Partly allowed

M/S. Grainotech Industries Limited v. State of Maharashtra and Ors.

Bombay HC12 Dec 2014WP/6286/2014

Case brief

AI extract

What is this about?

In this writ petition, the High Court of Bombay directed the State Government to pay financial assistance to the petitioner for a specific period under the 2007 Scheme and granted liberty for further representations regarding the remaining period and tax waiver.

What did the court decide?

Directed State to pay financial assistance for period till 25 August 2013; liberty to represent for balance period and VAT waiver consideration.

M/S. Grainotech Industries Limited Vs State of… — Service and Employment | Bombay HC (2014)

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IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION

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WRIT PETITION NO. 6286 OF 2014

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M/s Grainotch Industries Ltd

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..Petitioner

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Vs.

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State of Maharashtra and Ors ..Respondents

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Mr. Ashutosh Kumbhakoni a/w Vaibhav Sugdhare and Samsher Garud and Vishwabhushan Kamble i/b Jayakar and Partners,for the Petitioner.

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Mr. V. B. Thadani, AGP,for the Respondent State.

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CORAM :- MOHIT S. SHAH, C.J. & B. P. COLABAWALLA, J.

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DATE :- DECEMBER 12, 2014.

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P. C.:

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Rule. Rule returnable forthwith.

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2 The learned Assistant Government Pleader waives service of Rule for the Respondents.

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3 Mr. A. A. Kumbhakoni, the learned counsel for the Petitioner M/s. Grainotch Industries Limited states that on account

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of the State Government not having released the amounts of benefit under the scheme of “ Financial Assistance to Grain Based Distilleries, and Integrated Units-2007 ” (hereinafter referred to as the “Scheme of 2007”) which is to the tune of about Rs.17,47,58,180/- up to December 2013 the Petitioner would have no other alternative but to close down the factory. It is further submitted that the Petitioner has taken loans from the banks/financial institutions and the Petitioner will also not be able to repay such loans, if the factory will be closed down. It is submitted that if the amounts of benefit under the above Scheme of 2007 and which are not disputed, are paid to the Petitioner, the Petitioner would be able to continue to run the factory which would fetch the state exchequer a sum of Rs.670/- per proof liter as excise duty. As against that, the incentive which the Government gives under the above Scheme of 2007 is only Rs.10/- per bulk liter.

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The learned counsel for the Petitioner, therefore, submits that on account of the shortsightedness on the part of the Respondent Authorities in not paying the Petitioner an incentive of Rs.10/- per bulk litre for manufacturing grain based alcohol, the State Government will be losing excise duty of Rs.670/- per proof litre.

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4 The learned Assistant Government Pleader opposes the Petition and raises the following objections to the Petitioner's

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claim:-

(i) that the incentive under the Scheme of 2007 is available only in respect of the alcohol manufactured from grain produced in Maharashtra and thereafter sold within the State of Maharashtra. The Petitioner has not produced any material to show that the grain alcohol manufactured by the Petitioner was sold within the State; (ii) that the Petitioner is not entitled to the benefit under the Scheme of 2007 for the period up to December 2013, because under this Scheme as modified by the Government Resolution dated 31 August, 2009, the benefit is available only for a period of four years from the date of commencement of manufacturing alcohol or up to December 2013 or till the incentive amount equals to the investment made in the unit, whichever is earlier. Though the incentive availed of by the Petitioner did not reach the investment amount, the Petitioner had commenced the production of alcohol in the Petitioner's unit on 26 August, 2009, and therefore the four year period came to an end on 25 August, 2013. The Petitioner would therefore not be entitled to get any incentive for the period from 26 August, 2013 to 31 December, 2013.

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5 In the rejoinder, Mr. Kumbhakoni, the learned Senior Counsel appearing for the Petitioner invites our attention to the Government Resolution dated 8 June, 2007 containing the Scheme of 2007 and particularly clause 3 thereof which (translated in

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English) reads as under:-

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“This financial assistance will be provided to those grain based distillery units which will be using the grain produced in the State only.”

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6 It is submitted that it is not in dispute the Petitioner has manufactured alcohol from grain produced within the State. According to Mr Kumbhakoni, there is no requirement that the alcohol so manufactured, has also to be sold within the State of Maharashtra. He however states that in the present case, even the alcohol has been sold within the State of Maharashtra. He therefore submits that there is no merit in the first objection taken by Respondent No.1.

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7 Regarding the second objection about the period for which financial assistance is available, Mr Kumbhakoni submitted that the scheme as originally published and contained in the Government Resolution dated 8 June, 2007 does not provide for any period of four years, but merely provide as under:-

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“6. The scheme is aplicable upto the completion of the capital expenditure or 2013 whichever is earlier. Under no circumstances the benefit will be extended beyond 2013.”

