Case Law Details
Greenland Cements Private Limited Vs Union of India (Jammu & Kashmir HC)
Introduction: The Jammu and Kashmir High Court recently ruled in favor of Greenland Cements Private Limited in a case against the Union of India, directing the latter to pay a 9% interest due to the delayed reimbursement of GST. This delay was attributed to the negligence of a tax officer.
Analysis: The court’s judgement was significant for various reasons. Firstly, it brought to light the bureaucratic impediments faced by businesses in claiming benefits under government schemes, in this case, the “Budgetary Support” intended to stimulate industrial activity in the Union Territory.
Secondly, the court strongly disapproved the fact that despite the eligibility of the company for availing the benefit being approved and supported by the Union of India, the local authorities unnecessarily delayed the benefit, causing financial strain on the business.
Finally, the ruling emphasized the seriousness of such negligence by imposing a penalty of 9% interest on the total amount due, to be paid by the Union Territory. This was a clear message to administrative authorities to adhere to their duties and obligations, as their negligence can lead to legal and financial consequences.
Conclusion: The ruling of the Jammu & Kashmir High Court in the case of Greenland Cements Private Limited Vs Union of India underscores the importance of an efficient and accountable administrative system. The court’s decision to impose a 9% interest as penalty for the delay in reimbursement reiterates that negligence on part of tax authorities will not be overlooked. This judgement sends a powerful message to governmental authorities, emphasizing their duty towards the businesses that operate within their jurisdictions and the repercussions they may face when these duties are not met.
FULL TEXT OF THE JUDGMENT/ORDER OF JAMMU AND KASHMIR HIGH COURT
The Petitioner is a Company producing/manufacturing cement in the Union Territory of Jammu & Kashmir. The Union Government, in order to give impetus to its industrial activity, introduced a scheme known as “Budgetary Support” in lieu of grant of General Exemption and refund of goods and services tax where eligible. According to the petitioner, the benefit is available under the General Exemption No. 61- A. Sub-clause II of clause 8 envisages that where a Unit has made a new investment on or after the 6th Day of February 2010 and where such investment is directly attributable to the generation of additional regular employment of not less than twenty five percent over and above the base employment limit which however, was subject to the condition that the Unit claiming exemption shall not reduce regular employment after claiming exemption, and once such employment is reduced below one hundred twenty five percent of the base employment limit, the Unit shall be debarred from claiming the exemption in future. The said ‘Budgetary Support’ was a grant from the Union Government for the GST received by it from the Unit.
2. The Union of India has filed its reply and in paragraph 3.1, has averred that the case of the petitioner for availing the benefit of the notification dated 06.02.2010 was approved by the Assistant Commissioner, Central Excise Division, Srinagar, vide order dated 21.06.2017. The original order was reviewed by the Commissioner GST, Central Excise, Jammu & Kashmir, Jammu vide order in review dated 21.09.2017 by which the appeal filed before the Commissioner, against the original order was rejected and the original order dated 21.06.2017 was Thereafter, it is averred specifically “thus, eligibility of the petitioner for availing the benefit of notification no. 01/2010-CE dated 06.02.2010 has attained finality”. In short, the Union of India has supported the case of the petitioner for Budgetary Support.
3. However, as the said amount was not reimbursed to the petitioner he approached this Court in the year 2018. This Court vide its order dated 03 .2023, recorded the fact that the inspection report qua the unit of the petitioner had been uploaded on ACES/GST portal of the Central Board of Excise & Customs but the same was done with the rider “till clarifications are obtained from GMDIC the matter may be kept on hold” and the order quoted that part of the inspection report which reads “since GMDIC, Pulwama, representative of State Industries Department, one of the member of the team during the investigation raised certain reservations regarding the authenticity of the letter no. DICP/Bev/RN-46/17/412-14 dated 18.05.2017 (copy of the letter enclosed) wherein recommendation has been addressed to the Assistant Commissioner, Custom and Central Excise Division Kashmir. As informed by GMDIC, Pulwama, he has taken up the matter with his department for clarification, till clarifications are obtained from GMDIC the matter may be kept on hold”.
4. The portion quoted by the order of this Court on 28.03.2023, raised a question-mark on the authenticity of the letter dated 18.05 .2017. In this regard it is essential to refer to the said letter issued by the District Industries Center, Pulwama on 18.05.2017, which was purportedly addressed by the General Manager DIC, Pulwama to the Assistant Commissioner Customs & Central Excise Division, Kashmir, whereby the District Industries Center, Pulwama, has referred to the petitioner as a medium scale Unit registered on 22.05.2007 with the Directorate of Industries & Commerce for incentive purpose for manufacture of Portland Cement having hundred tonnes per day capacity with its production having commenced from 05.06.2008.
5. The authority further certifies that the Unit holder has made new investment in fixed assets, completed the civil works of storage yard for new material the grinding media in the raw mill, changed the liner plates, crusher parts, gear boxes, refractory bricks conveyor belts and replaced the VSK Klin from March 2014 to February 2017 in order to achieve the optimum level of production (100) tonnes per day. It also certified that the unit holder has increased the permanent employment over and above the all time base employment of over and all time base employment of 40 to 51(11 persons i.e 27.5%) from the month of February, 2017 and thereafter, the said report states that the Central Excise Department is requested that the unit holder may be allowed the exemptions under notification no. 01 of 2010 dated 06.02.2010.
