R. Ramasamy, (Deleted ) R.Ramesh vs. The Principal Secretary/

Held

The Court held that the rejection of the petitioner's claim for capital and LTPT subsidy could not be sustained and was liable to be quashed. The Court found that the petitioner had indeed constructed a new building after demolishing the old mill and installed new machinery, subsequently commencing production. The Court noted that the relevant G.O. and policy did not explicitly state that a unit operating under an old TIN number was ineligible for subsidy. Furthermore, the Court considered the extensive steps taken by the petitioner, including purchasing new land, demolishing the old structure, constructing a new building, installing brand new machinery, obtaining a new power connection, and commencing production, all of which indicated the establishment of a new unit or substantial expansion. The Court directed the respondents to grant the capital and LTPT subsidy to the petitioner within four weeks. The Court expressly did not decide any issues related to GST provisions, as the dispute centered on subsidy eligibility under a policy.

Facts

The petitioner, R. Ramesh, sought capital and Low Tension Power Tariff (LTPT) subsidy for his modern rice mill. The third respondent rejected his application, citing that the unit continued under the same TIN number until GST introduction, and the original firm continued in the same premises with new machinery, implying it was a replacement rather than a new unit or substantial expansion. The petitioner argued that he had acquired additional land, demolished the old factory building, constructed an entirely new building, installed new machinery, obtained a new electricity connection, and commenced production on 30.10.2014. He had also applied for and received bank loans for this new project. The rejection was based on a clarification from the Directorate stating the original TIN continued until GST, which the petitioner contended was not a ground for ineligibility under the relevant Government Order (G.O.).

Key Issues

1. Whether the petitioner's modernization of his rice mill, involving demolition of the old structure, construction of a new building, installation of new machinery, and commencement of production under a new electricity connection, constitutes a "new unit" or "substantial expansion/diversification" eligible for capital and LTPT subsidy under G.O.(Ms)No.14, Micro, Small and Medium Enterprises (B) Department, dated 07.05.2008, despite the continued use of the original TIN number until the introduction of GST. Petitioner's arguments: The petitioner contended that he had taken all necessary steps to establish a new unit, including acquiring new land, demolishing the old building, constructing a new factory, installing new machinery, and obtaining a new power connection. He argued that the continued use of the old TIN number until GST was not a disqualifying factor as per the G.O. and that his actions clearly demonstrated a new unit or substantial expansion. Respondents' arguments: The respondents argued that the unit was not new because the same TIN registration was continued until the introduction of GST. They also contended that it could not be considered expansion/diversification because the existing machinery had been disposed of, and the new machinery was installed in the old premises under the same TIN.