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High Court Of ChhattisgarhWPT/171/2016allowed

M/S Real Ispat And Power Ltd. v. State Of Chhattisgarh

2020-11-09Hon'Ble Shri Justice P. Sam Koshy29 pages

NAFR HIGH COURT OF CHHATTISGARH, BILASPUR Writ Petition (T) No. 3909 of 2011 Reserved on 26.06.2020 Delivered on 09/11/2020

1. Shri Bajrang Power and Ispate Limited, a company duly registered under the Companies Act, 1956 at village Borjhara Industrial State, Urla and Guma, Raipur through its Director Shri Rajendra Goyal, S/o Hariram Goyal, aged about 53 years, resident of new Timber Market, Fafadih, Raipur

2. Shri Rajedra Goyal, S/o Hariram Goyal, aged about 53 years, resident of new Timber Market, Fafadih, Raipur.

---- Petitioners

Versus

1. State Of Chhattisgarh through Secretary , Department of Commercial Taxes, DKS Bhawan, Mantralaya, Raipur, Chhattisgarh

1. State Of Chhattisgarh through Secretary, Department of Industries and Commerce, DKS, Mantralaya Bhawan , Raipur, Chhattisgarh

2. Commissioner, Department of Commercial Taxes, Vanijya Kar Bhawan, Civil Lines, Raipur, C.G.

3. Commercial Tax Officer, Circle-5, Raipur, Chhattisgarh ---- Respondents WPT No. 33 of 2016

1. Shri Bajrang Power and Ispat Limited, a Company Duly Registered Under The Companies Act, 1956, having its Office and Works at Village Borjhara Industrial State, Urla And Guma, Raipur, through its Authorized Signatory and Director Shri S. K. Goyal, S/o Shri B. P. Goyal aged About 49 Years, R/o Flat No. 4C, Block C, Merlin Jaishree Vihar, P. S. And P. O. Pandri, Raipur., Chhattisgarh

2. Shri S. K. Goyal, S/o Shri B. P. Goyal, aged About 49 Years R/o Flat No. 4 C, Block C, Merlin Jaishree Vihar, P. S. And P. O. Pandri, Raipur, Chhattisgarh ---- Petitioners

Versus

1. State Of Chhattisgarh through Secretary, Department Of Industries and Commerce, Mantralaya Naya, Raipur, District Raipur, Chhattisgarh., Chhattisgarh

2. State Of Chhattisgarh, through Secretary, Department Of Commercial Taxes, Mantralaya, Naya Raipur, District Raipur Chhattisgarh

3. Directorate Of Industries, Udyog Bhawan, Ring Road No. 1, Opposite Sonakhan Building, Raipur Chhattisgarh

4. State Appellate Forum, Department Of Commerce and Industries, Mantralaya, Naya Raipur, District Raipur Chhattisgarh

5. Chief Manager, District Trade and Industries Centre, Raipur, District Raipur, Chhattisgarh ---- Respondents WPT No. 37 of 2017

1. Shri Bajrang Power and Ispat Limited, A Company Duly Registered Under The Companies Act, 1956, having its Office and Works At Village Borjhara Industrial State, P.S. And P.O. Urla And Guma, Raipur, Through Its Authorized Signatory And Director Shri Rajendra Goyal S/o Shri Hari Ram Goyal, Aged About 59 Years R/o Gurudwara Raod, Hari Kripa, Pandri, Raipur, Chhattisgarh

2. Shri Rajendra Goyal S/o Shri Hari Ram Goyal Aged About 59 Years R/o Gurudwara Raod, Hari Kripa, Pandri, Raipur, Chhattisgarh- ---- Petitioners

Versus

1. State Of Chhattisgarh Through Secretary, Finance, Mantralaya, Naya Raipur, Chhattisgarh, Chhattisgarh

2. Secretary Industries and Commerce Department, Mantralaya, Naya Raipur, Chhattisgarh

3. Commissioner Of Commercial Taxes, Civil Lines, Raipur, Chhattisgarh

4. Divisional Deputy Commissioner Of Commercial Tax Division - Il, Raipur, Chhattisgarh ---- Respondents WPT No. 75 of 2012 Shri Bajrang Power and Ispat Limited duly Registered under the Companies Act, 1956 having its registered office and works at Village Borjhara, Guma Road, Urla, Raipur, Through Authorized Signatory Shri Sharavan Kumar Goyal, S/o Shri B.P. Goyal, aged about 47 years R/o Flat 4C, Block C, Merlin Jayshree Vihar, Mandi Road, Pandari, RaipurChhattisgarh ---- Petitioner

Versus

2. State Of Chhattisgarh, through Secretary, Department Of Commercial Taxes, DKS Bhawan Mantralaya, Naya Raipur, Chhattisgarh

2. Commissioner Of Commercial Taxes Civil Lines Raipur C.G.

3. Dy. Commissioner Commercial Tax Circle-1, Raipur C.G.,

4. Commercial Tax Officer Circle-9, Raipur C.G., District : Raipur, Chhattisgarh ---- Respondents WPT No. 96 of 2016

1. Shri Bajrang Power and Ispat Limited, a Company duly Registered under The Companies Act, 1956, having its Office and Works at Village Borjhara Industrial State, P. S. & P. O. Urla and Guma, Raipur, through its authorized signatory and Director Shri Rajendra Goel, S/o Lt. Hari Ram Goal, aged about 59 Years, R/o Gurudwara Road, Hari Kripa, Ravi Nagar, Pandri, Raipur Chhattisgarh

