TaxTMI 
TaxTMI 
2021 (2) TMI 829
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....t Sikkim. 1.(b) The Petitioner's case is that vide a Memorandum, dated 17.02.2003, the Respondent No.1 notified the "New Industrial Policy and other concessions for the State of Sikkim" ("Industrial Policy, 2003") which inter alia granted 100 per cent exemption from Excise duty for a period of ten years from the date of commencement of commercial production. Pursuant thereto, various exemption Notifications were issued under the respective Fiscal Statutes, including Central Excise original Notification No.56/2003-C.E., dated 25.06.2003. By this Notification, 100 per cent duty exemption was granted to the goods specified in the Schedule thereto, manufactured and cleared from a Unit located in Sikkim from so much of the duty of Excise leviable under the Central Excise Act, 1944 and other allied Acts as is equivalent to the amount of duty paid by the manufacturer of the goods other than the amount of duty paid by utilization of CENVAT Credit under the CENVAT Credit Rules, 2002 for a period of ten years from the date of commencement of commercial production. 1.(c) On 01.04.2007, the Respondent No.1 notified the North East Industrial and Investment Promotion Policy, 2007 ("Industrial ....
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....me in the country underwent a major reform with the introduction of the Goods and Services Tax ("GST") which thereby introduced the Central Goods and Services Tax Act, 2017 (for short "CGST Act"), the Integrated Goods and Services Tax Act, 2017 (for short "IGST Act") and the Sikkim Goods and Service Tax Act, 2017. Section 174 of the CGST Act repealed the Central Excise Act, 1944 with certain exceptions and vide Notification No.21/2017-C.E., dated 18.07.2017, the Respondent No.1 rescinded Notifications No.20/2007-C.E., dated 25.04.2007 and 56/2003-C.E., dated 25.06.2003. 1.(g) In continuation of the earlier Industrial Policies as well as Excise Notifications to exempt the levy of Central Excise duty on the Goods manufactured and sold from the Units in the State of Sikkim, the Central Government provided for Budgetary Support Schemes for such Units under the GST regime. The Budgetary Support Scheme is applicable to the Units which were eligible for drawing benefits under the earlier Excise Duty Exemption/Refund Schemes and was applicable for the remaining period out of the total period not exceeding ten years, from the date of commencement of commercial production as specified under....
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....asure of goodwill only to the Units which were eligible for drawing benefits under the earlier Excise Duty Exemption/Refund Schemes but otherwise has no relation to the erstwhile Schemes and it is impossible to compare the benefits under the old Scheme and the new Scheme, neither is it feasible or desirable. This has been considered by the Central Government to be expedient in public interest and for revenue. That, in fact, the Petitioner has availed benefits extended by the Government under the Budgetary Support Scheme for various periods from July, 2017 through December, 2017 and after availing the benefits, they have filed the instant Writ Petition which is arbitrary and bad in law, on which ground alone the Petition deserves a dismissal. Moreover, the full benefit in respect of the share of the Central Revenue is being granted to the Petitioner and they have been availing of the said benefit from the Department. Hence, for the aforestated reasons, the Writ Petition is liable to be rejected. 3. The Respondent No.3 chose not to file any Counter-Affidavit. 4. A Rejoinder was filed to the Counter-Affidavit of Respondents No.1 and 2 which, while reiterating the facts stated in the....
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....ratio of SL Srinavasa Jute Twine Mills (P) Ltd. Vs. Union of India (2006) 2 SCC 740 and Southern Petrochemicals Industries Co. Ltd. vs. Electricity Inspector and Etio and Ors. (2007) 5 SCC 447. That, in the Counter-Affidavit filed by the Respondents No.1 and 2, as also in the Budgetary Support Scheme, it is stated that the limited benefit accorded is due to the reason that the Central Government devolves 42 per cent of the Taxes on goods and services to the State as per the recommendations of the 14th Finance Commission. That, even prior to the GST regime, the Central Government was sharing the revenue of Central Excise duty in the same proportion with the State Governments and at the time of introduction of the exemption Notification in 2003, the Centre was sharing 29.5 per cent of the Central Taxes with the States. However, the Petitioner was promised and granted 100 per cent exemption from Excise duty and it was not restricted to 70.5 per cent of the Tax payable. Hence, when the promises were made, the Parliament was well aware of its obligation to share the revenue with the States. That, the position under the GST Scheme is no different than the position under the erstwhile Cen....
