Jharkhand High Court
Dalmia Cement (Bharat) Limited Through ... vs The State Of Jharkhand Through The Chief ... on 14 February, 2025
Author: Gautam Kumar Choudhary
Bench: Gautam Kumar Choudhary
IN THE HIGH COURT OF JHARKHAND AT RANCHI
W. P. (C) No. 5477 of 2021
Dalmia Cement (Bharat) Limited through its
authorized signatory Mr. Rajeev Kumar Sinha ... .... Petitioner
Versus
1. The State of Jharkhand through the Chief Secretary, Ranchi
2. The Secretary, Department of Industries, Govt. of Jharkhand, Ranchi
3. The Director Industries, Department of Industries, Govt. of Jharkhand,
Ranchi
4. The Deputy Director, Department of Industries, Govt. of Jharkhand, Ranchi
... .... Respondents
With
W. P. (C) No. 5544 of 2021
Dalmia Cement (Bharat) Limited through its
authorized signatory Mr. Rajeev Kumar Sinha ... .... Petitioner
Versus
1. The State of Jharkhand through the Chief Secretary, Ranchi
2. The Secretary, Department of Industries, Govt. of Jharkhand, Ranchi
3. The Director Industries, Department of Industries, Govt. of Jharkhand,
Ranchi
4. The Deputy Director, Department of Industries, Govt. of Jharkhand, Ranchi
... .... Respondents
-----
CORAM: HON'BLE MR. JUSTICE GAUTAM KUMAR CHOUDHARY
-----
For the Petitioner : M/s Sumeet Gadodia, Advocate
Shilpi Sandilya Gadodia, Ritesh Gupta,
Prakhar Harit, K. Hari, Advocates
For the State : Mr. Shray Mishra, AC to Advocate General
Ms. Komal Tiwari, AC to Advocate General
-----
C.A.V. ON 29.01.2025 PRONOUNCED ON 14 / 02 / 2025
Heard, learned counsel for the parties.
1. Since both the aforesaid Writ Petitions raise similar issues, therefore,
they are heard together and will be disposed of by common order.
2. Petitioners claim subsidy on the basis of Jharkhand Industrial Policy,
2001 under the Scheme known as Special Package for Mega Industries,
2003.
3. W.P.(C) No.5477 of 2021 has been filed for a direction to the
respondent-authorities for paying the deficit VAT/ CST to the tune of
Rs.162 Crores which has not been paid as per the Industrial Policy,
2001 read with Special Package, 2003 for mega industries.
Whereas W.P.(C) No.5544 of 2021 has been filed for payment of
Capital investment subsidy of about Rs.4 Crores under the same
scheme.
CASE OF THE PETITIONER
4. Petitioner's claim under the Industrial Policy, 2001 are under following
heads, namely, (i) Reimbursement of VAT subsidy of 75% on fixed
capital investment for the period of April to June 2017; (b) Subsidy of
100% on SGST from July 2017 to March 2019 (which came into force
on 1.7.2017) and; (iii) CST subsidy on fixed capital investment for a
period of 7 years in terms of Jharkhand Industrial Policy, 2001.
5. Petitioner company is a manufacturing unit of Cement and started its
commercial production from its unit situated at Bokaro from
20.05.2011. The claim hinges upon Industrial Policy, 2001 read with
Scheme for Mega Unit and Project Incentive Rule, 2005. The salient
features of the said Scheme can be summed up as under :-
(a) The Government of Jharkhand on 10.06.2003 vide Memorandum
No.1885 formulated a scheme known as "Special Package for
Mega Industries", which inter-alia provided for capital
investment incentive of Rs.4 Crores for industrial unit Category A
at 5% of the fixed capital investment with a maximum amount of
Rs.4 crores;
(b) Amount equivalent to 75% of the commercial taxes so received
from the unit in a financial year to be payable to the unit in the
form of capital investment incentive for the next financial year.
Incentive to be paid with effect from the date of commencement
of commercial production for Category-A. It was applicable for 7
years subject to maximum limit of capital investment incentive of
75% of the total fixed capital investment made by the unit of this
category up to the date of commercial production. As per the
Policy, Bokaro Cement Unit comes under Category-A.