2. Shri Rajendra Goel, S/o Lt. Hari Ram Goal, aged About 59 Years R/o Gurudwara Road, Hari Kripa, Ravi Nagar, Pandri, Raipur Chhattisgarh ---- Petitioners

Versus

1. State Of Chhattisgarh, through Secretary, Commercial Tax Department, Mantralaya, Naya Raipur, Chhattisgarh

2. Secretary, Industries and Commerce Department, Mantralaya, Naya Raipur, Chhattisgarh

3. Commissioner Of Commercial Taxes, Civil Lines Raipur Chhattisgarh

4. Divisional Deputy Commissioner Of Commercial Tax, Division Il, Raipur Chhattisgarh ---- Respondents WPT No. 147 of 2015

1. M/s Shri Bajrang Power and Ispat Limited, a Company duly registered under The Companies Act, 1956, having its Office and Works at Village Borjhara Industrial State, P. S. And P. O. Urla And Guma, Raipur, through its Director Shri S. K. Goyal, S/o Shri B. P. Goyal, Aged About 47 Years, R/o Flat No. 4C, Block C, Merlin Jaishree Vihar, Pandri, Raipur. Chhattisgarh.

2. Shri S. K. Goyal, S/o Shri B. P. Goyal, aged about 47 Years R/o Flat No. 4C, Block C, Merlin Jaishree Vihar, P. S. & P. O. Pandri, Raipur. Chhattisgarh ---- Petitioners

Versus

1. State Of Chhattisgarh through Secretary, Finance, Mantralaya, Naya Raipur, Chhattisgarh

2. Secretary Industries and Commerce Department, Mantralaya, Naya Raipur, Chhattisgarh

3. Commissioner Of Commercial Taxes, Civil Lines Raipur Chhattisgarh

4. Deputy Commissioner Commercial Tax Division - Il, Raipur Chhattisgarh ---- Respondents WPT No. 171 of 2016

1. M/s Real Ispat and Power Ltd. having its works at Urla Bendri Road, Borjhara, Raipur and office at Vrindavan, Near IDBI Bank, Civil Lines, Raipur Chhattisgarh through its Director and authorized signatory Mr. Ritesh Jindal, S/o Shri Kuldeep Agrawal, aged about 37 Years, R/o B103, CG Heights, Mova, Raipur Chhattisgarh

2. Mr. Ritesh Jindal, S/o Shri Kuldeep Agrawal, aged about 37 Years R/o B- 103, CG Heights, Mova, Raipur Chhattisgarh ---- Petitioners

Versus

1. State Of Chhattisgarh, through Secretary, Department Of Industries and Commerce, Mantralaya, Naya Raipur, District Raipur Chhattisgarh

2. State Of Chhattisgarh, through Secretary, Department Of Commercial Taxes, Mantralaya, Naya Raipur, District Raipur Chhattisgarh

3. Directorate Of Industries, Udyog Bhawan, Ring Road No. 1, Opposite Sonakhan Building, Raipur Chhattisgarh

4. State Appellate Forum, Department Of Commerce and Industries, Mantralaya, Naya Raipur, District Raipur Chhattisgarh

5. Cheif Manager, District Trade and Industries Centre, Raipur, District Raipur Chhattisgarh ---- Respondents

For Petitioners :

Mr. Neelabh Dubey, Advocate For State :

Mr. Alok Bakshi, Addl. AG Hon'ble Shri Justice P. Sam Koshy C.A.V. ORDER 1.

These are seven writ petitions wherein the same common question of law is to be decided. Since the issues were common, this Court proceeds to decide these bunch cases by a common judgment. 2.

The brief facts of the case relevant for adjudication of these bunch cases are that based upon the benefits enshrined under the Chhattisgarh State Industrial Policy 2004-2009 the petitioners have set up a company with its industrial unit in the State of Chhattisgarh. Under the said Industrial Policy of 2004-2009 fixed capital cost subsidy was to be provided to those companies to the extent of capital investment made for setting up of the industry. The petitioners as such were entitled for 25% of the total capital investment as subsidy by way of tax adjustment under the aforementioned industrial Policy. 3.

Upon the petitioner approaching the authorities claiming for the said aforementioned subsidy an eligibility certificate was issued granting the petitioners a total subsidy of Rs. 12,81,44,310/-. In spite of having obtained the eligibility certificate for an amount of Rs. 12,81,44,310 the respondents did not adjust the same against the payment of VAT/CST. On the contrary demand notices were being raised by the respondents for recovering the VAT/CST. A similar demand raised in the subsequent years all of which are under challenge by way of separate Writ Petitions all of which are connected today for adjudication. This has led to the

filing of the first Writ Petition WPT No.3909/2011 and other writ petitions are challenging the demand notices of the subsequent years. That an interim relief also to the extent that no coercive steps shall be taken against the petitioners till the next date of hearing is operating in favour of the petitioners. \ 4.

Without granting any adjustment to the subsidy that the petitioner was entitled for the respondents raised a tax demand vide assessment order dated 27.02.2009. Meanwhile, Government vide notification dated 10.08.2011 introduced a cap of Rs. 3 Crores to the subsidy being made available to the companies like that of the petitioner. Later on, The State Level Committee in its meeting held on 31.05.2013 recalled/reviewed its earlier decision dated 18.02.2009 granting subsidy to the tune of Rs. 12,81,44,310/- and held that the benefit of subsidy shall be applicable to only those establishments where the captive power plant is generating power for its own use and not under any other circumstance. This has led to the filing of the another writ petition i.e. WPT 33/2016 and WPT 171/16 challenging the said aforesaid decision of the State Level Committee dated 31.05.2013 which again is clubbed with these bunch of writ petition.

