Industrial incentive classification depends on the intimation date, and subsidy cannot be extended beyond the governing policy framework.

Industrial incentive classification under the policy turned on the date of intimation for expansion, diversification or modernisation, and the unit was therefore treated as a category III loss-making existing functional industrial unit. The sanctioned package was for the Chaibasa/Jhinkpani unit as a whole, so subsidy and tax relief could not be limited to clinker alone and extended to cement produced under that modernisation package. However, incentives were confined to the unit that actually undertook modernisation, so sales tax subsidy for the Sindri unit was not sustainable. Promissory estoppel and legitimate expectation could not be used to enlarge benefits beyond the governing policy.

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Issues: (i) whether the unit was to be treated as a category III loss-making existing and functional industrial unit or only as a category II existing functional unit; (ii) whether subsidy and tax relief were confined to clinker and excluded cement; (iii) whether subsidy on additional incremental sales tax could be denied for the Sindri unit and restricted only to the Chaibasa unit.

Issue (i): Whether the unit was to be treated as a category III loss-making existing and functional industrial unit or only as a category II existing functional unit.

Analysis: The eligibility for the mega-unit package had to be determined with reference to the date on which the unit gave intimation for expansion, diversification, or modernisation and sought the incentive package. The policy and the government memo classified units according to their status at that stage, and the petitioner had applied seeking benefits as a loss-making unit which had suffered cash losses for several years. The subsequent commencement of commercial production could not be used to alter that classification, because doing so would make the category III package unworkable.

Conclusion: The unit was entitled to be treated as a category III loss-making existing and functional industrial unit, not merely as a category II existing functional unit.

Issue (ii): Whether subsidy and tax relief were confined to clinker and excluded cement.

Analysis: The sanction and proposal were for modernisation of the Jhinkpani/Chaibasa unit as a whole and did not confine the package to clinker alone. Cement was the final product of the unit, and the incentive linked to incremental sales tax was intended to operate on the product covered by the sanctioned modernisation package. The restriction sought by the State had no support in the sanction letter or the policy framework.

Conclusion: The relief could not be confined to clinker alone, and the petitioner was entitled to subsidy on cement and clinker produced by the Chaibasa unit.

Issue (iii): Whether subsidy on additional incremental sales tax could be denied for the Sindri unit and restricted only to the Chaibasa unit.

Analysis: Clause 22 of the policy granted incentives only to the unit that undertook expansion, diversification, or modernisation. No such modernisation had taken place in the Sindri unit, so a claim for subsidy on sales tax attributable to that unit could not be sustained. The doctrines of promissory estoppel and legitimate expectation could not be used to compel the State to grant a benefit contrary to the policy.

Conclusion: The petitioner was not entitled to subsidy on sales tax paid on cement sold by the Sindri unit.

Final Conclusion: The writ petitions succeeded in part: the petitioner obtained recognition as a category III mega industrial unit and relief on the Chaibasa unit's cement and clinker sales tax incentive, but the claim relating to the Sindri unit was rejected.

Ratio Decidendi: For industrial incentive classification under the policy, the relevant date is the date of intimation for expansion, diversification, or modernisation, and incentives cannot be extended by promissory estoppel or legitimate expectation in a manner contrary to the governing policy.

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