2020 (4) TMI 135 - HC - VAT and Sales Tax

Court orders incentives under Bihar Industrial Incentive Policy, 2011 be granted within 3 months to petitioners

M/s. Sunny Stars Hotels Private Limited, M/s. Manokamna Infraresources LLP, M/s Vitra India Glass Private Limited Versus The State of Bihar, The Principal Secretary, Department of Industry, The Director of Industries, The Deputy Commissioner of Commercial Taxes, The General Manager, The Principal Secretary, The Development Commissioner-cum-Chairman, The Director (Technical) Development

M/s. Sunny Stars Hotels Private Limited, M/s. Manokamna Infraresources LLP, M/s Vitra India Glass Private Limited Versus The State of Bihar, The Principal ... Issues Involved:1. Rejection of claims for benefits/incentives under the Bihar Industrial Incentive Policy, 2011.2. Eligibility for VAT reimbursement and other subsidies.3. Requirement of approval from the Competent Authority.4. Discrepancy between the Industrial Policy, 2011 and the resolution dated 16.01.2006.5. Application of the principle of promissory estoppel.Issue-wise Detailed Analysis:1. Rejection of Claims for Benefits/Incentives under the Bihar Industrial Incentive Policy, 2011:The petitioners filed writ petitions under Article 226 of the Constitution of India, challenging the rejection of their claims for benefits under the Bihar Industrial Incentive Policy, 2011. The Director, Industries, Bihar, Patna rejected these claims on the grounds that the proposals did not have the approval of the Competent Authority. The Court noted that the grievances of the petitioners were common and decided to dispose of the writ petitions analogously.2. Eligibility for VAT Reimbursement and Other Subsidies:The petitioners sought directions to restore VAT reimbursement, declare the discontinuation of VAT reimbursement illegal, and grant other subsidies promised under the Industrial Policy, 2011. The petitioners had submitted all necessary documentation and had been issued Eligibility Certificates confirming their entitlement to VAT reimbursement and other subsidies. Despite this, the reimbursement was abruptly stopped, and the petitioners were informed that their claims were rejected due to the lack of approval from the Competent Authority.3. Requirement of Approval from the Competent Authority:The Court examined the argument that the term 'Competent Authority' was not defined in the Industrial Policy, 2011. The policy provided for a committee chaired by the Principal Secretary, Industries, to clarify and provide solutions for effective implementation. The Court found that the objections raised by the Industries department, citing the lack of approval from the Competent Authority, were unfounded. The approval granted by the State Investment Promotion Board and the subsequent issuance of Eligibility Certificates were deemed sufficient.4. Discrepancy between the Industrial Policy, 2011 and the Resolution Dated 16.01.2006:The Industries department relied on Clause 2.2 of the resolution dated 16.01.2006, which required approval from the Chief Minister/Governor for projects involving significant investments. The Court noted that the Industrial Policy, 2011 was framed upon review of the Industrial Policy, 2006, and introduced fresh stipulations. The Court held that the reliance on the 2006 resolution was misplaced, as it was superseded by the 2011 policy. The resolutions and orders issued under the 2011 policy confirmed the approval process and the role of the Competent Authority.5. Application of the Principle of Promissory Estoppel:The Court emphasized that the State cannot retract from its promise made under the Industrial Policy, 2011. The petitioners had made investments based on the promises of incentives, and their eligibility was not in dispute. The Court referred to the principle of promissory estoppel, as laid down in various judgments, including the case of M/s Suprabhat Steel Ltd. The Court concluded that the rejection of the petitioners' claims was whimsical, lacked application of mind, and was bereft of reasons.Conclusion:The Court quashed the orders rejecting the petitioners' claims for incentives under the Industrial Policy, 2011. It directed the State Government in its Industries department and the Commercial Taxes department to ensure that all incentives to which the petitioners were entitled under the policy be accorded within three months. The Court emphasized that the two arms of the State Government must act within the stipulations of the Industrial Policy, 2011, and not allow the petitioners to face further litigation or bureaucratic hurdles. The writ petitions were allowed with these directions.