5.

The common question of law to be adjudicated in the present writ petition firstly is whether the benefits already granted to the petitioner as promised under the Industrial Policy 2004-09 can be withdrawn later on only in the light of change of opinion of the respondents. The second question of law, to be considered is as to the definition of captive power plant for the purpose of determining whether the

petitioners would be entitled for the benefit of exemption of capital investment made in the captive power plant.

6.

As regards, the question of law in respect of whether the petitioners would be entitled for the benefit of promised subsidy as per the industrial policy of 2004-09 is concerned. The said issue as of now stands settled by a recent judgment of Division Bench of this Court in the case of the petitioners establishment itself in WPT 36/2013 decided on 04.10.2019. The Division Bench dealing with the subject matter at length after discussing the various judicial pronouncements in Paragraph 31, 32, 33, 34 & 35 has held as under :- "31.

The very word 'Policy' contemplates something which either deals with the 'present' or the 'future'. There cannot be any Policy in respect of a transaction which had already occurred in the past, as the change sought to be made in the Policy cannot convert the event already occurred. In other words, a Policy evolved later, after expiry of the 'Policy period', can't guide or navigate a course of action already implemented based on the terms of the 'Policy' existed at that time. The benefit provided under the Policy '2004-2009',as it existed earlier and as covered by the Rules notified in this regard were sought to be altered by the State only after expiry of the said Policy period, by issuing a Notification in the year '2011'.

No 'Notification' or 'instruction' could have amended the 'Rules' framed and notified in this regard and in fact, amendment of the Rules came only in the year '2012'.By the time the amended Policy/Rules was issued, the Petitioners had already acted upon the promise/concessions offered by the Respondent-State and had pumped in necessary investments and set up the Industry in the State by virtue of which, they had acquired the right to get the investment subsidy in terms of the subsisting Policy / Rules which governed the field during the Policy period.

Policy for the year '2009-2014' was notified by the Government w.e.f. 17.01.2015. It was after notification of the 'new Policy', that the Government thought of introducing a 'further cap' to the already expired Policy (2004-2009), simply stating that it was an omissionor mistake to be rectified. In other words, the attempt of the Government was to re-write the terms of the Policy / Rules which were formulated and notified (specifically incorporated in the Agreement), making the industrialists like the Petitioners to have acted upon it. After having acquired the desired results in the State, it was never open for the State to have turned its back on such entrepreneurs, curtailing their benefits as flowing from the Offer / Policy / Rules / Agreement, as originally provided. 32.

Yet another important aspect to be noted is that the extent of benefit available to the Petitioners were clearly laid down and it was with reference to the said extent of benefit in mind, that the investment was made by the Petitioners. By virtue of the said investment, the benefit obtainable to them (in terms of money /subsidy) was quite certain and this would have naturally weighed much with the Petitioners in having fixed the 'market price' of their products. In other words, the cost of raw materials, cost of labour, quantum of statutory payments, cost of transportation, cost of electricity and such other heads etc. matter muchin the fixation of 'sale price', also providing a reasonable extent of profit.

The commodity thus manufactured fixing the 'sale price' (based on the above factors, also reckoning the element of 'investment subsidy' surely to get as offered / assured as per the notified Industrial Policy / Rules)has already been marketed and as such, if the amount payable towards the Investment Subsidy as per the original terms of the Policy / Rules is sought to be denied after expiry of the Policy period, it will simply result in rupturing the financial base of the Petitioners, as the unconscionable financial burden cannot be recovered by them 'by resetting the sale price 'of the commodity which they had already sold out. To put it more clear,the clock cannot be reset to have a level playing field.

have more profit for the State by fixing an"additional cap" in respect of the quantum of Investment Subsidy is not liable to be considered as mistake to be rectified in public interest, but for re-writing the terms of contract. The State, in its attempt to generate revenue, can tap any source, but care has to be taken, to see that the source itself is not let to be dried up.

33.

We are of the view that the Petitioners have made out a case that they were having 'Legitimate Expectation' to have had the benefits flowing from the Industrial Policy for year 2004-2009 and incorporated as part of the Rules notified and existed throughout the Policy period. This is more so since, similar terms of benefit were offered in the Industrial Policy originally notified for the period 20012006, in respect of which, no plea is raised from the part of the State as to any mistake having occurred therein. Admittedly, the said Policy was prematurely terminated and anew Policy was introduced for the period 2004-2009; when also the need to fix any "additional capping of benefit" was never felt by the Government. As such, the explanation now offered from the part of the Government, that it was only a mistake, which required to be rectified in 'public interest' does not hold any water at all. 34.

In the above facts and circumstances, we are of the firm view that the course of action pursued by the Respondent-State in the case of the Petitioners herein, curtailing the benefit of Investment Subsidy, which ought to have been extended to them on the strength of the original Industrial Policy 2004-2009 and declared in the Investment Subsidy Rules, 2005 (as originally notified in the Gazette) is not correct or proper. It is declared that the Petitioners are entitled to have the benefit of Investment Subsidy to an extent of 25% of the infrastructure cost, subject to a ceiling of the Sales Tax / VAT / CST paid in the State for the first 'five' years. In the said circumstances, all the orders / proceedings passed in the case of the Petitioners, insofar as they stand against said declaration are set aside. The Respondents are directed to compute the benefits based on the investments made as per the terms of the Industrial Policy 2004-2009 and the relevant

Rules as originally notified and given effect to as per the terms of the Agreement executed in between. This shall be done, issuing necessary Certificate so as to enable the Petitioners to avail the benefit as above as expeditiously as possible; at any rate, without 'two months' from today. 35.

