Star Cement LTD vs. The Union Of INDIA And Anr

The petitioner in the present proceeding has prayed for the following reliefs: “In the premises aforesaid it is therefore most respectfully prayed that Your Lordship's may graciously be pleased to admit this petition, call for the records of the case and issue a Rule calling upon the Respondents to show cause as to why a Writ in the nature of Certiorari should not be issued to Set aside and/or quash the Demand Notice dated 08.06.2020 and further why a writ in the nature of Mandamus should not be issued directing the respondent No. 2 to release the withhold balance payment of Rs. 84,88,237/- to the petitioner along with interest. And after hearing the parties the Hon'ble Court may further be pleased to make the rule absolute by issuing a writ in the nature of Certiorari to set aside and/or quash the Demand Notice dated 08.06.2020 and a writ in the nature of Mandamus directing the respondent No. 2 to release the withhold balance payment of Rs. 84,88,237/- to the petitioner along with interest.”

The petitioner in the present writ petition has projected that it is involved in the manufacturing and sale of cement of various grades. It is further projected that in pursuance to the tenders dated 13-10-2016 and 21-12-2016, floated by the NHPC Ltd. i.e. the respondent No. 2, herein, for supply of cements of various grades for its ongoing projects, executed at sites situated in the State of Arunachal Pradesh as well as in the State of Assam, the petitioner company had submitted its bids. The bids submitted by the petitioner company being found to be suitable, upon completion of the formalities involved and a contract coming into being, the petitioner company came to be issued with supply orders by the respondent No. 2, for supply of cement. The petitioner company

As the GST Act was to be implemented in the country, the petitioner company vide a communication dated 27-06-2017, requested the respondent No. 2 to make necessary amendments in the purchase order(s) so issued, by considering the GST taxation parameters. An e-mail was also sent on 17-07-2017, on the same issue by the petitioner. Thereafter, on 22-07-2017, the petitioner company, informed the respondent No. 2, that the basic price and freight charges would remain the same as per supply order dated 21- 12-2016 and on account of implementation of GST Act only the taxation component would change. A breakup of the price, post implementation of the GST Act was also forwarded. It is contended that the respondent authorities vide an e-mail dated 25-07- 2017, had agreed with the GST module as proposed by the petitioner company and Page No.# 4/29 required the petitioner company to expedite the supply of the cement without fail. It is projected that the petitioner had, thereafter, continued with the supply of cement as per the supply orders issued and raised bills by reckoning the agreed price.

Poised thus, the respondent No. 2 issued an e-mail to the petitioner company on 17-09-2018, whereby the respondent No. 2 reduced the dues receivable by the petitioner company to that of Rs. 29,81,375/-,excluding liquidated damage amounting to Rs. 48,346/-, in lieu of Rs. 84,88,237/- as billed by the petitioner company. The approaches made by the petitioner for release of its dues to the extent of Rs. 84,88,237/-, had met with the response from the respondent No. 2, that the bill amount of the petitioner company was so calculated by applying the same price for supplies made to sites situated in the State of Assam as well as in the State of Arunachal Pradesh. The said procedure was contended to have been adopted on account of the fact that after implementation of the GST Act there could not have been variance with regard to the basic rate of the commodity being supplied to two different States.

While the said issue with regard to the release of the contractual dues of the petitioner was pending, the respondent No. 2 issued a communication dated 13-09-2018, seeking a clarification from the petitioner company as to whether it had claimed any benefit under the notification dated 25-04-2007 issued by the Ministry of Finance, Department of Revenue, against the supply orders and if any benefit were claimed as to whether the same was passed on to the respondent No.

