Facts of the Case

The petitioners, namely Star Cement Ltd., Star Cement Meghalaya Limited, and Dalmia Cement (Bharat) Limited, challenged the impact of the GST regime on the continuation of area-based industrial subsidies. Prior to the implementation of GST, eligible manufacturing units were entitled to receive subsidy benefits. After GST was introduced, the benefit available to the petitioners was reduced due to the notification dated 05.10.2017.

During the hearing, both the petitioners and the Union of India accepted that the principal issue had already been decided by the Hon'ble Supreme Court in Hero MotoCorp Ltd. vs Union of India (Civil Appeal No. 7405 of 2022 dated 17.10.2022).

Issues Involved

  1. Whether the reduction of subsidy benefits under the GST regime was legally sustainable.
  2. Whether the petitioners were entitled to restoration of the balance subsidy available prior to GST.
  3. Whether relief should be granted after the Supreme Court's decision in Hero MotoCorp Ltd. vs Union of India.

Petitioners' Arguments

  • The petitioners contended that they were entitled to continue receiving the benefits available under the earlier industrial incentive scheme.
  • They challenged the reduction in subsidy following the implementation of the GST regime and the notification dated 05.10.2017.
  • They sought restoration of the subsidy benefits that existed prior to GST.

Respondents' Arguments

  • The Union of India submitted that the controversy had already been settled by the Hon'ble Supreme Court in Hero MotoCorp Ltd. vs Union of India.
  • It was further submitted that although the Supreme Court upheld the notification dated 05.10.2017, it permitted affected industries to approach the respective State Governments and the GST Council regarding restoration of the balance 42% subsidy.
  • The Union also informed the Court that a mechanism had already been framed for reimbursing approximately 58% of the subsidy attributable to the Central Government.

Court Order / Findings

The Meghalaya High Court observed that the principal issue stood concluded by the Supreme Court's judgment in Hero MotoCorp Ltd. vs Union of India.

Accordingly, the Court disposed of all the writ petitions by:

  • Taking on record the Supreme Court judgment dated 17.10.2022.
  • Granting liberty to the petitioners to approach the respective State Governments and the GST Council for restoration of the remaining 42% subsidy available prior to the GST regime.
  • Passing no order as to costs.

Important Clarification

  • The judgment does not invalidate the notification dated 05.10.2017.
  • The Central Government's reimbursement mechanism covering approximately 58% of the subsidy remains intact.
  • Eligible manufacturers may seek restoration of the remaining 42% subsidy by making appropriate representations before the concerned State Government and the GST Council.
  • The High Court disposed of the petitions by following the binding decision of the Supreme Court in Hero MotoCorp Ltd. vs Union of India.

Related Case Law

  • Hero MotoCorp Ltd. vs Union of India (Civil Appeal No. 7405 of 2022, Supreme Court)
  • Star Cement Ltd. vs Union of India & Ors.
  • Star Cement Meghalaya Limited vs Union of India & Ors.
  • Dalmia Cement (Bharat) Limited vs Union of India & Ors.

Sections / Notifications Involved

  • Central Goods and Services Tax (CGST) Regime
  • Area-Based Industrial Incentive Scheme
  • Notification dated 05.10.2017
  • GST Budgetary Support Scheme
  • Principles relating to Industrial Subsidy under GST
  • Article 226 of the Constitution of India

Link to Download the Order  https://www.mytaxexpert.co.in/uploads/1784529987_1010compressed.pdf

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