State of Odisha & Ors. Vs Ultratech Cement Ltd. & Anr. (Supreme Court of India)
Summary: The Supreme Court of India dismissed the Special Leave Petitions filed by the State of Odisha and others against the Orissa High Court’s judgment in favour of Ultratech Cement Limited, stating that it was not inclined to interfere with the impugned order. The Supreme Court’s order contains no independent discussion of the merits or reasons for its decision. The substantive legal findings concerning retrospective withdrawal of industrial incentives, promissory estoppel, discrimination and SGST reimbursement are those of the Orissa High Court, whose relief remains undisturbed following dismissal of the SLPs.
The dispute arose under Odisha’s Industrial Policy Resolution, 2007 (IPR 2007). Ultratech Cement had expanded its Jharsuguda cement manufacturing facility from 1 million tonnes per annum to 2.6 million tonnes per annum, investing more than Rs.350 crore, including fixed capital investment of Rs.183.75 crore. Commercial production from the expanded unit commenced on 15 October 2013. Following verification, the State authorities issued eligibility and thrust-sector certificates in 2016 and sanctioned VAT reimbursement of Rs.6,06,75,000 on 6 June 2017 for the period 15 October 2013 to 31 March 2014. However, on 6 October 2018, the Director of Industries cancelled the sanction, treating the facility as a standalone cement grinding unit falling within the negative list under IPR 2007. Subsequently, a resolution dated 18 August 2020 retrospectively amended paragraph 18.4 of the policy with effect from 1 July 2017, excluding cement manufacturing/grinding and blast furnace slag-based units from SGST reimbursement.
Ultratech challenged these measures, contending that it had made substantial investments relying on the State’s representations and had already received the necessary eligibility certifications. It invoked promissory estoppel, legitimate expectation and protection against arbitrary discrimination, particularly because another cement unit, Kapilash Cement Manufacturing Works, had received comparable incentives. Odisha defended its actions on the grounds of policy-making authority, public interest and financial burden. The State estimated potential SGST reimbursement exposure of approximately Rs.918 crore annually for cement manufacturing capacity of 17.85 million tonnes per annum.
The Orissa High Court held that Ultratech’s manufacturing activity could not be reduced to mere grinding and mixing, particularly after the authorities had verified its manufacturing process and recognised it as a downstream thrust-sector industry. It found no provision in IPR 2007 disqualifying cement manufacturers merely because raw materials were sourced externally. Applying the principles discussed in MRF Limited v. Assistant Commissioner (Assessment) Sales Tax, State of U.P. v. Birla Corporation Ltd. and other authorities, the High Court concluded that the State had failed to establish sufficient public-interest justification for retrospectively depriving an eligible industrial unit of accrued incentives. The financial implications advanced by the State did not, on the evidence presented, justify withdrawing the promised benefits. The Court also found the differential treatment of Ultratech and the comparable cement unit inadequately explained.
Subsequent Supreme Court Decision: The Supreme Court subsequently upheld the Orissa High Court’s ruling concerning the retrospective withdrawal of SGST reimbursement benefits under Odisha’s Industrial Policy Resolution. Read: SC Upholds Odisha HC Ruling Against Retrospective Withdrawal of SGST Reimbursement – UltraTech Cement.
FULL TEXT OF THE SUPREME COURT JUDGMENT/ORDER
We are not inclined to interfere with the impugned order.
The Special Leave Petitions are, accordingly, dismissed. Pending application also stands disposed of.