The petitioner company responded to the said communication dated 13-09-2018, vide communication dated 09- 11-2018 and therein, clarified that the excise benefit claimed under the notification dated

The contractual dues of the petitioner having not being cleared, the petitioner company has instituted the present proceeding praying for release of the said contractual amount receivable by it, as well as presenting a challenge to the said communication dated 08-06-2020. 7. Dr. A. Saraf, learned Sr. counsel for the petitioner company by reiterating the facts noticed, hereinabove, has submitted that the supply orders issued to the petitioner, after it was found suitable in the tender process so held, had the price schedule enclosed to it. It is projected that in the price schedule FOR destination based price including packaging & forwarding charges, transportation, excise duty, CST, entry tax, loading and unloading charges, shutting charges, transit insurance, octroi, toll tax etc. were spelled out. It is projected that the supply orders for supply of cement for Subansiri Lower Hydro Electric

Dr. Saraf further submits that the GST Act was to come into effect from 01-07- 2017 and accordingly, the petitioner company, approached the respondent No. 2, vide a communication dated 27-06-2017, with a request to make necessary amendment to the purchase orders considering the GST taxation parameters so as to facilitate the petitioner to make its supplies. Dr. Saraf further projects that on 22-07-2017, the petitioner company had intimated the respondent No. 2, in writing, that the basic price and freight charges would remain the same as per the supply order dated 21-12-2016 and only the taxation component would change on account of the implementation of the GST Act. He submits that the said proposal made by the petitioner was agreed to by the respondent No. 2 and the petitioner was asked to expedite the supply of cement without fail. Dr. Saraf submits that in terms of the agreement arrived at in the matter after the implementation of the GST Act, the petitioner continued to supply the cement involved as per the supply order dated 21-12-2016 and had raised bills in this connection. He submits that although the receivable amount on account of the supplies made by the petitioner in Page No.# 7/29 terms of the supply order dated 21-12-2016 was for an amount of Rs. 84,88,237/-, the respondent No. 2 vide an e-mail dated 17-09-2018 informed the petitioner company that processing of the final payment of the bill amount of the petitioner against the supply order dated 21-12-2016 was underway and a final payment of Rs. 29,81,375/- is being processed which excludes a liquidated damage amount of Rs. 48,346/- for non-supply of cement of OPC-53 grade. He submits that the petitioner was required to furnish a no-due certificate in the format attached before the final settlement of the payment. Dr. Saraf submits that the petitioner has responded to the said e-mail on the same day and had highlighted that the receivable amount by the petitioner was to the tune of Rs. 85 Lakhs (approximatly). Accordingly, the basis for arriving at an amount of Rs. 29.81 Lakhs by the petitioner. 2 company as the dues receivable by the petitioner, was required to be disclosed.

Dr. Saraf, submits that in response to the said e-mail of the petitioner, the respondent No. 2, on the same day again intimated the petitioner that the difference in the bill amount is only on account of the fact that there was price difference between the cement supplied in the State of Assam and the supply so effected in the State of Arunachal Pradesh. Accordingly, the respondent No. 2, had calculated the dues receivable by the petitioner for the supplies of cement made by reckoning the same price to be applicable for supplies made for both the State of Assam as well as the State of Arunachal Pradesh. Dr. Saraf submits that the said stipulation made by the respondent No. 2, was questioned by the petitioner, herein. Dr. Saraf submits that, thereafter, the petitioner issued a communication dated 09-11-2018 and therein, clarified the entire issue with Page No.# 8/29 regard to the difference in base price for sites located in two different States. Dr. Saraf further submitted that in the said communication, it was further highlighted that the respondent No. 2, had issued supply orders from time to time accepting the different rates quoted by the petitioner for the two States involved. Dr. Saraf submits that the withholding of the due contractual amount of the petitioner was without any basis and the plea taken by the respondent No. 2 that in the GST regime there cannot be different prices for the same commodity in two different States, to be one without any basis. He submits that the provisions of the GST Act does not support the contention of the respondent No.

Dr. Saraf submits that the basic price for supply of commodity would be governed by the contract and the supply orders issued in this connection. In the case of the petitioner, it is submitted that the respondent No. 2, had accepted the different rates quoted by it for supplies to be effected in the State of Arunachal Pradesh as well as in the State of Assam and the supply orders were also issued by noticing the difference in the basic price of the commodity involved. Dr. Saraf further submits that the terms of the contract entered into by the petitioner with the respondent No. 2 having not being modified and/ or amended, the rates quoted by the petitioner would continue to govern the supplies effected under the contract and the respondent No. 2 cannot deny to the petitioner its contractual dues for the supplies effected under the said contract.

