Court affirms entitlement to Industrial Policy subsidy, directs adjustment against tax liabilities.

The court held that benefits granted under the Industrial Policy 2004-09 cannot be withdrawn retroactively, affirming the petitioners' entitlement to the subsidy. Additionally, the court determined that the petitioners' plants qualify as captive power plants under the Electricity Act 2003, making them eligible for the subsidy. The State was directed to adjust the subsidy against the petitioners' tax liabilities, disregarding an upper cap introduced in 2011 as not applicable to the petitioners' claims. The writ petitions were allowed in favor of the petitioners.

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Issues Involved:
1. Whether the benefits already granted to the petitioners under the Industrial Policy 2004-09 can be withdrawn later due to a change of opinion by the respondents.
2. Definition and interpretation of "captive power plant" for determining eligibility for subsidy under the Industrial Policy 2004-09.

Detailed Analysis:

Issue 1: Withdrawal of Subsidy Benefits
The primary issue is whether the benefits promised under the Industrial Policy 2004-09 can be withdrawn later. The court referenced a Division Bench judgment in WPT 36/2013, which settled this issue by stating that a policy cannot retroactively alter benefits already granted. The judgment emphasized that policies are meant for the present or future and cannot change past transactions. The court held that the benefits provided under the Industrial Policy 2004-09 were based on the rules existing at that time, and any subsequent policy or notification cannot retroactively alter these benefits. The petitioners had a "Legitimate Expectation" to receive the benefits as promised, and the State cannot curtail these benefits after the policy period has expired. The court concluded that the petitioners are entitled to the subsidy as promised under the Industrial Policy 2004-09.

Issue 2: Definition of Captive Power Plant
The second issue pertains to the definition of "captive power plant" and whether the petitioners' plants qualify for the subsidy. The State Level Committee had decided that the subsidy would only be granted to captive power plants generating electricity solely for their own use. This decision was challenged by the petitioners, who argued that the definition under the Electricity Act 2003 and the Electricity Rules 2005 should apply. According to these laws, a captive generating plant is one where at least 51% of the electricity generated is consumed by the plant itself, allowing for some surplus to be sold. The court found that the State's restrictive interpretation was not aligned with the central legislation and would lead to impractical and absurd results. The court emphasized that the policy's intention was to promote investment and development, and the restrictive interpretation would undermine this goal. The court held that the definition under the Electricity Act should prevail, and the petitioners' plants qualify as captive power plants eligible for the subsidy.

Conclusion:
The court concluded that the benefits under the Industrial Policy 2004-09 could not be withdrawn retroactively and that the petitioners are entitled to the subsidy as initially promised. The definition of "captive power plant" under the Electricity Act 2003 and the Electricity Rules 2005 should apply, making the petitioners' plants eligible for the subsidy. The court set aside the State Level Committee's decision and the State Appellate Tribunal's order, directing the State to adjust the subsidy against the petitioners' tax liabilities. The introduction of an upper cap of Rs. 3 Crores in 2011 was deemed prospective and not applicable to the petitioners' claims. The writ petitions were allowed with the consequences as discussed.

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