Harinagar Sugar Mill Ltd vs The State Of Bihar And Ors
2021 Latest Caselaw 6399 Patna

     IN THE HIGH COURT OF JUDICATURE AT PATNA
              Civil Writ Jurisdiction Case No.6658 of 2011
======================================================

Harinagar Sugar Mill Ltd., a Company registered under the provision of the

Indian Companies Act, 1956, having its registered office at 207, Kalbadevi

Road, Mumbai and its sugar factory at Harinagar, P.O.- Haringar, P.S.

Ramnagar, District West Champaran through its Chief General Manager,

S.N.Poddar @ Satya Narayan Poddar and the Chief Cane Controller H.P.

Pancharia @ Hari Prasad Pancharia holders of power of attorney on behalf of

the Company

... ... Petitioner Versus

1. The State of Bihar through the Chief Secretary, Bihar, Patna.

2. The Principal Secretary, Sugarcane Industries Department, Bihar, Patna.

3. The Commissioner-cum-Secretary, Cane Development Department, Bihar,

Patna.

4. The Secretary/Principal Secretary to the Government, Department of

Registration, Excise and Prohibition (Excise and Prohibition).

5. The Excise Commissioner-cum-Controller of Molasses, Department of

Registration, Excise and Prohibition, Government of Bihar, Patna.

6. The Joint Commissioner of Excise, Department of Registration, Excise and

Prohibition (Excise and Prohibition).

7. The Superintendent of Excise, West Champaran, Bettiah.

... ... Respondents ====================================================== Appearance :

For the Petitioner : Mr. Ramesh Kumar Agrawal, Advocate

For the Respondents : Mr. Vikash Kumar SC-11

====================================================== Patna High Court CWJC No.6658 of 2011 dt.23-12-2021

CORAM: HONOURABLE MR. JUSTICE CHAKRADHARI SHARAN SINGH and HONOURABLE MR. JUSTICE MADHURESH PRASAD ORAL JUDGMENT (Per: HONOURABLE MR. JUSTICE MADHURESH PRASAD)

Date : 23-12-2021

Heard learned counsel for the petitioner and learned

counsel for the State respondent.

2. The writ petitioner is a Company manufacturing sugar

at Harinagar in the District of West Champaran. The State

Government, vide a resolution dated 12.09.2006, announced

incentive Scheme for establishment and development of sugar

and sugar based industries in the State of Bihar (hereinafter

referred to as incentive Scheme). The same is Annexure 1 to the

writ petition. The same provided certain benefits /incentives for

establishment of sugar mills /sugar cane based industries as well

as for expansion of capacity of existing sugar mills. Clause 4

([k) (ii) provided exemption from administrative charges for five

years on molasses to Distilleries/Ethanol units being established.

The same exemption was granted in case of capacity expansion

of Distilleries and Ethanol units also.

3. Clause 5 (x) and (N) are relevant for the present case

and are, thus, being quoted:

"5. (d) ------

([k) ------

Patna High Court CWJC No.6658 of 2011 dt.23-12-2021

(x) mRiknu frfFk dk rkRi;Z ml frfFk ls gksxk tcls bdkbZ okLro esa okf.kfT;d mRiknu izkjEHk dj fy;k gks ftlds fy, og fucaf/kr gSA mRiknu frfFk ds laca/k esa funs"kd] rduhdh fodkl] m|ksx foHkkx }kjk fuxZr izek.k&i= ekU; gksxkA

----------

---------

-------

( N)[email protected] dh LFkkiuk @ {kerk foLrkj rFkk dks&tsujs"ku }kjk fo|qr mRiknu ds fy, oRrZeku esa fj;k;rsa @ NwVksa ij okf.kfT;d mRiknu djus dh frfFk ls ikWap o'kksZa ds fy, ns; gksxkA

----------

--------------**

4. After issuance of the Resolution dated 12.09.2006,

guidelines were issued by the sugar industries Department,

Bihar, Patna on 24.07.2007. Clause 6 whereof is relevant as the

same forms the basis for the dispute regarding petitioner's

entitlement to the benefit of exemption from administrative

charges on molasses under the Resolution dated 12.09.2006.

