Facts of the Case

M/s Patna Iron Private Limited approached the Patna High Court by filing a writ petition seeking directions against the State authorities for implementation of the Bihar Industrial Incentive Policy, 2011 and for payment of the petitioner’s alleged entitlement towards reimbursement of VAT/SGST paid and Electricity Duty paid.

The petitioner also sought a direction requiring the respondent authorities to place on record the orders or letters through which its claims for reimbursement of VAT/SGST and Electricity Duty had allegedly been denied, and further sought quashing of such orders or letters.

The petitioner contended that post-production incentives, including reimbursement of GST paid, VAT paid, Electricity Duty paid and AMG/MMG paid, could not be kept pending or denied once entitlement had been recognized under the applicable Industrial Incentive Policy.

A further grievance of the petitioner was that the respondent authorities had allegedly failed to release subsidy and reimbursement amounts on the ground of want of approval of the “Competent Authority,” despite the petitioner’s assertion that the investment proposal had already received approval from the State Investment Promotion Board (SIPB).

The petitioner relied upon the legal position stated to have been settled by a Coordinate Bench of the Patna High Court in M/s Sunny Stars Hotels Private Limited vs The State of Bihar & Ors., CWJC No. 12104 of 2018, which had attained finality after dismissal of the Special Leave Petition preferred by the State before the Hon’ble Supreme Court vide order dated 17 January 2020.

During the hearing, it was brought to the notice of the Court that certain amounts under the Bihar Industrial Incentive Policy, 2011 had already been paid to the petitioner.

In these circumstances, learned counsel for the petitioner stated that the petitioner would be satisfied if liberty were granted to approach the concerned authority by filing a representation and if the authority were directed to consider and decide the same within a fixed period.

Issues Involved

  1. Whether the petitioner was entitled to reimbursement of VAT/SGST paid and Electricity Duty paid under the Bihar Industrial Incentive Policy, 2011.
  2. Whether post-production incentives, including reimbursement of GST, VAT, Electricity Duty and AMG/MMG payments, could be withheld, discontinued, delayed or denied after the petitioner had allegedly been declared entitled under the Industrial Incentive Policy.
  3. Whether any further approval of a “Competent Authority” was required after approval of the investment proposal by the State Investment Promotion Board (SIPB).
  4. Whether the respondent authorities could refuse, stop or interfere with disbursal of reimbursement or subsidy after acceptance of the investment proposal by SIPB.
  5. Whether the petitioner was required to repeatedly undergo technicalities and procedures for release of VAT/GST reimbursement despite its claimed entitlement.
  6. Whether the respondent authorities were required to disclose and place on record the orders or communications through which the reimbursement claims had allegedly been denied.
  7. Whether the petitioner’s grievance should be considered in light of the decision in M/s Sunny Stars Hotels Private Limited vs The State of Bihar & Ors., CWJC No. 12104 of 2018, stated to have attained finality after dismissal of the State’s Special Leave Petition by the Hon’ble Supreme Court.
  8. Whether the petitioner should first approach the competent authority through a representation for consideration and decision of its remaining claims.

Petitioner’s Arguments

The petitioner substantially contended as follows:

  • The respondent authorities were required to implement the Bihar Industrial Incentive Policy, 2011 and release the petitioner’s entitlement towards reimbursement of VAT/SGST paid and Electricity Duty paid.
  • Any orders or letters denying the petitioner’s claims for reimbursement ought to be brought on record and, if legally unsustainable, quashed.
  • Payments towards post-production incentives, including reimbursement of GST paid, VAT paid, Electricity Duty paid and AMG/MMG paid, could not be indefinitely kept pending or denied.
  • The respondents had erred in not releasing subsidy and reimbursement on the alleged ground relating to approval of the “Competent Authority,” particularly when the proposal had already received SIPB approval.
  • According to the petitioner, the legal position had already been settled by the Division Bench of the Patna High Court and confirmed by the dismissal of the State’s Special Leave Petition before the Hon’ble Supreme Court, to the effect relied upon by the petitioner that once the proposal had been approved by SIPB, no other approval was required.
  • Once the investment proposal had been accepted and the petitioner had been declared entitled under the Policy, the respondents could not interfere with disbursal of reimbursement or subsidy.
  • The authorities could not withhold, discontinue or refuse the incentives and reimbursements allegedly accorded to the petitioner under the Bihar Industrial Incentive Policy, 2011.
  • The respondents were under an obligation to timely release reimbursement under the VAT/GST head whenever the petitioner submitted the relevant application, without compelling it to repeatedly undergo unnecessary technicalities and procedures.
  • The petitioner should not be made to run from pillar to post for reimbursement or subsidy after being found entitled.

