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2023 (9) TMI 1355 - HC - GSTDoctrine of promissory estoppel - incentive scheme - pre and post GST era - Notification issued under Clause 10.7 of I.P. 2016 by the Department of Industries - the notification gives 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 or not - HELD THAT - The 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. 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 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 the benefits as promised under I.P. 2016? - HELD THAT - A bare perusal of the Industrial Policy would reveal that broad objective of the Policy was to convert the State of Jharkhand into a favoured destination for investors and to promote sustainable Industrial Growth in the State. The Policy specifically enumerates that State of Jharkhand has accorded top priority to industrial growth as a means to mitigate poverty and unemployment. I.P. 2016 aims to establish State of the art infrastructure, promote manufacturing, enhance inclusivity poster innovation and create employment opportunities across sectors. It is with this bona fide objective I.P. 2016 has been promulgated. Hon ble Apex Court, in its decision rendered in the case of Brahmaputra Metallics Ltd. 2020 (12) TMI 1241 - SUPREME COURT , dealt with Industrial Policy, 2012 notified by the State Government on 16th June, 2012. In the earlier Policy of 2012, certain benefits towards exemption from payment of 50% of Electricity Duty for a period of five years for self-consumption of captive use was stipulated vide Clause 32.10 of I.P. 2012. Despite such unambiguous promise being extended by the State of Jharkhand, in a similar fashion by issuing Operational Guidelines and/or Notification, said benefit was sought to be curtailed to eligible Industrial Units. 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 March, 2019, in effect nullifies, annuls or makes illusionary benefit under I.P. 2016 by introducing a fresh/new End User condition within the State having an effect of destroying the acquired and/or vested right of the Petitioner. It is the case of the petitioner that although the petitioner, for expanded Unit, has maintained separate books of account, but while considering the claim of incentive of the petitioner 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.
Issues Involved:
1. Validity of the amendment to Clause 7.5 of the Jharkhand Industrial Investment and Promotion Policy, 2016. 2. Denial of SGST subsidy to the petitioner based on the amendment. 3. Legality of the High Power Committee's decision to keep the subsidy in abeyance. 4. Petitioner's entitlement to the SGST subsidy and interest thereon. Summary: Issue 1: Validity of the Amendment to Clause 7.5 of the Policy The petitioner challenged the amendment carried out by Notification dated 7th March 2019, which inserted an explanation to Clause 7.5 of the Jharkhand Industrial Investment and Promotion Policy, 2016 (I.P. 2016). The explanation defined "State GST paid on Intrastate sale subject to tax realization in the State Government Treasury" and imposed additional conditions, including that if any Input Tax Credit (ITC) is claimed on the goods supplied, the SGST paid on such goods shall not be eligible for reimbursement. The court held that this amendment was without jurisdiction, beyond the power of the Department of Industries, and ultra vires I.P. 2016. It was declared that the amendment carried out vide Notification dated 7th March 2019 is not sustainable and was quashed. Issue 2: Denial of SGST Subsidy Based on the Amendment The petitioner argued that the amendment was arbitrary, illegal, and contrary to the principles of Legitimate Expectations and Promissory Estoppel. The court agreed, stating that the amendment nullified the benefit of the subsidy/incentive on GST provided under I.P. 2016. The court emphasized that the State Government is bound by promissory estoppel and legitimate expectations, and in the absence of any supervening public interest, the policy cannot be amended to the detriment of the petitioner. Issue 3: Legality of the High Power Committee's Decision The High Power Committee's decision dated 17.02.2023, which kept the earlier decision of granting SGST subsidy in abeyance, was challenged. The court found this decision to be based on the invalid amendment and thus quashed it. The court directed the respondents to release the amount towards reimbursement of SGST subsidy to the petitioner for the period 2017-18 to 2022-23 within three months. Issue 4: Petitioner's Entitlement to SGST Subsidy and Interest The petitioner claimed an amount of Rs. 117,13,33,199/- for the period 2017-18 to 2022-23 as SGST subsidy. The court directed the respondents to calculate the incentive towards reimbursement of SGST paid to the petitioner, considering only the expanded unit, as the petitioner maintained separate books of account. The court also directed the respondents to sanction and disburse the amount claimed by the petitioner. Conclusion: The writ application was allowed, and the amendment carried out vide Notification dated 7th March 2019 was quashed. The High Power Committee's decision dated 17.02.2023 and the letter dated 30.12.2022 issued by the Additional Commissioner, Commercial Taxes Department, were set aside. The respondents were directed to release the SGST subsidy amount to the petitioner within three months.
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