2024 (1) TMI 714 - HC - VAT and Sales Tax

Denial to grant of subsidy to the petitioner - seeking direction for setting aside the Notification dated 21.12.2018 (Annexure P-14) and Notification dated 09.01.2019 (Annexure P-18) seeking to amend the policy for grant of subsidy being against the law and contrary to the Enterprises Promotion Policy, 2015 - HELD THAT - In the case of Pournami Oil Mills 1986 (12) TMI 37 - SUPREME COURT it was a case where the State Government has granted package of concessions to new Small Scale Industries, thereafter the units were set up in response to the first order passed granting concessions. The order granting concessions was subsequently withdrawn by the Government. The Supreme Court held that all the units which have been set up in response to the first announcement made were entitled to claim all concessions on the plea of estoppels. Thereafter, a similar question came up for consideration before the Supreme Court in the case M/s Pawan Alloys and Casting Pvt. Ltd. 1997 (8) TMI 519 - SUPREME COURT . The Supreme Court was examining a case where the U.P. State Electricity Board had granted incentives to set up new industries for a particular period. Subsequently, this benefit was withdrawn by the Board. The Supreme Court examined and held that the withdrawal was made on account of any public interest and hence it was held that it was barred by promissory estoppels and the Board had granted the benefit for a period of three years and the benefit could not be withdrawn before three years. The units had already been set up. The petitioner had set up a small-scale technical textile unit in Village Khera Gani, Tehsil Shahzadpur, District Ambala, which falls in Block C . The industrial unit was covered as per the Notification dated 17.10.2017 showing categorization of blocks, notified on 02.06.2016 (Annexure P-2). The Haryana Government had issued a policy dated 12.06.2018 (Annexure P-9) pursuant to the Enterprises Promotion Policy-2015, where power tariff subsidy upto Rs. 2/- per unit for micro and small enterprises, category C and D blocks was to be provided for a period of three years from the date of release of power connection - The respondents cannot decline the benefit of subsidy in view of the Notification dated 21.12.2018 (Annexure P-14) as per the rule of estoppels they cannot deny this benefit as the industries have already been set up pursuant to the 2015 Policy and they have complied with all the conditions of the Enterprises Promotion Policy- 2015 (Annexure P-1), Notification dated 17.10.2017 (Annexure P-2) and the Policy dated 12.06.2018 (Annexure P-9). The order dated 28.05.2019 (Annexure P-21) passed by respondent No. 3-Uttar Haryaba Bijli Vitran Nigam Limited (UHBVNL) declining the grant of subsidy to the petitioner, is set aside and direction is being given to the respondents to pay the power subsidy as claimed by the petitioner as per the bills submitted without insisting on the policy decision notification dated 21.12.2018 (Annexure P-14). It is further being observed that the Notification dated 21.12.2018 (P-14) and 09.01.2019 (Annexure P-18) whereby the policy for grant of subsidy has been amended, will be applicable prospectively and not retrospectively pertaining to the units which were set up after the Notification of the Enterprises Promotion Policy- 2015 (Annexure P-1), Notification dated 17.10.2017 (Annexure P-2) and the Policy dated 12.06.2018 (Annexure P-9). The writ petition is allowed.

Summary

Issues Involved:
1. Legitimacy of the order dated 28.05.2019 denying subsidy.
2. Validity of the Notifications dated 21.12.2018 and 09.01.2019 amending the subsidy policy.
3. Applicability of the rule of estoppel and legitimate expectation.

Summary:

1. Legitimacy of the order dated 28.05.2019 denying subsidy:
The petitioner sought a writ of certiorari to set aside the order dated 28.05.2019 by UHBVNL, which declined the grant of subsidy. The petitioner, a small-scale unit manufacturing non-woven fabrics, was covered under the Enterprises Promotion Policy-2015. The policy aimed to promote industries in Haryana, especially in blocks B, C, and D, offering various incentives including power tariff subsidies. The petitioner's unit, located in Block-C, commenced commercial production on 03.05.2017 and applied for the subsidy in June 2017. However, the subsidy was denied based on a subsequent notification dated 21.12.2018, which limited the benefit to units with a connected load of 20KWA or less.

2. Validity of the Notifications dated 21.12.2018 and 09.01.2019 amending the subsidy policy:
The petitioner challenged the notifications dated 21.12.2018 and 09.01.2019, which amended the subsidy policy, arguing they were contrary to the Enterprises Promotion Policy-2015. The court noted that the petitioner's unit was established based on the 2015 policy, which promised a power tariff subsidy of Rs. 2/- per unit for three years. The subsequent notifications could not retroactively alter the benefits already granted under the 2015 policy.

3. Applicability of the rule of estoppel and legitimate expectation:
The court referred to precedents, including the Supreme Court's rulings in Pournami Oil Mills and M/s Pawan Alloys and Casting Pvt. Ltd., which held that incentives once granted and acted upon cannot be withdrawn retrospectively. The rule of estoppel and legitimate expectation mandates that the government cannot revoke benefits already promised and relied upon by the petitioner. The court emphasized that the petitioner's unit, set up under the 2015 policy, should continue to receive the promised subsidies.

Conclusion:
The court allowed the writ petition, setting aside the order dated 28.05.2019 by UHBVNL. It directed the respondents to pay the power subsidy as claimed by the petitioner without applying the restrictive notification dated 21.12.2018. The court clarified that the amendments in the notifications dated 21.12.2018 and 09.01.2019 would apply prospectively and not affect units established under the 2015 policy.