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TMI Blog2024 (12) TMI 873X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 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 giv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anies Act, 2013, on 23-04-2010, is engaged in the manufacture and sale of pharmaceuticals, cosmetics, food and beverages, falling under Chapters 21 and 33 of the GST Tariff of India. It has two manufacturing Units, both located in Namchi, Sikkim. The appellant in Writ Appeal No.10 of 2023 has five manufacturing Units, all located in Namthang, Sikkim and are engaged in manufacturing medicaments and food, falling under Chapters 30 and 21 of the GST Tariff of India. 3. The respondent no.1, the Department of Revenue, Ministry of Finance, issued notification no.20/2007-CE, dated 25-04-2007, as amended by the notification no.20/2008-CE, dated 27-03-2008, applicable to the North Eastern States, including Sikkim, exempting goods specified therein, from excise duty leviable, under the Central Excise Tariff Act, 1985 (5 of 1986). This area-based tax benefit was applicable to manufacturing Units, for a period of ten years, from the date of commercial production, if such production commenced any time between 01-04-2007 to 31-03-2017. These notifications were rescinded with effect from 01-07-2017, vide notification no.21/2017, dated 18-07-2017. Consequent thereto, the scheme under the GST regim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said Unit under the notification of 2007, was entitled to exemption for a period of ten years, from the date of commercial production, i.e., upto 09-03-2027. On notification of the BSS on 05-10-2017, a new UID was allotted to the petitioner. On 05-12-2019, after the acquisition, the petitioner filed an application before the respondents no.3 and 4 seeking issuance of fresh UID for Unit-V, under the new GSTIN registration, this was denied, consequently, the petitioner could not file online claims for the budgetary support. The claims were thus filed manually for the said period. 5. The common prayers in the writ petitions inter alia were (i) to hold and declare the omission and withholding of the applications filed by the petitioners under the BSS as arbitrary, unreasonable and illegal, being violative of the scheme; (ii) issuance of a writ, order or direction in the nature of mandamus, directing the respondent no.3 to issue fresh UIDs to the petitioners; and (iii) issuance of a writ, direction or order in the nature of mandamus, directing the respondent no.3 to allow the claim applications of the petitioners, for the periods claimed in accordance with the scheme of budgetary suppo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ordingly 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 as defined under paragraph 4.1 of the budgetary scheme. The intention of the Government of India in providing the Budgetary Support Scheme was to support those eligible units for the residual period not exceeding ten years of commercial production during which they would have been eligible to avail exemption for the specified goods under exemption notification no. 20/2007-CE in recognition of the hardship arising due to its withdrawal. Clearly, the exemption under exemption notification no. 20/2007-CE was to those manufacturers who have made investments in the State of Sikkim. The untimely withdrawal of exemption notific ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e specified goods manufactured remain the same as also the date of commencement of commercial production. The learned Single Judge was of the view that the manufacturer must be a person and in case of change of ownership or expansion, the person (transferee) claiming budgetary support, becomes different from the person, who made the investment to set up the Unit. It was observed that a GST registered person, who is different from the GST registered person who invested and set up the Unit, is not entitled to the BSS benefit. Learned Senior Counsel urged that, the documents of the respondents reveal that the DPIIT (Department of Promotion of Industry and Internal Trade), proposed the insertion of an exception clause in the BSS, to exclude Units in case inter alia of change of ownership, which was disagreed to by the CBIC. In such circumstances, the non-speaking decision of the respondents in the instant matters, to discontinue the budgetary support, in case of change of ownership of the eligible Unit or expansion by way of purchase is not only sans support but is in fact contrary to the provisions of the said BSS. Hence, both the writ appeals be allowed. 9. Resisting the arguments ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Mizoram or Manipur or Nagaland or Arunachal Pradesh or Sikkim, as the case may be, 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. .. [emphasis supplied] 13. 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 extracted supra, 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 undoubted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the States, in terms of Article 270 of the Constitution. 2. The erstwhile Schemes which were in operation on 18.07.2017 were as follows: . 2.3 North East States including Sikkim- Notification no. 20/2007-CE dated 25.04.2007 as amended from time to the time. . 3.2 OBJECTIVE The GST Council in its meeting held on 30.09.2016 had noted that exemption from payment of indirect tax under any existing tax incentive scheme of Central or State Governments shall not continue under the GST regime and the concerned units shall be required to pay tax in the GST regime. The Council left it to the discretion of Central and State Governments to notify schemes of budgetary support to such units. Accordingly, the Central Government in recognition of the hardships arising due to withdrawal of above exemption notifications has decided that it would provide budgetary support to the eligible units for the residual period by way of part reimbursement of the Goods and Services Tax, paid by the unit limited to the Central Government s share of CGST and/or IGST retained after devolution of a part of these taxes to the States. 