Considering the persuasive submission made by the learned Advocate General, that the State might be permitted to set off the subsidy amount to be disbursed to the Petitioners against subsequent / remaining the tax liability to be cleared by the Petitioners, considering the totality of the facts and circumstances involved, we permit the Respondents-State to set off / adjust the investment subsidy payable to the Petitioners, against the tax liability to be cleared by the Petitioners in respect of any past,present or future transactions.

The writ petitions are allowed. No costs."

7.

In view of the aforesaid authoritative pronouncement by the Division Bench of this Court and which has attained finality, the said issue need not be reconsidered by this Court, particularly, sitting singlely. As a consequence in the light of the judgment of the Division Bench, the said issue stands answered in favour of the petitioner holding that petitioner thereby entitled for the subsidy as was promised and offered in the industrial policy 2004-09.

8.

Now comes the second issue involved in these bunch of writ petitions and for which primarily there are two writ petitions in respect of second issue i.e. WPT No.33/2016 & WPT No.171/2016. The second issue involved in these bunch of writ petitions is as to whether the decision of the State Level Committee concluding that subsidy to a captive power plant would be paid only to those captive power plants where the generated electricity is only for its own use and not as defined under

Central Legislation i.e. Electricity Act 2003 and Electricity Rules framed thereunder of 2005.

9.

The reason why these two set of writ petitions are taken up together is that even though the other 5 writ petitions other than WPT 33/2016 & WPT 171/2016 stands allowed in the light of the Division Bench judgment of this Court in WPT 36/2013 dated 04.10.2019, the petitioner would not be able to reap the benefits for the reason which is under challenge in these two writ petitions. i.e. WPT 33/2016 & WPT 171/2016 whereby the decision of the State Level Committee have deprived the petitioners the benefit of subsidy on account of given captive power plant a different interpretation other than what is defined under the Central law and Rules. Therefore unless the petitioners succeeds in these two writ petitions the allowing of the other five writ petitions would be of no consequence. As per the State Level Committee's decision dated 31.05.

2013 the notification granting subsidy would be only to those captive power plant which generates electricity for its own use which in other words has been interpreted as, the moment a captive power plant sells even a small portion of surplus electricity generated they would be excluded from the category of captive power plants for the purpose of getting the benefit of subsidy. 10.

It is pertinent to mention at this juncture that decision of the State Level Committee dated 31.05.2013 was also challenged by the petitioners before State Appellate Tribunal in an appeal and the Tribunal also vide its judgment dated 09.10.2015 in both the aforesaid two writ petitions confirmed the order of the State Level Committee and dismissed the

appeals of the petitioners leading to the filing of the present writ petition. 11.

The contention of the petitioner while challenging the action on the part of the respondents so far as denying the grant of subsidy is concerned, was that, once when the respondents had taken a policy decision of granting Infrastructure Cost Fixed Capital Investment Subsidy under the Industrial Policy of 2004-2009, there was no occasion that the respondents to have turned around and withdrawn the said benefit earlier granted. It was also the contention of the petitioner that before withdrawing the said benefit, the petitioners were not granted an opportunity of hearing, which was otherwise necessarily required. According to the petitioner, since the consequences of the decision of the State level committee dated 31.05.

2013 has an adverse civil consequence which in the instant case was a direct loss of huge monetary subsidy it was incumbent upon the respondents to have at least granted a fair opportunity of hearing to the petitioner before taking such a decision. It was all the more required particularly when the decision was being taken after a period of more than four years from the date when the same State level committee had ordered for grant of subsidy to the petitioner. According to the petitioner, the averments made in the order that the petitioners were noticed and they refused to appear before the authorities nor having submitted any explanation is only a paper work and that no such steps have been taken by the respondents in calling upon the petitioners to provide for an explanation before the decision was taken.

12.

It was the further contention of the petitioner that the decision on the

part of the respondents while passing the order dated 31.05.2013 is by providing wrong interpretation to the provisions of law as it stands. According to the petitioners, the respondents have given an interpretation in total contravention to the statutory provisions as has enacted by the Central Government both under the Electricity Act as also under the Rules framed therein. According to the counsel for the petitioners, any interpretation that the petitioners intend to give has to be in-consonance with the law and it cannot be violative of the law nor can the respondents give a restricted interpretation to the term "Captive Power Plant" other than what it is defined under the Electricity Act. The counsel for the petitioners in support of his contention relied upon 2001 SCC Online M.P. 519, (2016) 1 SCC 780, (2006) 8 SCC 702, (2000) 5 SCC 271, (1997) SCC Online M.P. 449, (1996) SCC Online M.P. 618 in support of his contention.

13.

According to the counsel for the petitioners, the second question of law to be considered in the present case also has to be decided keeping in mind the views expressed by the Division Bench of this Court in the case of petitioner's establishment in WP(T) No. 36 of 2013, decided on 04.10.2019.

14.