Having made the above submissions, Dr. Saraf has referred to the affidavit filed by the respondent No. 2 in the matter and had submitted that therein, a contention has been raised that as per the agreement entered into by and between the petitioner and the respondent No. 2, a repeat supply order dated 25-10-2017, was issued to the petitioner

In the above premises, Dr. Saraf submits that a direction is called upon to the respondent No. 2 from this Court, for releasing to the petitioner its contractual dues amounting to Rs. 84,88,237/-.

Dr. Saraf has, thereafter, by referring to the impugned communication dated 08-06- 2020, at the outset has submitted that the demand made, therein, is clearly hit by the principles of delay and laches. He submits that the excise duty refund as demanded from the petitioner by the respondent No. 2, is for a period w.e.f. 2007 to 2017. He submits that the said communication would mandate interference only on this count. Having made the said submission, Dr. Saraf submits that the said demand for refund/ recovery of the excise duty paid by the respondent No. 2, for the supplies of cement made by the petitioner to be illegal and in violation of the provisions of the Policy of 2007 read with the notification dated 25-04-2007 issued by the Govt. of India, Ministry of Finance. Dr. Saraf submits that in pursuance to the clarification sought in the matter by the respondent No. 2, the petitioner had clarified that the excise benefit claimed under the notification dated

Dr. Saraf submits that in terms of the notification dated 25-04-2007, the eligible industrial units was to charge the excise duty in its bills and make payment thereof and only, thereafter, it was permissible to claim for refund of the excise duty so paid. Dr. Saraf submits that the demand notice dated 08-06-2020 was so issued by the respondent No. 2 without understanding the purport of the notification dated 25-04-2007 and for the matter the purport of the Policy of 2007. It was further projected that the exemption as mandated under the said policy was made applicable only to the new industries which commenced their commercial production on/or after 01-04-2007 but not later than 31-03- 2017 and to existing industrial units before 01-04-2007 which undertook substantial expansion, by way of increase in installed capacity by not less than 25% on/ or after 01- 04-2007. He submits that the object and purport of the policy and the consequent notification issued was to refund the excise duty paid by an industrial unit, by way of subsidy. Accordingly, he submits that under the said circumstances the question of passing on the benefit of refund received in pursuance to the said policy and the notification issued towards implementation of the same, to the purchaser of the goods would not arise. Accordingly, he submits that the demand notice dated 08-06-2020, would mandate interference from this Court.

Dr. Saraf has further submitted that during the period the supplies were affected by Page No.# 11/29 the petitioner, there was no reduction in the rates of excise duty nor the goods supplied were exempted from payment of excise duty and accordingly, the refund of the excise duty by the competent authorities after the same was levied and paid by the petitioner would not amount to unjust enrichment of the petitioner and therefore, the refund of the same to the respondent No. 2 would not arise. He submits that under the provisions of the notification dated 25-04-2007, there was no exemption granted from charging and levying of excise duty. Rather, he submits that the Govt. of India had required the excise duty payable to be levied and paid to the Government and only, thereafter, the refund process would be initiated. He submits that in the event the intention of the Government was to exempt the purchaser from paying excise duty, then the policy would have postulated that there would be no charge and/ or levy of the excise duty. Dr. Saraf submits that however, no such exemption is found under the said notification dated 25- 04-2007 and accordingly, the claim made by the respondent No. 2, in the demand notice dated 08-06-2020, would not mandate any acceptance.

Dr. Saraf in support of the said submission pertaining to the challenge made to the demand notice dated 08-06-2020, has relied on the decisions of the Hon’ble Supreme 27 ITR 729, Somaiya Organics (India) Ltd. & Anr. Vs. State of UP & Anr. Bihar & Ors. reported in 2004 137 STC 389. 16. Dr. Saraf has also relied upon a decision of a Division Bench of this Court in the Page No.# 12/29 case of PVR Limited Vs. State of Assam & Ors. reported in 2017 (5) GLR 117. 17. In the above premises Dr. Saraf submits that the demand notice dated 08-06-2020, would be liable to be interfered, with a further direction that the petitioner is not eligible to pass on the excise benefits, received under an exemption by it, to the respondent No.

