Reimbursement of GST delayed due to Negligence of Tax Officer: Jammu & Kashmir and Ladakh HC directs to Pay 9% Interest [Read Order]

The High Court of Jammu & Kashmir and Ladakh directed to allow 9% interest on the delayed amount of Reimbursement of Goods and Service Tax (GST) due to negligence of the tax officer.

Greenland Cements Private Limited, the Petitioner is a Company producing/manufacturing cement in the Union Territory of Jammu & Kashmir. The Union Government introduced a scheme known as “Budgetary Support” instead of a grant of General Exemption and refund of goods and services tax where eligible.

The petitioner believed that the benefit is available under the General Exemption No. 61A. 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 per cent over and above the base employment limit which however, was subject to the condition that the Unit claiming the exemption shall not reduce regular employment after claiming exemption, and once such employment is reduced below one hundred twenty-five per cent of the base employment limit, the Unit shall be debarred from claiming the exemption in future. 

The petitioner for availing the benefit of the notification dated 06.02.2010 was approved by the Assistant Commissioner, Central Excise Division, Srinagar. The original order was reviewed by the Commissioner GST, Central Excise, Jammu & Kashmir, Jammu by which the appeal filed before the Commissioner, against the original order was rejected and the original order was affirmed.

The authority further certifies that the Unit holder has made new investments in fixed assets, completed the civil works of the storage yard for new material the grinding media in the raw mill, changed the liner plates, crusher parts, gearboxes, refractory bricks conveyor belts and replaced the VSK Klin from March 2014 to February 2017 to achieve the optimum level of production (100) tonnes per day.

It was 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.  

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. 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. 

The Court held that 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 is not correct.

A division bench comprising Justice Atul Sreedharan and Justice Mohan Lal held 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, the court imposed a penalty of 9% interest on the total amount due to the petitioner from 18.05.2017, 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, and delay in disbursing the reimbursement of GST has occurred.“

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