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TMI Blog2023 (9) TMI 631X X X X Extracts X X X X X X X X Extracts X X X X ..... t clear that Government of India had decided to provide budgetary support to the existing manufacturing unit operating in Sikkim under different Industrial Promotional Schemes of the Government of India, for the residual period for which each of the unit is eligible . Quite evidently, it was a support given to the existing manufacturing units operating in Sikkim since the said units had not been able to enjoy the full benefit of exemption notification no.20/2007-CE for the entire period. Reading the definition of person under section 2(84) and the requirement of registration under section 22 of such persons makes it clear that Zydus Nutritions Limited (later Zydus Wellness Products Limited) and Alkem Laboratories Limited were required to be registered under section 22 after the change in ownership. Accordingly and admittedly, Zydus Nutritions Limited was registered under Rule 10(1) on 26.03.2019 and Alkem Laboratories Limited on 3.10.2019. Consequently, both the petitioners who were separate and distinct legal entities from the previous persons , i.e., Zydus Wellness-Sikkim and Cachet Pharmaceuticals Private Limited, who were eligible under exemption notification 20/2007-CE could n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etary support under the "Scheme of Budgetary Support dated 05.10.2017" (the Budgetary Support Scheme), for the "residual period" for which Zydus Wellness Sikkim was entitled to exemption under Notification No. 20/2007-C dated 25.4.2007. 3. In the case of Alkem Laboratories Limited, in October 2019, Unit-V was transferred by way of slump sale from Cachet Pharmaceuticals Private Limited - the transferee company, to Alkem Laboratories Limited on a running and going concern basis under section 54 of the Transfer of Property Act, 1882. The petitioner seeks direction to allocate fresh Unique Identity (UID) for Unit-V of the petitioner and to process the verification and claim applications under the Budgetary Support Scheme for the "residual period" for which Cachet Pharmaceuticals Private Limited was entitled to exemption under Notification No. 20/2007-C dated 25.4.2007. 4. The changes in case of Zydus Wellness Products Limited as well as Alkem Laboratories Limited entailed grant of fresh UID and change in the registration number. This is an admitted fact. 5. The short question which arises for consideration in both the writ petitions is - Are the petitioners entitled to the budgetary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... II Bombay (1992) 3 SCC 78. 8. The learned Deputy Solicitor General of India submitted that Zydus Wellness Products Limited came into existence after change in its constitution from partnership firm to private limited company. Unit to be declared as an "eligible unit" under the Budegtary Support Scheme is synonymous with the company which runs it. As Zydus Wellness-Sikkim had stopped operation as partnership firm and Zydus Wellness Products Limited had taken over, the erstwhile unit without making any investment cannot be considered as an "eligible unit". It is submitted that the Ministry of Finance and Ministry of Commerce had both unanimously opined that change in constitution and ownership disentitled them from the Budgetary Support Scheme as it was a new company having separate GSTIN and PAN number. 9. Mr. Vivek Sarin, learned counsel for Alkem Laboratories Limited, submits that Circular or Office Memorandum cannot take away or restrict the effect of Budgetary Support Scheme. He further argued that change of ownership or slump sale of unit is immaterial as the Budgetary Support Scheme is unit based and not ownership based scheme. He relied upon the judgment of the Uttarakhand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rowing concern the Axles business from the latter, w.e.f., 1.7.2011 and they wished to continue to avail exemption under Central Excise Notification by which exemption was being availed by Axles India Limited. The High Court allowed the writ petition in view of the circular issued by the Central Board of Excise & Customs (CBEC) as the petitioner had already exercised option in writing to avail of the benefit of exemption notification before effecting the first clearance and it was found that the petitioner was entitled for the exemption. No such circular has been issued in favour of the petitioners. 13. According to the Budgetary Support Scheme, in pursuance of the decision of the Government of India to provide budgetary support to "the existing eligible manufacturing units" operating inter alia in Sikkim under different Industrial Promotion Schemes of the Government of India, for a residual period for which each of the "units" is eligible, a new scheme is being introduced. The new scheme is offered, as a measure of good will, only to the "units" which were eligible for drawing benefits under the earlier exercise duty exemption/refund schemes but has otherwise no relation to the e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... umentary evidence regarding date of commercial production shall be submitted in terms of para 5.7." 