According to the counsel for the petitioners, the petitioners also have a legitimate expectation for grant of the subsidy, for the reason that the investment put in by the petitioner was keeping in view the incentives provided by the State Government under their Industrial Policy 20042009. According to the counsel for the petitioners, the State Level Committee cannot be expected to take a different interpretation than

what it had given at the time of granting the subsidy when the respondents had interpreted the definition of captive power plant in terms of the specific law relating to electricity i.e the Electricity Act, 2003 and the Electricity Rules, 2005. According to the counsel for the petitioners, the interpretations which the State or the State Level Committee has applied or has provided would be leading to absurdity or creating a situation where there shall be huge amount of wastage of power.

15.

According to the counsel for the petitioners under the Industrial Policy, there is no definition provided for the term "Captive Power Plant" and in the absence of a definition in the industrial policy, it is the definition available under the Electricity Act and the Electricity Rules which will prevail. That it was the said provision of law which was applied by the State Level Committee at the first instance, while granting the eligibility certificate to the petitioner's unit/company. According to the counsel for the petitioners, the interpretation given by the respondents also would not be sustainable for the reason that the State themselves in the course of framing the subsequent Industrial Policy for 2009-2014 in order to avoid any ambiguity and also to avoid confusion have used the term only captive power plant and have omitted the words "for its own use" which was there in the policy of 2004-2009. 16.

Per contra, Mr. Alok Bakshi, learned Additional A.G. representing the State, opposing the petition submitted that the petitioners do not have a case to make out for the reason that similar reliefs of the other Industrial establishments also have been refused or rejected as would be evident

from the plain reading of the impugned order passed by the State Level Committee on 31.05.2013. According to the State counsel, the decision of the State Level Committee is as a matter of policy based upon the notification issued by the State Government and which has been applied and since it is a policy decision particularly on revenue matters, there is hardly any scope of interference available for the Writ Court under Article 226 of the Constitution of India. The State counsel while referring to the judgment of the Division Bench of this Court in WPT No. 33/2016 submitted that since the notification dated 10.08.2011 applying the same retrospectively, the same now stands settled and decided. According to him the question now to be considered is only the veracity of the order dated 31.05.2013 by which the petitioners establishment stands excluded from getting the benefit of subsidy. . 17.

According to the State counsel, the earlier decision granting subsidy to the petitioners was erroneously granted without proper consideration of the contents of the Industrial Policy. According to the State counsel clause 17 "NRrhlx<+ jkT; v/kkslajpuk ykxr LFkk;h iwath fuos'k vuqnku fu;e] 2004" deals with the Power Supply Investment and in Note (2) of clause 17 of the same, the provision for grant of subsidy is made available, to only those Captive Power Plants, which have been installed only for meeting the power requirement of the Industrial Establishment. According to the State counsel, this use of the terminology of the use of power generated from a Captive Power Plant only for the requirement of the Industrial Establishment was not properly construed by the State Level Committee when the subsidy was granted earlier. Therefore the State Level Committee had in its meeting held on 31.05.2013 suo motu

reviewed their decision and reached to the conclusion that the petitioners Captive Power Plants and the power generated therefrom was not just being consumed to the extent of the power requirement of the petitioners establishment alone, but there was surplus power also which the petitioners establishment were selling, thereby they would be dis-entitled for the benefit of subsidy and thus the earlier order was recalled.

18.

According to the State counsel, there is no dispute so far as the definition of Captive Power Plant that which is provided under the Electricity Law, however it was contended that as regards the State Government and its policy decision for grant of subsidy on investment is concerned, the same are subject to the conditions available under the industrial policy itself and under the policy clause 17 which is referred to in the preceding paragraph. It is specifically numerated that the benefit can be extended only to those Industrial Establishments where its Captive Power Plant is generating electricity only to the extent required by the Industrial Establishment and not anything surplus. 19.

According to the State counsel there isn't any ambiguity on the said reading of clause 17 which clearly reflects that the certificate of Electrical Inspector would be required for grant of subsidy only in the event if the Captive Power Plant established by the industry supply its entire generated electricity to the concerned Industrial Establishment alone, which in other words, according to the State counsel means it would not be applicable to any of those Industrial Establishment which have got surplus power over and above its consumption at their own

establishment.

20.

According to the State counsel, even the argument of the petitioners that the respondents have applied the policy with a retrospective effect is not sustainable for the reason that it was only a review of an earlier decision, it was not new provision of law introduced, inserted or brought into force by the respondents by giving a retrospective effect. According to the State counsel, in case if the State Level Committee at the first instance had taken an erroneous decision granting the benefit of subsidy to the petitioners, it does not mean that the error so committed by the said State Level Committee cannot be rectified by recalling the same and by giving a proper and meaningful interpretation. It was the further contention of the learned Additional A.G.

that even otherwise, the petitioners establishment would not be entitled for the benefit of subsidy for the reason that the Industrial Policy, 2004-09 itself was amended on 10.08.2011 wherein by way of an amendment the respondents had put an upper limit of Rs.3 crores, so far as the granting of subsidy is concerned and this amendment to the policy was given effect from 01.11.2004 and therefore as per the said amendment of 2011 also, the petitioner at best could have got only the subsidy of Rs.3 crores and not more.

21.

According to the State counsel, the Government of Chhattisgarh had vide their notification dated 18.08.2005 framed the "NRrhlx<+ jkT; v/kkslajpuk ykxr LFkk;h iwath fuos'k vuqnku fu;e] 2004" and under the said Rules, clause 17 defines "fo|qr vkiwfrZ fuos'k" and it is the simple reading of the said definition, which has been taken into consideration by the

State Level Committee, while passing the impugned order dated 31.05.2013, which has also been affirmed by the State Appellate Forum vide its order dated 09.10.2015. According to the State counsel, once when the aforesaid Rules of 2005 gives a very specific and unambiguous meaning to the provisions, there is no requirement of searching for the definition of Captive Power Plant under other statutes for the purpose of its applicability for getting the benefit of subsidy under the Industrial Policy. Thus, the State counsel prayed for the dismissal of the bunch of the writ petitions holding it to be devoid of merits.