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.... has been discounted as a privilege vide Section 174(2)(c) of the CGST Act read with Notification No.21/2017-C.E., dated 18.07.2017, the Petitioner has been compensated for the benefits they were drawing earlier. That, as per the recommendations of the 14th Finance Commission, the Central Government devolves 42 per cent of the taxes on goods and services to the States, hence, it has been considered to be expedient in public interest and in the interest of revenue by the Central Government. In view of the above grounds, the present Petition deserves no consideration and is liable to be dismissed. 7. Learned Government Advocate for the State-Respondent No.3, in his arguments, contended that the distribution of Revenue Tax in accordance with the recommendation of the Finance Commission in the proportion of 58 per cent to the Union and 42 per cent to the States, is a recommendation involving all States in the Indian Union and does not pertain to the State of Sikkim alone. Of the 42 per cent which is distributed to the State, the share of the State of Sikkim is less than 0.5 per cent and in this view of the matter, it would be wholly erroneous to extrapolate the number of 42 per cent o....
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.... exempted from so much of the duty of Excise leviable thereon as is equivalent to the amount of duty paid by manufacturer of the goods other than the amount of duty paid by utilization of CENVAT Credit under the CENVAT Credit Rules, 2002, for a period of ten years from the date of commencement of commercial production, the Petitioner, by investing large amounts of money, established Units for the manufacture of P&P Medicaments falling under Serial No.11 of the Schedule to the Notification No.56/2003-C.E., dated 25.06.2003. In the meanwhile, Office Memorandum dated 01.04.2007, was issued notifying the Industrial Policy, 2007, which also granted 100 per cent Excise duty exemption as provided in the Industrial Policy, 2003. That, however, the Industrial Policy, 2007, specifically provided that the new Industrial Units which commenced production within ten years of the said Memorandum, would be eligible for the incentive thereunder. In line with the Industrial Policy, 2007, Notification No.20/2007-C.E., dated 25.04.2007, was issued whereby the Petitioner's goods were exempted from so much of the duty of Excise leviable thereon as is equivalent to the amount of duty paid by the manufact....
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....the Writ Petitions were liable to be allowed and the offending Notifications and Orders of the Commissionerate quashed. Further, once an exemption Notification has been issued in public interest, the authority cannot, by simply saying it is in public interest, withdraw or reduce its benefit and the onus would be on the authority to establish a superior public interest for such curtailment or withdrawal. (vi) The Respondents (in the Writ Petitions under consideration then) while defending their action, claimed that a different mechanism was devised in public good and that the impugned Notification No.20/2008-C.E., dated 27.03.2008, does not deviate from the 100 per cent policy. This was sought to be explained by placing two separate calculations of Re-Credit/Refund under Area Based Exemption Notification. That, the Petitioner had started availing credit of the amount of duty paid other than by way of utilization of CENVAT Credit under the CENVAT Credit Rules, 2004 at the rate of 56 per cent right from the beginning. That, the Petitioner started paying Central Excise duty from the Personal Ledger Account with effect from August, 2009, by which time, the impugned Notifications No.21/....
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....ition shall be equivalent to the amount calculated as a percentage of the total duty payable on the excisable goods. For the goods i.e. P & P medicaments falling under chapter 30 of the first schedule, the rate prescribed in the table to the amended paragraph 2A was 56%. Reading of the amended paragraph 2A leaves no room for doubt that the total 100% exemption once declared by the Industrial Policy, 2007 and as put into operation by Notification No. 20/2007 was hugely reduced to only 56% that too only on the value addition undertaken in the manufacture of the said goods. Simply put value addition is the amount by which the value of any good is increased at each stage of its production, exclusive of initial cost. Whereas in the original Notification No. 20/2007, the exemption on payment of excise duty was referable to the excise duty payable on the finished goods in the impugned Notification No. 20/2008 the excise duty was restricted to the quantum of value addition only. This surely was something not promised vide the Industrial Policy, 2007 and Notification No. 20/2007." (x) This Court further expressed its agreement with the views of the High Court of Gujarat in Sal Steel Limite....
