unit, wherein it has been communicated to Director of Industries (Respondent No.3) that Petitioner is not entitled for the benefit of SGST subsidy under the Policy of 2016. (v) For issuance of further appropriate writ/order/ direction, including Writ of Mandamu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. The date of commercial production of the unit was determined as 20.02.2017, which was during subsistence of the policy, which was effective from 01.04.2016 for five years. 7. The policy itself contemplated that GST regime is likely to be implemented shortly and, accordingly, a Note was provided under clause 7.5 of the policy enabling the State Government to make appropriate amendment, deletion or substitution of any incentives granted in the policy after implementation of the Goods and Service Tax System into the State. 8. The State of Jharkhand, after implementation of GST regime, amended Clause 7.5 of the Policy vide Notification contained in Memo No. 1335 dated 16.05.2018 and inserted Clause 7.5 (aa) providing, inter alia, that new large units including the units having undertaken expansion/ modernization/diversification, would be given incentive of 75% reimbursement of State GST paid on Intrastate Sale subject to actual realization in the State Government Treasury for seven years with a ceiling of 100% of total fixed capital investment made. Thus, State Government, after implementation of the GST regime, in consonance with the spirit of the Industrial Policy, extended the be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gh Powered Committee decided to keep in abeyance the earlier decision of grant of SGST subsidy to the petitioner by relying upon the purported amendment carried out in the Industrial Policy vide Notification dated 7th March, 2019, wherein an Explanation was inserted to Clause 7.5(aa). Reliance was also placed upon the Standard Operating Procedure (for short SOP ) issued by Commercial Taxes Department for denying the benefit of reimbursement of State GST to the Petitioner. 12. By virtue of Notification dated 7th March, 2019, an Explanation was inserted to Clause 7.5(aa) of the I.P.2016, wherein the term SGST paid on intrastate sale subject to tax realization in the State Government Treasury, as contained under Clause 7.5(aa) was expanded and it was provided, inter alia, that if a subsequent taxable person to whom supply of goods has been made, claims Input Tax Credit (for short ITC ) on the goods supplied, benefit of SGST subsidy would not be available to the Industry. In the garb of the said Explanation inserted to Clause 7.5(aa), Commercial Taxes Department, vide its letter dated 13.12.2022 held that petitioner is not entitled for any subsidy as the goods which have been sold by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l be entitled to get similar benefits in respect of VAT. However, they have to maintain separate record of production, investment details and VAT paid/payable after such expansion/ diversification / modernization. In case, maintaining a separate record is not possible by such units the benefit to such eligible units shall be available in the ratio of installed capacity. (c) Any unit claiming these benefits will have to get registered with Commercial Taxes Department, Government of Jharkhand and shall have to file all their statutory returns. (d) Department of Commercial Taxes shall give top priority to such units in matters of final assessment of annual tax return in a specific time frame. (e) Commercial Taxes Department shall also notify the responsibility of assessing officers along with time frame to be maintained in assessment of tax. (f) VAT incentive will be made on annual basis and claim for such incentives shall be made in the next financial year after the financial year in which DoP was given. (g) The unit for which return assessment has not been duly completed by Commercial Taxes Department will not be eligible for incentive of the VAT claimed for the next year. (h) Net V ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . (ii) New Large unit will be given incentive of 75% reimbursement of state GST paid on intra state sale subject to the tax actual realization in the state government treasury for seven year from the Date of production with a ceiling of 100% of total fixed capital investment made. (iii) New Mega unit will be given incentive of 75% reimbursement of state GST paid on intra state sale subject to the tax actual realization in the state government treasury for nine year from the Date of production with a ceiling of 100% of total fixed capital investment made. (iv) New ultra Mega unit will be given incentive of 75% reimbursement of state GST paid on intra state sale subject to the tax actual realization in the state government treasury for twelve year from the Date of production with a ceiling of 100% of total fixed capital investment made. 16. By referring to the amended Notification dated 16th May, 2018, it was contended that said Notification clearly records, inter alia, that said amendment is being made pursuant to decision of the Council of Ministers dated 18.04.2018, wherein decision has been taken to amend the Industrial Policy to make it in consonance with the GST regime. It has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gible for reimbursement. 