At the stage of disposal, learned counsel for the petitioner acknowledged that certain amounts under the Bihar Industrial Incentive Policy, 2011 had already been paid and stated that the petitioner would be satisfied with liberty to file a representation before the concerned authority, coupled with a time-bound direction for its disposal.

Respondent’s Arguments / Stand

The judgment does not record any detailed independent counter-arguments on merits advanced by the respondents regarding the petitioner’s substantive entitlement to VAT/SGST, GST or Electricity Duty reimbursement.

However, the Court specifically recorded that the parties agreed that the writ petition could be disposed of.

The matter was accordingly resolved procedurally by granting the petitioner liberty to approach the concerned authority through a representation, rather than by adjudicating the disputed reimbursement and subsidy claims on merits.

Court Order / Findings

The Patna High Court disposed of the writ petition with the following directions and observations:

  1. The petitioner was granted liberty to approach the concerned authority by filing a representation within a period of four weeks.
  2. The concerned authority was directed to consider and decide the representation within a period of four weeks from the date of its presentation.
  3. The Court expressly stated that it was disposing of the petition without expressing any opinion on the merits of the claim.
  4. All issues of fact and law were left open.
  5. While considering the petitioner’s request, the concerned authority was required to follow the principles of natural justice.
  6. Due opportunity of hearing was required to be afforded to the parties.
  7. If aggrieved by the order passed by the authority, the petitioner was granted liberty to approach the High Court through separate petition or petitions, if required and desired.
  8. The petitioner was also granted liberty to take recourse to such alternative remedies as might otherwise be available in accordance with law.
  9. The Court expressed hope that if the petitioner pursued remedies otherwise available in law before the appropriate forum, such proceedings would be dealt with in accordance with law and with reasonable dispatch.
  10. The writ petition stood disposed of in the aforesaid terms.
  11. Interlocutory application(s), if any, also stood disposed of.

Important Clarification

The judgment is important to understand with precision because the Patna High Court did not finally adjudicate or declare the petitioner’s substantive entitlement to reimbursement of VAT/SGST, GST, Electricity Duty or other post-production incentives.

The Court also did not record a final finding on the merits in this writ petition that SIPB approval automatically entitled the petitioner to payment of all claimed incentives or that no further approval was required in every factual situation.

Instead, the Court:

  • noted the earlier decision in M/s Sunny Stars Hotels Private Limited vs The State of Bihar & Ors. and the fact that the Special Leave Petition preferred by the State had been dismissed by the Hon’ble Supreme Court;
  • recorded that certain amounts under the Bihar Industrial Incentive Policy, 2011 had already been paid to the petitioner;
  • recorded the petitioner’s willingness to approach the concerned authority by way of representation;
  • granted liberty to file such representation within four weeks;
  • directed its consideration and decision within four weeks from presentation;
  • required compliance with principles of natural justice and opportunity of hearing; and
  • expressly left all questions of fact and law open.

Therefore, the judgment should principally be understood as a time-bound procedural direction for consideration of the petitioner’s representation, rather than a final merits-based adjudication granting the entire reimbursement or subsidy claim.

Sections / Policy Provisions Involved

The judgment primarily concerns the following policy and constitutional framework:

  • Bihar Industrial Incentive Policy, 2011
  • Provisions relating to reimbursement of VAT/SGST paid
  • Provisions relating to reimbursement of GST paid, as claimed by the petitioner
  • Provisions relating to reimbursement of Electricity Duty paid
  • Claims concerning AMG/MMG payments
  • State Investment Promotion Board (SIPB) approval
  • Post-production incentives and subsidy/reimbursement entitlements under the Industrial Incentive Policy
  • Article 226 of the Constitution of India – Writ jurisdiction of the High Court, including prayers in the nature of mandamus and certiorari
  • Principles of Natural Justice
  • Right to reasonable opportunity of hearing

Important Note on Sections: The judgment does not identify any specific substantive section number of the Bihar Industrial Incentive Policy, 2011, VAT law, GST law or Electricity Duty law as the basis of the final disposal. Accordingly, no unsupported statutory section number should be attributed to the judgment.

Link to download the order -https://mytaxexpert.co.in/uploads/1783418429_1372compressed.pdf

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