Clause 6 of this guidelines reads as under:

"6. Nksvk ij iz"kklfud pktZ ls NqV ds laca/k esa mRikn foHkkx }kjk vyx ls vf/klwpuk fuxZr fd;k tk;sxk ,oa mlds vuq:i dkjZokbZ gksxhA**

5. Pursuant to Clause 6 of this guidelines, the

Registration, Excise and Prohibition Department, Govt. of Bihar

issued the notification dated 11.09.2008 (Annexure-7). The

same was issued under Section 8(A) of the Bihar Molasses Patna High Court CWJC No.6658 of 2011 dt.23-12-2021

(Control) Act, 1947. The notification dated 11.09.2008 reads as

follows:-

"1 Upon establishment of new distillery/ethanol plant and expansion of existing distillery plant in the state of Bihar, the administrative charges on all grades of molasses are fully exempted. In case of expansion of existing distillery exemption from payment of administrative charges on molasses, shall be confined only to the quantity of molasses which is used for increased capacity of production and shall not be admissible to installed capacity prior to expansion irrespective of production below or at par installed capacity.

2. The above exemption of administrative charges on all grades of molasses will be applicable for a period of 5 years from the date of commercial production of new distillery/ethanol plants and expansion of existing distillery plant in the state of Bihar."

6. Admitted facts are that the petitioner established a new

45 KLPD Ethanol/ Distillery plant in their factory premises. The

new Ethanol/ Distillery plant was commissioned on 05.03.2008

for trial. Commercial production of this new Ethanol/Distillery

plant started w.e.f. 05.04.2008.

7. The petitioner, in terms of Clause 5 (x) and (N), the

incentive Scheme and para 2 of the notification dated

11.09.2008, has claimed that he was entitled to exemption from Patna High Court CWJC No.6658 of 2011 dt.23-12-2021

administrative charges on the molasses being consumed by this

new Ethanol/Distillery plant for a period of five years from the

date of its commercial production i.e. w.e.f. 05.04.2008. As a

consequence of such entitlement, the petitioner claims refund of

Rs. 37,51,350/- being the administrative charges paid by the

petitioner in between 05.04.2008, i.e. the admitted date of

commencement of commercial production till 30.06.2008. After

this period, petitioner has been allowed the exemption. The

exemption has been denied only for this limited period and,

therefore, the petitioner has sought a direction for refund of the

said amount.

8. The learned counsel for the State has opposed this

prayer referring to the counter affidavit filed by the State of

Bihar in the Department of Registration, Excise and Prohibition

(Respondent Nos. 4 to 7). The stand of the respondents is that in

terms of incentive Scheme guidelines had been issued by

Annexure-2 (24.07.2007) and Clause 6 of the guidelines clearly

specify that for exemption from administrative charges on

molasses under the incentive Scheme a notification was required

to be issued by the Excise Department. Since the notification

has been issued on 11.09.2008, exemption from administrative

charges cannot be claimed prior to the date of notification, being Patna High Court CWJC No.6658 of 2011 dt.23-12-2021

the period in-question, i.e. 15.05.2008 to 30.06.2008. It is the

stand of the State that the notification dated 11.09.2008 does not

have retrospective effect. The petitioner, therefore, cannot claim

exemption from administrative charges on molasses for the

period in-question, which is prior to issuance of the

notification dated 11.09.2008.

9. Petitioner does not dispute the fact that in terms of

Clause-6 of the guidelines dated 24.07.2007, notification came

to be issued by the Registration, Excise and Prohibition

Department, Govt. of Bihar on 11.09.2008. Issuance of this

notification, however, as per petitioner, would have no bearing

on the petitioner's entitlement to exemption from administrative

charges w.e.f. the date of commercial production, irrespective of

the fact that the said date is prior to the notification dated

11.09.2008. Admittedly, the petitioner has started commercial

production w.e.f. 05.04.2008. The incentive policy contained in

Resolution dated 12.09.2006 as well as the notification dated

11.09.2008, issued by the Excise Department, both provide that

the exemption on administrative charges on all grades of

molasses is applicable for five years from the date of

commercial production. The date of commercial production

being admitted, it does not lie in the mouth of the respondent Patna High Court CWJC No.6658 of 2011 dt.23-12-2021

authorities in the Department of Registration, Excise and

Prohibition to contend that the same would be made available

from any date other than the date of commencement of

commercial production. The stand of the authorities in the

Excise Department that the same cannot be granted w.e.f the

date of commercial production, because that date is prior to

issuance of the notification dated 11.09.2008 is unsustainable in

the eyes of law and contrary to the incentive policy dated

12.09.2006, read with the guidelines dated 24.07.2007 issued

with respect to the same and the notification dated 11.09.2008

issued by the Excise Department which are Annexure(s) 1,2

and 7 respectively to the writ petition.