(c) Under Clause 29.11 of the Jharkhand Industrial Policy, 2001,
special packages for new projects with an investment of more
than Rs.50 Crores on case-to-case basis was provided.
6. The main grievance of the petitioner is that the subsidies have been
released in favour of the Petitioner as per the Industrial Policy, 2012 and
not as per Special Mega Package, 2003. Petitioner has been paid
Rs.163.45 Crores as per Industrial Policy, 2012 and have been deprived
of the incentive as per the Special Mega Package, 2003. Loss is
tabulated as under :-
(a) VAT/ SGST of Rs.161.22 Crores
(b) CST Subsidy of Rs.1.20 Crores
(c) Capital Subsidy of Rs.4 Crores
7. It is submitted by learned counsel for the petitioner(s) that the
commercial industrial production started from May, 2011, however it
has not been disputed by the State that the production had started from
December, 2011.
8. The Industrial Policy, 2001 read with the Special Mega Package, 2003
was followed up to 31st March, 2011. Respondents have determined the
date of commercial production from 01.12.2011 and on the sole ground
that the commercial production commenced after 31st March 2011,
therefore, the petitioner has been denied the incentive under Special
Mega Package, 2003.
9. The crux of dispute is whether the incentives have to be computed on
the basis of the Industrial Policy, 2012 or under Industrial Policy, 2001
read with Special Mega Package, 2003.
10. It is contended that rules cannot be invoked to deny or curtail the
incentives on the basis of which the party concerned has acted and made
investment under the expectation of incentives offered under the Policy.
In the present case, it is argued that the rule framed pursuant to the
Special Package, 2003 is being invoked to deny the incentives proposed
under the Industrial Policy, 2001 read with Special Package, 2003.
Under the rules there is no time limit in the Special Package, 2003
which is imported by formulating subsequent rule of 2005.
11. Petitioner had made investment of Rs. 445.13 Crore till 31.03.2011 on
the promises made by the State for grant of certain incentives under
2001 Policy. After the investments being made incentives assured under
2001 Policy is being denied by the State.
12. Once acting on the promise as made in Industrial Policy, 2001,
investments were made by the petitioner's Company and there was no
specific cut-off date mentioned in the Special Mega Package, 2003, the
respondents-State cannot deny the incentives on the plea that
commercial production from the unit commenced after 31.03.2011.
Reliance is placed on the following authorities:
2014 SCC OnLine (Jhr) 2479 Vaishnavi Ferro Tech (P) Ltd. And
Ors. Vs. State of Jharkhand & Ors. wherein it has been held, it is to
be kept in mind that, there should be consistency in the decision of the
Government and therefore, the past transactions should not be
reopened unless, it is found that serious illegality has been committed
while granting benefit under the Jharkhand Industrial Policy-2001.
This judgment has been affirmed by the Division Bench of this Court
in LPA No. 207 of 2015.
State of Bihar v. Suprabhat Steel Ltd., (1999) 1 SCC 31
7. Coming to the second question, namely, the issuance of
notification by the State Government in exercise of power under
Section 7 of the Bihar Finance Act, it is true that issuance of
such notifications entitles the industrial units to avail of the
incentives and benefits declared by the State Government in its
own industrial incentive policy. But in exercise of such power, it
would not be permissible for the State Government to deny any
benefit which is otherwise available to an industrial unit under
the incentive policy itself. (emphasis supplied)
(2007) 8 SCC 189 (State of Orrisa Vs. Tata Sponge Iron Ltd.)
CASE OF RESPONDENT
13. Mr. Shray Mishra, A.C. to learned Advocate General, appearing for the
respondents, has submitted that the Special Package, 2003 under which
the claim has been made, is based on Jharkhand Industrial Policy, 2001
which was effective from 15.11.2000 to 31.03.2011 but during this
period the production of the unit had not commenced. So, the petitioner
was not entitled to the benefit of incentives under the Industrial Policy,
2001 and the Special Package, 2003 arising therefrom. Petitioner has
been extended incentive from Jharkhand Industrial Policy, 2012 came
into effect from 01.04.2011.