20. It has been contended that the Department of Industries, while issuing follow up Notification, has, in effect, introduced an End User Condition Within the State which amounts to imposing additional condition and/or restriction in availing the benefit under the policy, which is not permissible in the eye of law. Reference in this regard has been placed by the counsels for the Petitioner on the decisions rendered by Hon ble Apex Court in the cases of :- (i) State of Bihar Vs. Suprabhat Steel Ltd., reported in (1999) 1 SCC 31 (relevant Para-7). (ii) State of Orissa and Orts. Vs. Tata Sponge Iron Ltd., reported in (2007) 8 SCC 189. (iii) Manuelsons Hotels Private Ltd. Vs. State of Kerala and Ors., reported in (2016) 6 SCC 766. 21. It has been fervently submitted that the petitioner in the writ application specifically pleaded that amendment vide Notification dated 7th March, 2019 has been carried out by the Department of Industries, Government of Jharkhand and not by the State of Jharkhand in exercise of power under Clause 10.7 of the I.P. 2016 and said Notification is bad in law. It has been submitted that the averment made in the writ application that afo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Petitioner, as the Petitioner has made substantial investment and has altered its position. Reliance in this regard has been placed to the decisions in the cases of Birla Corporation Ltd., MRF Ltd. and Pondicherry State Cooperative Consumer Federation Ltd., and it has been contended that Hon ble Apex Court in the aforesaid Judgments has held that rigorous burden of proof lies on State to show the supervening public interest and mere loss of future revenue cannot be a ground to invoke benefit promised under the policy, on the strength of which, Industrial Unit has already established and commenced production. Following rulings have been cited in support of aforesaid contentions. (i) State of U.P. Vs. Birla Corporation Ltd. reported in (2020) 72 GSTR 1 (SC); (ii) MRF Ltd. Vs. ACST, reported in (2006) 8 SCC 702; and (iii) Pondicherry State Cooperative Consumer Federation Ltd. vs. Union Territory of Pondicherry, reported in (2007) 10 VST 630 (SC). 25. Petitioner has further placed reliance upon the decision of Hon ble Apex Court in the case of Brahamputra Metallics Ltd., reported in 2020 SCC Online SC 968, and has contended that State Government, after having promised to grant indu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ary, 2022. It has been contended by the petitioner that petitioner, for the period 2017-18 up to 2022-23, is entitled for subsidy being 75% reimbursement of NET SGST paid of Rs. 117,13,33,199/- and appropriate direction in the nature of Mandamus be issued upon Respondents to sanction the said amount and, consequently pay incentive to the petitioner within the stipulated time. Petitioner also, during the course of arguments, emphasized that due to latches being committed on behalf of the State Government, petitioner has been denied its valid claim of incentive and, thus, it is liable to be compensated on account of withholding of the amount towards reimbursement of SGST incentive by issuance of appropriate direction upon the State Government to pay interest on the incentive amount to the Petitioner. 28. Per contra, Mr. Sachin Kumar, learned AAG-II has defended the decision of the High Powered Committee dated 17.03.2023 by placing reliance upon Counter Affidavit filed by the State of Jharkhand, more particularly, Paragraphs 10 and 11 thereof, which reads as under:- 10. That it is stated and submitted that in the year 2017 after coming of GST and after implementation of GST, State of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Counter Affidavit of any supervening public interest for amending/withdrawing the benefits conferred under the policy and, on the contrary, the Notification dated 7th March, 2019 speaks about implementation of the Policy. 31. We have heard learned counsels for the partiers and have given our anxious consideration to the submissions made in the bar. In our opinion, following two questions arise for consideration in the instant writ petition, namely:- (i) Whether a Notification issued under Clause 10.7 of I.P. 2016 by the Department of Industries for giving effect to the provisions of the Policy can lay down additional conditions and/or restrictions for availment of benefit of Incentive which has not been stipulated under the Policy? (ii) Whether even if it is presumed that Notification dated 7th March, 2019 has been issued by the State of Jharkhand in exercise of power under Clause 10.10 of I.P. 2016 curtailing the benefit of Incentive of reimbursement of SGST, the same is contrary to the principles of Promissory Estoppel and whether the same can be sustained in absence of any supervening public interest being pleaded and/or established by the State of Jharkhand for curtailing t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e appended to Clause 7.5 with a clear intention to convey a message that it has already amended the policy in terms of the GST regime and the benefit offered under the Policy would not be further amended and/or curtailed. 