2024 (3) TMI 783 - HC - GST

Doctrine of promissory estoppel - Benefit under incentive Scheme - Scenarios of new Acts replacing the VAT Act, ensuring entitlement despite the GST regime. - refusal to disburse the rest of the amount of the scheme on the plea that in the altered GST regime, the scheme cannot be continued, since the scheme did not contemplate of such tax - HELD THAT - A close scrutiny of Clause 19.2 of the subsidy scheme indicates that the same specifically stipulates that in the event of the West Bengal Value Added Tax Act, 2003 being replaced by any other Act , the provision of the Scheme will apply mutatis mutandis even after the new Act comes into force - Thus, in the absence of any other Act being introduced apart from the GST Act, which has subsumed the VAT Act, the argument advanced by the respondents cannot be accepted. Admittedly and even as per such judgment as cited by the respondents, the said component is also envisaged within the GST scheme of things. Both the Centre and States have their respective shares in the GST taxes. Hence, it cannot be said that the respondents would be deprived of any component if the petitioners come within the purview of the GST scheme - In the present case, the petitioners were issued both RC-I and RC-II and the petitioners application under the subsidy scheme was duly sanctioned. The petitioners, in fact, have continued commercial production under the specific promise made by the State of giving the incentive/subsidy under the scheme-in question - the doctrine of promissory estoppel is squarely applicable in the present case. The sanction was granted to the petitioners under the said Scheme, thereby clearly admitting the fact and acquiescing to the position that the petitioners were entitled to the benefits of the scheme - the petitioners are squarely entitled to claim the benefits of the subsidy scheme-in-question even after coming into force of the GST Act, as per Clause 19. 2 of the Scheme. The respondent authorities have acted palpably de hors the scope of the scheme in passing the impugned order dated February 17, 2022 authored by the Managing Director, West Bengal Industrial Development Corporation Limited where it has been held that the petitioners are not eligible for disbursement/sanction for incentive under the Scheme. The said order is, thus, set aside - Petition allowed.

Summary

Issues involved:
The issues involved in the judgment are the entitlement of the petitioner under an incentive scheme, the impact of the Goods and Services Tax (GST) regime on the scheme, the application of Clause 19.2 of the scheme, the invocation of doctrines of estoppel, the scrutiny of the petitioner's eligibility under the scheme, and the validity of a notice issued by the respondent authorities.

Entitlement under the Incentive Scheme:
The petitioner opted for an incentive scheme and was granted benefits under it, including Registration Certificates (RC-I and RC-II). Subsequently, the authorities refused to disburse the remaining amount under the scheme citing the introduction of the GST regime and its impact on the scheme. The petitioner argued that the scheme should still apply as per Clause 19.2, which allows for provisions to apply even after the introduction of a new Act replacing the West Bengal Value Added Tax Act.

Impact of GST Regime and Legal Arguments:
The respondent authorities contended that the GST Act replaced not only the VAT Act but also other statutes governing indirect tax, which could affect the applicability of the scheme. However, the petitioner argued that the GST regime subsumed all indirect taxes, including VAT, and thus, the scheme should still be applicable. Legal precedents and judgments were cited to support both positions.

Application of Doctrines of Estoppel:
The respondent authorities argued that the doctrines of estoppel or promissory estoppel do not apply to an incentive scheme. However, the petitioner contended that they were issued RC-I and RC-II, and a substantial amount was disbursed under the scheme, which should invoke the doctrine of promissory estoppel in their favor.

Scrutiny of Eligibility under the Scheme:
The respondent authorities raised concerns about the petitioner's eligibility under the scheme, particularly regarding the definition of a "new unit" and the production of a new product. The petitioner's compliance with the scheme's requirements and the validity of the documents provided were scrutinized.

Validity of Notice and Final Decision:
A notice was issued by the respondent authorities questioning the petitioner's eligibility, which was challenged as an attempt to render the petition infructuous. The Court found in favor of the petitioners, setting aside the impugned order and the notice, directing the authorities to disburse the balance amount under the scheme to the petitioners within a specified timeframe.