22.

Having heard the counsel for the parties, what stands undisputed is the fact that the petitioners herein had established their business of manufacturing and selling of Sponge Iron. The petitioners when they had thought of establishing the said Sponge Iron plant. The State Government had framed an industrial policy which was known as Industrial Policy 2004-09. In the said industrial policy, the State Government had framed the industrial policy ensuring promotion of new industries to be established in the State of Chhattisgarh. In order to attract more and more Business Enterprises establishing industrial units in the State of Chhattisgarh, the State Government had given certain incentives in the industrial policy. One such policy was that of granting State Infrastructure Cost Fixed Capital Investment Subsidy.

Granting of the subsidy is a sort of financial assistance provided to the new establishment which is to be setup and the financial assistance is in the from of subsidy.

as subsidy. Finding the industrial policy and the incentives provided therein, the petitioners sought of setting of a plant in the State of Chhattisgarh and which they did foreseeing the incentives so provided in the policy.

23.

The petitioners thereafter having made the investment in a Captive Power Plant approached the authorities claiming for the benefit of subsidy. The State Level Committee in its meeting on 18.02.2009 took a decision to grant eligibility certificate entitling the petitioners the benefit of subsidy to the extent of Rs.12,81,44,310/- as subsidy. Though the State Level Committee took a decision and the authorities in the State Government issued eligibility certificate, but the petitioners were never provided with the refund of subsidy or adjustment of the same against the subsequent liability.

The petitioners had been repeatedly approaching the authorities claiming for adjustment of the tax liability against the incentives that the petitioners are entitled for, which the respondents did not respond and meanwhile the respondents raised the demand notice against the assessment order dated 27.02.2009 and later on the authorities also were able to get a revenue recovery certificate issued against the petitioners against the assessment order dated 27.02.2009 and similar demand notices have raised by the respondents in the subsequent years also. It is this demand notice issued in the different years, which are under challenge in this bunch of writ petitions except for WPT No. 33/2016 & WPT 171/2016.

In all the writ petitions, petitioners were granted interim protection by this Court to the extent of restraining the respondents not to take any coercive steps against the petitioners.

24.

The provisions regarding grant of subsidy subsequently stood amended on 10-08-11, to the extent of the State Government introducing an upper cap of Rs.300 Lacs (i.e. Rs.3 Crores) as subsidy to the companies. Later on the State Level Committee in its 23rd meeting held on 31.05.2013 reviewed its earlier decision dated 18.02.2009 and recalled the order and held that the petitioners would not be entitled for the benefit of subsidy at all. The decision so taken by the State Level Committee is on the ground that the petitioners establishment does not fall within the definition of Captive Power Plant for the reason that the Captive Power Plant established by the petitioners not only generates electricity for self consumption but is generating electricity much more than required for themselves. It is this decision dated 31.05.2013 and which has also been affirmed by the Tribunal on 09-10-15, which has been challenged by the petitioners.

25.

As has been discussed in the preceding paragraphs, the bunch of seven writ petitions have been classified in two groups, one where the challenge is only to the demand notice raised by the respondents without giving any adjustment to the amount of subsidy that the petitioners were entitled for and the second batch consists of two writ petitions i.e. WPT Nos. 33/2016 & 171/2016, whereby the challenge is to the decision of the State Level Committee dated 31.05.2013 holding that the petitioners are not entitled for any subsidy for the investment made in the Captive Power Plant.

26.

Since the first question of law already stands decided by this Court in the preceding paragraphs, relying upon the decision of the Division

Bench of this Court in WP(T) No. 36/2013, the relevant paragraphs of which are already reproduced. All what now needs to be discussed is that, whether the decision of the State Level Committee denying the benefit of subsidy to the petitioner on the sole interpretation to the term "Captive Power Plant" as referred to in the Chhattisgarh Rajya Adosanrachna Lagat Sthaai Punji Nivesh Anudan Niyam, 2004 is proper legal and justified .

27.

Before dealing with the legality of the said issue, it would be appropriate at this juncture to consider the definition of "Captive Power Plant" under the mother act i.e., Electricity Act, 2003 where captive generating plant is defined under Section 2 (8), for ready reference the same is reproduced here-in-under.

" "Captive generating plant" means a power plant set up by any person to generate electricity primarily for his own use and includes a power plant set up by any co-operative society or association of persons for generating electricity primarily for use of members of such co-operative society or associations." 28.

In exercise of the powers conferred under the provision of the Electricity Act, the Central Electricity Board had also framed the Electricity Rules of 2005. The said rules envisages the requirement of captive generating plant, the relevant portion of which in the instant case is Rule 3(1) is reproduced here-in-under:

"(1) No power plant shall qualify as a 'Captive Generating Plant' under section 9 read with clause (8) of section 2 of the Act unless- (a) in case of a power plant- (i) not less than twenty six per cent. of the ownership is held by the captive user(s) and

(ii) not less than fifty one per cent. of the aggregate electricity generated in such plant, determined on an annual basis, is consumed for the captive use"

29.

