Balaji Enterprise Vs Union of India (Gauhati High Court)
Gauhati High Court held that industrial units which was not required to be registered under the Central Excise Act, either due to low threshold limit or as manufacturing goods that were exempted, cannot be denied benefit of budgetary support scheme.
Facts- The present bunch of writ petitions have been filed by the petitioners challenging the Notification dated 05.10.2017 issued by the Ministry of Commerce and Industry (Department of Industrial Policy and Promotion) framing a Scheme of budgetary support under the GST Regime to the units located in States of Jammu and Kashmir, Uttarakhand, Himachal Pradesh and North East including Sikkim as well as the consequential circulars dated 27.11.2017, 30.11.2017 and 10.01.2019 issued by the Under Secretary to the Government of India, Ministry of Finance, Department of Revenue whereby it was clarified that the benefit of the budgetary scheme shall not be available to the industrial units which were under the threshold exemption and/ or manufacturing exempted goods but are required to pay GST under the GST regime. The petitioners are challenging the Scheme of budgetary support in so far as the budgetary support has not been extended to the petitioners because its industrial unit was not registered under the Central Excise Act, 1944 prior to introduction of the GST regime as the turnover of the industrial unit was below the threshold limit and/or the goods manufactured by the industrial unit were exempted from payment of excise duty.
Conclusion- Held that not claiming of any refund under Notification No. 20/2007 cannot be construed to mean that the said industrial unit was not eligible for benefits of Notification No. 20/2007 if the said the industrial unit was established after fulfilling the conditions of the Industrial Policy of 2007 and is an eligible industrial unit for claiming the benefits as provided in the Industrial Policy including the excise benefits as granted by Notification No. 20/2007. In the present set of cases, the industrial units, though eligible for benefits under the Industrial Policy of 2007 in so far as excise benefits was concerned, the said benefit could not be claimed inasmuch as either the goods manufactured were exempted from payment of excise duty or the total turnover of these units were below the threshold limit. On the above two grounds, it cannot be said that the said industrial units were not eligible units for claiming benefits under Notification No. 20/2007. The aforesaid Clarification dated 22.02.2023 reinforces the submission of the petitioners that not claiming of any refund of excise duty as per Notification No. 20/2007 cannot be a ground to hold that the said industrial units were not eligible and/or not availing benefits of Notification No. 20/2007. In view of the aforesaid, the impugned circular dated 10.01.2019 holding that industrial units like that of the petitioner are not eligible for benefits under the Budgetary Support Scheme is absolutely illegal, not tenable in law, without jurisdiction and the petitioners are liable to be considered to be an eligible unit after introduction of GST when the goods manufactured by the petitioner have become taxable under GST.
The classification made between an industrial unit registered under Central Excise Act prior to 01.07.2017 and other industrial units which was not required to be registered under the Central Excise Act because the total turnover of the said industrial unit was below the threshold limit and/ or were manufacturing goods that were exempted under the Central Excise Act, though such industrial units were established in pursuance to the promises and assurances made under NEIIPP, 2007 and were entitled to all the benefits and concessions covered under Notification No. 20/2007 dated 25.04.2007, is absolutely irrational and has no nexus with the object sought to be achieved.
Held that such discrimination made by the Government is hostile discrimination inasmuch as equals have been treated unequally and thereby such classification made to exclude the petitioners from the purview of the Scheme of budgetary support cannot withstand the scrutiny of Article 14 of the Constitution.
FULL TEXT OF THE JUDGMENT/ORDER OF GAUHATI HIGH COURT
These bunch of writ petitions have been filed by the petitioners who had setup their factories in various industrial growth centers in State of Assam in pursuance to the incentives offered under the Industrial Policy by the Government of India by Notification dated 24.12.1997. As per the Office Memorandum brought about by the Government of India notifying the New Industrial Policy Resolution, a slew of packages were notified containing various incentives and concessions with the avowed object of development of industries in the Northeastern Region. These industrial zones setup under the Industrial Policy in the State of Assam offered completely tax free zones for the period of ten (10) years. It was announced by the Government of India under the Industrial Policy that all industrial activities for such areas would be free from inter alia payment of Central Excise Duty and would also be offered other tax benefits for a period of 10 years from the date of commencement of productions. The State Governments would also be moved for granting exemptions for sales tax, municipal tax and other local taxes on industrial activities in the said areas. It was further mentioned in the Industrial Policy Resolution that necessary amendments will be made in the existing Rules/Notification for conferring the benefits as notified under the Industrial Policy Resolution.
2. Encouraged by incentives offered under the Industrial Policy, these petitioners had set up their industries in the various industrial parks, estates, zones set up for the purposes of giving effect to the industrial policy of the Government of India. In order to confer benefits to the various industries like the petitioners’ industries, set up in pursuance to the industrial policy decision of the Government of India, various notifications we e issued from time to time by the Government of India for conferring the benefits as envisaged under the Industrial Policy Resolution. In so far as exemption of Central Excise Duty is concerned, Notifications were issued by the concerned departments in the Government of India by Notifications No. 32/99-CE and 33/99-CE dated 08.07.1999 granting exemption in respect of all excisable goods which are cleared from a unit located in the growth or integrated infrastructure development centre or export promotion industrial park or industrial estate or industrial area as the case may be from the payment of excess or such additional duty of Excise leviable thereof as is equivalent to the amount of duty paid by the manufacturer of these goods from the account current maintained under Rule 9 read with Rule 173(G) of the Rules. The exemptions in the said Notification were made applicable only to new industrial units which commenced production on or after 24th day of December, 1997 or to industrial units existing before 24.12.1997 but which undertook substantial expansion by increase in the installed capacity by not less than 25% on or after 24.12.1997. These exemptions were made available to the industrial units for a period of 10 years from the date of publication of the official gazette. The Government of India thereafter in its continued efforts to encourage development of industries in the Northeastern Region announced a new package of fiscal incentives and other concessions for the Northeastern Region to continue the exemptions and benefits as was promised. This new package was known as North East Industrial Investment Promotion Policy, 2007 (NEIIPP). This policy was came effect from 01.04.2007. The said incentives were available to new industrial units or existing industrial units undergoing substantial expansion on or after 01.04.2007. Amongst the various incentives announced, there was Central Excise duty exemption to the extent of 100% which was to be continued on finished products made in the Northeastern Region which was earlier available under the North East Industrial Policy, 1997. The petitioners set up new industrial units pursuant to the NEIIPP, 2007 in the various industrial growth centres and certificates of registrations were issued to these petitioners by the Directorate of Industries under NEIIPP 2007. After setting up their industries, they applied for registration and were granted certificate of issuance by the General Manager, DICC. Along with the NEIIPP, 2007 announced by the Government of India, the Government of Assam had also announced a new industrial policy, namely, the industrial policy of Assam, 2008 granting exemption from payment of VAT under Assam VAT Act, 2003 to the new industrial units as well as to the existing industrial units undertaking exemption, modernization and diversification. In order to give effect to the industrial policy of Assam 2008, the Government of Assam framed a scheme namely, the Assam Industries (Tax Exemption) Scheme, 2009. The petitioners being eligible for availing the benefits under the Industrial Policy of Assam, 2008 and the Assam Industrial (Tax Exemption) Scheme, 2009 applied for availing the benefits before the Department and were issued the eligibility certificate dated 13.08.2014 for availing VAT exemption for a period of seven years from 10.11.2012 to 09.11.2019. The petitioners were also issued entitlement certificate by the Commissioner of Taxes, Assam by the Certificate dated 14.10.2015 for availing the benefits of VAT exemption. The particulars of the various petitioners are extracted below:
