Facts of the Case

The petitioner, Atibir Industries Company Ltd., an iron and steel manufacturer in Giridih, expanded its unit for production of Sinter and Pig Iron with an investment of Rs. 158.88 crore, commencing commercial production on 20.02.2017. Under the Jharkhand Industrial Investment and Promotion Policy, 2016, Clause 7.5 originally provided reimbursement of Net VAT, later amended (Notification dated 16.05.2018) to reimbursement of 75% of State GST paid on intra-state sale, in line with the GST regime. The petitioner claimed Rs. 117,13,33,199/- as SGST subsidy for 2017-18 to 2022-23. The High Powered Committee (HPC) initially sanctioned Rs. 53,17,97,670/- for 2017-18 to 2020-21 (decision dated 06.01.2022), but this sanction was later kept in abeyance (Memo No. 393 dated 17.02.2023) by relying on an Explanation inserted vide Notification dated 07.03.2019, which denied reimbursement wherever a recipient of the petitioner's goods claimed Input Tax Credit (ITC).

Issues Involved

  1. Whether the Department of Industries could, via a follow-up implementation notification issued under Clause 10.7 of the Policy, insert an 'end-user' restriction denying SGST reimbursement whenever the recipient claims ITC.
  2. Whether, even if the notification is treated as issued under the amendment power (Clause 10.10), such curtailment of an already-accrued incentive violates promissory estoppel absent any pleaded supervening public interest.

Petitioner's Arguments

  • The Notification dated 07.03.2019, purportedly issued under Clause 10.7 (mere implementation guidelines), impermissibly inserted a new substantive restriction — denial of reimbursement wherever any subsequent taxable person claims ITC — nullifying the very incentive promised under Clause 7.5(aa).
  • Relying on Suprabhat Steel Ltd., Tata Sponge Iron Ltd., and Manuelsons Hotels (Supreme Court), it was argued that implementation guidelines cannot override or curtail a benefit conferred by the parent policy itself.
  • Even if the Notification is treated as an amendment under Clause 10.10, it is arbitrary and violates promissory estoppel and legitimate expectation since no supervening public interest was pleaded, and the petitioner had already made substantial investment and altered its position (citing Brahmaputra Metallics Ltd.).
  • The petitioner's expanded unit, manufacturing Pig Iron/Sinter (an intermediate, non-end-consumer product), would inevitably see its purchasers avail ITC, making the restriction effectively nullify the entire incentive for the petitioner.

Respondent's Arguments

  • The Notification dated 07.03.2019 was issued to make the Policy consonant with the GST regime and was traceable, in the alternative, to the State's general power under Clause 10.10 to amend or withdraw provisions of the Policy, and to Section 24 of the General Clauses Act.

Court Order / Findings

  • The Court held the Respondents could not show that the Notification was issued under Clause 10.10, as no such stand was pleaded in the counter affidavit; the notification, on its own text, was only an implementation measure under Clause 10.7.
  • The Court declared the end-user restriction inserted vide Notification dated 07.03.2019 to be without jurisdiction, without sanction of law, and ultra vires the Industrial Policy 2016, applying the settled principle that subordinate implementation guidelines cannot curtail benefits conferred by the parent policy itself (Suprabhat Steel, Tata Sponge Iron).
  • In the alternative, even treating it as an amendment, the Court held it violated promissory estoppel since no supervening public interest was pleaded to justify curtailing an already-accrued incentive, and the amendment was impermissibly retrospective in effect on accrued rights.
  • The decision of the High Powered Committee dated 17.02.2023 and the letter dated 13.12.2022 were quashed; the State was directed to calculate the SGST reimbursement based on the expanded unit's separately maintained accounts and release Rs. 117,13,33,199/- within three months.

Important Clarification

A subordinate notification issued to lay down mere operational/implementation guidelines for an industrial incentive policy cannot introduce new substantive conditions (such as an 'end-user ITC' restriction) that curtail or nullify the incentive promised under the policy itself; and once a unit has altered its position by substantial investment relying on a promised SGST/tax subsidy, withdrawal or curtailment of that benefit without pleaded supervening public interest violates promissory estoppel and Article 14.

Sections Involved

  • Clause 7.5(aa), Jharkhand Industrial Investment and Promotion Policy, 2016 – provides reimbursement of a percentage of State GST paid on intra-state sale for new/expanded industrial units.
  • Clause 10.7, Industrial Policy, 2016 – empowers issuance of guidelines/notifications for implementation of the Policy, without authority to alter its substantive terms.
  • Clause 10.10, Industrial Policy, 2016 – separately empowers the State Government to amend or withdraw provisions/schemes under the Policy by gazette notification.

Decision – In Favour of

The writ application was allowed and the impugned restriction and HPC decision quashed, with a direction to disburse the full claimed SGST reimbursement — the outcome is clearly in favour of the Assessee.

Case Details

Court: High Court of Jharkhand at Ranchi
Case No.: W.P.(T) No. 3357 of 2023
Coram: Hon'ble Mr. Justice Rongon Mukhopadhyay and Hon'ble Mr. Justice Deepak Roshan
Date of Order: Reserved 31.08.2023, Delivered 12.09.2023

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