2021 Supreme(Sikk) 23

THE HIGH COURT OF SIKKIM : GANGTOK
MEENAKSHI MADAN RAI, BHASKAR RAJ PRADHAN, JJ.
Sun Pharma Laboratories Limited - Petitioner
versus
Union of India and Others – Respondents
WP(C) No.47 of 2018
Decided On : 05-02-2021

Headnote:

GOODS AND SERVICES TAX - BUDGETARY SUPPORT SCHEME - REDUCTION OF BENEFITS - PROMISSORY ESTOPPEL - APPLICABILITY - RATIO DECIDENDI - The Budgetary Support Scheme, issued under the GST regime, reduced the quantum of benefits earlier availed by the Petitioner, thereby reneging on the promises made under the erstwhile Tax regime and adversely affecting the Petitioner. The Petitioner challenged the restrictions imposed by the Scheme, contending that it violated the principle of Promissory Estoppel. The Court held that the subsequent Notifications were merely clarificatory in nature and did not take away any vested right and had, in fact, been issued in the larger public interest to prevent misuse and to achieve the original object and purpose of the incentive/exemption.

Fact of the Case:

The Petitioner, a Private Limited Company engaged in the manufacture of P&P Medicaments and Consumer Health Products, set up Unit I in 2005 and Unit II later, both situated at Ranipool, East Sikkim. The Petitioner availed 100 per cent exemption from Excise duty for a period of ten years from the date of commencement of commercial production, as per various exemption Notifications issued under the respective Fiscal Statutes. In 2007, the North East Industrial and Investment Promotion Policy was notified, discontinuing the Industrial Policy of 2003 but providing that new Units and existing Units which go in for substantial expansion and commence commercial production within ten years of the date of Notification of the said Policy, would be eligible for incentives for a period of ten years from the date of commencement of commercial production. The Petitioner set up the first Unit in 2005 and commenced commercial production on 20.04.2009. The second Unit set up later, commenced commercial production on 14.04.2014. Thus both Units started its commercial production within ten years from the date of issuance of Industrial Policy, 2007 and were enjoying the full refund of the Central Excise Duties paid by them by way of the mechanism provided in the exemption Notification. From 01.07.2017, the entire indirect Tax regime in the country underwent a major reform with the introduction of the Goods and Services Tax (GST) which thereby introduced the Central Goods and Services Tax Act, 2017 (CGST Act), the Integrated Goods and Services Tax Act, 2017 (IGST Act) and the Sikkim Goods and Service Tax Act, 2017. The Central Government provided for Budgetary Support Schemes for such Units under the GST regime. The Budgetary Support Scheme is applicable to the Units which were eligible for drawing benefits under the earlier Excise Duty Exemption/Refund Schemes and was applicable for the remaining period out of the total period not exceeding ten years, from the date of commencement of commercial production as specified under the erstwhile Notification. The amount of Budgetary Support under the Scheme for specified goods manufactured by the eligible Unit is specified as the sum total of 58 per cent of the Central Tax paid through debit in cash ledger account maintained by the Unit after full utilization of the input Tax Credit of the Central Tax and Integrated Tax and 29 per cent of the Integrated Tax paid through debit in cash ledger account maintained by the Unit after full utilization of the input Tax Credit of the Central Tax and Integrated Tax. The Excise Duty Exemptions availed by the Petitioner by way of refund in the pre GST regime, for both the Units were curtailed by the Respondent No.1 through the Budgetary Support Policy thereby reducing the benefit granted to the Petitioner.

Finding of the Court:

The Court held that the subsequent Notifications were merely clarificatory in nature and did not take away any vested right and had, in fact, been issued in the larger public interest to prevent misuse and to achieve the original object and purpose of the incentive/exemption. The Court further held that the principle of Promissory Estoppel is not applicable in the instant case as the subsequent Notifications were issued in public interest and in the interest of the Revenue, and they seek to achieve the original object and purpose of giving incentive/exemption while inviting the persons to make investment on establishing the new undertakings and they do not take away any vested rights conferred under the earlier notifications.

Issues: Whether the Budgetary Support Scheme, issued under the GST regime, which reduced the quantum of benefits earlier availed by the Petitioner, violated the principle of Promissory Estoppel.

Ratio Decidendi: The principle of Promissory Estoppel is not applicable in the instant case as the subsequent Notifications were issued in public interest and in the interest of the Revenue, and they seek to achieve the original object and purpose of giving incentive/exemption while inviting the persons to make investment on establishing the new undertakings and they do not take away any vested rights conferred under the earlier notifications.

Final Decision: The Writ Petition was dismissed.