4. DEFINITIONS 4.1 Eligible unit means a unit which was eligible before 1st day of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 15. It is not in dispute that the Zydus Wellness Sikkim was set up in Sikkim on 23-04-2010 and started its commercial production for Unit-I on 06-04-2011 and for Unit-II on 18-03-2017. Cachet Pharmaceutical Private Limited, as averred, started its commercial production on 10-03-2017. All Units were existing eligible Units in the State of Sikkim prior to the BSS and the manfacturing activity in the said Units were being carried on prior to 01-07-2017 as mandated by the BSS. At this juncture, it would be relevant to consider that in terms of paragraph 4.1 of the BSS an eligible Unit is one which was eligible before 01-07-2017, to avail the benefit of ab initio exemption or exemption by way of refund from the payment of central excise duty, under notifications issued in this regard, listed in paragraph 2 of the BSS and was availing the said exemption immediately before 01-07-2017. Subsequently, after the GST regime, Zydus Wellness Sikkim having converted to Zydus Nutritions Limited on 28-02-2019 and Cachet Pharmaceutical Limited handed over rights to Alkem Laboratories Limited on 15-10-2019. Alkem Laboratories Limited was an existing Unit as well. In our considered view, the mere fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ility of the unit shall be on the basis of application filed for budgetary support under this scheme with refernce to: (a) Central Excise registration number, for the premises of the eligible manufacturing unit, as it existed prior to migration to GST; or (b) GST registration for the premises as a place of business, where manufacturing activity under exemption notification no. 49/2003-CE dated 10.06.2003 and 50/2003-CE dated 10.06.2003 were being carried prior to 01.07.2017 and the unit was not registered under Central Excise. [emphasis supplied] (i) The definition of eligible Unit nowhere contemplates that if there is a change in ownership or expansion of a particular Unit, then the Unit would cease to be an eligible Unit. Indeed, the notification prescribes no other requirements or caveats for a manufacturer to qualify as an eligible Unit, save what is specified in paragraph 4.1 above to avail the benefit of the BSS. It is now no more res integra that if a statute provides for a thing to be done in a particular manner then it has to be done in that manner alone and in no other manner. [See, Chandra Kishore Jha vs. Mahavir Prasad and Others (1999) 8 SCC 266 ] (ii) In Opto Circuit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nLine SC 1262 ] 19. Paragraph 4.3 defines residual period which is extracted hereinbelow; 4.3 Residual period means the remaining period out of the total period not exceeding ten years, from the date of commencement of commercial production, as specified under the relevant notification listed in paragraph 2, during which the eligible unit would have been eligible to avail exemption for the specified goods. The documentary evidence regarding the date of commercial production shall be submitted in terms of para 5.7. [emphasis supplied] As manifest from the provision, 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 as already discussed hereinabove, it is reiterated that the ten year period was not complete when the GST regime came to be enforced. (i) As correctly argued by the learned Senior Counsel for the appellants paragraph 5.7 of the BSS deals with procedural aspect as also paragraph 5.8 and paragraph 7.1 and its consideration is extraneous to the circumstances in is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he eligibility of the above-mentioned Units be intimated to the Office of the Under Secretary (CX-8) of the Department of Revenue, Central Board of Indirect Taxes and Customs, Ministry of Finance, as has been done in the case of M/s. Pritika Autocast Limited. This communication evidently was not carried forward to the appellants herein, as there is no communication in this context on the records of the case, nor were submissions advanced by the learned Deputy Solicitor General of India on this aspect. 21. It is noticed in the office memorandum, dated 19-02-2021, referred to in the communication dated 03-03-2022 supra, that it was dealing with the implementation of the BSS to the eligible industrial Units located in Himalayan States and North-Eastern States, including Sikkim technical/operational issues. It was observed therein that it has not been found possible to agree to the following points; 2.2. It has not been found possible to agree to following points:- (i) (ii) Eligibility of the units that are already availing benefit of the Scheme in the event of their undergoing and expansion, relocation and change of ownership. This disagreement was not communicated to the appellants. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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, paragraph 5 of the communication dated 06-04-2022 (supra) leaves the decision concerning the eligibility of the appellants to be taken by the CGST CX, Central Excise, Siliguri, West Bengal. 25. Having given due consideration to the entire gamut, the facts and circumstances of the case and documentary evidence placed before us, we are 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, as already discussed. We are 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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