Back
IN THE HIGH COURT OF JUDICATURE AT PATNA
ANIL KUMAR SINHA, J.
CWJC No.10038 of 2020
(22.3.2024)
M/s Essell Lubricants and Chemicals Pvt. Ltd. ... Petitioner
vs.
State of Bihar & Ors. ... Respondents
Bihar Industrial Incentive Policy, 2006 – Clause 2(vi) read with Clause 10 & Industrial Policy, 2011, Clause 3(iii) – Petitioner claiming 80% VAT reimbursement under 2006 policy – under 2006 policy, the unequivocal promise made by the state was that the new industrial unit which commences production within five years from the cut off date fixed under the policy i.e., 01.04.2006, shall be entitled for VAT reimbursement to the extent of 80% – in response to the policy, the petitioner/unit established an industrial unit for manufacture of refined petroleum product (lubricants) and admittedly commenced production within two years from the date of coming into force the Industrial Policy i.e., of 01.07.2008 – the State Government granted eligibility certificate under the 2006 policy to the petitioner/company certifying that the petitioner/unit is eligible to receive reimbursement of 80% of VAT paid under the Industrial Policy, 2006 – the policy was acted upon and the petitioner/unit based on the promise, made under the policy, altered/changed its position by establishing the manufacturing unit – it invested a lot of amount also on the basis of promise made in the policy – the respondent/State reimbursed 80% of the VAT paid by the unit for the year 2010-11 and 2011-12, thereafter, for the financial years 2012-13, 2013-14 and 2014-15, it has been denied on the basis of subsequent policy of 2011 that the unit is only entitled for 25% of reimbursement and not 80% the decision is arbitrary and whimsical, lacking application of mind inasmuch as the respondents/state itself granted eligibility certificate to the petitioner/unit for grant of incentive/reimbursement of VAT amount and in fact reimbursed the amount also to be extent of 80% for two financial years and 25% for another financial years – therefore, the plea that the petitioner/unit was not having the single window clearance by S.I.P.B./District Committee, is preposterous and is not acceptable and accordingly letter No. 649 dated 27.08.2001 quashed – the State, having made a promise under the Industrial Policy, 2006, to extend the incentive benefits to the industrial unit for a period of ten years and the petitioner/company having acted on the promise made investment, fulfilled the criteria for grant of incentive, the respondent/state cannot deny the benefits arising at of 2006 policy on the principle of promissory estoppels/legitimate expectation – accordingly the respondent/authorities directed to reimburse the 80% of the VAT amount paid by the petitioner (company for the period 2012-13 to 2014-15 after adjusting the amount which has already been paid by the respondents to the petitioner – the payment directed to be made within two months. (Paras 15 & 16)
1986 Supp SCC 728, 1979 (2) SCC 409, 2021 (3) PLR 73, (2005)7 SCC 348 Para 34 – Referred.
Anil Kumar Sinha, J. – Heard the parties.
2. The petitioner/M/s Essel Lubricants and Chemicals Pvt. Ltd. has filed the present writ application for a direction to the respondent/authorities to pay a sum of Rs. 17.79 lacs towards reimbursement of value added tax for the year 2012-13 till 2014-15 under the Bihar Industrial Incentive Policy of 2006 (hereinafter referred to as the 2006 Policy). By way of I.A. No. 1 of 2022, the petitioner has sought quashing of the letter no. 649 dated 27.08.2001 whereby respondent no. 6 has communicated that the petitioner does not have the approval of district level Single Window Clearance Committee/State Investment Promotion Board.
3. Brief facts involved in the case are that the Bihar government published 2006 Policy for increasing the industrial growth of the State and to revive the sick and closed unit by creating favourable environment to attract domestic and foreign investment. As per Clause 2 (vi) read with Clause 10 of the Policy, new units which commence the commercial production within five years from 01.04.2006 were given the incentive of 80% of reimbursement against the admitted VAT amount deposited by the unit in the account of the State Government. This facility was made available for a period of ten years. The petitioner, on the basis of promise made under the Policy, setup a manufacturing unit of refined petroleum products for which production commenced on 01.07.2008. Vide letter no. 546, dated 31.07.2010 (Annexure 1), the petitioner was issued eligibility certificate under the 2006 Policy by the General Manager, District Industrial Centre, Aurangabad, certifying that the petitioner/company is eligible to receive reimbursement of 80% of VAT paid under the 2006 Policy.
4. For the financial year 2010-11, 2011-12, 2012-13, 2013-14 and 2014-15, the petitioner applied for reimbursement of a sum of Rs. 17,493/-, Rs. 9,50,600/-, Rs. 9,07,022/-, Rs. 9,28,077/-, Rs. 7,11,502/-, total amounting to Rs. 35,14,694/- under the 2006 Policy, out of which, reimbursement of Rs. 9,67,590/- for the financial year 2010-11, 2011-12 was paid to the petitioner against reimbursement of the VAT amount which is 80% of the total admitted tax paid by the petitioner.
5. For the financial year 2012-13, 2013-14 and 2014-15, against the total amount of Rs. 26,94,442/-, the petitioner has been paid only Rs. 9,14,606/-. The balance amount of Rs. 17,79,836/- has not been paid for which the petitioner has filed a representation before the Commercial Tax Department but did not receive any response.
6. Learned counsel for the petitioner argued that after coming into force the 2006 Policy, the petitioner/company set up a manufacturing unit of refined petroleum and in terms of the policy, commenced production on 01.07.2008 i.e., within five years from the cut of date i.e., 01.04.2006. The petitioner/unit was fully covered by the 2006 Policy, as such, it was eligible for 80% VAT reimbursement. Vide Annexure 1, the respondent/authorities duly declared the petitioner/unit eligible for 80% VAT reimbursement. The authorities also accepted the claim of the petitioner for reimbursement of 80% VAT amount and paid the same for financial year 2010-11, 2011-12.
7. In the supplementary counter affidavit, dated 01.09.2021, the respondent/authorities, for the first time, took a specious plea that petitioner does not have the approval of District Level Single Window Clearance Committee/S.I.P.B. The petitioner/company, on the basis of promise made in the Industrial Policy, established the manufacturing unit, changed its position. Now, the 80% of VAT reimbursement is being denied firstly on the plea of not having the approval of District Level Single Window Committee and secondly, that in 2011, a new Industrial Policy has come into force under which the petitioner/company is entitled for 25% of VAT reimbursement only.
8. On the other hand, learned counsel for the respondent/state argued that in 2011, new Industrial Policy came into existence a
Subsequent amendments to the Bihar Industrial Incentive Policy do not apply retrospectively, and promised incentives must be honored for the entire entitlement period.
The court established that the lack of explicit restrictions in the Bihar Industrial Incentive Policy, 2011 regarding the commencement of production prior to SIPB approval invalidated the denial of i....
The doctrine of promissory estoppel prevents the State from withdrawing tax exemptions promised under the Industrial Policy, 2004, even after the de-notification of backward areas.
Point of Law : Notification cannot be construed as having retrospective or retroactive effect to whittle down the accrued rights in favour of the Respondent units which were entitled to rebate.
The absence of a cut-off date in the Special Mega Package allows entitlement to incentives regardless of the commercial production start date relative to the previous policy's expiry.
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