14. Industrial production started from 01.12.2011 and for this period,
Jharkhand Industrial Policy, 2012 was applicable under which incentives
were extended to the Petitioner company. Under this Policy, a VAT
subsidy amount of Rs. 16367.99 Lakh was paid for the period from
2012-13, 2016-17 and approval for payment of Net VAT incentives
amounting to Rs. 54,02,809/- has been made by the answering
respondent no. 3 vide letter No. 2692 dated 16.12.2020 to the petitioner
company. Further amount of Rs. 22.52 Lakh has also been paid vide
Letter No. 105 dated 20.01.2022.
15. It is submitted that whether the Petitioner company was entitled to the
incentives under 2001 Policy when the date of production commenced
after 31.03.2011 came for consideration in 2018 SCC OnLine (Jhr)
362 (Adhunik Power and Natural Resources Limited through its
General Manager Sri. Mani Shankar Vs. The State of Jharkhand
through the Chief Secretary & Ors., in which the Co-ordinate Bench
of this Court held that "as mentioned earlier, as per Clause-29.2 an
industrial unit shall get fiscal incentive only when it starts commercial
production during the period the Policy of 2001 remains effective. This
means, to get any financial benefit under Clause-29.0 or through any
scheme formulated later on under the said Policy of 2001, one has to
start commercial production during the period the Policy of 2001
remains effective. It is an admitted case of both the parties that the
commercial production of the petitioner started on and from 21.01.2013
and 19.05.2013 in respect of the two units of the petitioner. This period
of commercial production is admittedly beyond the effective period of
the Industrial Policy of 2001. It is also the admitted case that by the time
the petitioner has commenced commercial production, i.e. 21.01.2013
and 19.05.2013, the new Industrial Policy of 2012 has seen the light of
the day and the Policy of 2001 was not in existence. Thus, since the
commercial production of the petitioner did not commence during the
period the Policy of 2001 was in force, the petitioner is not entitled to
get any benefit under the said policy in terms of Clause-29.2 of the
Industrial Policy of 2001."
16. On the legal issue of promissory estoppel raised on behalf of the
petitioner, it is submitted that the incentive cannot be claimed as a
matter of right by invoking promissory estoppel. Reliance is placed
on Chowgule & Co. Ltd. v. Asstt. Director General of Foreign Trade,
(2023) 1 SCC 320 wherein it has been held that, there cannot be any
negative discrimination which may perpetuate the illegality. The
appellant cannot be allowed the benefit of additional licence on the
ground that some others might have been granted such benefits dehors
the scheme, which otherwise the appellant is not entitled to under the
scheme.
ANALYSIS
17. It is not in dispute that Jharkhand Industrial Policy, 2001 was launched
on 15.11.2000 to optimally utilize the available resources of the State
and to accelerate the industrial development of the State. Under this
Policy, fiscal incentive was proposed under Clause 29.0. Apart from
this, under Clause 29.11 special packages for Mega Unit were proposed
to be formulated for new projects for investment of more than 50 Crores
on case to case basis through direct negotiation with the prospective
investors. The Special Mega Package, 2003 was a part of this fiscal
incentive which was launched on 10.06.2003.
18. It is also not in dispute that the petitioner Company made investments in
the Cement Industrial Unit at Bokaro and qualified for the financial
incentives under Mega Package Scheme, 2003 and commenced
production from 01.12.2011.
19. In order to appreciate the rival submissions revolving on the question of
incentives and subsidies, it shall be desirable to set out the list of dates
to give a better perspective.
24.03.2014- Bokaro Jaypee cement manufacturing unit acquired by
Dalmia Cement East Ltd.
2017--Dalmia Cement East Ltd merged into M/s Odisha Cement
East Ltd (ODCL).
25.08.2001- Govt of Jharkhand vide memorandum notified the
Industrial Policy 2001 of the State of Jharkhand.
10.06.2003- Govt of Jharkhand formulated a scheme known as
"Special Package for Mega Industries".
02.08.2005- Govt of Jharkhand framed and published the Mega
Project Incentive Rules, 2005.
17.07.2008- Predecessor of the Petitioner viz. Bokaro Jaypee Cement
Ltd applies for special package for 2.1 MTPA Cement Project being
set up with SAIL Bokaro.
27.08.2008- Deputy Director of Industries Govt of Jharkhand (R-4)
assured Petitioner the Company will be entitled to the benefits under
Jharkhand Industrial Policy,2001 read with special package for Mega
Industries.
