2024 (12) TMI 873 - HC - GST

Entitlement to the budgetary support under the Budgetary Support Scheme - Interpretation of eligible unit under the BSS - HELD THAT - The notification of 2007 was issued with the specific purpose of (i) exempting the goods specified in the First Schedule to the Central Excise Tariff Act, 1985 (ii) which was cleared from a Unit located in the areas detailed in the petition, including Sikkim (iii) from so much of the duty of excise leviable thereon, under the said Act as is equivalent to the duty payable on value addition, undertaken in the manufacture of the said goods by the said Unit. The contents are self-explanatory, suffice it to elucidate that the Government has exercised its power in public interest. Certain amendments were inserted in the aforementioned notification by notification no.20/2008-CE, dated 27-03-2008. A purposive interpretation is to be given to the object of the notification of 2007 which ought to be considered holistically and not interpreted in a narrow ambit. It was undoubtedly a concerted effort on the part of the Central Government to bring the areas mentioned in the notifications, which are in difficult terrain, at par with the rest of the country, in terms of industrialisation and investment. The residual period is the period remaining for the tax exemption, which was rendered incomplete on account of the BSS being notified on 05-10-2017. As the 2017 notification came into force in the midst of the ten year period of commercial production by the appellants, it is reiterated that the ten year period was not complete when the GST regime came to be enforced. In the instant cases as seen from the litany of correspondence and office memoranda supra, the anxiety of the appellants have remained unaddressed. There is no information regarding rejection or for that matter, any decision taken by the DPIIT regarding the eligibility or otherwise of the appellants. As is evident, the communication dated 06-04-2022 leaves the decision concerning the eligibility of the appellants to be taken by the CGST CX, Central Excise, Siliguri, West Bengal. Having given due consideration to the entire gamut, the facts and circumstances of the case and documentary evidence placed, it is inclined to agree with the argument of the appellants that to avail of the BSS, the concerned Unit is to be located in the areas specified in the notifications of 2007 and 2017, producing specified goods which were to be cleared from the self same Units. The intent of the BSS, pivoted around the geographical location of the Unit and the benefit that was to accrue to the said Units for the residual period - it is constrained to observe that by change of names or acquisition of a new Unit within the State of Sikkim, there is no change in respect of the geographical location of the Unit, which were in existence in Sikkim prior to the GST regime. The impugned judgment rendered by the learned Single Judge in the two writ petitions is liable to be set aside and is hereby set aside - Appeal disposed off.

Issues Involved:

1. Eligibility for budgetary support under the Budgetary Support Scheme (BSS).
2. Impact of change in ownership or expansion on eligibility for BSS.
3. Interpretation of "eligible unit" under the BSS.
4. Procedural aspects related to the application and registration for BSS benefits.

Detailed Analysis:

1. Eligibility for Budgetary Support under the BSS:

The primary issue was whether the appellants were entitled to budgetary support under the BSS. The appellants argued that the scheme was intended to support "eligible units" and not the owners of those units. The respondents contended that due to changes in ownership, the appellants were new legal entities and thus ineligible for the BSS. The court examined the provisions of the BSS, including definitions of "eligible unit" and "residual period," and concluded that the scheme was intended to support units that were operational before the transition to the GST regime and were eligible for excise duty exemptions under previous notifications.

2. Impact of Change in Ownership or Expansion on Eligibility for BSS:

The court addressed whether a change in ownership or expansion of a unit affected its eligibility for the BSS. The learned Single Judge had concluded that such changes rendered the units ineligible. However, the appellate court disagreed, stating that the mere fact of expansion, acquisition, or change of name did not negate the primary requirement that these were existing units prior to the GST regime. The court emphasized that the BSS was unit-specific and focused on the geographical location and the nature of goods produced, rather than the identity of the owner.

3. Interpretation of "Eligible Unit" under the BSS:

The court analyzed the definition of "eligible unit" under paragraph 4.1 of the BSS, which refers to units that were eligible for excise duty exemptions before July 1, 2017. The court found that the definition did not stipulate that a change in ownership or expansion would disqualify a unit from being eligible. The court criticized the learned Single Judge's interpretation, which added conditions not present in the statutory language, and reaffirmed that statutory provisions should be interpreted based on their plain language.

4. Procedural Aspects Related to Application and Registration for BSS Benefits:

The court examined procedural aspects, including the requirement for units to reapply for registration under the BSS and the allocation of Unique IDs (UIDs). The appellants had faced delays and denials in obtaining fresh UIDs due to changes in ownership and registration. The court noted that procedural requirements should not affect the substantive eligibility of units for the BSS, as long as the units continued to meet the criteria outlined in the scheme.

Conclusion:

The appellate court set aside the judgment of the learned Single Judge, holding that the appellants were indeed eligible for the BSS benefits. The court directed the respondent authorities to adjudicate the claims of the appellants in accordance with the court's observations and to provide an opportunity for a hearing within twelve weeks. The court emphasized that the BSS was designed to support units based on their geographical location and operational status before the GST regime, rather than the identity of their owners.

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