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Issues: (i) Whether the retrospective exclusion of cement manufacturing and grinding units from net SGST reimbursement under Clause 5.4.5(a) of IPR 2015 was valid; (ii) Whether the application for provisional Priority Sector status stood deemed approved under Section 11 of the Orissa Industries (Facilitation) Act, 2004 and the applicable guidelines; and (iii) Whether the Negative List precluded Priority Sector status and consequential SGST reimbursement.
Issue (i): Whether the retrospective exclusion of cement manufacturing and grinding units from net SGST reimbursement under Clause 5.4.5(a) of IPR 2015 was valid.
Analysis: The Industrial Policy Resolution, 2015 permitted review or modification of incentives, but that power did not by itself authorise deprivation of an incentive for a period preceding the amendment. The industrial project had progressed through approvals, investment, application for Priority Sector status and commencement of production under the existing policy. Financial implications could justify a prospective policy revision, but did not establish overriding public interest or a sufficient basis for retrospectively withdrawing accrued fiscal rights. The selective retrospective exclusion of cement and specified units was arbitrary and attracted the doctrines of Promissory Estoppel and Legitimate Expectation.
Conclusion: The retrospective exclusion from net SGST reimbursement with effect from 1 July 2017 was arbitrary, unconstitutional and unenforceable against the assessee for the period before the Resolution dated 18 August 2020; the policy change could operate only prospectively.
Issue (ii): Whether the application for provisional Priority Sector status stood deemed approved under Section 11 of the Orissa Industries (Facilitation) Act, 2004 and the applicable guidelines.
Analysis: Section 11 of the Orissa Industries (Facilitation) Act, 2004, read with Clause 4.2 of the Industrial Policy Resolution, 2015 and the time-bound Operational Guidelines, attaches a deemed-approval consequence where a covered application is not decided within the prescribed period. The application was acknowledged, inspected, verified and forwarded by the Regional Industries Centre to the competent authority, but no rejection was communicated within time. A later request for documents while the application remained pending could not defeat the statutory consequence, since otherwise deemed approval could be nullified by indefinitely withholding a formal certificate.
Conclusion: The application for provisional Priority Sector status stood deemed approved under Section 11 of the Orissa Industries (Facilitation) Act, 2004 and the applicable guidelines, in favour of the assessee.
Issue (iii): Whether the Negative List precluded Priority Sector status and consequential SGST reimbursement.
Analysis: Serial No. 36 of the Negative List applies to specified size-reducing, separating, grinding and mixing units having plant-and-machinery investment below the prescribed threshold, while excepting manufacture of cement with clinker. The material showed investment above that threshold and a manufacturing process involving clinker. The verification report also recorded that the unit did not fall within the Negative List. No sufficient basis was established to disregard that verification or categorically apply the exclusion.
Conclusion: The Negative List objection does not preclude Priority Sector status or consideration of SGST reimbursement, subject to verification of the reimbursement amount and compliance with the remaining conditions of IPR 2015, in favour of the assessee.
Final Conclusion: Eligible net SGST reimbursement, together with applicable interest, must be determined and released under IPR 2015 without reopening deemed provisional status or relying on the retrospective exclusion.
Ratio Decidendi: A State may prospectively modify an industrial incentive policy, but cannot retrospectively withdraw an accrued fiscal incentive from an industrial unit that has acted on the policy representation without demonstrated overriding public interest; statutory deemed approval cannot be defeated by administrative inaction in issuing formal clearance.
Retrospective withdrawal of industrial tax incentives is impermissible without overriding public interest, while statutory deemed approvals remain effective.
Retrospective withdrawal of net SGST reimbursement under IPR 2015 from cement manufacturing and grinding units is impermissible where an industrial unit acted on the policy, obtained approvals, invested and commenced production; financial implications alone do not establish overriding public interest to displace promissory estoppel and legitimate expectation. Policy revisions may operate prospectively. Section 11 of the Orissa Industries (Facilitation) Act, 2004 and applicable guidelines provide deemed approval of provisional Priority Sector status where a covered application remains undecided within the prescribed period. The Negative List does not apply where the investment threshold is exceeded and cement is manufactured with clinker, subject to verification and remaining policy conditions.
Retrospective withdrawal of industrial tax incentives - Promissory estoppel and legitimate expectation - Deemed approval of Priority Sector status - Negative List eligibility of clinker-based cement manufacturing units Retrospective withdrawal of industrial tax incentives - Promissory estoppel and legitimate expectation - Validity of the retrospective exclusion of cement manufacturing and grinding units from net SGST reimbursement under IPR 2015 - HELD THAT: - Though the State could review and prospectively modify an industrial incentive scheme, the policy review clause did not by itself justify withdrawal of the benefit for an antecedent period. The petitioners had proceeded with the project, investment and production under IPR 2015, and financial implications, without material establishing overriding public interest, did not warrant retrospective deprivation. The selective exclusion of cement manufacturing, grinding and blast furnace slag-based units was also held unsupported by convincing justification. [Paras 49, 50, 53, 54, 81] The retrospective exclusion was held arbitrary, discriminatory and unconstitutional and was set aside to the extent of its retrospective operation against the petitioners. Deemed approval of Priority Sector status - Entitlement to deemed approval of the application for provisional Priority Sector status - HELD THAT: - Section 11 attaches a statutory consequence to failure to issue a covered clearance within the prescribed period; the requirement of communication by the Nodal Agency cannot defeat that consequence through official inaction. The application had been inspected, verified and forwarded to the competent authority, and no rejection within the stipulated period was shown. The subsequent request for documents indicated that the application remained pending and could not be treated as a timely rejection. Deemed approval, however, did not dispense with the conditions governing subsequent reimbursement and its quantification. [Paras 64, 65, 67, 68, 69] The application for provisional Priority Sector status was held to have received deemed approval under the Facilitation Act, IPR 2015 and the applicable guidelines. Negative List eligibility of clinker-based cement manufacturing units - SGST reimbursement under industrial policy - Applicability of the Negative List to the clinker-based cement manufacturing unit and consequential eligibility for net SGST reimbursement - HELD THAT: - The relevant Negative List entry applied to specified size-reducing, separating, grinding and mixing units below the prescribed investment threshold, while expressly excepting manufacture of cement with clinker. The material showed investment above that threshold, use of clinker as a principal raw material and an RIC verification that the unit was outside the Negative List. Mere reference to cement manufacturing or grinding did not establish the exclusion, and the State failed to demonstrate a sufficient basis to disregard the verification. [Paras 75, 76, 77, 79, 82] The Negative List objection was rejected; the claim for net SGST reimbursement must be determined and released in accordance with IPR 2015, subject to verification of the amount payable and fulfilment of applicable conditions. Final Conclusion: The writ petition was allowed. The retrospective exclusion from SGST reimbursement was invalidated, the provisional Priority Sector application was treated as deemed approved, and the reimbursement claim was directed to be determined and released subject to IPR 2015 and the applicable conditions.