So also it is relevant at this juncture to refer to Clause 2 of sub-rule 2 of rule 3 which again for ready reference is reproduced here-in-under: "(2) It shall be the obligation of the captive users to ensure that the consumption by the captive users at the percentages mentioned in subclauses (a) and (b) of sub-rule (1) above is maintained and in case the minimum percentage of captive use is not complied with in any year, the entire electricity generated shall be treated as if it is a supply of electricity by a generating company.

Explanation.- (1) For the purpose of this rule,- (a) "annual basis" shall be determined based on a financial year; (b) "captive user" shall mean the end user of the electricity generated in a Captive Generating Plant and the term "captive user" shall be construed accordingly."

30.

Another fact which needs consideration at this juncture is that the Industrial Policy of 2004-2009 does not anywhere define captive power plant and the objective of the industrial policy of the State Government was to encourage captive power generation so as to provide low cost power. The policy is also framed to promote the different business houses to invest in the State of Chhattisgarh and for which they would also be given incentives for the investment that they would make. That all this is primarily done with the motive of firstly, development of the State and secondly creating additional employment opportunities for the unemployed within the State. Under the action plan for basic infrastructure, it was decided by the authorities to provide incentives for captive power generation. It was taking this into consideration the policy

of 2004-2009 was framed and based on this policy and the motive behind the policy that the State Level Committee at the first instance in its meeting held on 18.02.2009 ordered in favour of the petitioner entitling them the benefit of Infrastructure Cost/Fixed Capital Investment Subsidy. Once when the decision on 18.02.2009 granting the subsidy of Rs 12,81,44,310/- the required Eligibility Certificate also was issued in this regard vide their order dated 23.02.2010 there was no occasion for the respondents to have gone back on this decision. It would also be relevant at this juncture to refer to the aforementioned Rules of 2004 wherein Clause 17 of Appendix -I Vidyut Apoorti Nivesh has been described as under:

" " fo+|qr vkiwfrZ fuos'k " ls vfHkizsr fdlh uohu vS|ksfxd bdkbZ ;k fdlh fo| eku m|ksx dh foLrkfjr bdkbZ esa mRiknu izkjaHk djus ds fy;s fo|qr iznk; dh O;oLFkk djus gsrq fo|qr la;kstu ds fy;s NRrhlx<+ jkT; fo|qr eaMy@mlds mRrjkf/kdkjh midzeksa dks Hkqxrku dh xbZ jkf'k rFkk mlls lacaf/kr v/kkslajpuk ij O;; dh x;h jk'kh ls gS A Vhi% & (1) Hkqxrku dh xbZ jkf'k esa flD;wfjVh fMikftr rFkk NRrhlx<+ jkT; fo|qr eaMy ds iqjkus ns;dksa dh jkf'k lfEefyr ugh dh tkosxh A

(2) ;fn dsfIVo fo|qr la;= dh LFkkiuk dsoy Lo;a ds m|ksx dks fo|qr vkiwfrZ gsrq dh tkrh gS rks ml ij fd, x, fuos'k dks " fo+|qr vkiwfrZ fuos'k " ds rgr ekU; fd;k tkosxk ftlds fy, fo|qr fujh{kd dk izek.k i= vko';d gksxk A "

31.

The basic contention raised by the respondents is that for the petitioner to avail the benefit of subsidy, the only criteria that is required is the power that is generated from the Captive Power Plant has to be used by the petitioner themselves. What has to be visualized at this juncture is that the power that is generated cannot be stored. Whatever power that is generated has to be consumed or else the power would get

wasted. What is also to be visualized is the fact that the requirement of power may fluctuate from one month to another depending upon various factors primarily the climatic conditions and also the production, that is to be made in a particular period of time and therefore it would not be possible for any establishment to decide the fixed amount of power that has to be generated and in a given month in case, if the demand falls, the only option available to the petitioner would be to give it to some third agency, which could also be the State Government and in that circumstances if the arguments advanced by the respondents are to apply then this Court has no hesitation in presuming that the benefit of subsidy would not be reaped by any person or any establishment.

The policy thus framed would be a redundant or a policy only for name sake, the benefit of which cannot be availed by any establishment as such. This thus in the opinion of the Court was never the intention and the object, firstly while framing the industrial policy, 2004-2009 and secondly while also framing the aforementioned Vidyut Aapurti Nivesh Rules, 2004.

32.

It is not to be forgotten that it was for this reason that the State Level Committee at the first instance had granted the benefit to the petitioner by allowing the subsidy of Rs.12,81,44,310/-. Another aspect, which again needs consideration is that in the subsequent industrial policy also, the State Government has not given the interpretation that they are applying in the present writ petition. The term 'Captive Power Plant' has not been defined anywhere in the industrial policy, nor does the industrial policy envisages that the term 'Captive Power Plant' would be that which would be reflected in the Vidyut Aapurti Nivesh Rules, 2004.

Thus, in the absence of specific definition of 'Captive Power Plant' in the industrial policy, the only recourse that could be adopted was to accept the definition of 'Captive Power Plant' as defined under the Electricity Law i.e. under the Electricity Act as also under the Rules framed under the Electricity Act. The definition of which has already been reproduced in the preceding paragraph.

33.

The plain reading of the definition of Captive Power Plant under the Electricity Act would clearly spell out that the definition so provided was taking note of the fact that the requirement of power in an establishment can never be static, it would most of the time fluctuate depending upon various factors and that is why in the definition the Law makers thought of holding that Captive Power Plant would be those where the majority of power generated is consumed by the establishment itself and which in the afore given factual backdrop makes sense and also seems to be logical. At the same time the contention of the State if applied, it may lead to absurdity and also would be giving a negative impact on the industrial policy and the investors as a whole, which again would be far more detrimental to the State in its progress. 34.

