Abis Exports INDIA Private LTD vs. State Of Chhattisgarh

Facts

The petitioner, Abis Exports India Private Ltd, established an industry based on the Agriculture and Food Processing Industrial Policy, 2012, which promised tax benefits like VAT and CST refunds. Following the enactment of the CGST Act, 2017, these benefits were allegedly not extended. The petitioner had previously filed WPC No. 614 of 2020, which was disposed of with a direction for authorities to decide pending representations. However, the Secretary, Department of Commerce and Industry, State of Chhattisgarh, vide an order dated 2.8.2024, rejected these representations. The petitioner argues this rejection failed to consider the proviso to Section 174(2)(c) of the CGST Act, asserting that since the incentives were not withdrawn before the appointed day, they should continue. The State contended that the withdrawal of benefits was a consequence of the CGST Act and that the circumstances necessitating the subsidy had disappeared.

Held

The Court held that the proviso appended to Section 174(2)(c) of the CGST Act clearly indicates that tax exemption granted as an incentive against investment through a notification shall continue if it is not withdrawn or rescinded. The Court noted that the State had not placed any document on record to substantiate that the tax relaxation extended to the petitioner was ever withdrawn prior to the appointed day. Citing the Supreme Court's decision in Hero Motocorp Limited v. Union of India and Others, the Court found that the authority concerned had not properly considered Section 174(2)(c) of the CGST Act while rejecting the petitioner's representations. Consequently, the order dated 2.8.2024 was quashed. The respondent authorities were directed to reconsider the petitioner's representations in light of Section 174(2)(c) of the CGST Act and the Apex Court's ruling, expecting completion within 60 days.

Key Issues

1. Whether the tax exemption granted as an incentive against investment through a notification shall continue as a privilege if the said notification is not rescinded on or after the appointed day, under Section 174(2)(c) of the CGST Act, 2017? Petitioner's arguments: The petitioner contended that the proviso to Section 174(2)(c) of the CGST Act states that tax exemptions granted as incentives shall not continue if the notification is rescinded on or after the appointed day. Since the incentive extended to the petitioner was never withdrawn by the State Government, they are still entitled to it. The petitioner further argued that the CGST Act is not a change in law but a subsumption of existing tax laws, and therefore, the incentives should continue. They relied on the principle that if the notification is not rescinded, the incentive should persist. Revenue/State's arguments: The State argued that the decision to withdraw benefits was taken pursuant to the enactment of the CGST Act, and the concerned authority rejected the representations on the ground that the circumstances necessitating the subsidy had disappeared following the change in law.