Dr. Saraf further prays for a direction to the respondent No. 2, to forthwith release the withhold balance amount of Rs. 84,88,237/- (Rupees Eighty Four Lakhs Eighty Eight Thousand Two Hundred Thirty Seven) along with due interest.

Per contra, Mr. R.K.D. Choudhury, learned DSGI appearing for the respondent No. 2, has submitted that with the implementation of the GST Act, One Market One Tax principle, having been introduced, the benefit of input tax credit being now applicable for the supplies made in the State of Assam as well as in the State of Arunachal Pradesh, the different rates claimed by the petitioner for supply of cement to the sites of the respondent No. 2 situated in the said two States would be unjustified. He submits that the petitioner realizing the said position had in terms of the repeat supply order dated 25-10- 2017, effected the supplies of the cement involved at the same rate for the sites of the respondent No. 2, situated both in the State of Arunachal Pradesh and in the State of Assam. He submits that after effecting the said supply, the petitioner had also raised bills claiming the same basic price for cement supplied for sites situated in the State of Arunachal Pradesh and in the State of Assam. He submits that the respondent No. 2, had never agreed to continue with the supply of cement in terms of the earlier contract, after the implementation of the GST Act, at different supply rates for cement for both the State of Arunachal Pradesh as well as for the State of Assam.

Mr. Choudhury further submits that applying the same rate for supply of cement to the sites situated both in the State of Arunachal Pradesh as well as the State of Assam, the respondent authorities have calculated the amount receivable by the petitioner for such supply and approximately an amount of Rs. 30.29 Lakhs was determined for the purpose excluding the liquidated damage of Rs. 48,346/- (Rupees Forty Eight Thousand Three Hundred Forty Six), imposed on the petitioner on account of non-supply of cement of OPC-53 grade. Accordingly, he submits that the final payment receivable by the petitioner works out to Rs. 29.81 Lakhs (approximately) and the same was offered for payment to the petitioner which, however, was disputed by the petitioner and it had raised an unjust demand of Rs. 85 Lakhs (approximately). It is submitted that the petitioner cannot claim two different rates for supply of the same commodity only on account of the fact that such supply was being effected in two different States. In the above premises, Mr. Choudhury submits that the claim made by the petitioner in the present writ petition for payment of Rs. 84,88,237/- (Rupees Eighty Four Thousand Eighty Eight Lakhs Two Hundred Thirty Seven) to it to be not acceptable.

With regard to the challenge made to the demand notice dated 08-06-2020, Mr. Choudhury, submits that the petitioner under the provision of the notification dated 25- 04-2007, having availed excise exemption, the same ought to have been passed on to the respondent No.

However, the said benefit was not passed on by the petitioner to the respondent No. 2, which had resulted in unjust enrichment of the petitioner. He submits that the petitioner had not disclosed the fact of exemption of excise duty received by it from the Govt. of India. He submits that the contract price was inclusive of all applicable

This Court at the first instance would examine the claim of the petitioner for a direction upon the respondent No. 2 to pay to it an amount of Rs. 84,88,237/- being projected as the contractual dues receivable by it. On an examination of the materials brought on record, this Court finds that in pursuance to tenders issued on 13-10-2016 and 21-12-2016 for supply of cements of various grades, the petitioner company had submitted its bids. The bids of the petitioner company being found to be suitable, the same was accepted by the respondent No.

Thereafter, supply orders came to be issued in favour of the petitioner by the respondent No.

On a perusal of the supply orders brought on record by the petitioner company in the writ petition including the supply order dated 21-12-2016, this Court finds that, therein, different basic prices were quoted for the supply of the same grade of cement to the sites of the respondent No. 2, situated

