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2021 (2) TMI 829 - HC - GSTDoctrine of promissory estoppel - Impact of migration to GST from erstwhile area back exemption / incentive scheme in Central Excise - Validity of restrictions imposed by the Scheme of Budgetary Support, issued under the Goods and Services Tax regime vide Notification F.No.10(1)/2017-DBAII/NER, dated 05.10.2017, by the Respondent No.1, reducing the quantum of benefits earlier availed by the Petitioner - benefit of N/N. 56/2003-C.E., dated 25.06.2003 - alleged curtailment of 100 per cent Excise duty exemption granted vide the earlier Policies of the Government, which underwent a sea change under the new Tax regime in 2017 - whether the ratio in V.V.F. Limited 2020 (4) TMI 669 - SUPREME COURT would be applicable to the facts and circumstances of the instant case or does this matter require independent examination by this Court? - HELD THAT - The 100 per cent Excise duty exemption by way of refund availed by the Petitioner prior to the Tax Reform of 2017, was curtailed by the Respondents under the GST regime through the Budgetary Support Schemes reducing the benefits 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 Tax and Integrated Tax and 29 per cent of the Integrated 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. That, hence the Excise duty Exemptions availed by the Petitioner by way of refund in the pre GST regime, for both the Units were curtailed by the Respondent No.1 through the Budgetary Support Policy thereby reducing the benefit granted to the Petitioner, as the Petitioner is not allowed to take refund of full amount of CGST paid from electronic cash ledger and the refund of 50 per cent of the IGST paid from electronic cash ledger. The grievances of the Petitioner raised in the matter at hand is soundly quelled by the Hon ble Supreme Court in all aspects by the ratio in V.V.F. Limited (supra) and this Court does not intend to venture further - Petition dismissed.
Issues Involved:
1. Restrictions imposed by the Scheme of Budgetary Support under the GST regime. 2. Reduction in the quantum of benefits previously availed by the Petitioner. 3. Alleged violation of Promissory Estoppel. 4. Applicability of the Supreme Court's judgment in V.V.F. Limited. 5. Public interest and rationale behind the new Budgetary Support Scheme. Issue-wise Detailed Analysis: 1. Restrictions Imposed by the Scheme of Budgetary Support under the GST Regime: The Petitioner challenged the restrictions imposed by the Scheme of Budgetary Support issued under the GST regime, which reduced the benefits previously availed. The Petitioner, a Private Limited Company engaged in manufacturing P&P Medicaments and Consumer Health Products, argued that the new scheme reneged on promises made under the erstwhile tax regime, adversely affecting them. 2. Reduction in the Quantum of Benefits Previously Availed by the Petitioner: The Petitioner contended that the new scheme curtailed the 100 percent excise duty exemption they enjoyed under the previous regime. Under the GST regime, the Budgetary Support Scheme provided only 58 percent of the Central Tax and 29 percent of the Integrated Tax paid through debit in cash ledger, after full utilization of input tax credit. This reduction was argued to be contrary to Article 14 of the Constitution and the Petitioner’s right to avail the full benefit of the exemption. 3. Alleged Violation of Promissory Estoppel: The Petitioner argued that the principle of Promissory Estoppel applied, as they had made substantial investments based on the promises of 100 percent excise duty exemption. They claimed that the Respondents failed to demonstrate any supervening public interest necessitating the curtailment of benefits. The Petitioner relied on previous judgments, including SL Srinavasa Jute Twine Mills (P) Ltd. vs. Union of India and Southern Petrochemicals Industries Co. Ltd. vs. Electricity Inspector and Etio and Ors., to support their contention. 4. Applicability of the Supreme Court's Judgment in V.V.F. Limited: The Respondents argued that the Supreme Court's judgment in V.V.F. Limited, which set aside similar judgments by various High Courts, applied to the present case. The Supreme Court had held that the subsequent notifications were clarificatory in nature, did not take away any vested rights, and were issued in the larger public interest to prevent misuse and achieve the original object and purpose of the incentive/exemption. 5. Public Interest and Rationale Behind the New Budgetary Support Scheme: The Respondents justified the new scheme by stating that it was launched as a measure of goodwill and was unrelated to the erstwhile schemes. They argued that the new scheme was expedient in public interest and for revenue. The Respondents also highlighted that the Petitioner had availed benefits under the new scheme for various periods and then filed the writ petition, which was arbitrary and bad in law. Conclusion: The High Court dismissed the writ petition, finding no merit in the Petitioner’s arguments. The Court held that the issues raised were identical to those previously determined in the judgment dated 21.11.2017, which had been set aside by the Supreme Court in V.V.F. Limited. The Supreme Court had clarified that the subsequent notifications were issued in public interest and did not violate the principle of Promissory Estoppel. Therefore, the High Court found no reason to delve further into the question of Promissory Estoppel and upheld the new Budgetary Support Scheme under the GST regime.
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