Roxy Roller Flour Mills Private LTD vs. The Government Of Telangana And 3 Others
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Roxy Roller Flour Mills Private Limited (the petitioner) filed a writ petition seeking a direction to the respondents to release a subsidy amount of Rs. 2,31,84,741/-. This subsidy was towards stamp duty, sales tax, and power cost reimbursement, as per G.O.Ms. No. 28 dated 29.11.2014. The petitioner established two industrial enterprises in Medchal-Malkajgiri District, commencing commercial production on 23.10.2016. The G.O. provided for 100% reimbursement of stamp duty, fixed power cost reimbursement at Rs. 1.00 per unit for 5 years, and 75% reimbursement of net VAT/CST or SGST for 7 years. The petitioner claimed Rs. 7,13,000/- for stamp duty, Rs. 66,09,299/- for sales tax till 2017-18, and Rs. 1,58,62,442/- for power cost till 30.09.2020. Despite pursuing the respondents, no amounts were released. The respondents, through the General Manager, District Industries Centre, admitted that the claims were sanctioned as per guidelines but release was pending budget allocation and would be done as per seriatim of sanctions.
Held
The Court held that there was no dispute regarding the petitioner's entitlement to the subsidies as per G.O.Ms. No. 28. The counter-affidavit admitted that the claims for stamp duty, power tariff, and sales tax reimbursement were sanctioned and intimated to the petitioner. The Court found that the respondents had not denied that these amounts were due since 2016-17. The Court rejected the petitioner's proposal to adjust subsidy against power bills, stating the petitioner must pay their dues to Respondent No. 4. However, the Court directed Respondent No. 1 to coordinate with the Finance Secretary to get necessary approvals and funds allotted for the incentives. The Court emphasized that the Government, having launched a scheme offering incentives, cannot shy away from paying them within a reasonable time, as delays defeat the purpose of encouraging industries. The Court noted that despite sanctions in 2018, no payment had been made for four years. The Court directed Respondent No. 1 to endeavor to clear the dues within three months. The petitioner was granted liberty to represent to Respondent No. 4 for paying electricity arrears in installments, which should be considered sympathetically.
Key Issues
1. Whether the petitioner is entitled to the release of the sanctioned subsidy amounts towards stamp duty, sales tax, and power cost reimbursement in terms of G.O.Ms. No. 28 dated 29.11.2014? (Question of law) 2. Whether the respondents can delay the release of sanctioned subsidies indefinitely, citing budget constraints and seriatim of sanctions, thereby causing financial strain to the petitioner? (Question of mixed law and fact) Petitioner's contentions: The petitioner argued that they established the industry based on the promised incentives, and their pricing structure was fixed considering these subsidies. Delay in payment would strain their financial position and force them to increase borrowings. They proposed adjusting 75% of the monthly power bill against the subsidy amount. They relied on G.O.Ms. No. 28. Respondents' contentions: The Government Pleader for respondents 1-3 argued that the subsidies were conditional and release was subject to budget availability and seriatim of sanctions, and that the petitioner's proposal to adjust against power bills was not provided for in the T-IDEA incentives guidelines. Respondent No. 4 (Southern Power Distribution Company) stated its role was minimal and the petitioner must abide by the power supply agreement and pay monthly bills, not adjust them against government subsidies.
Sections Cited
G.O.Ms.No.28, G.O.Ms.No.77
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Cause title — parties, addresses and appearances
The Court made the following: ORDER PRESENT THE HONOURABLE SRI JUSTICE A.ABHISHEK REDDY WRIT PETITION NO: 10897 OF 2021 lA NO: 1 OF 2021 Counsel for the Respondent No.4 : SRI R.VINOD REDDY S.C. FOR TSSPDCL
THE HON'BLE SRI JUSTICE A.ABHISHEK REDDY WRIT PETITION No. lOa97 of 2O2l ORDER: In this writ petition, the petitioner, Roxy Rol. er Flour Mi11s Private Limited, seeks a direction to the respondents to release the amount of Rs. 2,31,84,741 1- in favour of petiticner-Company towards stamp duty subsidy, sales tax subsidy and power subsidy in terms of G.O.Ms. No. 28, Industries & Commerce (IP&INP) Department, dated 29.1 1.2014. The facts of the case are that the petitiont:r-Company is incorporated in the State of Telangana having its registered office at 58 & 59 IDA, Phase-lll, P O Jeedimetla, Hyderabad and is carrying on the business of manufacture of wheat flour. It L.as established two industrial enterprises in the backward arezL of Medchal- Malkajgiri District, duly obtaining license from the Department of Factories, Government of Telangana, dated lO.O2.2OlT . According to the petitioner, the State of Telangana, with an intent to encourage the establishment of new industrial ent,:rprises in the State, has issued the G.O.Ms. No. 28, dated 29.1 1.2014 providing 1007o reimbursement of stamp duty paid by the industry on purchase of land meant for industrial use; fixed power cost reimbursement at Rs. 1.00 per unit on the power consumed for a period of 5 years from the date of commencement of commercial production; and reimbursement of 7 s\o net VAT/CST or State Goods and Service Tax (SGST) paid for a period ol 7 years from the date of commencement of commercial production. The industrial unit established by the petitioner-Company is r:ntitled to the subsidy amounts as provided under the said G.O. The petitioner- Company commenced its production activity on 23.1O.2O16. \
