HC sets aside retrospective amendment In IPR denying GST reimbursement

Ultratech Cement Limited Vs State of Odisha (Orissa High Court)

Conclusion: High Court set aside the retrospective amendment in Industrial Policy Resolution denying GST reimbursement as the Court was not satisfied of the reasons given by the Opposite Parties for discriminating against assessee unit vis-à-vis KPCW which appeared to be identically placed as assessee and nowhere does IPR 2007 state that a cement producing unit that sources raw materials from outside would be ineligible to receive the incentives.

Held: Assessee-company was stated to be operating cement manufacturing units in various States in India including a cement manufacturing unit in Jharsuguda District in Odisha. According to assessee, the said unit was a state-of-the-art cement manufacturing industrial unit which, inter alia, utilized intermediate products (clinker) and waste products (fly ash) generated by other industrial undertakings along with gypsum as a raw material to manufacture high quality cement. In the present case, however, the situation was entirely different. The Opposite Parties themselves had granted the eligibility certificate and verification certificate. In fact, the orders sanctioning the VAT reimbursement had been passed on 6th June 2017. Therefore, there was justification in denial of the benefit of SGST reimbursement to assessee. The Court rejected the plea of the opposite Parties that it was being called upon in the present case to review a policy decision. The Court was in fact being asked to examine the reasonableness of the decision of the Opposite Parties to retrospectively take away the benefits already extended to an existing unit under IPR 2007. Consequently, none of the decisions relied upon by the Opposite Parties in the context of judicial review of policy decisions of the State have any applicability to the facts of the present case. Lastly, the Court was not satisfied of the reasons given by the Opposite Parties for discriminating against assessee unit vis-à-vis KPCW which appeared to be identically placed as assessee. HCLA noted that KCMW was “a separate unit but part of integrated facility of OCL for manufacturing cement”. In other words, KCMW was also a standalone unit. Further, nowhere does IPR 2007 state that a cement producing unit that sources raw materials from outside would be ineligible to receive the incentives. Thus, the Court sets aside the order dated 6th October 2018 issued by the Director of Industries withdrawing the earlier order dated 6th June 2017 granting assessee the exemption.

FULL TEXT OF THE JUDGMENT/ORDER OF ORISSA HIGH COURT

1. M/s. Ultratech Cement Limited (Petitioner No.1) and its Senior Vice-President (Petitioner No.2) have in this writ petition under Article 226 of the Constitution of India sought the quashing of a resolution dated 18^th August 2020 issued by the Industries Department, Government of Odisha (Opposite Party No.2) in relation to the amendment to the Industrial Policy Resolution 2007 (IPR 2007) as being unconstitutional and illegal. The principal ground of such challenge is that the said amendment to the heading of paragraph-18.4 of the IPR 2007 has been made effective retrospectively from 1^st July 2017 with a view to preventing Petitioner No.1 from availing the State Goods and Service Tax (SGST) reimbursement, as contemplated in paragraph-18.4 of IPR 2007.

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