35. However, interestingly, the Department of Industries, Government of Jharkhand issued the impugned Notification dated 7th March, 2019, wherein although in the said Notification it was spelt out that the same is being issued for implementation of I.P. 2016, but, interestingly, an Explanation was added to Clause 7.5(aa)(v). We are again quoting the said Explanation for the sake of ready reference:- (aa)(v) Explanation:- Actual realization in the state treasury means the goods supplied by the industrial unit and finally consumed within the state and SGST paid thereof realized in the state treasury. If any ITC is claimed on the goods supplied by the unit or by any subsequent taxable person in any manner whatsoever e.g. ITC on inter-State supply, then SGST paid on such goods shall not be eligible for reimbursement. 36. By virtue of the aforesaid Explanation, the term actual realization in the State Treasury was defined to mean Goods supplied by the Industrial Unit a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the State Government in its own industrial incentive policy. But in exercise of such power, it would not be permissible for the State Government to deny any benefit which is otherwise available to an industrial unit under the incentive policy itself. The industrial incentive policy is issued by the State Government after such policy is approved by the Cabinet itself. The issuance of the notification under Section 7 of the Bihar Finance Act is by the State Government in the Finance Department which notification is issued to carry out the objectives and the policy decisions taken in the industrial policy itself, In this view of the matter, any notification issued by government order in exercise of power under Section 7 of the Bihar Finance Act, if is found to be repugnant to the industrial policy declared in a government resolution, then the said notification must be held to be bad to that extent. In the case in hand, the notification issued by the State Government on 4-4-1994 has been examined by the High Court and has been found, rightly, to be contrary to the Industrial Incentive Policy, more particularly, the policy engrafted in clause 10.4(i)(b. Consequently, the High Court was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court, in its Judgment rendered in the case of Tata Sponge Iron Pvt. Ltd. , vide Paras 13 and 20, has held as under:- 13. The High Court passed the impugned Judgment inter alia on the premise that operational guidelines being in the nature of a subordinate sub-delegated legislation, the same was required to be in consonance with the IPR and by reason thereof no other or further condition could have been stipulated so as to prevail over the policy decision itself holding: .. If we accept the contention advanced by the learned counsel for the Revenue that the operational guidelines provide a limitation or time-period for sales tax incentives, it would tantamount to accepting a principle that by sub-delegated legislation, a delegatee may also effectively amend or supplant legislation, which it is clearly incompetent to do. On a reading of the said operational guidelines and the terms thereof would clearly indicate that the stipulations regarding time period find mention in Clause 5 of the operational guidelines . It would be clear that the said stipulation would relate only to those industries covered under Paras 7.3 and 7.4 of IPT, 1992 and would be limited to apply to those industr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ely covered by the aforesaid decisions of the Hon ble Supreme Court, as in the present case also, Department of Industries, Government of Jharkhand, in exercise of the power under Clause 10.7 of I.P. 2016, wherein power has been given for laying down operational guidelines, has imposed additional condition curtailing the benefit of reimbursement of State GST on End User restriction by providing, inter alia, that if any ITC is claimed by recipient of the goods sold by an eligible industry, the eligible industry would not be entitled for reimbursement of SGST as promised in the Industrial Policy, 2016. 41. At this stage, we would like to refer to the pleading made in the writ application, specifically paragraphs 47 and 48 thereof, wherein petitioner has specifically pleaded that its expanded unit is manufacturing Pig Iron which is not a consumable product by the people at large, or is not an End User product. It has been specifically pleaded that the expanded unit manufactures Pig Iron and Sinter, which necessarily can be used only by a Unit manufacturing Iron and Steel and the manufacturer of Iron and Steel would inevitably be entitled for ITC on the said amount and, thus, in view o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat State of Jharkhand is abundantly rich in mineral resources and also despite the fact that it is promulgating attractive Industrial Policies, still adequate industrial development has not taken place in the State of Jharkhand in a proportionate manner. This, in our opinion, is primarily due to lack of confidence among the potential investors regarding certainty of implementation of the Industrial Policy by the authorities of the State of Jharkhand. The classic example is the case of the petitioner before us. I.P. 2016, vide Clause 2.2, provided Single Window Clearance Mechanism wherein for Ease of Doing business and for providing mandatory clearances and disbursement of fiscal incentives within the time limit, a High Powered Committee was formed under the Chairmanship of the Chief Secretary with the Principal Secretary of Department of Industries, Mines and Geology, and few other Secretaries as Members, for granting approvals of fiscal incentives for large industries. In the case of the petitioner, the High-Powered Committee, vide its decision dated 6th January, 2022, considered the claim of the Petitioner for SGST incentive for the period 2017-18 to 2020-21 under I.P. 2016 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he time limit within which follow-up action would be taken by the State government through its departments for implementing the Industrial Policy 2012. 52. The State having held out a solemn representation in the above terms, it would be manifestly unfair and arbitrary to deprive industrial units within the State of their legitimate entitlement. The State government did as a matter of fact, issue a statutory notification under Section 9 but by doing so prospectively with effect from 8 January 2015 it negated the nature of the representation which was held out in the Industrial Policy 2012. Absolutely no justification bearing on reasons of policy or public interest has been offered before the High Court or before this Court for the delay in issuing a notification. The pleadings are completely silent on the reasons for the delay on the part of the government and offer no justification for making the exemption prospective, contrary to the terms of the representation held out in the Industrial Policy, 2012. 53. It is one thing for the State to assert that the writ petitioner had no vested right but quite another for the State to assert that it is not duty bound to disclose its reasons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble Supreme Court was interpreting a beneficial Notification of Exemption and, vide Para 27 of its report has held as under :- 27. This being the case, it is obvious that the beneficial purpose of the exemption contained in Section 3(1)(b) must be given full effect to, the line of authority being applicable to the facts of these cases being the line of authority which deals with beneficial exemptions as opposed to exemptions generally in tax statutes. This being the case, a literal formalistic interpretation of the statute at hand is to be eschewed. We must first ask ourselves what is the object sought to be achieved by the provision, and construe the statute in accord with such object. And on the assumption that if any ambiguity arises in such construction, such ambiguity must be in favour of that which is exempted. Consequently, for the reasons given by us, we agree with the conclusions reached by the impugned judgments of the Division Bench and the Full Bench. 46. Definitely, the objective of the Industrial Policy was to promote Industrial Growth and it is in that background provisions were incorporated for reimbursement of 75% of SGST. However, impugned Notification dated 7th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 99 years. 55. It was furthermore observed: (Sant Steels Case, SCC p. 803 para 35) 35. In this 21st century, when there is global economy, the question of faith is very important. The Government offers certain benefits to attract the entrepreneurs and the entrepreneurs act on those beneficial offers. Thereafter, the Government withdraws those benefits. This will seriously affect the credibility of the Government and would show the short-sightedness of governance. Therefore, in order to keep the faith of the people, the Government or its instrumentality should abide by their commitments. In this context, the action taken by the appellant Corporation in revoking the benefits given to the entrepreneurs in the hill areas will sadly reflect their credibility and people will not take the word of the Government. That will shake the faith of the people in the governance. Therefore, in order to keep the faith and maintain good governance, it is necessary that whatever representation is made by the Government or its instrumentality which induces the other party to act, the Government should not be permitted to withdraw from that. This is a matter of faith. 48. Recently, Hon ble High Court o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deprive MRF of the benefit of exemption for more than 5 years out of a total period of 7 years, in our opinion, is highly arbitrary, unjust and unreasonable and deserves to be quashed. In any event, the State Government has no power to make a retrospective amendment to SRO No. 1729/93 affecting rights already accrued to MRF thereunder. 49. The said Judgment of Odisha High Court was challenged before Hon ble Apex Court and S.L.P. has been dismissed. 50. There is one another aspect which we intend to highlight in our Judgment regarding retrospective application of Notification dated 07.03.2019. Admittedly, said Notification does not provide for any retrospective application and is prospective in nature. The Petitioner-unit came into commercial production on 20.02.2017 and there was no stipulation under the Industrial Policy which provided that benefit of reimbursement of NET VAT/SGST would not be paid to it if the recipient of the goods has availed ITC on such goods. In absence of the Notification dated 07.03.2019 being given retrospective effect, the accrued and acquired right of the petitioner cannot be curtailed. In view of the cumulative facts, we hereby declare that the Notifica ..... X X X X Extracts X X X X X X X X Extracts X X X X
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