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2023 Supreme(J&K) 631
IN THE HIGH COURT OF JAMMU AND KASHMIR AND LADAKH AT JAMMU
N. Kotiswar Singh, CJ., Vinod Chatterji Koul, J.
Best Crop Science Industrial Area, Kathua – Petitioner
Versus
Union of India & Ors.- Respondents
Writ Petition (Civil) No. 1171 of 2022
Decided On : 23-05-2023
Advocate Appeared:
For the Petitioner: Rony John; Suhani Kotwal
For the Respondent: Jagpaul Singh; Pallavi Sharma
IMPORTANT POINT
Budgetary support under the new GST regime is only available for goods that were previously manufactured and cleared under the excise duty exemption, as defined in the Exemption Notification.
Headnote:
BUDGETARY SUPPORT - EXCISE DUTY EXEMPTION - Micro Small and Medium Enterprises Development Act 2006, Central Excise Act 1944, Central Goods and Services Tax Act 2017, Exemption Notification No. 1/2010-CE - The court analyzed the provisions of the MSME Act, Central Excise Act, and the new GST regime, particularly focusing on the Exemption Notification and the Budgetary Support Scheme. It emphasized that the eligibility for budgetary support is contingent upon the manufacturing unit having previously availed excise duty exemption for specific goods under the Exemption Notification. The court interpreted 'specified goods' as those that were manufactured and cleared under the earlier regime, thus rejecting the petitioner's claim for budgetary support for goods not previously manufactured under the exempted categories.
Fact of the Case:
The petitioner, a partnership firm registered under the MSME Act, sought budgetary support under a scheme for goods manufactured in Jammu and Kashmir. The claim was rejected by the Assistant Commissioner of Central Goods and Services Tax on the grounds that the goods did not fall under the specified 8-digit HSN codes and were not manufactured prior to the introduction of the GST regime.
Finding of the Court:
The court found that the petitioner was not entitled to budgetary support as the goods claimed were not manufactured and cleared under the Exemption Notification prior to 01.07.2017. The court upheld the interpretation that only goods previously eligible for excise duty exemption could qualify for budgetary support under the new scheme.
Issues: Whether the petitioner is entitled to budgetary support for goods manufactured after the introduction of the GST regime, despite not having manufactured those specific goods prior to that date.
Ratio Decidendi: The court held that to qualify for budgetary support, the goods must have been manufactured and cleared under the earlier excise duty exemption regime. The definition of 'specified goods' in the new scheme requires that the goods must have been previously eligible for exemption, thus limiting the scope of budgetary support to those specific items.
Final Decision: The court dismissed the petition, affirming the decision of the respondents that the petitioner was not eligible for budgetary support for the goods in question.
JUDGMENT :
N. Kotiswar Singh, CJ.
1. The petitioner is a partnership firm registered under the Micro Small and Medium Enterprises Development Act 2006 (MSME Act) and is engaged in the manufacturing of chemical products namely emulsifiers, micronutrients/biozymes, water soluble/NPK fertilizers, pesticides, plant growth regulators, bio-pesticides and bio-pesticides fertilizers, etc.
2. This petition has been filed being aggrieved by the orders dated 03.09.2020 and the letter dt. 07.12.2020 issued by the respondent no.4, the office of the Assistant Commissioner Central Goods and Services Tax Division rejecting the petitioner's claim for benefit of budgetary support under a scheme on the ground that the benefit thereunder can only be allowed on goods manufactured under an 8-digit HSN code and cleared prior to 01.07.2017, and thus the petitioner is not eligible for the refund.
3. The said claim was made by the petitioner under a scheme prepared by the Government of India in 2017 for providing budgetary support, in lieu of excise duty tax exemption granted earlier for manufacturing certain goods by the manufacturing units in the State of Jammu and Kashmir as per the exemption notification issued earlier in this regard in 2010.
4. The Central Government in exercise of powers conferred under Section 5A (1) of the Central Excise Act, 1944, issued a Notification bearing No. 1/2010-CE on 06.02.2010 (hereinafter referred to as the Exemption Notification) which exempted from payment of excise duty or additional excise duty leviable on such goods as specified in the First and Second Schedules to the Central Excise Tariff Act, 1985 for a period of 10 years when these goods were cleared from a unit located in the State (now UT) of Jammu and Kashmir to boost industrial growth in the State (now UT). This exemption was limited to the Central Excise duty actually paid by the manufacturer of goods other than by utilization of CENVAT credit and was available by way of refund mechanism.
The benefit of excise duty exemption was extended to goods described in the Table mentioned in the Notification falling within different Chapters of the Central Excise Tariff Act, 1985. In the present case we are concerned with goods covered under Chapter 38. As regards Chapter 38, all goods under the chapter were eligible for the exemption of excise duty as mentioned in the Table.
5. The petitioner set up a manufacturing unit at Kathua, Jammu and Kashmir for production of the permitted goods namely emulsifiers micro-nutrients/biozymes and water soluble/NPK fertilizers falling under the 4-digit HSN code 3808 under Chapter 38 of the Central Excise Tariff Act, 1985, which is described as "insecticides rodenticides fungicides herbicides anti sprouting products and plant growth regulators common disinfectants and similar products put up in the forms or packing for retail sale or as preparations or articles (For example sulphur treated brands Wicks and the candles and the fly papers)" under Chapter 38 of the Tariff Act. The petitioner, accordingly, made huge investments in terms of finance, capital, human resources, heavy machineries, equipment and raw materials required for setting up the plant and factory for the production of the permitted goods falling under the Broad Item of HSN Code 3808 under Chapter 38 of the Tariff Act.
The petitioner commenced the manufacturing of the aforesaid products on [22.08.21016] and was availing exemptions in Central Excise duty under the aforesaid Notification dt. 06.02.2010 and was eligible to receive this exemption benefit till 19 October 2026.
6. Things changed with the introduction of the Central Goods and Services Tax Act, 2017 (CGST Act) and Integrated Goods and Services Tax Act, 2017 (IGST Act), because of which several indirect tax statutes including Central Excise Act, 1944 were repealed. Consequently, the benefits given under the Excise Act was also withdrawn including the exemption granted under the aforesaid Act to the units under th