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8 It is submitted that the Petitioner set up its manufacturing unit acting on the basis of the above promise spelt out by the Government through the Government Resolution dated 8 June 2007 and even the Respondent Authorities have admitted in their reply affidavit dated 1 November, 2014 filed by said Pravin. S. Tambe, Assistant Commissioner of State Excise, Mumbai that the Petitioner is granted the Letter of Intent by the State Government on 12 April, 2007 and necessary licence was issued on 29 May, 2009 and for the commencement of production of spirit/alcohol on 26 August, 2009.

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9 On the basis of the above factual aspect, the learned Senior Counsel appearing on behalf of the Petitioner submitted that the Petitioner's unit thus commenced production on the basis of the policy contained in the Government Resolution dated 8 June 2007, and therefore, the subsequent modification of the policy introduced by the Government Resolution dated 31 August, 2009 cannot apply to the Petitioner's case.

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10 On the other hand, the learned Assistant Government Pleader submitted that the Government Resolution dated 31 August, 2009 was based on the cabinet decision taken on 20 August, 2009 which was taken prior to the commencement of production in the Petitioner's unit on 26 August, 2009.

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11 We have considered the rival submissions and given our anxious consideration to the same.

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12 As far as first objection raised by the learned AGP is concerned, we do not find any substance in the said contention. Clause 3 of the Government Resolution dated 8 June 2007 clearly contemplates that the scheme of financial assistance will be available to the units manufacturing alcohol from grains produced within the State. There is no condition to the effect that the alcohol manufactured from grain produced within the State should also be sold within the State, but It is of course the Petitioner's case that the alcohol manufactured by the Petitioner from grain was also sold within the State it is not necessary to examine this issue as the Government Resolution dated 8 June 2007 merely requires that the alcohol that is manufactured shall be from the grains produced within the State. In the reply affidavit, the State has not raised any objection that the grains from which alcohol was manufactured, was not produced within the State. We, therefore, are of the view that the Petitioner cannot be denied the benefit of financial assistance under the Scheme of 2007 on this ground.

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13 Coming to the second objection, whether the Petitioner is entitled to get financial assistance only upto 25 August 2013 as contended by the Respondents, or upto the end of December 2013, as contended by the Petitioner, we find that this issue would require

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further detail examination. It is the Petitioner's case that the Petitioner had acted upon the representation / promise spelt out in the Government Resolution dated 8 June 2007 and on the basis thereof the Petitioner set up the unit for manufacturing alcohol from food grain and that the license also was issued as back as on 29 May 2009, as stated in paragraph 5 of the reply affidavit.

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14 We are of the view that since there is no dispute about the Petitioner's entitlement for getting financial assistance for the period up to 25 August, 2013 as the Petitioner had commenced production on 26 August, 2009, the Petitioner is entitled to a writ of mandamus and we accordingly direct the State Government to pay to the Petitioner the financial assistance under the Scheme of 2007 for the period up to 25 August 2013. The actual amount shall be worked out by the Respondent within two weeks from the date of receipt of this judgment and the payment shall be made within four weeks from today. As regards the Petitioner's claim for the balance period i.e. from 26 August 2013 to 31 December, 2013, the interest of justice would be served if the Petitioner is given liberty to make a representation to the Respondents and the Respondents are directed to decide the same within a period of 6 weeks from the date of receipt of such representation.

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15 In view of the above discussion, the Petition is partly allowed. The Respondents are directed to give the Petitioner the

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benefit under the scheme of “Financial Assistance to Grain Based Distilleries and Integrated Units 2007” for the period from 1 December 2012 to 25 August 2013 within four weeks from today.

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16 As regards the Petitioner's claim for the balance period, i.e. from 26 August 2013 to 31 December 2013, the Petitioner shall make a representation to the Respondent Authorities and the Respondent Authorities shall consider the same within a period of six weeks from the date of receipt of such representation.

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17 The Petitioner will be also at liberty to make a representation to the Respondents for not levying the interest or for waiver of interest on the delayed payment of the value added tax of sale of the grain based alcohol manufactured by the Petitioner, as the Petitioner submits that the delay was on account of non-receipt of the financial assistance from the State Government. This representation shall also be decided within six weeks from the receipt of the representation.

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18 Rule is made absolute in the aforesaid terms, with no order as to costs.

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CHIEF JUSTICE

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(B. P. COLABAWALLA , J.)

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M/S. Grainotech Industries Limited v. State of Maharashtra and Ors.

Case brief

What is this about?

What did the court decide?

M/S. Grainotech Industries Limited v. State of Maharashtra and Ors.

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Statutes considered

Parties & counsel

Coram

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