29.05.2010 Petitioner Company was registered through a "Certificate
of Registration" as a dealer under Section 7(1)/7(2) of the Central
Sales Tax Act, 1956 as a Public Ltd Company for the manufacturing
and selling of cement.
07.01.2011- Industry Department Govt. of Jharkhand notified that the
Industrial Policy, 2001 is extended up to 31.03.2011.
20.05.2011 (as per petitioner)/01.12.2011 (as per State)- Petitioner's
Company unit at Bokaro commenced its commercial production.
27.09.2011- Petitioner Company addressed a letter to the Director
Industries Department of Industries Govt of Jharkhand (R-3) for
issuance of "Date of Production Certificate" w.e.f. 20.05.2011.
15.11.2011- Petitioner-Company again addressed a letter to R-3
submitting an application for grant of Capital Investment subsidy
under the Industrial Policy 2001.
09.03.2012- Petitioner-Company addressed a letter to the Chief
Minister government of Jharkhand requesting for grant of capital
investment subsidy under the Jharkhand state industrial policy, for
the 2.1 MTPA Cement Grinding Project at Bokaro bearing includes
notice that Jharkhand Industrial Policy 2001 has not been extended
beyond March 2011 and the new policy was yet to be notified, the
benefits under the industrial policy of Jharkhand state have not so far
accrued to Petitioner which is causing a lot of financial hardship to
the Company.
16.06.2012-The new industrial policy was notified by the
government of Jharkhand and the same was made applicable
retrospective effect from 01.04.2011. It removed the capital
investment subsidy (CST) and brought down the VAT incentives by
reducing the same to be only applicable for a period of five years
instead of seven years as originally provided under the Industrial
Policy, 2011.
18.08.2012- R-3 awarded a certificate of Date of Commercial
Production on the basis of examination and verification of papers and
inspection report that M/s Jaypee Cement Plant Balidih, Bokaro had
gone into commercial production on 01.12.2011 for the production of
cement under the provisions of New Industrial Policy, 2012.
20. The matter for consideration before this Court is if the petitioner
Company can be deprived of the financial incentives promised under the
Special Mega Package Scheme, 2003 in view of the fact that the
Industrial Policy, 2001 came to an end by March, 2011 and the
notification of the Jharkhand Mega Project Incentive Rules, 2005 which
is specifically stated that it will be effective for the period of Jharkhand
Industrial Policy, 2001?
21. This question fell for consideration by the co-ordinate Bench of this
Court in W.P. (C) No.6909 of 2017 in Adhunik Power and Natural
Resources Ltd. Vs. The State of Jharkhand and Others. The writ petition
was dismissed for the following reasons:
Firstly, Jharkhand Mega Project Incentive Rules, 2005 or the MOU,
which has been entered between the petitioner and the State, is
dependent upon Jharkhand Industrial Policy of 2001. 2005 Rules
specifically stipulates that the said Rules is effective period of
Jharkhand Industrial Policy of 2001.
Secondly, as per Clause-29.2 an industrial unit shall get fiscal
incentive only when it starts commercial production during the period
policy of 2001 remains effective. By the time the unit commenced
industrial production, the new Industrial Policy of 2012 came into force
and in 2001 Policy came to an end.
Thirdly, principle of promissory estoppel will not apply, as the
promise of subsidy was coupled with condition to commence the
industrial production within the stipulated time, which was not
complied by the petitioner.
22. This Court respectfully differs with the findings of the co-ordinate
Bench for the following reasons:
Firstly, there was no cut-off date specified for Special Package
Scheme, 2003 whereas there was cut-off date with respect to the
Industrial Policy, 2001. Clause 29.11 of the Industrial Policy, 2001
specifically promised that special package shall be formulated for the
new projects with an investment of more than Rs 50 crore on case-to-
case basis. While in the definition of "New Industrial Unit", there is a
specific rider of commercial production between 15th November, 2000
to 31st March, 2005. This rider of production time line, is absent in the
definition of "Mega Unit" which has been defined to mean an eligible
new unit of special characteristic set up on or after the 15th November
2000 with investment exceeding Rs 50 crore. This distinction is
understandable, considering the type of investment to be made in such
units. Special Package for mega unit forms a class itself, where no time
frame was mentioned either in the Special Policy or Special Mega
Package, 2003 which also does not refer to any cut-off date.