Considering the aforesaid facts and circumstances, particularly in the backdrop of there being no specific definition of captive power plant in the industrial policy under which the petitioner's claims were being processed, the safest recourse that could be resorted to was to rely upon the definition of captive power plant as is provided under the Electricity Act as also the Rules framed therein. 35.

Another aspect which needs consideration is that under the principles of

interpretation, what is to be seen is the most practicable meaning to a term that could be given, an interpretation which is impracticable and which may lead absurdity, has to be avoided. What also has to be considered is looking upon the basic intention of the policy makers. Given the factual circumstances and the purpose, intention and object in providing incentive to investors leads us to an indisputable conclusion that the intention of the policy makers was in providing certain amount of incentives to those persons who would also be investing on captive power plants so as to ensure uninterrupted supply of power so that the investors do not suffer on the production front. 36.

It is always a legitimate expectation of an investor of getting certain extra benefit in the course of making huge investment in a particular State. At the same time, the benefit so extended is for giving the booster to the investors by the State Government and while framing the policy, the respondents have not felt that the definition of captive power plant would not be what it is under the Electricity Act or it would be a different interpretation that would be given. Therefore it was assumed by the petitioner that the meaning would be the same as that is reflected in the Electricity Act and to add with it applying the same interpretation the State authorities at the first instance had issued the eligibility certificate.

power.

37.

Another aspect which needs consideration is that it is not a case of the respondents of the petitioner playing fraud of any manner while seeking the benefit or while obtaining the eligibility certificate. Having granted the eligibility certificate once, it could not have been lightly recalled without a fair and reasonable opportunity of explanation to the petitioner. From the proceedings drawn by the authorities it clearly reflects that though there is a reference of notice having been issued, there is no evidence of the notice being duly served and further it would also reflect that even on the admitted factual dates that are reflected when the notice was issued and the date of the impugned order would again give a clear indication that the authorities had not granted reasonable time to the petitioner to explain. 38.

Yet another ground which needs consideration is the fact that there cannot be a definition given to a captive power plant contrary and violative to the definition as provided under the Electricity Act and the Rules framed therein.

39.

So far as the legitimate expectation of the petitioner is concerned, the Division Bench of this Court in WPT No. 36/2013 has emphatically held that the petitioners have a justified legitimate expectation for grant of subsidy and the State authorities were also in the said judgment held to be estopped from going back on the promises made in the industrial policy applying the doctrine of Promissory Estoppel. 40.

In MRF Limited, Kottayam Vs.

Assistant Commissioner (Assessment), Sales Tax and Others, 2006 (8) SCC 702, the Hon'ble

Supreme Court has held as below:

" ..... It is now well settled by a series of decisions of this Court that the State authorities as well as its limbs like the Board covered by the sweep of Article 12 of the Constitution of India being treated as 'State' within the meaning of the said Article, can be made subject to the equitable doctrine of promissory estoppel in cases where because of their representation the party claiming estoppel has changed its position and if such an estoppel does not fly in the face of any statutory prohibition, absence of power and authority of the promisor and is otherwise not opposed to public interest, and also when equity in favour of the promise does not outweigh equity in favour of the promissor entitling the latter to legally get out of the promise......

MRF made a huge investment in the State of Kerala under a promise held to it that it would be granted exemption from payment of sales tax for a period of seven years. It was granted the eligibility certificate. The exemption order had also been passed. It is not open to or permissible for the State Government to seek to deprive MRF of the benefit of tax exemption in respect of its substantial investment in expansion in respect of compound rubber when the State Government had enjoyed the benefit from the investment made by the MRF in the form of industrial development in the State, contribution to labour and employment and also a huge benefit to the State exchequer...." 41.

In view of the aforesaid facts and circumstances of the case, the withdrawal of the benefit granted to the petitioner by the State level committee through its decision dated 31.5.2013 (Annexure P-7) and the order of the State Appellate Forum dated 9.10.2015 (Annexure P-21) is illegal and unjustified and is liable to be and is accordingly set aside/quashed with consequences to flow. Petitioner would be entitled for the benefit of subsidy in terms of the policy prevalent on the date of issuance of the eligibility certificate, that is, to the extent of Rs.12,81,44,310/-.

42.

As a result in continuation to the order passed by the Division Bench, it is hereby ordered in the present bunch of writ petitions also that State

Government shall adjust the subsidy payable to the petitioners against the tax liability either which is due to be received from the petitioners or by adjusting the same from the future taxes that petitioner shall have to pay to the State Government.

43.

Petitioners also would not be adversely affected from the upper cap of Rs. 3 Crore (300 Lakh) that was introduced by the State Government through the notification dated 10.8.2011, for the reason that the entitlement of the petitioner for subsidy was for a period of five years commencing from 5.4.2005 and expiring on 4.4.2010. Any change subsequent to this period getting expired would not have an adverse bearing so far as the claim of the petitioner is concerned. The introduction of an upper level of Rs.3 Crore (300 Lakh) could had been only prospective; it could not have been retrospective. 44.

For all the aforesaid reasons, Writ Petition stands allowed with consequences as discussed above.

Sd/- (P. Sam Koshy) Judge Rohit/Rahul/Ved2/Rahul/Sharad