Shree Balaji Polymers 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 the criterion that they did not pay Central Excise Duty (either due to annual turnover below the threshold of 1.5 crores or because their manufactured items were already exempted), was based on fiction and was arbitrary. The Court found that this classification failed to achieve the objective of the scheme, which was to provide financial support to eligible industries under the North East Industrial and Investment Promotion Policy (NEIIPP). The Court further held that the subsequent interpretation given by the respondent authorities via the circular dated 10.01.2019, to the extent it excluded manufacturing units like the petitioners, was beyond the purview of the budgetary scheme notification itself and was therefore bad in law and set aside. The Court directed the respondent authorities to examine the individual claims of the petitioners and, if they satisfied the eligibility criteria laid down under the NEIIPP, to extend the benefits of the budgetary support scheme to them. The respondents were ordered to pass appropriate orders within 30 days of receiving the certified copies of the order.

Facts

The petitioners, various business entities including Shree Balaji Enterprise, North East Wood Supply, Prataap Snacks Ltd., Sajjan Kumar Jalan (HUF), Jalan Agro Products, KISHLAY SAVOURY FOODS, and AMIKER ENTERPRISES PVT. LTD., filed writ petitions challenging the denial of benefits under a budgetary support scheme. The scheme was intended to provide financial support to eligible manufacturing units in North Eastern States under industrial policies. The respondents, including various authorities of the Union of India and GST officials, denied benefits to the petitioners on the ground that they did not pay Central Excise Duty. The petitioners argued that they were eligible for the scheme as they were existing eligible manufacturing units under the industrial policies, even though they were exempted from paying Central Excise Duty due to turnover below the threshold or due to their manufactured goods being exempted.

Key Issues

1. Whether the exclusion of manufacturing units from the budgetary support scheme, solely on the basis that they did not pay Central Excise Duty (due to turnover below the threshold or exemption of manufactured goods), is arbitrary and violative of Article 14 of the Constitution of India, considering the scheme's objective to support eligible manufacturing units under industrial policies? Petitioner's arguments: The petitioners contended that the budgetary scheme's objective was to support eligible manufacturing units under industrial policies, and their ineligibility for Central Excise Duty payment did not negate their status as eligible manufacturing units. They argued that the respondents' interpretation, particularly the clarification via circular dated 10.01.2019, was an arbitrary classification that went beyond the scope of the original scheme notification and was not supported by any specific clauses in the industrial policy. They relied on the principle that the scheme was meant for "eligible" units, irrespective of actual duty payment if exemptions applied. Revenue/State's arguments: The respondents argued that the budgetary scheme was intended for industries that had paid Central Excise Duty, as evidenced by the calculation of Central Excise Duty paid within GST. They relied on the Supreme Court's judgment in Hero Motocrop (Supra) to uphold the validity of the budgetary scheme, implying that the conditions for availing benefits, including duty payment, were valid.