Sajjan Kumar Jalan (HUF) And Anr. vs. Union Of INDIA And 6 Ors.

Held

The Court held that the exclusion of the petitioner units from the budgetary support scheme, based on their non-payment of Central Excise Duty due to turnover below the threshold of Rs. 1.5 crores or exemption of their manufactured goods, is arbitrary and violative of Article 14 of the Constitution of India. The Court reasoned that the avowed object of the scheme was to provide financial support to eligible manufacturing units under the NEIIPP, and the respondents' classification, which relied on the actual payment of Central Excise Duty, was based on fiction and failed to achieve the scheme's objective. The Court found that the petitioners were eligible under the NEIIPP and their non-payment of duty did not render them ineligible. The clarification issued by the respondent authorities via the circular dated January 10, 2019, which excluded such units, was held to be beyond the purview of the original budgetary scheme notification and was set aside. The Court directed the respondent authorities to examine the individual claims of the petitioners and, if found eligible under the NEIIPP, extend the benefits of the budgetary support scheme to them within 30 days.

Facts

The petitioners, Shree Balaji Enterprise, North East Wood Supply, Prataap Snacks Ltd. (Unit-II), Prataap Snacks Ltd., Sajjan Kumar Jalan (HUF) and Jalan Agro Products, and M/s. Kishlay Savoury Foods, are industrial units operating in Assam. They challenged the action of the respondent authorities, including the Union of India and various GST officials, in denying them benefits under a budgetary support scheme. The scheme was intended to provide financial support to eligible manufacturing units under industrial policies. The petitioners argued that they were eligible for the scheme but were excluded because they did not pay Central Excise Duty, either due to their turnover being below the threshold or their manufactured goods being exempted. The respondents relied on a circular dated January 10, 2019, to justify this exclusion.

Key Issues

1. Whether the exclusion of manufacturing units from the budgetary support scheme, solely on the ground that they did not pay Central Excise Duty (due to turnover below threshold or exemption of goods), is arbitrary and violative of Article 14 of the Constitution of India, considering the object of the scheme is to support eligible manufacturing units under industrial policies? The petitioner's contention is that the scheme's objective is to support eligible manufacturing units under industrial policies, and their non-payment of Central Excise Duty was due to factors like turnover below the threshold (Rs. 1.5 crores) or exemption of their manufactured goods, not due to ineligibility under the industrial policies themselves. They argue that the respondents' classification, based on actual payment of Central Excise Duty, is artificial and not supported by the scheme's recital or the industrial policies. They contend that the circular dated January 10, 2019, which clarifies this exclusion, is beyond the purview of the original scheme notification. The respondent's contention, as inferred from the judgment, is that the budgetary support scheme is extended only to those industries that had paid Central Excise Duty, implying that payment of this duty is a prerequisite for eligibility. They relied on the Supreme Court's judgment in Hero Motocrop (Supra) to uphold the validity of the budgetary scheme, though the specific issue of units not paying duty due to exemptions or low turnover was not directly addressed in that case.