Calcutta High Court Orders 9% Interest Payment for Negligence in Delayed GST Reimbursement.

Court Name : Jammu & Kashmir High Court

Parties : Greenland Cements Private Limited Vs Union of India

Decision Date : 29 May 2023

Judgement ref : WP(C)-246-2022

The Petitioner is a Company producing/manufacturing cement in the Union Territory of Jammu & Kashmir. The Union Government, in order to give impetus to its industrial activity, introduced a scheme known as “Budgetary Support” in lieu of grant of General Exemption and refund of goods and services tax where eligible. According to the petitioner, the benefit is available under the General Exemption No. 61-A. Sub-clause II of clause 8 envisages that where a Unit has made a new investment on or after the 6th Day of February 2010 and where such investment is directly attributable to the generation of additional regular employment of not less than twenty five percent over and above the base employment limit which however, was subject to the condition

that the Unit claiming exemption shall not reduce regular employment after claiming exemption, and once such employment is reduced below one hundred twenty five percent of the base employment limit, the Unit shall be debarred from claiming the exemption in future. The said ‘Budgetary Support’ was a grant from the Union Government for the GST received by it from the Unit.

2. The Union of India has filed its reply and in paragraph 3.1, has averred

that the case of the petitioner for availing the benefit of the notification

dated 06.02.2010 was approved by the Assistant Commissioner,

Central Excise Division, Srinagar, vide order dated 21.06.2017. The

original order was reviewed by the Commissioner GST, Central Excise,

Jammu & Kashmir, Jammu vide order in review dated 21.09.2017 by

which the appeal filed before the Commissioner, against the original

order was rejected and the original order dated 21.06.2017 was

affirmed. Thereafter, it is averred specifically “thus, eligibility of the

petitioner for availing the benefit of notification no. 01/2010-CE dated

06.02.2010 has attained finality”. In short, the Union of India has

supported the case of the petitioner for Budgetary Support.

3. However, as the said amount was not reimbursed to the petitioner he

approached this Court in the year 2018. This Court vide its order dated

28.03.2023, recorded the fact that the inspection report qua the unit of

the petitioner had been uploaded on ACES/GST portal of the Central

Board of Excise & Customs but the same was done with the rider “till

clarifications are obtained from GMDIC the matter may be kept on

hold” and the order quoted that part of the inspection report which reads

“since GMDIC, Pulwama, representative of State Industries

Department, one of the member of the team during the investigation

raised certain reservations regarding the authenticity of the letter no.

DICP/Bev/RN-46/17/412-14 dated 18.05.2017 (copy of the letter

enclosed) wherein recommendation has been addressed to the Assistant

Commissioner, Custom and Central Excise Division Kashmir. As

informed by GMDIC, Pulwama, he has taken up the matter with his

department for clarification, till clarifications are obtained from

GMDIC the matter may be kept on hold”.

4. The portion quoted by the order of this Court on 28.03.2023, raised a

question-mark on the authenticity of the letter dated 18.05.2017. In this

regard it is essential to refer to the said letter issued by the District

Industries Center, Pulwama on 18.05.2017, which was purportedly

addressed by the General Manager DIC, Pulwama to the Assistant

Commissioner Customs & Central Excise Division, Kashmir, whereby

the District Industries Center, Pulwama, has referred to the petitioner

as a medium scale Unit registered on 22.05.2007 with the Directorate

of Industries & Commerce for incentive purpose for manufacture of

Portland Cement having hundred tonnes per day capacity with its

production having commenced from 05.06.2008.

5. The authority further certifies that the Unit holder has made new

investment in fixed assets, completed the civil works of storage yard

for new material the grinding media in the raw mill, changed the liner

plates, crusher parts, gear boxes, refractory bricks conveyor belts and

replaced the VSK Klin from March 2014 to February 2017 in order to

achieve the optimum level of production (100) tonnes per day. It also

certified that the unit holder has increased the permanent employment

over and above the all time base employment of over and all time base

employment of 40 to 51(11 persons i.e 27.5%) from the month of

February, 2017 and thereafter, the said report states that the Central

Excise Department is requested that the unit holder may be allowed the

exemptions under notification no. 01 of 2010 dated 06.02.2010.

6. Learned counsel for the Union Territory has handed over a file today in

which certain documents have been referred to. Specifically, he has

drawn the attention of this Court to the report of a Committee of five

officials who were the Functional Manager DIC, Budgam, Project

Manager DIC Pulwama, Chief Accounts Officer, Director of Industries

& Commerce, Kashmir, General Manager DIC, Srinagar and General

Manager DIC Budgam, dated 08.09.2021.

