Notification adding End User condition restricting SGST reimbursement held ultra vires under Industrial Policy 2016

The HC held that the Notification dated 7th March 2019, which introduced an additional End User condition restricting SGST reimbursement under the Industrial Policy 2016, was without jurisdiction, ultra vires, and contrary to promissory estoppel. The amendment nullified the vested rights of the petitioner and rendered the promised incentive illusory. The court quashed the High Powered Committee's decision and directed the State to calculate the SGST reimbursement based solely on the petitioner's expanded unit, as separate accounts were maintained. The State was ordered to release the SGST subsidy for 2017-18 to 2022-23 within three months. The application was allowed, affirming the petitioner's entitlement to the incentive as originally promised under the Policy.

---

---

Issues Involved:
1. Validity of the amendment to Clause 7.5 of the Jharkhand Industrial Investment and Promotion Policy, 2016.
2. Denial of SGST subsidy to the petitioner based on the amendment.
3. Legality of the High Power Committee's decision to keep the subsidy in abeyance.
4. Petitioner's entitlement to the SGST subsidy and interest thereon.

Summary:

Issue 1: Validity of the Amendment to Clause 7.5 of the Policy
The petitioner challenged the amendment carried out by Notification dated 7th March 2019, which inserted an explanation to Clause 7.5 of the Jharkhand Industrial Investment and Promotion Policy, 2016 (I.P. 2016). The explanation defined "State GST paid on Intrastate sale subject to tax realization in the State Government Treasury" and imposed additional conditions, including that if any Input Tax Credit (ITC) is claimed on the goods supplied, the SGST paid on such goods shall not be eligible for reimbursement. The court held that this amendment was without jurisdiction, beyond the power of the Department of Industries, and ultra vires I.P. 2016. It was declared that the amendment carried out vide Notification dated 7th March 2019 is not sustainable and was quashed.

Issue 2: Denial of SGST Subsidy Based on the Amendment
The petitioner argued that the amendment was arbitrary, illegal, and contrary to the principles of Legitimate Expectations and Promissory Estoppel. The court agreed, stating that the amendment nullified the benefit of the subsidy/incentive on GST provided under I.P. 2016. The court emphasized that the State Government is bound by promissory estoppel and legitimate expectations, and in the absence of any supervening public interest, the policy cannot be amended to the detriment of the petitioner.

Issue 3: Legality of the High Power Committee's Decision
The High Power Committee's decision dated 17.02.2023, which kept the earlier decision of granting SGST subsidy in abeyance, was challenged. The court found this decision to be based on the invalid amendment and thus quashed it. The court directed the respondents to release the amount towards reimbursement of SGST subsidy to the petitioner for the period 2017-18 to 2022-23 within three months.

Issue 4: Petitioner's Entitlement to SGST Subsidy and Interest
The petitioner claimed an amount of Rs. 117,13,33,199/- for the period 2017-18 to 2022-23 as SGST subsidy. The court directed the respondents to calculate the incentive towards reimbursement of SGST paid to the petitioner, considering only the expanded unit, as the petitioner maintained separate books of account. The court also directed the respondents to sanction and disburse the amount claimed by the petitioner.

Conclusion:
The writ application was allowed, and the amendment carried out vide Notification dated 7th March 2019 was quashed. The High Power Committee's decision dated 17.02.2023 and the letter dated 30.12.2022 issued by the Additional Commissioner, Commercial Taxes Department, were set aside. The respondents were directed to release the SGST subsidy amount to the petitioner within three months.

---