18. Paragraph 2.3 provides that Notification No.20/2007-CE dated 25.4.2007 as amended from time to time was the scheme which was in operation on 18.7.2017 in the State of Sikkim. 19. As paragraph 4.3 which defines "residual period" relates the "residual period" to the period during which the eligible unit would have been eligible to avail exemption for the "specified goods" it would be relevant to extract paragraph 4.2 which defines "specified goods" as under: "4.2 "Specified goods" means the goods specified under exemption notifications, listed in paragraph 2, which were eligible for exemption under the said notifications, and which were being manufactured and cleared by the eligible unit by availing the benefit of excise duty exemption, from: (a) The premises under Central Excise with a registration number, as it existed prior to migration to GST; or (b) The manufacturing premises registered in GST as a place of business from where the said goods under exemption notification no.49/2003-CE dated 10.06.2003 and 50/2003-CE dated 10.06.2003 were being cleared" 20. As paragraph ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ical composition or integral structure. 24. As the Budgetary Support Scheme has been issued under the Goods and Services Tax Regime to the units located in, inter alia, the State of Sikkim, it would be relevant to consider some of the provisions of the CGST Act, 2017). 25. Section 2(72) defines the word "manufacture" as under: ""manufacture" means processing of raw material or inputs in any manner that results in emergence of a new product having a distinct name, character and use and the term "manufacturer" shall be construed accordingly;" 26. The term "manufacturer" as used in Budgetary Support Scheme would thus mean the "person" who or which brings about any change(s) in the physical object resulting in transformation of the object into a distinct article with a different name of bringing a new object into existence with a different chemical composition or integral structure. 27. Section 2(84) defines the word "person" as under: "person" includes - (a) an individual; (b) a Hindu Undivided Family; (c)a company; (d) a firm; (e) a Limited Liability Partnership; (f) an association of persons or a body of individuals, whether incorporated or not in India or outside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ited) was not eligible for Budgetary Support Scheme. 32. Similarly, in the case of Alkem Laboratories Limited, it was also held that if any unit undergoes relocation, expansion and change of ownership, it will not be eligible under the scheme of budgetary support. Accordingly, the CBIC had also opined that Alkem Laboratories Limited Unit-V was not eligible for Budgetary Support Scheme. 33. Notification No.20/2007-CE dated 25.04.2007 for the North East States including Sikkim was issued in exercise of the powers conferred by sub-section (1) of section 5A of the Central Excise Act of 1944 in public interest. It exempted the goods specified in the First Schedule to the Central Excise Direct Tax, 1985 other than those mentioned in the Annexure and cleared from a unit located inter alia in the State of Sikkim from so much of the duty of exercise 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. 34. The exemption under Notification No. 20/2007-CE was given to the manufacturer who was required to submit a statement of the total duty paid and that paid by utilization of CENVAT cred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er the CGST Act, 2017, it is the "person" as defined under section 2(84) who is liable to the tax thereunder. Consequently, the Budgetary Support Scheme which is limited to the tax which accrues to the Central Government under the CGST Act, 2017 and IGST Act, 2017 is liable to be paid by the "person". Reading the definition of "person" under section 2(84) and the requirement of registration under section 22 of such "persons" makes it clear that Zydus Nutritions Limited (later Zydus Wellness Products Limited) and Alkem Laboratories Limited were required to be registered under section 22 after the change in ownership. Accordingly and admittedly, Zydus Nutritions Limited was registered under Rule 10(1) on 26.03.2019 and Alkem Laboratories Limited on 3.10.2019. Consequently, both the petitioners who were separate and distinct legal entities from the previous "persons", i.e., Zydus Wellness-Sikkim and Cachet Pharmaceuticals Private Limited, who were eligible under exemption notification 20/2007-CE could not have filed the application for budgetary support under paragraph 7 of the Budgetary Support Scheme. The petitioners, as rightly contended by the respondents, were not "eligible units ..... X X X X Extracts X X X X X X X X Extracts X X X X
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