10. This Court has carefully considered the submissions

on behalf of the parties and examined the incentive scheme

dated 12.09.2006, guidelines issued for implementation of the

incentive policy dated 24.07.2007 as well as the notification

dated 11.09.2008 issued by the Excise Department. The

admitted position is that under the incentive policy exemption

has been granted in respect of the administrative charges for

molasses to new Distillery/Ethanol units established under the

incentive policy dated 12.09.2006. It is also admitted that the

petitioner established the new Distillery/Ethanol plant after Patna High Court CWJC No.6658 of 2011 dt.23-12-2021

issuance of the incentive policy dated 12.09.2006. It is also an

admitted fact that commercial production of the new plant

commence w.e.f. 15.04.2008; and that notification in terms of

the guidelines dated 24.07.2007 was issued on 11.09.2008. It is

also admitted that that the incentive policy, dated 12.09.2006,

guidelines dated 24.07.2007 and the notification issued by the

Excise Department on 11.09.2008 all provide for grant of

exemption from administrative charges on molasses w.e.f. the

date of commercial production. The dispute sought to be raised

by the Excise Department that the exemption from the

administrative charges cannot be granted because

commencement of commercial production is w.e.f. the date

prior to issuance of notification dated 11.09.2008 is clearly

unsustainable. Since the new plant was established in view of

the incentive policy issued under the Resolution dated

12.09.2006, the fact that the notification came to be issued

nearly two years later by the Excise Department; and after the

date of commencement of commercial production would have

no bearing on the petitioner's entitlement under the incentive

policy, in view of the admitted fact that the petitioner had started

commercial production on 15.04.2008 after declaration of the

incentive scheme.

Patna High Court CWJC No.6658 of 2011 dt.23-12-2021

11. Submission in opposition to the petitioner's claim by

the State counsel cannot be sustained for the fact that in

paragraph No. 11 (?k) of the guidelines dated 24.07.2007, it has

clearly been specified that in the event of any dispute, decision

of the Principal Secretary, Department of Sugarcane Industry

will be final. Clause 11(?k)reads as follows:-

"11. (?k) izLrkfor phuh izksRlkgu iSdst ds vUrxZr fdlh fookn mRiUu gksus dh fLFkfr esa vk;qDr ,oa [email protected] xUuk m|ksx foHkkx dk fu.kZ; vafre ekuk tk,xkA**

12. In view thereof, it is the decision of the Department of

Sugarcane industry which is relevant with respect to the

dispute sought to be raised by the Excise Department regarding

petitioner's entitlement to exemption from administrative

charges on molasses w.e.f. the admitted date of commencement

of commercial production. Paragraph Nos. 12,13 and 14 of the

counter affidavit filed by the respondent Nos. 2 and 3 being the

Principal Secretary, Sugarcane Industries Department, Bihar,

Patna and Commissioner-cum- Secretary, Cane Development

Department, Bihar, Patna does not leave any room for disputing

the petitioner's entitlement to exemption from administrative

charges on molasses consumed w.e.f. the date of

commencement of commercial production i.e. w.e.f.

05.04.2008, for a period of five years. Paragraph Nos. 12,13 and Patna High Court CWJC No.6658 of 2011 dt.23-12-2021

14, therefore, are being reproduced:-

"12. That the averment made in this para-14 of the writ application is not contradicted. In order to serve the end of justice, it would be appropriate to mention that according to Letter No. 05 dated 10.02.2010 M/s Harinagar Sugar Mill Ltd. (Distillery Division) had informed that encouraged by the Incentive Package declared by the Sugarcane Industry Department through Resolution No. 1433 dated 12.09.2006 (Annexure-1 of the writ) they obtained permission of the State Investment Promotion Board and Established the Ethanol Production Unit and commenced commercial production from 05.04.2008. (Annexure-3 of the writ).