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....in the parameters of the doctrine of promissory estoppel and that it would be unconscionable on the part of the Respondent No.1 to shy away from it without fulfilling its promise. The relief that must, therefore be granted on the facts of the present case is that for the period declared vide Notification No.20/2007 the Petitioner would be entitled to the excise duty exemption as promised therein. Consequently impugned Notification Nos.20/2008 and 38/2008 are liable to be quashed to the extent they curtail and whittle down the 100% excise duty exemption benefit as promised vide Notification No.20/2007 and is hereby quashed. All impugned orders/ demand notices/show cause notices which are against the aforestated declarations of law are also quashed." (emphasis supplied) 10.(i) As already stated, against the Judgment of this Court dated 21.11.2017, the Union of India was in appeal before the Hon'ble Supreme Court along with Judgments of various other High Courts on similar issues. The Hon'ble Supreme Court, while considering the Civil Appeals arising out of the various impugned Judgments, observed in the case of Sikkim, that the High Court had quashed and set aside Notification No.2....
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....be applicable if the change in stand of the Government is made on account of public policy and in public interest. (iii) The Hon'ble Supreme Court inter alia held as follows; "10. ............Therefore, the questions which are posed for consideration of this Court are whether in the facts and circumstances of the case the subsequent notification which has been quashed and set aside by the High Court being notification No. 16 of 2008 dated 27.03.2008 can be said to be clarificatory in nature and can it be said that it takes away the vested right conferred pursuant to the earlier notification of 2001 and whether the same can be made applicable retrospectively and whether the same has been issued in the public interest and whether the same is hit by the Doctrine of Promissory Estoppel? 11. While considering the aforesaid questions and before considering the nature of the subsequent notification of 2008, few decisions of this Court on retrospectivity/clarificatory/applicability of promissory estoppel in the fiscal statute are required to be referred to, which are as under: 11.1 In the case of Kasinka Trading (supra), in paragraphs 12, 20 and 23, it is observed and held as follow....
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....ation issued in public interest and again withdrawn in public interest. So far as the second case (M.P. Sugar Mills case [(1979) 2 SCC 409 : 1979 SCC (Tax) 144 : (1979) 2 SCR 641] ) is concerned the facts were totally different. In the correspondence exchanged between the State and the petitioners therein it was held out to the petitioners that the industry would be exempted from sales tax for a particular number of initial years but when the State sought to levy the sales tax it was held by this Court that it was precluded from doing so because of the categorical representation made by it to the petitioners through letters in writing, who had relied upon the same and set up the industry. 23. The appellants appear to be under the impression that even if, in the altered market conditions the continuance of the exemption may not have been justified, yet, Government was bound to continue it to give extra profit to them. That certainly was not the object with which the notification had been issued. The withdrawal of exemption "in public interest" is a matter of policy and the courts would not bind the Government to its policy decisions for all times to come, irrespective of the satis....
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....he "public interest". It has been held that where the Government acts in "public interest" and neither any fraud or lack of bonafides is alleged, much less established, it would not be appropriate for the court to interfere with the same. 11.2 In the case of Shrijee Sales Corporation (supra), it is observed and held that the principle of promissory estoppel may be applicable against the Government. But the determination of applicability of promissory estoppel against public authority/Government hinges upon balance of equity or "public interest". In case there is a supervening public interest, the Government would be allowed to change its stand; it would then be able to withdraw from representation made by it which induced persons to take certain steps which may have gone adverse to the interest of such persons on account of such withdrawal. Once public interest is accepted as the superior equity which can override individual equity, the aforesaid principle should be applicable even in cases where a period has been indicated for operation of the promise. .............................................................................................................. 12. Now, so f....