W.P.Na. 10897 of 2021 According to the petitioner-Company, in terms of the G.O.Ms. No. 28, dated 29.11 .2014, the petitioner-Company is entitled to the total subsidy of Rs.2,31,84,7411- being (i) Rs. 7,13,000/- towards reimbursement of stamp duty; (ii) Rs. 66,09,299/- towards subsidy on Sales Tax till 2Ol7-18 (first half); and (iii) Rs. 1,58,62,4421- towards fixed power cost reimbursement at Rs. 1.0O per unit of the power consumed ti1l 30 .O9 .2O2O. Seeking release of the said amount, the petitioner-Company has been pursuing the respondents from time to time, but so far, no amounts are released in its favour. Hence, the writ petition. The General Manager, District Industries Centre, Medchal- Malkajgiri District, has filed a counter affidavit stating that by issuing G.O.Ms. No. 28, dated 29.\1.2014, the Government of Telangana has announced incentives policy, namely Telangana State Industrial Development and Entrepreneur Advancement ("fhe-IDEAJ to the eligible industrial units set up in Telangana State. Subsequently, the Government has issued operational guidelines vide G.O.Ms. No. 77, Industries & Commerce (lP & INF) Department, dated 09.10.2015 for implementing the T-IDEA scheme. The claim made by the petitioner-Company seeking incentives was processed as per the guidelines and the Commissioner of Industries, Telangana State, Hyderabad, has sanctioned the claims duly placing it in the State Level Committee ('SLCJ meetings and the same was duly intimated to the petitioner- Company. It is admitted that an amount of Rs. 7,13,000/- towards reimbursement of stamp duty; Rs. 1,58,62,440/- towards reimbursement of power tariff; and Rs. 66,09,299 / - towards reimbursement of sales tax were sanctioned in favour of the petitioner-Company and the same was also duly intimated to the W.F No. 10897 of 2021 Company. Further, in response to the letters addressed by the petitioner, the respondent No.2, by letters, dated {15.08.2020 & O2.O2.2O21 intimated the petitioner-Company stat ing that the pending incentives will be released as per seriatim of sanctions, as and when the Government releases the budget. Heard Sri Y. Ratnakar, the learned counsel for che petitioner- Company and the learned Government Pleader for Industries & Commerce Department for respondent Nos. 1 to 3 arrd Sri R.Vinod Reddy, learned Standing Counsel for respondent No.
Perused the material available on record. There is no dispute as to the entitlement of :he petitioner- Company for subsidies in terms of G.O.Ms. No. 28, dated 29.11.2014, which was issued by the State of Telang,ana extending various incentives for encouraging establishment of new industrial enterprises in the State. Even in the counter affidavit filed by the respondent No. 3, it is admitted that the claim of the petitioner- Company seeking subsidy of Rs. 7 ,13,OCO I - towards reimbursement of stamp drty; Rs. 1,58,62,4 40 I - towards reimbursement of power tariff; and Rs. 66,09,1t99/- towards reimbursemeni of sales tax was processed as per the guidelines and was sanctioned by the SLC and the same was also intimated to the petitioner-Company by the respondent Nos. 2 and 3. The learned counsel for the petitioner-Com:rany contends that the petitioner-Company has established the industry due to the incentives/ subsidies provided by the State Government and that the linal product pricing structure was also fi;<ed taking into consideration the subsidy amounts which the petitioner-Company would receive from the State Government as per (i.O.Ms. No.28 and that if the subsidy amounts are delayed abnormally, the - * ,.--- =-*- 3
