Facts of the Case

This case concerns a Central Excise-era Budgetary Support Scheme, not GST liability. M/s VJ Jindal Cocoa Pvt. Ltd. (earlier M/s Jindal Drugs Private Ltd., Cocoa Division), previously registered with the Central Excise Department under an area-based exemption, got itself registered under GST (GST Registration No. 01AAFCV7278R1ZL) after all area-based excise exemption notifications were rescinded upon GST's rollout in July 2017. To ease this transition, the Government introduced a Budgetary Support Scheme via a DIPP notification dated 05.10.2017, compensating eligible units for the residual period of their earlier exemption. The petitioner's claims under the Scheme were sanctioned by the competent authority but could not be disbursed for several quarters (March 2019 to December 2019) due to a shortfall of funds allocated by DIPP to the Jammu CGST Commissionerate, though the entire sanctioned amount was eventually paid during the pendency of the writ petition. The petitioner continued to press the case, seeking interest on the delayed disbursement.

Issues Involved

  1. Whether the petitioner was entitled to interest on the delayed disbursement of Budgetary Support Scheme funds, given that the Scheme contains no express provision for interest.

Petitioner's Arguments

  • The Circular dated 10.01.2019 required claims under the Scheme to be disposed of within two weeks, and the delay in actual disbursement, despite the claim being sanctioned in time, justified an award of interest.

Respondent's Arguments

  • The Scheme is a concession/incentive extended by the Government to industrial units affected by withdrawal of area-based excise exemptions, not a right enforceable as of course, and does not envisage payment of interest for delay.
  • The delay in disbursement (though the claim was sanctioned in time) was due to non-availability of sufficient funds allocated by DIPP for the Jammu region, since claims across the Commissionerate (Rs. 46.61 crore, including the petitioner's) far exceeded the Rs. 14.66 crore allocated for the financial year 2019-20.

Court Order / Findings

  • Justice Sanjeev Kumar and Justice Puneet Gupta accepted that the Scheme's benefit is in the nature of a government concession, not a matter of right, and that there was no specific provision for interest on delayed disbursement.
  • Since the claim itself had been sanctioned within the two-week timeline under the 10.01.2019 Circular, and the actual delay in disbursement was attributable to a genuine, demonstrated shortage of funds allocated by DIPP (not arbitrary or deliberate withholding), the petitioner was found not entitled to interest.
  • The writ petition was dismissed, though the Court clarified that dismissal would not prevent the respondents from processing and disposing of any of the petitioner's other pending claims under the Scheme in accordance with law.

Important Clarification

Although the petitioner is now GST-registered, the entire dispute is about entitlement to interest under a Central Excise-linked Budgetary Support Scheme meant to compensate for withdrawal of an area-based exemption — it does not decide any GST rate, credit, or liability question. Businesses that received sanctioned-but-delayed government incentive payments should note that courts will not award interest absent an express scheme provision, especially where the delay stems from genuine fund-allocation constraints rather than arbitrary inaction.

Sections Involved

  • Budgetary Support Scheme (Notification dated 05.10.2017, Department of Industrial Policy and Promotion, Ministry of Commerce and Industry) — compensating eligible units for area-based excise exemption withdrawal post-GST.
  • Central Excise Act, 1944 — area-based exemption regime that the Scheme was designed to replace.

Decision – In Favour of

In favour of the Respondents (Union of India/CGST authorities) — the claim for interest on delayed Budgetary Support disbursement was dismissed; this is a Central Excise/Budgetary Support Scheme ruling, not a GST liability determination.

Case Details

Court: High Court of Jammu & Kashmir and Ladakh at Jammu
Case No.: WP(C) No. 1830/2020
Coram: Justice Sanjeev Kumar and Justice Puneet Gupta
Date of Judgment: 26.05.2023 (reserved on 22.05.2023)

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