In State of Bihar v. Suprabhat Steel Ltd., (1999) 1 SCC 31 the
question that fell for consideration, was whether the industrial units
which had started production prior to 1-4-1993 and where investment in
plant and machinery did not exceed Rs 15 crores on 1-4-1993 would be
entitled to the facilities of sales tax exemption on the purchase of raw
material for a period of seven years from 1-4-1993 in accordance with
clause 10.4(i)(b) of the Industrial Incentive Policy, 1993 (hereinafter
referred to as "the Industrial Policy") and whether the notification
issued by the Government of Bihar dated 2-4-1994 in exercise of power
under Section 7 of the Bihar Finance Act to the extent it indicates "who
has not availed of any facility or benefit under any industrial promotion
policy" is invalid as being contrary to the Policy Resolution of 1993. It
was held by the Apex Court that it would not be permissible for the
State Government to deny any benefit which was otherwise available to
an industrial unit under the incentive policy itself. The industrial
incentive policy is issued by the State Government after such policy is
approved by the Cabinet itself. The issuance of the notification under
Section 7 of the Bihar Finance Act is by the State Government in the
Finance Department by which notification is issued, to carry out the
objectives and the policy decisions taken in the industrial policy itself.
In this view of the matter, any notification issued by government order
in exercise of power under Section 7 of the Bihar Finance Act, if it is
found to be repugnant to the industrial policy declared in a government
resolution, then the said notification must be held to be bad to that
extent. It was not open for the Government to issue a notification in
exercise of power under Section 7 of the Bihar Finance Act, which may
override the incentive policy itself. It has been held in Motilal
Padampat Sugar Mills Co. Ltd. v. State of Uttar Pradesh, (1979) 2
SCC 409 that the Government is competent to resile from the promise
on giving reasonable notice which need not be a formal notice, giving
the promisee a reasonable opportunity for resuming his position
provided, of course, it is possible for the promisee to restore status quo
ante. If, however, the promisee cannot resume his position, the promise
would become final and irrevocable.
Another principle of law that has been laid down by the Apex
Court is that State should act fairly. United India Insurance Co. Ltd. v.
Manubhai Dharmasinhbhai Gajera, (2008) 10 SCC 404, Hon'ble
Court observed :
"46. One important facet of the matter which must also be taken
note of is duty on the part of a State to act fairly. Such a fair
dealing is expected at the hands of State within the meaning of
Article 12 of the Constitution of India. Strong reliance has been
placed by Mr Parekh on the decision of this Court in Mahabir
Auto Stores v. Indian Oil Corpn. [(1990) 3 SCC 752]
and Shrilekha Vidyarthi v. State of U.P. [(1991) 1 SCC 212 :
1991 SCC (L&S) 742] There cannot be any doubt whatsoever
that Article 14 of the Constitution of India which encompasses
within its fold obligations on the part of the State to act fairly
which operates also in the contractual field, but the said
principle would be applicable more in a case where bargaining
power is unequal or where the contract is not a negotiated one
and/or is based on the standard form contracts between
unequals".
Secondly, when "Special Package for Mega Unit-2003" also
does not specify any such time line for commencement of production,
Jharkhand Special Incentive Rules, 2005 could not have been made
coterminous with the Jharkhand Industrial Policy, 2001 and thereby
snatching an incentive already extended under it.
Thirdly, Ratio of Suprabhat Steel Ltd., (supra) and Vaishnavi
Ferro Tech (P) Ltd. And Ors. (supra) was not canvassed before the
Co-Ordinate Bench.
Under the circumstance, this Court is of the view that the
question, raised at Bar in the present cases, needs to be decided
by a larger Bench and the matter may, therefore, be placed before
Hon'ble the Chief Justice for appropriate order.
Registry is directed to place the matter before the Hon'ble
Chief Justice in the administrative side, for constituting larger Bench
at the earliest.
(Gautam Kumar Choudhary, J.)
Jharkhand High Court, Ranchi
Dated 14th February, 2025
AKT /Sandeep
NAFR
