M/S Gangotri Iron And Steel Co. LTD. vs. The State Of Bihar And Ors

Held

The Court held that the Industrial Incentive Policy, 2006, along with its annexures, clearly and unequivocally provides for subsidy/incentive on admitted tax paid under the Bihar VAT Act, Bihar Entry Tax Act, and Central Sales Tax Act. The Court reasoned that the clarification to clause 2(vi) and Annexure-III, which details the passbook format, explicitly includes Bihar Entry Tax alongside VAT and Central Sales Tax. The Court found that the form of return under the Bihar VAT Act also treats Entry Tax as an integral part of admitted VAT, making them inseparable for the purpose of this policy. The Court rejected the State's argument that the subsidy was limited to VAT based solely on the heading of clause 2(vi), stating that the substantive provisions and the policy as a whole must be considered. The Court also held that the circular dated September 31, 2007, which attempted to amend the policy by changing the passbook format, was invalid as an executive fiat cannot amend a policy approved by the legislature and notified in the gazette. The Court invoked the doctrine of promissory estoppel, stating that the State is bound by its clear and unequivocal promise made in the policy, which the petitioner acted upon. The Court directed the respondents to grant the subsidy/reimbursement to the petitioner for the admitted tax paid under the Bihar VAT Act, Bihar Entry Tax Act, and Central Sales Tax Act for the relevant period within three months.

Facts

M/s Gangotri Iron and Steel Co. Ltd. (the petitioner) filed a writ petition seeking a direction to the State Government of Bihar to grant reimbursement of taxes deposited by way of subsidy under the Industrial Incentive Policy, 2006. The petitioner, engaged in manufacturing steel products and industrial oxygen gas, commenced commercial production in January 2009. The Industrial Incentive Policy, 2006, notified on July 25, 2006, promised various incentives, including an 80% reimbursement of admitted VAT for new units for ten years, capped at 300% of capital invested. The petitioner contended that this policy, including its annexures, clearly indicated that the subsidy was applicable to Bihar VAT, Central Sales Tax, and Bihar Entry Tax. The State, however, appeared to limit the subsidy only to VAT.

Key Issues

1. Whether the Industrial Incentive Policy, 2006, specifically clause 2(vi) and its annexures, provides for subsidy/incentive on Bihar Entry Tax in addition to Bihar VAT and Central Sales Tax? Petitioner's Arguments: - The petitioner argued that clause 2(vi) of the Industrial Incentive Policy, 2006, when read with its Annexures (particularly Annexure-III, the format of the passbook), clearly shows that the subsidy is intended to cover Bihar VAT, Central Sales Tax, and Bihar Entry Tax. The use of the term 'VAT' in the clause was generic and, when considered with the annexures and the clarification, encompassed Entry Tax. - They relied on Annexure-III, which lists "Amount of tax admitted under BVATA*/CSTA*/BETA*" and "Amount paid against the amount admitted under BVATA*/CSTA*/BETA*", indicating that all three taxes were considered for the subsidy. - The petitioner also pointed out that the Bihar Industrial Incentive Policy, 2011, explicitly provided for reimbursement of VAT and Entry Tax. - They argued that the policy document is incomplete without its annexures and that the State's attempt to limit the subsidy to VAT based solely on the heading of clause 2(vi) was a misinterpretation. Respondent's Arguments: - The respondent-State relied on the heading of clause 2(vi) of the Industrial Incentive Policy, 2006, to contend that the subsidy/incentive was available only on VAT. - They also relied on a circular dated September 31, 2007, which purportedly changed the format of the passbook at Annexure-III.