13. That it was clearly mentioned in Letter No. 1355 dated 24.07.2007 ( para-6) (Annexure-2 of the writ application) that notification regarding exemption of administrative charge on molasses will be issued by the Department of Excise. The Department of Excise issued the notification on 11.08.2008 while the Incentive Package had been declared in 2006 itself. In order to rectify this position it was recommended by the Sugarcane Industry Department that the Notification No. 989 dated 11.09.2008 of the Department of Excise should be effective from the date of the issuance of Resolution No. 1533 dated 12.09.2006 and accordingly the Harinagar Sugar Mill should get the benefit of exemption from the date of commencement of commercial production i.e. 05.04.2008.

Patna High Court CWJC No.6658 of 2011 dt.23-12-2021

14. That Letter No. 1355 dated 24.07.2007 clearly mentions in para-11 (Gha) that in the event of any dispute, the decision of the Principal Secretary, Department of Sugarcane Industry will be final the abovementioned letters were approved by the Principal Secretary, Department of Sugarcane Industry."

13. Since the Principal Secretary, Sugarcane Industries

Department was the competent Authority for resolving the

dispute sought to be raised regarding the petitioner's entitlement

to exemption from administrative charges, his decision, at least

was required to be acknowledged by the Excise Department by

granting the benefit to the petitioner for exemption on

administrative charges on molasses consumed w.e.f. date of

commencement of commercial production i.e. 05.04.2008.

14. This Court would find that the stand of the Excise

Department in denying the petitioner's exemption from

administrative charges w.e.f. the date of commencement of

commercial production amounts to frustrating the object and

intent of incentive Scheme for establishment and development

of sugarcane and sugar based industries in the State of Bihar

contained in Resolution dated 12.09.2006. The bogey of

retrospectivity, which is sought to be raised by the Excise

Department is legally unsustainable, also in view of their own

notification dated 11.09.2008 (Annexure-7), which clearly Patna High Court CWJC No.6658 of 2011 dt.23-12-2021

specifies that exemption of administrative charges on molasses

were applicable for five years from the date of commencement

of commercial production of new Distillery/Ethanol plant.

15. By raising such unsustainable plea the court would

find that the petitioner has been deprived of the benefits of

incentive Scheme w.e.f. the date of commercial production and

has been driven to this most baseless and undesirable litigation.

16. During the instant proceedings also, the Excise

Department has failed to see reason, even after the Principal

Secretary, Sugarcane Industry (Respondent No.2) being the

Competent Authority under the guidelines dated 24.07.2007 for

resolving the dispute, has stated on affidavit that the petitioner

was entitled to get the benefit of exemption from the date of

commencement of commercial production i.e. 05.04.2008.

17. In view of the foregoing discussions, it is evident that

the petitioner could not have been denied exemption from the

administrative charges for the period during which he has

claimed for the same, i.e. w.e.f. 05.04.2008 being the date of

commencement of the commercial production. The petitioner, as

a consequence of his entitlement, should have been refunded the

amount of Rs. 37,51,350/- deposited towards administrative

charges during the period of his claim. The same has not been Patna High Court CWJC No.6658 of 2011 dt.23-12-2021

done and for the last about more than 13 years the petitioner has

been deprived of the same. The State based on unfounded and

unsustainable stand of the Excise Department has retained the

amount without any justification. This enrichment of the State,

based on the unfounded and unsustainable stand of the Excise

Department, and in spite of the decision of the Principal

Secretary, Sugarcane Department acknowledging petitioner's

entitlement for the same, is clearly unjustified. The authorities

are therefore, directed to refund the said amount along with

interest at the varying Bank rate of interest applicable during

this period on fixed deposits.

18. Instant case is a glaring example of baseless and

unwanted litigation having been generated by the Excise

Department, at the cost of the State exchequer, based on an

unsustainable and mindless opposition of the petitioner's

claim, due under the incentive Scheme. The opposition of the

petitioner's claim amounts to frustration of the State

Governments own incentive scheme. This Court was tempted to

impose cost in the matter.

19. However, we refrain from doing so and observe that

the refund with interest should be paid along with a calculation

chart showing calculation of the amount being paid within a Patna High Court CWJC No.6658 of 2011 dt.23-12-2021

period of three(03) months from the date of receipt/production

of a copy of this order.

20. The writ petition stands allowed in the aforesaid

terms.

(Madhuresh Prasad, J)

I agree Chakradhari Sharan Singh, J:

(Chakradhari Sharan Singh, J)

shyambihari/-

AFR/NAFR
CAV DATE
Uploading Date          24.12.2021
Transmission Date