Budgetary support claims for Bagheri Unit remitted for fresh decision after personal hearing required

HP HC set aside orders dated 27.07.2018 and 29.07.2019 rejecting petitioner's budgetary support claim for Bagheri Unit for Q2 (01.07.2017-30.09.2017) due to non-consideration of entitlement plea. Also set aside order dated 20.08.2018 regarding Q3 claim (01.10.2017-31.12.2017) as respondent failed to provide personal hearing, assign reasons for partial rejection, and adopted figures without petitioner's input. Matter remitted to 4th respondent for fresh decision after personal hearing. Petition disposed through remand.

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Issues Involved:
1. Entitlement for budgetary support for the 2nd and 3rd quarters.
2. Non-consideration of specific pleas and principles of natural justice.
3. Jurisdiction of the Appellate Authority regarding the budgetary support scheme.

Summary:

Issue 1: Entitlement for budgetary support for the 2nd and 3rd quarters

The petitioner, a cement manufacturer with two units in Himachal Pradesh, sought budgetary support u/s the "Scheme of Budgetary Support" notified on 05.10.2017. The petitioner filed applications for budgetary support for the periods 01.07.2017 to 30.09.2017 and 01.10.2017 to 31.12.2017. The Deputy Commissioner, CGST, denied the claim for the 2nd quarter on the basis that there was a credit balance of Rs. 10,25,02,596/- in the credit ledger, which could have been utilized for payment of taxes. The petitioner contended that this credit balance pertained to its other unit (Baga Unit) and not the eligible Bagheri Unit. For the 3rd quarter, the Deputy Commissioner sanctioned only part of the claim without providing notice or reasons for the rejection of the remaining amount.

Issue 2: Non-consideration of specific pleas and principles of natural justice

The petitioner argued that the budgetary support scheme is applicable to eligible units and not to the GSTIN number. The petitioner pointed out that the credit balance in the electronic credit ledger was related to the non-eligible Baga Unit. The Appellate Authority dismissed the appeals without addressing the merits, citing a Circular dated 10.01.2019 which stated that the scheme is in the nature of a grant and not a refund, thus lacking jurisdiction to decide the matter. The court noted that the Deputy Commissioner failed to consider the specific pleas of the petitioner and did not provide a personal hearing, violating principles of natural justice as held in Dabur India Limited vs. Union of India & Anr. 2019 (9) TMI 1573.

Issue 3: Jurisdiction of the Appellate Authority regarding the budgetary support scheme

The Appellate Authority dismissed the appeals on the ground that there was no mechanism for appeal against the orders of the Sanctioning Authority, as the scheme is considered a grant. The court set aside the orders of the Deputy Commissioner and the Appellate Authority, remanding the matter back to the Deputy Commissioner for reconsideration after providing a personal hearing to the petitioner.

Conclusion:

The court directed the Deputy Commissioner to reconsider the claims for budgetary support for the periods 01.07.2017 to 30.09.2017 and 01.10.2017 to 31.12.2017 afresh, after giving a personal hearing to the petitioner, and to pass orders in accordance with law within three months from the date of receipt of the order. The writ petition was disposed of accordingly.

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