6. Learned counsel for the Union Territory has handed over a file today in which certain documents have been referred to. Specifically, he has drawn the attention of this Court to the report of a Committee of five officials who were the Functional Manager DIC Budgam, Project Manager DIC Pulwama, Chief Accounts Officer, Director of Industries & Commerce, Kashmir, General Manager DIC, Srinagar and General Manager DIC Budgam, dated 08 .09.2021.
7. Having gone through the said report, it appears that the committee held the earlier report dated 18.05.2017 as invalid as the Officer concerned has acted beyond his competence. It does not state that the contents of the said documents are incorrect or the same is motivated or that it was fabricated. On the second page of the report are the findings of the Committee. Finding no. 2 observes that the unit has a capacity of 30000 metric tonnes per annum from the date of its commencement on 05.06.2008. The third finding is that the “unit holder has claimed the enhancement of capacity by way of optimum utilization of existing resources without any substantial expansion”. Here it is necessary for us to observe that the Committee admits that there has been expansion, but it qualifies it with the adjective substantial, which is subjective, and gives no details as to why then committee is of the opinion that the expansion was not substantial. The fourth finding is “The substantial expansion envisages a fresh DPR with increase in productivity/capacity details and fresh date of production, which is not available in this case”. Finding no. 5 is to the effect that “the perusal of the records reveals that in fact the unit has never reached its maximum/optimal productivity of 30000 metric tonnes per annum”. Thereafter it gives a chart of the annual assessment, for the year 2014-15, there were 15 locally skilled person employed by the unit and 25 unskilled persons and the total number of persons employed were 40 and, in that year, the production was 1330 metric tonnes which is 4.43 % of the total capacity. The next period of assessment is 2018-2019 where the locally skilled persons saw a rise in employment by 6 additional persons (21) and the un-skilled persons saw a rise by 5 (30) and the total persons employed were 51 as against 40 in the year 20 14-15. The production has gone up to 13320 metric tonnes which was 44.4 %of the total capacity of the unit. The assessment for the year 20 19-20 reflects that with the same number of employees (51) the production had gone up to 15042 metric tonnes which was 50.14 % of the total capacity of the plant. In finding no. 7, the Committee has been critical that the unit has not been able to attain its optimum capacity of 30000 metric tonnes by observing thus “to this effect an order should have been issued by the General Manager, DIC Pulwama, for enhancement of capacity beyond 30000 Metric tonnes after reassessment of plant which has not been made in the instant case. In finding number eight the Committee finds that the annual assessment report as annexed, does not show any major increase in turnover/manpower which substantiate that no enhancement in capacity has been made. Most importantly the finding no. 9 reflects “the mere increase in the employment as shown has been 25% which in real case might have increased the output manifold and there does not seem any such evidence”.
8. Findings no. 7, 8 and 9 of the Committee reflect that the Company has not attained its optimum capacity of 30000 metric tonnes. However, the chart of annual assessment itself shows that the unit has been consistently increasing its output from 4.43% to 50.14% in a span of five years. As regards its finding that despite increase of employment has shown us 25% the output has not increased stands belied by the chart itself which shows that in the year 2018-19, with 51 employees it had reached 41.4 % of its optimum capacity and thereafter the very next year 20 19-20, with the same number, they had increased the plant output from 44.4 % to 50.14 % for the year 2019-20.
9. The approach of the committee appears to deny the benefit of the budgetary support to the petitioner which has attained finality as per the affidavit of the Union Government itself and the benefit ought to have been released to the Petitioner. In the last paragraph of the report, it discloses “the committee therefore owes an explanation with regard to the part of industries department that conditions do not seem to be fulfilled. However, if the department of Customs and Central Excise, deems it fit that the necessary procedure has been followed by the unit holder for seeking incentive as per their terms and conditions, the present committee doesn’t reserve any right of decline.” Thus, the report itself reflects that their observations and opinions notwithstanding if the Customs and Central Excise Department is satisfied that the petitioner is eligible for the Budgetary Support, the Committee does not have any right to decline the same.
10. This being the accepted position, we do not find any reason to not grant the benefit as prayed for by the petitioner. At the same time, we are upset by the response of the authorities of the Union Territory which has deliberately denied the petitioner the benefit which ought to be rightly theirs, as the Union Government has also held that the Petitioner’s claim had attained finality. We are pained by the delay of almost five years on account of the intransigence of the Union Territory due to which, the Budgetary Support could not be made available to the petitioner. Thus, while holding that the petitioner is entitled to receive the budgetary support as already arrived at forthwith and the same should be released without any further delay. At the same time on account of the delay caused by the Union territory of almost five years we impose a penalty of 9% interest on the total amount due to the petitioner from 18.05.2017, till the date of payment which shall be paid by the Union Territory. The costs so imposed be recovered by the Union Territory from the Officers so identified on account of whose indolence, delay in disbursing the reimbursement of GST has occurred.
11. With the above petition stands finally disposed of.
