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.

JUDGMENT :

S. Muralidhar, J.

1. M/s. Ultratech Cement Limited (Petitioner No.1) and its Senior Vice-President (Petitioner No.2) have in this writ petition under Article 226 of the Constitution of India sought the quashing of a resolution dated 18th August 2020 issued by the Industries Department, Government of Odisha (Opposite Party No.2) in relation to the amendment to the Industrial Policy Resolution 2007 (IPR 2007) as being unconstitutional and illegal. The principal ground of such challenge is that the said amendment to the heading of paragraph-18.4 of the IPR 2007 has been made effective retrospectively from 1st July 2017 with a view to preventing Petitioner No.1 from availing the State Goods and Service Tax (SGST) reimbursement, as contemplated in paragraph-18.4 of IPR 2007.

Background facts

2. The background facts are that Petitioner No.1 is stated to be operating cement manufacturing units in various States in India including a cement manufacturing unit in Jharsuguda District in Odisha. According to the Petitioners, the said unit is a state-of-the-art cement manufacturing industrial unit which, inter alia, utilizes intermediate products (clinker) and waste products (fly ash) generated by other industrial undertakings along with gypsum as a raw material to manufacture high quality cement.

3. It is stated that the cement manufacturing process undertaken by Petitioner No.1 is a controlled manufacturing process resulting in high value addition, employment generation and revenue augmentation. It is stated that the said manufacturing process requires substantial investment in high-end plant and machinery, monitoring and regulation through sophisticated electrical, mechanical and instrumentation systems by qualified technical personnel.

IPR 2007

4. On 2nd March 2007, the Industries Department, Government of Odisha published the IPR 2007 with a view to reinforcing and expanding the policy framework for industrial promotion and investment facilitation "including creation of an enabling environment". Paragraph 1.7 of IPR 2007 spelt out the strategy of the State Government, inter alia, promoting investments "in new cement plants based on blast furnace slag and fly ash, which would be available in abundance due to the large number of steel and power plants coming up in the State".

5. Paragraph-4 of the IPR 2007 spelt out the general policy framework whereby the State was to pursue a multi-pronged approach for industrial promotion. Efforts were to be made "to incentivise investment in thrust and priority sectors with a view to maximizing the triple objectives of value addition, employment generation and revenue augmentation". In paragraph-4.4, certain "thrust sectors" were identified for providing "tailor made incentive packages" and "additional incentive for the pioneer industries in these sectors". Paragraph-19 of the Annexure-I to the IPR 2007 spelt out what industries qualified as being in the "thrust sector". This included agro processing, automobiles, auto components, textile, apparel, ancillary and downstream industries. Industrial units operating the said categories were required to meet specified minimum capital investment and employment generation criteria. For instance, Rs.10crores minimum capital investment and a direct employment generation of 100 persons was specified for a "downstream industry" in order to avail incentives meant for the "thrust sector". Paragraph-2 of Annexure-I of the IPR 2007 defined "downstream industry" to mean an industrial undertaking which is engaged or proposed to be engaged in value addition of the intermediate or final produce or waste product of one or more industrial undertakings.

6. By a resolution dated 3rd March 2015, the definition of "downstream industry" was amended by the Industries Department prospectively to include a minimum threshold requirement of utilization of 50% of intermediate/final produce/waste products of industrial undertakings for qualification as a downstream industry.

7. Acc