9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2024 (1) TMI 823 - HC - Central ExciseArea Based Exemption - Benefit of budgetary scheme under Notification dated 05.10.2017 issued by the Ministry of Commerce and Industry (Department of Industrial Policy and Promotion) - industrial units which were under the threshold exemption and/ or manufacturing exempted goods. Case of Revenue is that the petitioners having opted for availing the benefits under the Notification No. 8/2003-CE dated 01.03.2003 to get the benefit of exemption from payment of Central Excise Duty, they cannot be extended the benefit of budgetary support which is restricted to only those units who had their registration under Central Excise and had paid Central Excise Duty and had collected their refunds as applicable. HELD THAT - As is seen from the recital of the notification of the budgetary support scheme, it is to provide financial support to those industries who were existing eligible manufacturing units operating in the various states mentioned including the North Eastern States under the industrial policies announced. The petitioner units were also availing benefits under the Industrial Policy and under the erstwhile Central Excise Law but were however either exempted from payment of central excise duty by virtue of their turnover being below threshold limit of 1.5 crores per annum or that the items which they had manufactured were already exempted. No materials have been placed before the Court by the respondents to suggest that because the petitioner units were not required to pay Central Excess Duty by virtue of their annual turnover being below the threshold limit of 1.5 crores or that they had produced goods which were already exempted under Central Excise Duty, they were not considered to be eligible industries to avail the benefits offered under the NEIIPP industry policy. In the absence of such specific averments and contentions on behalf of the respondents or in the absence of such specific clauses being available under the industrial policy itself, the petitioner industries will have to be considered to be eligible industries to avail the benefits as applicable and as conferred under the NEIIPP. The judgment of the Apex Court in M/S HERO MOTOCORP LTD. VERSUS UNION OF INDIA ORS. 2022 (10) TMI 677 - SUPREME COURT , relied upon by the respondents, had upheld the validity of budgetary scheme support. However, the question of the manufacturing units, like the petitioners, who, although were eligible to avail the benefits under the industrial policies, were not required to avail those benefits by virtue of their manufactured goods being exempted or their turnover fell below the threshold limit, was not at all an issue before the Apex Court in the said Judgment. The issue before the Apex Court was the validity of the budgetary scheme and which was upheld by the Apex Court - The scheme does not conceive of a class of manufacturing units who, although were eligible, were not availing the benefits under the industrial policies. The subsequent interpretation given by the respondent authorities vide the circular dated 10.01.2019 by way of a clarification is held to be beyond the purview of the budgetary scheme notification itself. The said clarification by circular dated 10.01.2019 to the extent it excludes the manufacturing units like the petitioner is therefore held to be bad and set aside accordingly. When the avowed object of the budgetary support scheme is to provide financial support to those industries who were eligible to avail benefits under the NEIIPP, the exclusion of the petitioner units on the classification that they did not pay Central Excise Duty either because their annual turnovers were below the threshold limit of 1.5 crores or that they had produced items which were already exempted is based on fiction and cannot be permitted to be a ground to deny the benefits of budgetary support scheme. The respondent authorities are therefore directed to examine the individual claims of the petitioners and if they are found to have satisfied the criteria and the eligibility laid down under the NEIIPP, the benefits of budgetary support scheme as had been extended to other similarly situated units shall also be extended to the petitioner units. The respondent authorities will forthwith proceed to examine the individual claims and pass appropriate orders within a period of 30 days from the date of receipt of the certified copies this order. Petition allowed.
Issues Involved:
1. Eligibility for Budgetary Support Scheme under GST Regime. 2. Validity of the classification made under the Budgetary Support Scheme. 3. Application of Promissory Estoppel and Legitimate Expectation. Summary: 1. Eligibility for Budgetary Support Scheme under GST Regime: The petitioners, industrial units with turnovers below 1.5 crores or manufacturing exempted goods, were not registered under the Central Excise Act due to their eligibility for exemptions under Notification No. 8 of 2003-CE. With the introduction of the GST regime in 2017, these units became taxable under GST and registered accordingly. The Government of India introduced the "Budgetary Scheme" to provide support to units eligible under the earlier excise duty exemption/refund schemes. However, the petitioners' claims for budgetary support were rejected based on a circular dated 10.01.2019, which stated that benefits would not be available to units not registered under the Central Excise Act prior to the GST regime. The petitioners challenged this rejection, seeking a Writ of Mandamus to direct authorities to extend budgetary support benefits to them. 2. Validity of the Classification Made Under the Budgetary Support Scheme: The court examined the classification under the Budgetary Support Scheme, which extended benefits only to units registered under the Central Excise Act and paying excise duty prior to the GST regime. The court found this classification unreasonable and not having a rational nexus with the object of the scheme, which was to provide financial support to units eligible under the NEIIPP. The court held that excluding units based on their non-registration under the Central Excise Act due to their turnover being below the threshold limit or manufacturing exempted goods was arbitrary and violated Article 14 of the Constitution of India. The court noted that all units, including the petitioners, are now required to pay GST, and the classification fails to achieve the scheme's objective. 3. Application of Promissory Estoppel and Legitimate Expectation: The court addressed the petitioners' arguments based on promissory estoppel and legitimate expectation. It was held that the government cannot arbitrarily resile from promises made under the NEIIPP, which encouraged the establishment of industrial units by offering tax exemptions. The court emphasized that the Budgetary Support Scheme was introduced to mitigate hardships due to the withdrawal of excise duty exemptions under the GST regime. The exclusion of the petitioners from the scheme, despite their eligibility under the NEIIPP, was found to be contrary to the principles of promissory estoppel and legitimate expectation. Conclusion: The court directed the respondent authorities to examine the individual claims of the petitioners and extend the benefits of the Budgetary Support Scheme to them if they meet the eligibility criteria under the NEIIPP. The classification excluding the petitioners was held to be arbitrary and violative of Article 14, and the circular dated 10.01.2019 was set aside to the extent it excluded the petitioners from the scheme.
|
