Continuation of industrial incentives under a state scheme survived GST, and prior sanction and part payment barred belated denial.

Clause 19.2 of the West Bengal State Support for Industries Scheme, 2008 was treated as a continuation clause, so the Scheme continued after GST replaced the earlier indirect tax structure and the petitioners remained entitled to incentives. Because the authorities had issued RC-I and RC-II, sanctioned the application, and made part disbursal, they were held unable to later deny the balance benefit on belated objections that the unit was outside the Scheme or that the certificates and payments were invalid. The notice under Clause 7.2 and the order refusing further disbursement were found inconsistent with the Scheme and with the authorities' prior conduct, and were set aside.

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Issues: (i) Whether the petitioners remained entitled to incentives under the West Bengal State Support for Industries Scheme, 2008 after the advent of the GST regime in view of Clause 19.2 of the Scheme; (ii) whether the respondents were entitled to deny the balance incentive on the basis that the petitioners did not fall within the Scheme or that the RC-II and subsequent disbursal were invalid; (iii) whether the notice issued under Clause 7.2 and the impugned order rejecting further disbursement were sustainable.

Issue (i): Whether the petitioners remained entitled to incentives under the West Bengal State Support for Industries Scheme, 2008 after the advent of the GST regime in view of Clause 19.2 of the Scheme.

Analysis: Clause 19.2 provided that if the West Bengal Value Added Tax Act, 2003 was replaced by any other Act, the Scheme would continue mutatis mutandis. The GST regime was held to have subsumed the pre-existing indirect tax structure, including VAT, and the Court rejected the contention that Clause 19.2 was confined to a replacement of VAT alone in a narrow sense. The subsequent disbursal of incentive amounts after 1 July 2017, including GST components, reinforced that the Scheme continued to operate after GST came into force.

Conclusion: The petitioners were held entitled to continue under the Scheme notwithstanding the GST regime.

Issue (ii): Whether the respondents were entitled to deny the balance incentive on the basis that the petitioners did not fall within the Scheme or that the RC-II and subsequent disbursal were invalid.

Analysis: The petitioners had been issued RC-I and RC-II, their application had been sanctioned, and a substantial portion of the incentive had already been paid. On that footing, the respondents were held to have accepted the petitioners' entitlement and were precluded from resiling at a belated stage. The objections that the unit was not new and that the Scheme was merely concessional were treated as afterthoughts and were rejected in light of the long-standing conduct of the respondents and the petitioners' continued commercial production in reliance on the State's promise.

Conclusion: The respondents were held estopped from disputing the petitioners' entitlement under the Scheme.

Issue (iii): Whether the notice issued under Clause 7.2 and the impugned order rejecting further disbursement were sustainable.

Analysis: The notice under Clause 7.2, issued during the pendency of the writ petition, was found to be an attempt to frustrate the petitioners' claim and was inconsistent with the respondents' own prior treatment of the RC-II and the Scheme benefits. The impugned order refusing further incentive was found to be contrary to the Scheme and the respondents' own conduct, and therefore unsustainable.

Conclusion: The impugned order and the notice were set aside.

Final Conclusion: The writ petition succeeded, the petitioners' entitlement to the remaining incentive under the Scheme was affirmed, and the respondents were directed to release the balance amount in accordance with the Scheme.

Ratio Decidendi: Where a State incentive scheme contains a continuation clause and the authorities have sanctioned the benefit, issued eligibility certificates, and made part payment after the relevant legislative change, they cannot later deny the remaining benefit on a belated objection inconsistent with their own prior conduct; promissory estoppel and acquiescence may bar such denial.

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