For the purpose of illustration, the petitioner had effected supplies of cement of PPC-43 grade for the State of Arunachal Pradesh with Unit- Ex-Works, including packaging and forwarding charges per metric tonne @ Rs. 3276/-, whereas for the same commodity supplied within the State of Assam basic price including packaging and forwarding charges per metric tonne was quoted as Rs. 2906.13. 22. While the petitioner was effecting its supplies, the GST Act being implemented, the petitioner approached the respondent No. 2 vide an e-mail dated 17-07-2017 and therein, had requested the respondent No. 2 to make necessary amendment to the purchase orders considering the GST taxation parameters. The said email was followed by a communication dated 22-07-2017, wherein the petitioner company had intimated the respondent No. 2, that the basic price and the freight charges would remain the same as per the supply order dated 21-12-2016 and only the taxation part would be changed upon implementation of the GST Act. A breakup of the price post GST implementation was enclosed, thereto. The petitioner, accordingly, continued to effect the supply and thereafter, had raised bills for the supplies so made. The bills were raised basing on the agreed prices of supply of cement of various grades to the sites of the respondent No. 2, situated in the State of Arunachal Pradesh as well as in the State of Assam. It is to be noted that the respondent No. 2, vide email dated 25-07-2017, while responding to the communication made in this connection by the petitioner company, had communicated its Page No.# 16/29 agreement with the GST module as proposed by the petitioner and required the petitioner to expedite the supply of cement involved.

It is at this stage, that the respondent No. 2 had sent an email dated 17-09-2018 to the petitioner wherein it was, highlighted, that the bills of the petitioner in pursuance to the supply order dated 21-12-2016 were being considered to be processed for final payment shortly and the final payment amount was highlighted to be Rs. 29,81,375/- excluding the liquidated damage charges. Accordingly, the petitioner was requested to furnish a no dues certificate in the format attached to the said email before the final settlement payment was made. The petitioner on receipt of the said email, responded to the same on the same day and therein, had highlighted that its receivable amount was approximately Rs. 85 Lakhs. However, only an amount of Rs. 29.81 Lakhs was projected as the final dues receivable by the petitioner. Accordingly, the petitioner had required the respondent No. 2 to provide full breakup invoice wise with regard to the determination made of the final payment receivable by the petitioner made by it. The petitioner also required the respondent No. 2 to communicate, in writing, as to why the deduction came to be made and to substantiate such deduction. In response to the said communication of the petitioner, the respondent No. 2, vide an email dated 17-09-2018, intimated the petitioner that the difference was only on account of the price difference existing in the cement supplied by the petitioner in the State of Assam as well as in the State of Arunachal Pradesh. It was projected that the respondent No. 2, had calculated the dues receivable by the petitioner by applying the same price of the cement supplied as was quoted for the State of Assam also to the supplies made in the State of Arunachal

At this stage, it is to be noted that the respondent No. 2 in the affidavit filed by it before this Court in the present proceeding has projected that the contentions made by the petitioner in the writ petition that the different rates for supply of cements in the State of Arunachal Pradesh and in the State of Assam would be mandated to be maintained to be perverse contention inasmuch as the petitioner and the respondent No. 2 upon a mutual agreement had agreed that the supplies of the cement involved to the sites of the respondent No. 2 in the State of Arunachal Pradesh as well as in the State of Assam would be so made on the same basic price. In support of such contention a repeat supply order dated 25-10-2017 is relied upon, wherein, the rate for supply of the cement is the same for both the State of Arunachal Pradesh as well as the State of Assam. The petitioner had contended that the repeat supply order had no nexus with the NIT dated 13-10-2016 and was a completely different and independent transaction entered into between the petitioner company and the respondent No.

It was projected that for the supplies made in pursuance to the NIT dated 13-10-2016, the rates quoted by the petitioner company and accepted by the respondent No. 2, continued to govern the field.

This Court finds that the supplies made in pursuance to the NIT dated 13-10-2016 and 21-12-2016 was at the rates agreed upon by and between the petitioner company and the respondent No.

Admittedly, in terms of the said agreed rate for supply of Page No.# 18/29 cement, it is found that two different rates were applicable for supply of cement for the sites of the respondent No. 2 situated in the States of Arunachal Pradesh as well as the State of Assam. The respondents have not brought on record any material to demonstrate that the said rates were subsequently superseded by way of mutual agreement. This Court also finds that the claim of contractual dues made by the petitioner in the present writ petition pertains to the supplies as effected by it in pursuance to the supply orders issued to it by the respondent No. 2 including the supply order dated 21-12-2016. Accordingly, the supplies being procured by the respondent No. 2, after having accepted the rates quoted in this connection by the petitioner company, the respondent No. 2 cannot be permitted to unilaterally alter the rate of supply of the cement involved to the prejudice of the petitioner, herein. The supply as made by the petitioner company in terms of the supply orders issued to it on the acceptance of its bid pursuant to the tender notices dated 13-10-2016 and 21-12-2016, would be mandated to be so paid by reckoning the bid price quoted of the petitioner and accepted by the respondent No.

