Industrial incentive eligibility cannot be denied merely because production began before approval under the Bihar policy.

Denial of VAT, ET and SGST reimbursement and related incentives under the Bihar Industrial Incentive Policy, 2011 was found unsustainable where the only ground was that commercial production started before SIPB approval. The Patna HC noted that the policy did not make prior SIPB approval a condition precedent for commencing production, nor did it provide that production before approval would automatically extinguish incentive eligibility. The rejection was therefore arbitrary and lacked legal foundation. The Court indicated that benefits could, at most, operate from the date of approval, but not be denied altogether, and set aside the rejection order while recognising entitlement to incentives from the date of SIPB approval.

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Issues: Whether denial of VAT/ET/SGST reimbursement and other incentives under the Bihar Industrial Incentive Policy, 2011 on the ground that commercial production commenced before SIPB approval was legally sustainable.

Analysis: The petitioner was granted SIPB approval and was otherwise covered by the incentive policy. The rejection rested solely on the fact that commercial production had begun before approval. The policy did not prescribe prior SIPB approval as a condition precedent for commencing production, nor did it state that commencement of production before approval would forfeit incentives altogether. On that basis, the rejection was held to be without legal foundation and arbitrary. The Court further held that, at most, benefits could run from the date of approval, but the incentives could not be denied in entirety.

Conclusion: The rejection order was set aside and the petitioner was held entitled to incentives under the policy from the date of SIPB approval.

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