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....ptions granted by the Government, which was meant to be available only for genuine manufacturers. It was noticed as under: i) Reporting of bogus production by mere issuance of sale invoices without actual production of goods and supply/clearance of excisable goods. This would result in availment of CENVAT credit by buyers of such excisable goods in other parts of the country without actual production being carried out and in absence of actual receipt of goods. ii) Reporting of bogus production by such units in these areas where actual production takes place elsewhere in the country. iii) Over valuation of goods resulting in availment of excess credit by buyers. iv) Goods are supplied by manufacturers, importers to these units without issuance of sales invoice and these are backed by bogus sale invoices issued by traders who do not undertake actual supply of goods. The actual supplier of these goods issue bogus duty paid invoices to other manufacturers who take credit based on such invoices without receipt of goods. Therefore, the Government came out with the impugned notifications/industrial policies that the refund of excise duty shall be provided on actual and calculate....
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.... Section 5A of the Central Excise Act and even the subsequent notifications which were issued in public interest and in the interest of Revenue were also issued under Section 5A of the Central Excise Act, which can not be said to be bad in law, arbitrary and/or hit by the doctrine of promissory estoppel. 14.2 The purpose of the original scheme was not to give benefit of refund of the excise duty paid on the goods manufactured only on paper or in fact not manufactured at all. As the purpose of the original notifications/incentive schemes was being frustrated by such unscrupulous manufacturers who had indulged in different types of tax evasion tactics, the subsequent notifications/industrial policies have been issued allowing refund of excise duty only to the extent of duty payable on the actual value addition made by the manufacturers undertaking manufacturing activities in these areas which is absolutely in consonance with the incentive scheme and the intention of the Government to provide the excise duty exemption only in respect of genuine manufacturing activities carried out in these areas. 14.3 As observed hereinabove, the subsequent notifications/industrial policies do not....
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.... once it is held that the subsequent notifications/industrial policies which were impugned before the respective High Courts are clarificatory in nature and are issued in public interest and in the interest of the Revenue and they seek to achieve the original object and purpose of giving incentive/exemption while inviting the persons to make investment on establishing the new undertakings and they do not take away any vested rights conferred under the earlier notifications/industrial policies and therefore cannot be said to be hit by the doctrine of promissory estoppel, the same is to be applied retrospectively and they cannot be said to be irrational and/or arbitrary." (emphasis supplied) Learned Counsel for the Petitioner has admitted that the Hon'ble Supreme Court, while examining the reduction in Excise duty exemption benefits, held that the subsequent Notifications were merely clarificatory in nature and did not take away any vested right and had, in fact, been issued in the larger public interest to prevent misuse and to achieve the original object and purpose of the incentive/exemption. 11. On a meticulous scrutiny of the pleadings before us and from a careful considerat....
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....tral Tax and Integrated Tax. That, hence the Excise duty Exemptions availed by the Petitioner by way of refund in the pre GST regime, for both the Units were curtailed by the Respondent No.1 through the Budgetary Support Policy thereby reducing the benefit granted to the Petitioner, as the Petitioner is not allowed to take refund of full amount of CGST paid from electronic cash ledger and the refund of 50 per cent of the IGST paid from electronic cash ledger. In fact, it was the submission of Learned Counsel for the Petitioner in I.A. No.02 of 2019, before this Court, that the subject matter in the SLP(s) supra dealt with the same issue as in the instant Writ Petition. It is relevant to notice that the Order of this Court, dated 17.09.2019, in the said I.A., reads inter alia as follows; "Heard on I.A. No.02 of 2019 which is an application filed by the Petitioner, i.e., Sun Pharma Laboratories Limited, bringing on record subsequent developments relating to the subject-matter of WP(C) No.47 of 2018, which was finally heard on 03-09-2019 and Judgment reserved. It is submitted by Learned Counsel for the Petitioner that the Respondents No.1 and 2 filed SLP(C) Nos.10257 of 2018, 1025....