Vijay Steel Industries Vs UT of Jammu & Kashmir (Jammu & Kashmir High Court)
The case concerns the entitlement of an industrial unit to reimbursement under the Budgetary Support Scheme introduced following the implementation of the Goods and Services Tax (GST) regime. The petitioner had established a manufacturing unit for producing TMT bars and related steel products under earlier excise exemption notifications, which granted refund-based benefits for a specified period. Upon transitioning to the GST regime in 2017, these earlier exemptions were withdrawn and replaced with a budgetary support scheme that provided reimbursement of a portion of Central and State taxes, subject to eligibility conditions defined in Central and State notifications.
The petitioner qualified as an eligible unit under the scheme and was granted registration after inspection by the competent authorities. It subsequently filed multiple claims seeking reimbursement of taxes paid during various periods. While a substantial portion of the claims was allowed, the authorities denied reimbursement in respect of tax paid on the sale of M.S. Scrap, on the ground that scrap did not fall within the category of “specified goods” under the applicable State notification.
The petitioner argued that the scrap in question was not mere waste but a by-product generated during the manufacturing process of TMT bars. According to the petitioner, non-standard sizes of TMT bars arise during production, and the edge cuttings from these bars are sold as scrap. These products undergo the same manufacturing process as the finished goods and retain their essential character, making them distinct from raw materials. It was further contended that such scrap had been treated as manufactured goods in the pre-GST regime and had been cleared on payment of excise duty while availing earlier exemptions. The petitioner also relied on the fact that Central authorities had granted reimbursement on scrap under the budgetary support scheme and argued that State authorities could not deny reimbursement once Central eligibility had been established.
