Industrial incentive scheme GST compliance: refusal based on VAT-to-GST shift held unreasonable, with legitimate expectation recognised.

The Scheme was treated as continuing despite the shift from VAT to GST because it expressly contemplated later changes in law and contained a saving clause, and the later Scheme did the same. On that basis, refusing to act solely because GST had replaced VAT was found unreasonable, and the covered industrial units could not be left uncertain after being promised incentive benefits. The petitioner's legitimate expectation to receive clarity was recognised, although eligibility still had to be examined by the concerned department before any grant of benefits. The departments were directed to take steps to make the Scheme GST-compliant within sixteen weeks.

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Issues: Whether the State authorities were required to take steps to make the industrial incentive scheme GST-compliant and whether the petitioner could be denied consideration for incentive benefits on the ground of the shift from VAT to GST.

Analysis: The Scheme expressly contemplated subsequent changes in law and provided for continued application even if the legal regime changed. A similar saving clause was also present in the later Scheme. In that setting, refusal to act merely because GST replaced VAT was held to be unreasonable. The industrial units covered by the Scheme could not be kept in uncertainty after having been promised incentive benefits, and the petitioner had a legitimate expectation to be given clarity. The Court also made clear that eligibility would still have to be examined by the concerned department before any grant of benefits.

Conclusion: The Department of Industry, Commerce and Enterprises and the Finance Department were directed to take steps to make the Scheme GST-compliant within sixteen weeks, and the petitioner was left at liberty to seek RC-II thereafter. The relief was therefore in part in favour of the petitioner.

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