M/S. Dina Metals Limited vs. The State Of Bihar

Facts

M/s. Dina Metals Limited (the petitioner) filed a writ petition before the Patna High Court challenging a memo dated 13.10.2017 issued by the Director of Industries, Bihar. This memo rejected the petitioner's claim for VAT/GST subsidy under the Bihar Industrial Incentive Policy, 2011. The petitioner sought a writ of certiorari to quash the rejection and a writ of mandamus to compel the respondents to sanction and disburse the subsidy. The petitioner argued that the rejection was arbitrary and contrary to the policy. The respondents, including various departments of the Government of Bihar, were arrayed as parties. The petitioner also sought adjudication on their entitlement to the subsidy and argued that the policy, once approved by the Cabinet, could not be diluted by any department. The court noted from a subsequent affidavit that the Department of Industries did not dispute the petitioner's claim for reimbursement of State Goods and Services Tax, stating that a reference had been made to the Department of Goods and Service Tax for recommendation.

Held

The Court held that the Department of Industries did not dispute the petitioner's claim for reimbursement of State Goods and Services Tax. The respondents' stance was that a reference had been made to the Department of Goods and Service Tax, Bihar, and upon receipt of a recommendation, the amount would be reimbursed. The Court found no reason why the two government departments should not work in cohesion to resolve the petitioner's grievances concerning the non-disbursement of benefits under the Bihar Industrial Incentive Policy, 2011. The Court observed that the petitioner had been made to "run from pillar to post" and that the government had realized its mistake, releasing certain amounts. The only surviving issue was the release of VAT/GST under the policy. Consequently, the Court directed the Principal Secretary, Department of Industries, to convene a meeting with all stakeholders, including the Principal Secretary-cum-Commissioner of Commercial Taxes and the Deputy Commissioner, State Goods and Service Tax, to positively take a decision regarding the petitioner's entitlement for refund within two months. The amount due was to be released on or before 31st July, 2022, failing which the petitioner would be entitled to interest at the banking rate. Liberty was reserved for the petitioner to agitate grievances afresh if needed. The petition was disposed of in these terms.

Key Issues

1. Whether the rejection of the petitioner's claim for VAT/GST subsidy under the Bihar Industrial Incentive Policy, 2011, by the Director of Industries, was arbitrary, unreasonable, and contrary to the policy itself, thereby warranting quashing under Section 226 of the Constitution of India? 2. Whether the respondents are mandated to sanction and disburse the VAT/GST subsidy to the petitioner as promised under the Bihar Industrial Incentive Policy, 2011, invoking the principles of promissory estoppel and legitimate expectation? Petitioner's Arguments: The petitioner contended that the Bihar Industrial Incentive Policy, 2011, having been issued after Cabinet approval, could not be diluted by any department. They argued that apart from the approval by the State Investment Promotion Board, no further approval from any other authority was required, as the term 'Competent Authority' was not defined in the policy. The petitioner also asserted that the rejection of their claim was hit by the principles of promissory estoppel and legitimate expectation, and that the non-reimbursement of VAT/GST, despite the issue being settled up to the Apex Court, was illegal and unjustified. Revenue's Arguments: The respondents, through the Department of Industries, did not dispute the petitioner's claim for reimbursement of State Goods and Services Tax. They stated that a reference had been made to the Department of Goods and Service Tax, Bihar, and upon receipt of a recommendation, the amount would be reimbursed.