Bombay HC Dismisses Writ Petition Against Retrospective Withdrawal of Industrial Park Tax Benefits [Read Order]

The Bombay High Court has dismissed a writ petition challenging the retrospective withdrawal of tax benefits under the Industrial Park Scheme, 2002. The petitioner, Pantheon Infrastructure Private Limited, had sought relief against the Central Government’s notification dated June 22, 2017, which rescinded an earlier notification that had granted tax exemptions under Section 80-IA(4)(iii) of the Income-tax Act, 1961.

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Pantheon Infrastructure Private Limited was initially granted approval as an Industrial Park under the 2002 scheme by the Department of Industrial Policy and Promotion (DIPP) via a notification dated November 7, 2008. The approval was granted with retrospective effect from March 31, 2008. The petitioner claimed that they made substantial investments relying on this approval, and that the sudden rescission in 2017 with retrospective effect caused serious financial implications and violated principles of natural justice.
The Central Government had issued the rescinding notification on the basis of a report from the Income Tax Department alleging that the petitioner had not fulfilled certain eligibility criteria of the scheme, particularly concerning the lease period and usage of the developed space. The petitioner contended that they were not afforded any prior hearing before the withdrawal and that their objections had not been considered.
The Union of India, in its affidavit-in-reply, maintained that the withdrawal of benefits was justified due to the petitioner’s non-compliance with the conditions stipulated in the scheme. It was further argued that the notification granting benefits was issued subject to satisfaction of eligibility, and the retrospective withdrawal was well within the government’s powers under Section 21 of the General Clauses Act, 1897.
After considering the submissions, the Court observed that the scheme itself stipulated that benefits would accrue only if the conditions were fully met. The Court held that mere issuance of a notification under the scheme does not create an absolute or vested right in favour of the assessee, particularly where continuing compliance with the scheme is required. The Court also noted that the show-cause notice and opportunity to respond had been granted prior to the issuance of the rescinding notification.
The division bench comprising Justice K. R. Shriram and Justice Neela Gokhale concluded that there was no procedural infirmity or breach of natural justice in the issuance of the rescinding notification. It upheld the power of the Central Government to withdraw the tax benefit retrospectively where it found that the Industrial Park did not meet the required conditions.
Accordingly, the Court dismissed the writ petition filed by Pantheon Infrastructure Private Limited, refusing to interfere with the Central Government’s decision to withdraw the tax exemptions retrospectively.

To Read the full text of the Order CLICK HERE

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