Unit denied excise exemption benefits under 2017 scheme for not meeting eligibility conditions

The HC dismissed the writ petition challenging excise exemption notifications. The petitioner-unit, operating under the 2002 notification scheme, was not entitled to benefits under the 2017 scheme as it was not availing benefits immediately before July 1, 2017, and commenced commercial production on September 25, 2017. The court held that exemption notifications must be interpreted strictly, with beneficiaries fulfilling all prescribed conditions. The doctrine of promissory estoppel cannot bind the government when equity demands otherwise, and withdrawal of exemptions in public interest is a policy matter beyond judicial interference.

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Issues Involved:
1. Constitutionality of Notifications No.F.No.10(1)2017-DBA-II/NER dated 5th October 2017 and Notifications/SRO 519 and 521 dated 21st December 2017.
2. Eligibility of the petitioner's units for budgetary support under the impugned notifications.
3. Legality of Order No. C.No.IV(16)GST-1/Regd-ID/Godrej/2017/2989 dated 20th August 2018.
4. Validity of Notification No.21/2017-Central Excise dated 18th July 2017.
5. Constitutionality of Proviso to Section 174(2)(c) of the CGST Act, 2017.
6. Application of the doctrine of promissory estoppel and legitimate expectation.

Issue-wise Detailed Analysis:

1. Constitutionality of Notifications No.F.No.10(1)2017-DBA-II/NER dated 5th October 2017 and Notifications/SRO 519 and 521 dated 21st December 2017:
The petitioner argued that these notifications were violative of Article 14 of the Constitution as they excluded their units from availing benefits. The court noted that the notifications were issued as a measure of goodwill to units eligible under earlier excise duty exemption schemes but had no relation to the erstwhile schemes. The court held that the notifications were clear and did not require interpretation beyond their plain language, thus dismissing the challenge to their constitutionality.

2. Eligibility of the petitioner's units for budgetary support under the impugned notifications:
The petitioner's units were not considered "Eligible Units" as defined under Para 4.1 of the Budgetary Support Notification dated 5th October 2017. The court upheld the rejection of the petitioner's application for budgetary support, noting that the petitioner's unit commenced commercial production on 25th September 2017, which did not meet the criteria of availing benefits immediately before 1st July 2017. The court emphasized that the plain language of the provision must be preferred in a taxing statute.

3. Legality of Order No. C.No.IV(16)GST-1/Regd-ID/Godrej/2017/2989 dated 20th August 2018:
The court found the impugned order self-explanatory, stating that the petitioner's unit was not eligible for the benefits under the 2017 scheme as it was not availing any benefit immediately before 1st July 2017. The order was based on the clear provisions of the notifications, and the court dismissed the challenge to its legality.

4. Validity of Notification No.21/2017-Central Excise dated 18th July 2017:
The petitioner contended that this notification was issued without legal backing as the Central Excise Act was repealed by the CGST Act effective 1st July 2017. The court held that the notification was valid, as the power to rescind or modify an exemption notification is inherent under the General Clauses Act. The court dismissed the challenge to its validity.

5. Constitutionality of Proviso to Section 174(2)(c) of the CGST Act, 2017:
The petitioner argued that the proviso was inconsistent with the main provision of Section 174 and restricted tax exemptions contrary to the doctrine of promissory estoppel and legitimate expectation. The court held that the withdrawal of exemption in public interest is a matter of policy, and the government has the power to change its policy in public interest. The court found no merit in the challenge to the proviso's constitutionality.

6. Application of the doctrine of promissory estoppel and legitimate expectation:
The court held that the doctrine of promissory estoppel cannot be invoked in the abstract and must yield when equity demands, particularly in matters of public interest. The court emphasized that the government can change its policy in public interest, and the doctrine cannot be used to enforce a promise contrary to law. The court dismissed the petitioner's reliance on promissory estoppel and legitimate expectation.

Conclusion:
The court dismissed both writ petitions, upholding the constitutionality and validity of the impugned notifications and orders. The court emphasized that exemption notifications should be strictly construed, and the petitioner's units did not meet the eligibility criteria under the 2017 scheme. The assertion of promissory estoppel and legitimate expectation was also rejected, as the government's policy changes in public interest were deemed lawful and necessary.

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