Benefits under Incentive Scheme cannot be Curtailed in the name of New GST Policy: Calcutta HC [Read Order]

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In a significant case Calcutta High court has held that benefit under incentive scheme could not be curtailed in the name of new Goods And service policy

 Jayanta Mitra and Rahul Dhanuka are the counsel appearing for the appellant/Assesee and A. Ray,T. M. Siddiqui, D. Ghosh, and Debraj Sahu,  advocates appeared for the respondent/Revenue.

 The writ petition filed by the assesee  Electrosteel Castings Limited who is a registered dealer under the West Bengal Sales Tax Act, 1994 against the order of the  West Bengal Taxation Tribunal .

The reason for filing the above petition was,Assesee Electrosteel Castings Limited  leading producers of Ductile Iron Pipes and has set up its unit at Khardah for the manufacture of DI Pipes .  The Assessee undertook expansion of the unit from time to time and became eligible for remission of sales tax under various Incentive Schemes of the State.

 Assesee claim that they have made 274 crore total  investment  thereafter petitioner claim that the Gross Value of Fixed Capital Assets was194 crore.

 Petitioners prayed for enhancement of GVFCA by Rs. 80 crores to include the investment made by the petitioner till 31.12.2005.

The Standing committee of the industries of the State Cabinet in its meeting Fixed Capital Investment by Rs. 57 crores instead of 80 crores as prayed for by the petitioner.

 The Special Secretary to the Government of West Bengal informed the petitioner that the investment of Rs. 23 crores made after 31.03.2005 would not be counted.

Against the action assessee filed the application under Section 8 of the West Bengal Taxation Tribunal Act 1987 before the Tribunal.

But the Tribunal upholds the decision of the State Government. Aggrieved assessee filed the writ petition before the High court.

 Counsel for the assessee submits that,

“various provisions under the West Bengal Incentive Scheme 1999 and contended that the said scheme provides that all investments made in land, building, plant and machinery and equipment on or after 01.04.1998 shall be eligible for benefits under the scheme “

 Moreover  the scheme contains a promise made by the State Government to allow deferred payment of Sales Tax dues or remission of sales tax dues to an existing unit for its approved project of expansion

 Counsel for the respondent submits that,

“Unit could claim remission of sales tax for an unlimited period of time and the State which has the power to grant remission of sales tax also has the power to decide the period up to which the investments made in the Fixed capital assets will be counted for the purpose of remission of sales tax”.

After considering the contentions of the both parties the division bench of Justice T. S. Sivagnanam and Hiranmay Bhattacharyya dismissed the  writ petition and determined that “State action in the case on hand could not  be said to be arbitrary. The Tribunal rightly observed that no right accrued in favor of the petitioners to claim remission of tax. The Tribunal was also right in observing that the unit was granted benefit as a special case.”

Further the bench observed that no authority was given to the Commissioner to modify, enlarge or curtail the validity period and also that the benefits under the Incentive Scheme could not be curtailed in the name of the new GST policy.

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