Industrial incentive restrictions cannot be added by notification or retrospectively withdrawn without overriding public interest.

A notification issued to implement an industrial policy cannot add an end-user restriction that is absent from the policy and has the effect of denying GST reimbursement where input tax credit is claimed by a recipient or subsequent taxable person; such a subordinate measure was treated as ultra vires the policy. The later amendment curtailing the subsidy also could not stand because no pleaded or established overriding public interest justified retrospectively taking away accrued industrial incentives after the unit had altered its position and commenced production. The amendment was quashed, adverse administrative decisions were set aside, and release of the GST subsidy for the relevant period was directed.

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Issues: (i) Whether a notification issued for implementation of the industrial policy could impose an additional condition restricting reimbursement of GST incentive beyond the policy terms; (ii) whether the 7 March 2019 amendment curtailing the subsidy could be sustained in the absence of pleaded and established supervening public interest and whether it could operate to take away accrued benefits.

Issue (i): Whether a notification issued for implementation of the industrial policy could impose an additional condition restricting reimbursement of GST incentive beyond the policy terms.

Analysis: The policy originally granted VAT-linked incentive and was later aligned with GST by substituting reimbursement of State GST paid on intra-State sales. The later notification, though expressed as an implementation measure, introduced an end-user restriction by denying reimbursement where ITC was claimed by the recipient or any subsequent taxable person. Such a restriction was not part of the policy and went beyond the limited power to issue guidelines for operationalisation. A subordinate notification cannot add conditions that negate the incentive promised under the policy.

Conclusion: The impugned notification was held to be without jurisdiction and ultra vires the policy.

Issue (ii): Whether the 7 March 2019 amendment curtailing the subsidy could be sustained in the absence of pleaded and established supervening public interest and whether it could operate to take away accrued benefits.

Analysis: The incentive was part of a policy intended to induce industrial investment, and the petitioner had altered its position by setting up and expanding the unit. No supervening public interest was pleaded to justify curtailment. A policy promise that has been acted upon gives rise to legitimate expectation and attracts promissory estoppel, subject only to overriding public interest. The amendment, applied to deny reimbursement after production had commenced, would destroy accrued and vested benefits and was not shown to be justified by any public interest.

Conclusion: The curtailment could not be sustained and the petitioner's entitlement to the incentive was protected.

Final Conclusion: The amendment was quashed, the adverse administrative decisions were set aside, and release of the GST subsidy for the relevant period was directed.

Ratio Decidendi: A notification issued only to implement a policy cannot add restrictive conditions that defeat the incentive promised under the policy, and an accrued industrial incentive cannot be retrospectively curtailed absent pleaded and established overriding public interest.

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