7. Having gone through the said report, it appears that the committee held

the earlier report dated 18.05.2017 as invalid as the Officer concerned

has acted beyond his competence. It does not state that the contents of

the said documents are incorrect or the same is motivated or that it was

fabricated. On the second page of the report are the findings of the

Committee. Finding no. 2 observes that the unit has a capacity of 30000

metric tonnes per annum from the date of its commencement on

05.06.2008. The third finding is that the “unit holder has claimed the

enhancement of capacity by way of optimum utilization of existing

resources without any substantial expansion”. Here it is necessary for

us to observe that the Committee admits that there has been expansion,

but it qualifies it with the adjective substantial, which is subjective, and

gives no details as to why then committee is of the opinion that the

expansion was not substantial. The fourth finding is “The substantial

expansion envisages a fresh DPR with increase in productivity/capacity

details and fresh date of production, which is not available in this case”.

Finding no. 5 is to the effect that “the perusal of the records reveals that

in fact the unit has never reached its maximum/optimal productivity of

30000 metric tonnes per annum”. Thereafter it gives a chart of the

annual assessment, for the year 2014-15, there were 15 locally skilled

person employed by the unit and 25 unskilled persons and the total

number of persons employed were 40 and, in that year, the production

was 1330 metric tonnes which is 4.43 % of the total capacity. The next

period of assessment is 2018-2019 where the locally skilled persons

saw a rise in employment by 6 additional persons (21) and the un-

skilled persons saw a rise by 5 (30) and the total persons employed were

51 as against 40 in the year 2014-15. The production has gone up to

13320 metric tonnes which was 44.4 %of the total capacity of the unit.

The assessment for the year 2019-20 reflects that with the same number

of employees (51) the production had gone up to 15042 metric tonnes

which was 50.14 % of the total capacity of the plant. In finding no. 7,

the Committee has been critical that the unit has not been able to attain

its optimum capacity of 30000 metric tonnes by observing thus “to this

effect an order should have been issued by the General Manager, DIC

Pulwama, for enhancement of capacity beyond 30000 Metric tonnes

after reassessment of plant which has not been made in the instant case.

In finding number eight the Committee finds that the annual assessment

report as annexed, does not show any major increase in turnover/ manpower which substantiate that no enhancement in capacity has been made. Most importantly the finding no. 9 reflects “the mere increase in the employment as shown has been 25% which in real case might have increased the output manifold and there does not seem any such evidence”.

8. Findings no. 7, 8 and 9 of the Committee reflect that the Company has

not attained its optimum capacity of 30000 metric tonnes. However, the

chart of annual assessment itself shows that the unit has been

consistently increasing its output from 4.43% to 50.14% in a span of

five years. As regards its finding that despite increase of employment

has shown us 25% the output has not increased stands belied by the

chart itself which shows that in the year 2018-19, with 51 employees it

had reached 41.4 % of its optimum capacity and thereafter the very next

year 2019-20, with the same number, they had increased the plant

output from 44.4 % to 50.14 % for the year 2019-20.

9. The approach of the committee appears to deny the benefit of the

budgetary support to the petitioner which has attained finality as per the

affidavit of the Union Government itself and the benefit ought to have

been released to the Petitioner. In the last paragraph of the report, it

discloses “the committee therefore owes an explanation with regard to

the part of industries department that conditions do not seem to be

fulfilled. However, if the department of Customs and Central Excise,

deems it fit that the necessary procedure has been followed by the unit

holder for seeking incentive as per their terms and conditions, the

present committee doesn’t reserve any right of decline.” Thus, the

report itself reflects that their observations and opinions

notwithstanding if the Customs and Central Excise Department is

satisfied that the petitioner is eligible for the Budgetary Support, the

Committee does not have any right to decline the same.

10. This being the accepted position, we do not find any reason to not grant

the benefit as prayed for by the petitioner. At the same time, we are

upset by the response of the authorities of the Union Territory which

has deliberately denied the petitioner the benefit which ought to be

rightly theirs, as the Union Government has also held that the

Petitioner’s claim had attained finality. We are pained by the delay of

almost five years on account of the intransigence of the Union Territory

due to which, the Budgetary Support could not be made available to the

petitioner. Thus, while holding that the petitioner is entitled to receive

the budgetary support as already arrived at forthwith and the same

should be released without any further delay. At the same time on

account of the delay caused by the Union territory of almost five years

we impose a penalty of 9% interest on the total amount due to the

petitioner from18.05.2017, till the date of payment which shall be paid

by the Union Territory. The costs so imposed be recovered by the Union

Territory from the Officers so identified on account of whose indolence,

delay in disbursing the reimbursement of GST has occurred.

11. With the above petition stands finally disposed of.

(Mohan Lal) (Atul Sreedharan)

Judge Judge