Fiscal incentive rules must follow the parent policy: no five-year cap, fresh investment review, and capital subsidy remain available.

For expansion, modernisation and diversification units, the Industrial Policy Resolution, 1992 did not authorise a five-year cap on sales tax incentive where clause 7.5 and the corresponding notification contained no such time limit; a subordinate guideline could not add a restriction inconsistent with the policy, so the five-year condition was invalid. The policy also allowed the qualifying investment to be reconsidered where further evidence supported the expansion cost, so the eligibility certificate could be amended to reflect the actual fixed capital investment and corresponding incentive ceiling. The same policy granted capital investment subsidy to expansion projects, and no disqualification arose merely because earlier subsidy had been taken, so the subsidy claim was maintainable.

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Issues: (i) Whether the eligibility certificate for sales tax incentive under the Industrial Policy Resolution, 1992 could validly restrict the benefit to five years; (ii) whether the fixed capital investment for expansion could be re-evaluated so as to enhance the sales tax incentive ceiling; (iii) whether the petitioner was entitled to capital investment subsidy under the Industrial Policy Resolution, 1992.

Issue (i): Whether the eligibility certificate for sales tax incentive under the Industrial Policy Resolution, 1992 could validly restrict the benefit to five years.

Analysis: The Industrial Policy Resolution, 1992 treated expansion, modernisation and diversification of existing units as a separate category from new industrial units and, in clause 7.5, granted sales tax exemption or deferment on finished products for incremental sales subject to a ceiling linked to additional investment in plant and machinery. The corresponding statutory notification under the Orissa Sales Tax Act, 1947 also reflected this structure. No time-limit was prescribed in clause 7.5 or in the notification for EMD units, and the operational guidelines issued by the Industries Department could not add a condition of five years when the policy itself did not contain it. A subordinate instruction cannot supplant the policy or introduce a restriction inconsistent with it.

Conclusion: The five-year restriction in the eligibility certificate was invalid and was set aside as being ultra vires the policy.

Issue (ii): Whether the fixed capital investment for expansion could be re-evaluated so as to enhance the sales tax incentive ceiling.

Analysis: Clause 7.5 limited the incentive by reference to the additional capital investment in plant and machinery, but it did not prohibit reconsideration of the investment figure where the expansion investment had been further evidenced and was supported by the project materials and chartered accountant's certificate. The policy did not contain any express bar on reassessment after production, and the rejection of amendment solely on the ground that the certificate had already been issued was not justified. Since the entitlement was to be determined on the actual qualifying investment, the authority was required to reconsider the investment position and amend the eligibility certificate accordingly.

Conclusion: The petitioner was entitled to reconsideration of the investment figure for expansion and consequential enhancement of the eligibility certificate.

Issue (iii): Whether the petitioner was entitled to capital investment subsidy under the Industrial Policy Resolution, 1992.

Analysis: Paragraph 5 of the Industrial Policy Resolution, 1992 granted capital investment subsidy to new units as well as expansion, modernisation and diversification projects, with a ceiling applicable to the relevant zone. The policy did not prescribe any disqualification merely because the unit had earlier availed subsidy under an earlier policy, nor did it support denial on the ground that some earlier limit had been exhausted. The petitioner's expansion project fell within the subsidy provision and the denial rested on grounds not found in the policy.

Conclusion: The petitioner was entitled to capital investment subsidy in terms of the Industrial Policy Resolution, 1992.

Final Conclusion: The writ petition succeeded. The sales tax incentive could not be confined to five years, the investment claim required fresh consideration for proper quantification of the qualifying benefit, and the petitioner's claim to capital investment subsidy was held maintainable under the policy framework.

Ratio Decidendi: A subordinate operational guideline cannot impose a time limitation or other restrictive condition on a policy incentive where the parent policy and its statutory notification do not prescribe such limitation, and fiscal incentive provisions must be applied according to their text without adding words that defeat the policy objective.

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