The variation in the bid price of the petitioner for effecting supplies of cement to the State of Arunachal Pradesh in comparison to the rates quoted for such supplies within the State of Assam would be inconsequential, inasmuch as, such difference in rates was accepted by the respondent No. 2, with open eyes.

In view of the above discussions, this Court is of the considered view that the respondent No. 2 is bound to clear the bills of the petitioner company at the rates agreed by it for supply of the cement and incorporated in the supply orders issued to the petitioner, including the supply orders dated 17-11-2009, 22-03-2013, 03-11-2014 and Page No.# 19/29 21-12-2016. Accordingly, the respondent authorities shall now process the bills submitted by the petitioner in pursuance to the supplies effected by it in terms of the supply orders issued to it in pursuance to the NIT in question by reckoning the rates as quoted by the petitioner, therein, for various grades of cement and accepted by the respondent No.

The respondent No. 2 is restrained from raising the difference in rates involved for supply of cement to the two sites of the respondent No. 2, situated in the State of Arunachal Pradesh as well as the State of Assam, in view of the clear acceptance of such different rates by the respondent No. 2. 27. Having drawn the said conclusion, this Court would now examine the challenge made by the petitioner in the present proceeding to the demand notice dated 08-06- 2020. The relevant portion of the said demand notice for the purpose of appreciation of the issue raised, therein, being relevant, the same is extracted here-in-below: “WHEREAS, a number of Supply Orders for supply of different grade of cement to Subansiri Lower HE Project of NHPC Limited were placed to you between the years 2007 and 2017 as per details below 1)S.

NH/SLP/PROC/PR-200700040/50-413/4785, DT-24/11/2007 2) S.O. NH/CONTS(E&M)-III/SSL-13/PR-425/828/50-818/09/3825-27, DT- 17/11/2009 3)S.O. NH/SLP/PROC/PR-11512/120/2013/50/643 Dated 22.03.2013 4) S.O. NH/SLP/PROC/P-05/2014/S0/42 Dated 03.11.2014 5) S.O. NH/SLP/PROC/2015/P-41/50/470 Dated 14.03.2016 6) S.O. NH/SLP/PROC/2016/P-11/50/500 Dated 21.12.2016 WHEREAS, the Contract Price of all the above mentioned Supply Orders was inclusive of all applicable taxes and duties including Excise Duty (on percentage basis or fixed amount per MT basis) which was reimbursable on production of documentary evidence after supply of cement to the designated stores of Subansiri Lower HE Project WHEREAS, Bid Proforma of the tender documents required the bidders to Page No.# 20/29 mention "Rates of Excise Duty. CST/VAT. Service Tax etc applicable on finished products (if concessional rates of C.ST/E.D. etc. are applicable, specify the same and attach documentary evidence in support thereof)." WHEREAS, you had mentioned the full rate of Excise Duty in your bids and after supply of cement, have submitted Excisable Invoices at the full rate of Excise Duty, wherein no adjustment is apparent on account of any concessions/exemptions applicable to such cement supply WHEREAS, the Government of India vide its Notification no 20/2007 CE dated 25.04 2007 amended vide Notification no. 20/2008-CE dated 27.03.2008 exempted the goods specified in the first Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) other than those mentioned in the Annexure and cleared from a unit located in the States of Assam or Tripura or Meghalaya or 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. WHEREAS, you have been supplying cement to Subansiri Lower HE Project from unit(s) located in the States of Assam or Tripura or Meghalaya or Mizoram or Manipur or Nagaland or Arunachal Pradesh of Sikkim and hence have availed the exemption as per the Notification mentioned hereinabove. WHEREAS similar benefits are being availed by you in the GST regime also WHEREAS, as per extant provisions made in the Central Excise Tariff Act, 1985 vide Notification nos. 20/2007-CE dtd 25.04.2007 and 20/2008-CE dtd 27.03.2008, you have taken Duty Exemption which should have been refunded to NHPC (Subansiri Lower HE Project) WHEREAS, you have not passed on the refunds received on account of the exemption Notifications as above and similar provisions under the GST in view of the conditions of the contract and thereby you may have unjustly enriched yourself by obtaining refund of the duty from the Government, the burden of which stands passed on to NHPC (Subansiri Lower HE Project).