W.P.N7. 10897 of 2021 petitioner-Company would be forced to increase its borrowings, thereby its financial position gets strained and impaired. The alternative proposal submitted by the learned counsel for the petitioner-Company to appropriate and adjust the subsidy amount against the balance current power bill, commencing from the month of April, 2021 onwards till the entire subsidy amount is fully adjusted, is rejected by the learned Government Pleader on the ground that as per The-IDEA incentives guidelines, there is no such provision provided. However, the learned Government Pleader contends that the subsidies/ incentives sanctioned to the petitioner- Company are conditional and the Department is exploring to release the said amounts as and when the petitioner's unit turn comes as per seriatim for disbursement of available funds. Sri R.Vinod Reddy, learned Standing Counsel appearing for respondent No.4 has stated that in the relief sought for in the present writ petition, the role of the respondent No.4-Corporation is minimal and it is only the respondent No. 1 who has to answer. Learned Standing Counsel has argued that the respondent No.4 is an independent Corporation and the subsidy from the Government is payable to the petitioner Company and the respondent No.4- Corporation. That the petitioner has to abide by the terms and conditions of the power supply agreement entered and pay the monthly CC bills, the petitioner cannot take a stand that the power bilis may be adjusted against the subsidy amounts due from the Government. Having regard to the incentives envisaged in G.O.Ms.No.28, Industries and Commerce (lP&lNF) Department, dated 29.11,2014, and the contents of the counter where under it is not denied that the subsidy amount under various heads are due to the petitioner .P.No. 10897 of 2021 since the year 2016_IT onwards, and also taking into account the fact that the respondent No.l has stated that the lmounts due to the petitioner w l be paid as per seriatim for crisbursement of available funds, this Court deems it fit to allow the present writ petition. The respondent No. 1 shall coordinate with the Finance Secretary and get the necessary approvals and funds allotted for the various schemes/ incentives announced by t.re Government from time to time. The respondent No. 1 cannot simply state that the amounts due will be paid as per seriatim and do nothing about it. As seen from the counter filed, the 23.d SLC m,reting was held on 04.04.201g which sanctioned an amount of Rs.29,36,2 40 /- and, Rs.36,73,O59/- to the petitioner and thereafter nothing has been done to pay the sanctioned amount even though fcur years have elapsed. The Government having commenced a sch:me by offering incentives/concessions to the entrepreneurs who wanted to establish/set up new industries or expansion or diversification of the existing industries in the State of Telangana, cannot shy away from paying the said incentives/concessions to the entrepreneurs who establish.new industries or expand or diversily the existing industries as and when the amounts are due or by the end of the financial year. The Government should stick to its promise of paying the incentives/ concessions within otherwise, the very purpose of setting up expanding or diversifying the existing industries will be defeated as the entrepreneurs who have established these indust:-ies will not be in a position to run the industries in eflicient ;1nd profitable manner, if these incentives/concessions are not pzLid within the reasonable time. 5 a fixecl time frame, the n,:w industries, (
To W.P.No. 10897 of 2021 For the afore-stated reasons, the Writ Petition is allowed with the following directions 1) the respondent No. 1 sha1l endeavour to clear the dues payable to the petitioner as expeditiously as possible preferably within a period of three months from the date of receipt of a copy of this order, and 2) the petitioner will have to pay the monthly CC charges or any other dues to the respondent No.4, levied by the Department. The request of the petitioner to direct the respondent No.4 not to insist for payment of the electricity consumption charges till the subsidy amount is released cannot be considered and the same is rejected. However, the petitioner is granted liberty to file a representation to the respondent No.4 for paying the arrears of amounts due in instalments and the same shall be considered sympathetically by the respondent No.4 authorities duly taking into consideration the fact that the petitioner cannot be faulted for the non-payment of the subsidy amount from the Government within time. Miscellaneous petitions pending in this writ petition,'if any, shall stand closed. There shall be no order as to costs. .I.NAGALAKSHMI ASSISTANT REGISTRAR ///l \f,./ SECTION OFFICER The Principal Secretary to the Government, Industrie-s and Commerce O""or rt.Jfit, Oovernm;rnt of Telanga na, Hyderabad. 500 063' The Commissioner of lndustri#c%'"ih't"i "t le.lqngana' Commissionerate of rriorJtrilil, Cr,iius Rti Lane, Abids, Hvderabad 500-00'1 The General Manager, Disil;i'ln;u;iries CJltf"-,3rd Floor' A-Block' Collectorate c'"'.ir""ili,,r"i.r,Jl viarr<aisiri biit':ici Nei.oRR, Keesara [/edchal District. The Chairman and lvtanagirig'o?"JiJi,'io'tn"rn q9w9r Distribution C-ompany of Telanoana Limited' (n co,eYn"meii'"i'f-"fJngin' Undertaking)' Mint Compound' nvier"auaO 500 063; Telangana State-- -. .^- O?re CC to Sri Y.Ratnakar, Advocate IOPUUI i"lx dd.'i" cp ior inousiieiaii-coinrJr.
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HIGH COURT DATED:0510712021 ORDER WP.No.10897 of 2021 ALLOWING THE WRIT PETITION WITHOUT COSTS. e 1 ( )oo 10 AuG20t1 -k (> s 7',-o .,c
Reproduced from the public record of the Telangana High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.