Atibir Industries Company LTD Through Its Authorized Signatory Chiranjive Kumar Chourasia vs. The State Of Jharkhand Through The Chief Secretary

Held

The Court held that the amendment carried out vide Notification dated March 7, 2019, was unsustainable, irrational, unreasonable, and violative of Article 14 of the Constitution of India. The Court found that the amendment had the effect of destroying the acquired, accrued, and vested right of the petitioner. The Court reasoned that the notification was prospective in nature and did not provide for retrospective application. The petitioner's commercial production commenced on February 20, 2017, and there was no stipulation under the Industrial Policy at that time that the benefit of reimbursement of NET VAT/SGST would not be paid if the recipient of the goods had availed ITC. The Court relied on the principle that where a right has already accrued and the conditions for that right have been fulfilled, withdrawal of the benefit during that period cannot affect the accrued right, citing precedents like the MRF case. The Court also directed the Respondent-State to calculate the incentive towards reimbursement of SGST paid to the petitioner keeping in view the expanded unit of the petitioner only, as the petitioner was maintaining separate books of account. Consequently, the Court quashed and set aside the decision of the High Powered Committee dated February 17, 2023, and the letter dated December 13, 2022, issued by the Additional Commissioner, Commercial Taxes Department. The Court directed the Respondents to release the amount towards reimbursement of SGST subsidy to the Petitioner under I.P. 2016 for the period 2017-18 to 2022-23 within three months. The issue of interest was not expressly decided.

Facts

The petitioner, Atibir Industries Company Ltd., challenged an amendment to the Jharkhand Industrial Investment and Promotion Policy, 2016 (Policy of 2016). The amendment, made via a notification dated March 7, 2019, inserted an explanation to Clause 7.5 defining 'State GST paid on Intrastate sale subject to tax realization in the State Government Treasury'. The petitioner argued this amendment nullified the policy's benefits and was beyond the Department of Industries' jurisdiction. Specifically, the petitioner objected to a condition stating that if Input Tax Credit (ITC) is claimed on goods supplied by the unit, SGST paid on such goods would not be eligible for reimbursement. The petitioner's unit commenced commercial production on February 20, 2017, under the original policy, which promised reimbursement of 75% of net VAT/SGST for seven years. The petitioner sought quashing of a High Power Committee decision dated February 17, 2023, which denied SGST subsidy, and a letter dated December 13, 2022, to the same effect. The petitioner claimed Rs. 117,13,33,199/- as SGST subsidy for the period 2017-18 to 2022-23.

Key Issues

1. Whether the amendment carried out vide Notification dated March 7, 2019, to Clause 7.5 of the Jharkhand Industrial Investment and Promotion Policy, 2016, by inserting an 'Explanation' to define 'State GST paid on Intrastate sale subject to tax realization in the State Government Treasury', has the effect of imposing an additional restriction or condition that nullifies the policy's benefits and is beyond the jurisdiction of the Department of Industries, thereby being wholly without jurisdiction and beyond power under Clause 10.7 of the Policy of 2016? 2. Whether the purported amendment carried out under Clause 7.5 (aa)(v) of the Policy of 2016, to the extent it provides that if any Input Tax Credit is claimed on the goods supplied by the Unit by any subsequent taxable person, then SGST paid on such goods shall not be eligible for reimbursement, is arbitrary, illegal, and contrary to the principles of Legitimate Expectations and Promissory Estoppel, rendering the entire benefit of subsidy/incentive nugatory for the Petitioner? 3. Whether the decision contained in Memo No. 393 dated February 17, 2023, of the High Power Committee, holding the Petitioner-Unit ineligible for SGST subsidy as per the existing Standard Operating Procedure (SOP) issued by the Commercial Taxes Department, Jharkhand, and keeping the earlier decision of January 6, 2022, in abeyance, is liable to be quashed? 4. Whether the Letter dated December 13, 2022, issued by the Additional Commissioner, Commercial Taxes Department, to the extent it relates to the Petitioner-Unit, communicating that the Petitioner is not entitled to the benefit of SGST subsidy under the Policy of 2016, is liable to be quashed? 5. Whether the Respondents are directed to immediately release the amount of GST subsidy under the Policy of 2016 to the Petitioner-Unit for the period 2017-18 to 2022-23 amounting to Rs. 117,13,33,199/- along with interest @ 18% per annum? Petitioner's Arguments: The petitioner contended that the amendment was beyond the jurisdiction of the Department of Industries, which could only issue guidelines or statutory notifications to give effect to the policy. They argued that the amendment was arbitrary, illegal, and violated principles of legitimate expectation and promissory estoppel, nullifying the intended benefits of the policy. The petitioner asserted that their accrued right to subsidy could not be curtailed by a subsequent amendment that was not retrospective. They also argued that they maintained separate books of account for their expanded unit, as required by Clause 7.5(b), and the subsidy should be calculated based on this expanded unit alone. Respondents' Arguments: The judgment does not explicitly record arguments made by the respondents. However, the decisions challenged by the petitioner, such as the High Power Committee's decision and the Additional Commissioner's letter, indicate the State's stance that the petitioner was not eligible for the subsidy under the amended policy or SOP.