A perusal of the said demand notice would go to reveal that the respondent No. 2, by referring to the notification dated 25-04-2007, as well as the notification dated 27-03- 2008, had projected that the petitioner company had taken excise duty exemption which Page No.# 21/29 should have been refunded to the respondent No. 2 (for its Subansiri Lower HE Project). It was further projected that the petitioner in not having passed on the refund received in terms of the exemption notification referred to in the said demand notice, had unjustly enriched itself. Basing on the said projection, the respondent No. 2 had demanded for refund/ recovery of excess excise duty for the period w.e.f. the year 2007 to 2017 along with the GST claimed by the petitioner from the respondent No. 2 for the period July, 2017 onwards within the timeframe mentioned therein.

The Government of India had announced a policy namely the “North-East Industrial and Investment Promotion Policy (NEIΙΡΡ), 2007”. The Government of India vide the NEIIPP, 2007 also approved a package of fiscal concessions and other concession for the North East Region. In the said new Policy NEIIPP of 2007, on the issue of the excise duty exemption under Clause (v), it was clearly noted that "hundred per cent excise duty exemption will be continued on finished products made in the North-Eastern Region, as was available in the NEIIΡ, 1997"

In terms of the promise made by the Government of India in the North-East Industrial and Investment Promotion Policy (NEIIPP), 2007 dated 01-04-2007, Notification No. 20/2007 was issued by the Under Secretary to the Government of India, Ministry of Finance conferring benefits in terms with the promise as held out in the NEIIPP, 2007, in so far as the exemption of Central Excise was concerned, granting exemption in respect of all excisable goods cleared from a unit located in the States of Assam or Tripura or Meghalaya or Mizoram or Manipur or Nagaland or Arunachal Pradesh or Sikkim, from such of the excise or additional duty of excise leviable thereon as was equivalent to the amount

The excise benefit claimed under Notification No. 20/2007-CE dated 25-04-2007 was issued to give effect to the Industrial Policy Resolution of Government of India announced in North East Industrial and Investment Promotion Policy, 2007, by which the Government approved a package of fiscal incentives to the new industries set up in North Eastern region as well as to existing industrial units undertaking substantial expansion. The said benefits of excise duty was by way of incentives for establishment of the Industrial units in otherwise industrially underdeveloped region of North East India.

The main objective of the NEIIPP, 2007 and the consequent Central Excise Notifications was to encourage the entrepreneurs to set up new industries in the area and/or undertake substantial expansion in the existing industrial units so as to generate

The contract price for supply of the cement involved was inclusive of all duties and taxes including the excise duty and since there was no exemption from the levy and charge of the excise duty, inasmuch as, excise duty was to be charged in the bills and to be paid in the Government Treasury and thereafter eligible units were to claim refund in view of the Notifications, the question of refunding back the said amount received in pursuance to the Policy, 2007 and consequent Notifications in the considered view of this Court does not arise. There was no reduction in the rate of excise duty nor the goods supplied were exempted from payment of excise duty and the excise duty was chargeable in the bills was as per the prevailing law and thereby the question of unjust enrichment occasioning to the petitioner company and consequential refund of the same to the Page No.# 24/29 purchaser would not arise.

In view of the above discussions, this Court finds that the Government of India made the Excise Duty payable and only after payment of the duty the refund can be applied. So the benefits are directly meant for those who pay the excise duty as they are entitled to claim the refund and there is a reasonable objective for such exemption i.e. to increase industrial growth in the North Eastern Region. Had there been any intent on the part of Government to exempt the purchaser from such Excise Duty then the exemption would have been granted in charging or levying the Duty. But no such exemption is there in the present case which exempts the purchaser to pay the excise duty which is charged and levied on them. Further the Notification specifically suggests that the benefits are to be granted to newly established or expanded industry. So the exemption benefits cannot be transferred to the respondent No. 2 or any other purchaser given the purport and intent of the exemption granted.

