M/S Jsw Cement Limited,Jajpur vs. State Of Odisha

Facts

M/s JSW Cement Limited (Petitioner) challenged an amendment to Odisha's Industrial Policy Resolution (IPR) 2015, made by a Government Resolution dated 18.8.2020. This amendment retrospectively excluded cement manufacturing and grinding units from SGST reimbursement benefits under Clause 5.4.5(a) of IPR 2015, effective from 1.7.2017. The Petitioner argued that they had invested significantly (approx. ₹350 crore, with first fixed capital investment on 31.7.2017) and applied for provisional Priority Sector status on 16.8.2017, which was forwarded by the Regional Industries Centre (RIC) on 22.9.2017. They commenced commercial production on 1.5.2020. The State contended that the policy could be modified due to financial implications and that the Petitioner could not claim incentives based solely on an application or RIC recommendation.

Held

The Court held that the amendment to Clause 5.4.5(a) of IPR 2015, seeking to retrospectively exclude cement manufacturing and grinding units from SGST reimbursement from 1.7.2017, is arbitrary, unconstitutional, and contrary to the doctrine of promissory estoppel and legitimate expectation. The Court found that the Petitioner's claim for reimbursement had accrued and crystallized before the amendment. The retrospective exclusion was set aside. Furthermore, the Court held that the Petitioner's application for provisional Priority Sector status, submitted on 16.8.2017, attracted the consequence of deemed approval under Section 11 of the Orissa Industries (Facilitation) Act, 2004, due to the authorities' failure to decide within the prescribed period. The RIC's verification, which found the unit eligible and recommended provisional status, could not be disregarded. The State could not rely on the retrospective exclusion or the absence of a formal certificate to deny the claim. The Petitioner is entitled to consideration of their claim for reimbursement of net SGST, subject to verification of the amount and compliance with other conditions. The Court directed that the claim for SGST reimbursement, along with applicable interest, be determined and released within four weeks. The impugned Resolution dated 18.8.2020 was set aside retrospectively.

Key Issues

1. Whether the amendment to Clause 5.4.5(a) of IPR 2015, excluding cement manufacturing and grinding units from SGST reimbursement, can be applied retrospectively from 1.7.2017, impacting units that had already made investments and applied for benefits under the original policy? (Question of law) 2. Whether the Petitioner is entitled to the benefit of deemed approval for its provisional Priority Sector status application, given the RIC's inspection and forwarding of the application, and the State's failure to issue a decision within the prescribed timelines under the Operational Guidelines and Section 11 of the Orissa Industries (Facilitation) Act, 2004? Petitioner's arguments: The amendment is arbitrary, unconstitutional, and violates principles of promissory estoppel and legitimate expectation as it withdraws benefits after substantial investment and application. The retrospective application is unjust. The application for provisional status should be deemed approved due to the authorities' inaction. Reliance on Section 11 of the Facilitation Act and Clause 4.2 of IPR 2015. State's arguments: The policy could be modified due to financial burden. The Petitioner cannot claim incentives based merely on an application or RIC recommendation. Reliance on High Level Committee proceedings and Cabinet decisions.