2022 (12) TMI 1046 - HC - VAT and Sales Tax

Court dismisses appeals, affirms order granting subsidies and waiver. Promissory estoppel not applicable.

The court dismissed both appeals (APOT 59 of 2021 and APO 68 of 2021) and affirmed the Single Judge's order. The petitioner was entitled to interest ... Entitlement of interest subsidy under West Bengal State Support for Industry Scheme, 2008 - Fixation of Capital Investment Subsidy (FCIS) in full - seeking total waiver of electricity subsidy in terms of the Scheme - HELD THAT:- In the matter of BHAI JASPAL SINGH AND ANOTHER VERSUS ASSISTANT COMMISSIONER OF COMMERCIAL TAXES AND OTHERS [2010 (10) TMI 899 - SUPREME COURT] considering the exemption notification for sales tax and VAT under the West Bengal Sales Tax Act, 1954, Hon’ble Supreme Court has held that the exemption provision should be construed strictly against the person claiming exemption and that before an exemption can be recognized, a person or property claiming exemption must come clearly within language apparently granting the exemption. We are conscious of the fact that the aforesaid judgment have been rendered by the Hon’ble Supreme Court considering the statutory notifications relating to tax exemption whereas the notification in question concerning WBSSIS – 2008 is not a statutory notification but the broad principles stated by the Hon’ble Supreme Court will be attracted in respect of the present notification also - The above judgment make it clear that the concession notification should be strictly construed to ascertain whether the subject falls in the notification or in the exemption clause, but once the subject is found to be eligible, then liberal interpretation is to given for extending the benefit. It is also settled that while determining the entitlement, the purpose of the scheme or notification should not be defeated. Claim relating to fixed capital investment subsidy - HELD THAT:- The writ petitioner was granted the registration certificate for assistance under the WBSSIS – 2008 dated 22nd of May, 2012 in respect of general eligibility to receive benefit under the scheme. The writ petitioner is undisputedly a unit with investment under Scale 1 and is not an ineligible unit under clause 9.1.1 - The denial of fixed capital investment subsidy on the ground that it will lead to granting of double benefit to the petitioner, cannot be sustained, as under the Scheme of subsidy, WBIDC was acting in two different and separate capacities as ‘Authorized Agent’ and as ‘Financial Institution’. Hence, we find no error in the order of the learned Single Judge in allowing the prayer for grant of fixed capital investment subsidy. So far as the grant of total waiver of electricity duty in terms of clause 9.3 of WBSSIS – 2008 is concerned, no serious challenge has been advanced before this Court, no infirmity has been pointed out, therefore, we find no reason to interfere in that part of the order of the learned Single Judge. Thus, no case is made out to interfere in the order of the learned Single Judge - Application dismissed. Issues Involved:1. Entitlement to interest subsidy under WBSSIS-2008.2. Entitlement to Fixed Capital Investment Subsidy (FCIS).3. Waiver of electricity duty.4. Application of promissory estoppel.Detailed Analysis:1. Entitlement to Interest Subsidy under WBSSIS-2008:The primary issue was whether the writ petitioner was entitled to interest subsidy under the West Bengal State Support for Industry Scheme, 2008 (WBSSIS-2008). The petitioner claimed interest subsidy for the term loan borrowed for the project implementation. The State argued that the petitioner did not fulfill the conditions prescribed in clause 9.2, specifically that the interest was not paid in full and on due dates, and there was no certificate from WBIDC certifying such payment. The court highlighted that the eligibility clause should be strictly construed, and once eligibility is established, the exemption clause may be construed liberally. The petitioner had fulfilled the eligibility conditions up to August 31, 2011, as per the loan-related information provided by the respondent, thus entitling them to interest subsidy up to that date. However, for the period after August 31, 2011, the requisite conditions were not satisfied, and thus, the petitioner could not claim interest subsidy for that period.2. Entitlement to Fixed Capital Investment Subsidy (FCIS):The petitioner claimed FCIS based on the fixed capital investment of Rs. 1038.37 lakhs, which was initially assessed at Rs. 869.42 lakhs and later amended. The court examined whether the petitioner fulfilled the conditions for FCIS under clause 9.1 of the Scheme. The petitioner had submitted the necessary certificates from the Commissioner of Commercial Taxes, West Bengal, certifying the VAT paid during the relevant years. The court found that the petitioner met all the conditions for FCIS and rejected the State's argument that granting FCIS would lead to double benefits. The court upheld the Single Judge's order allowing FCIS to the petitioner.3. Waiver of Electricity Duty:The petitioner claimed a waiver of electricity duty for five years from the commencement of commercial production under clause 9.3 of the Scheme. The court noted that no serious challenge was advanced against this claim, and no infirmity was pointed out in the Single Judge's order. Therefore, the court found no reason to interfere with the order granting the waiver of electricity duty.4. Application of Promissory Estoppel:The petitioner argued that the principle of promissory estoppel should apply, relying on judgments in Manuelsons Hotels Private Limited vs. State of Kerala and Motilal Padampat Sugar Mills Co. Ltd. vs. State of Uttar Pradesh. The court found that there was no evidence of the competent authority withdrawing any promise made to the petitioner. Therefore, the principle of promissory estoppel was not applicable in this case.Conclusion:The court dismissed both appeals (APOT 59 of 2021 and APO 68 of 2021) and affirmed the Single Judge's order. The petitioner was entitled to interest subsidy up to August 31, 2011, Fixed Capital Investment Subsidy, and waiver of electricity duty as per the Scheme. The principle of promissory estoppel was not applicable in this case.