In the present case, this Court finds that the charging of taxes is not exempted, the payment of the tax so charged is also not exempted. The petitioner in terms of the notification holding the field after the payment of the excise duty involved is to submit appropriate application before the competent authority for refund of the same and thereafter, on processing of the matter the refund of the excise duty is made to the petitioner. Accordingly, the manner in which the exemption has been provided of the excise duty in the present matter, this Court is of the view that the same was intended to provide incentive to the eligible unit like the petitioner covered under the policy in question. The charge of tax having not being exempted the purchaser, i.e. the respondent

In support of the said conclusion, this Court would rely on a decision of the Division Bench of this Court in the case of M/s PVR Ltd. (Supra). The conclusions drawn by the said decision, relevant to the issue arising in the present writ petition, is extracted, here-in-below:

This Court would also rely upon the decision of the Hon’ble Supreme Court in the case of Peekay Re-Rolling Mills (P) Ltd. Vs. Asstt. Commissioner & Anr. reported

In National Tobacco case [(1972) 2 SCC 560] this Court was faced with certain questions relating to the refund of excise duty on the manufacture of cigarettes. In this context, the Court examined the scope of the term "levy" and made the following observations: (SCC p. 572, para 19) "

The term 'levy' appears to us to be wider in its import than the term 'assessment'. It may include both 'imposition' of a tax as well as 'assessment. The term 'imposition' is generally used for the levy of a tax or duty by legislative provisions indicating the subject-matter of the tax and the rates at which it has to be taxed. The term 'assessment', on the other hand, is generally used in this country for the actual procedure adopted in fixing the liability to pay a tax on account of particular goods or property or whatever may be the object of the tax in a particular case and determining its amount. The Division Bench appeared to equate 'levy' with an 'assessment' as well as with the collection of a tax when it held that 'when the payment of tax is enforced, there is a levy. We think that, although the connotation of the term levy' seems wider than that of 'assessment', which it includes, yet, it does not seem to us to extend to 'collection'. Article 265 of the Constitution makes a distinction between 'levy' and 'collection'

The Court made it very clear that levy and collection are not synonymous and that collection of the tax is not a necessary facet of a "levy". ……………………….. ……………………….

In the light of the above two cases, it is evident that collection and levy are distinct and that collection is not an essential facet of levy. It is true that collection of a tax may sometimes be indicative of a lawful levy of tax, but in our opinion it does not logically follow that absence of collection means an absence of liability.”

Applying the decisions, noticed hereinabove, to the facts of the present case, this Court finds that the non-passing over of the excise duty refunds received in the matter by the petitioner company to the respondent No. 2, did not result in any unjust enrichment being caused to it. Accordingly, it was not open to the respondent No. 2 to make any claim for being refunded the excise duty collected from it by the petitioner for the supplies effected. Accordingly, this Court is of the considered view that the excise duty exemption

In view of the above discussions, the respondent No. 2 is directed to compute the bills submitted by the petitioner for the supplies effected by it in terms of the supply orders issued to the petitioner, pursuant to the NIT involved in the present proceeding, by reckoning the rates as quoted by the petitioner in its bids and accepted by the respondent No. 2, which was also reflected in the supply orders issued by the respondent No. 2. 39. Accordingly, on such verification being made, the amounts due to the petitioner be computed at the rate, quoted by it, in terms of the conclusions drawn by this Court, hereinabove, and the dues receivable by the petitioner/ company be released to it from the date of 60 (sixty) days from the date of receipt of certified copy of this order. In the event the amount involved is not so released to the petitioner within a period of 60 days from the date of receipt of a certified copy of this order, the amount involved would carry an interest @ 9% per annum w.e.f. the date the amounts were due for payment to the petitioner till the date of actual payment of the same.

With the above observations and directions, the present writ petition stands disposed of.