Gauhati HC grants relief to industrial units on tax reimbursement scheme

Guwahati, May 7: Gauhati High Court, through a recent judgement, has granted relief to the industrial units which were availing the benefits of remission of VAT and Central Sales Tax (CST) under the Assam Industries Tax Exemption Schemes 2009 and 2017.

After the introduction of Goods and Service Tax, the earlier remission schemes were rescinded and the Government of Assam framed a new scheme namely Assam Industries (Tax reimbursement for Eligible Units) Scheme, 2017 for granting reimbursement of tax to eligible units under the Industrial and Investment Policy of Assam, 2008 and/or under the Industrial and Investment Policy of Assam, 2014 or those which were covered by earlier schemes or special notifications.

In the same scheme, it was provided that if any existing eligible unit including a mega unit to which the customized tax incentives have been granted, is unable to utilize or avail of the full amount of monetary ceiling within the specified period of exemption, it may make an application to the Finance (Taxation) Department for extension of period of eligibility and upon examination of such an application, if the Finance (Taxation) Department is satisfied that the unit could not achieve the full quantum of monetary ceiling due to some genuine reasons and in order to sustain the industrial unit, it is necessary to extend such time limit, it may, by an order, extend such time limit by a further period not exceeding five years.

The industrial units which could not avail the full benefits because of the introduction of GST applied for extension of eligibility period under the Scheme of 2017. Some of the industrial units were granted the benefit of extension of eligibility period.

However, the Government of Assam by an amendment made to the Scheme of 2017 by notification dated December 30, 2020 withdraw such power to grant such extension of the eligibility period and also provided for that the applications of those industrial units, which were pending, shall be deemed to have been rejected.

Dr Ashok Saraf, senior advocate appeared before the Court on behalf of the industrial units and contended that such action of the respondent authorities was arbitrary in as much as the benefit was denied in respect of the industrial units whose applications were pending, which is a clear example of arbitrary actions of the respondents and such actions of the State cannot be justified on the touchstone of Article 14 of the Constitution.

The Gauhati High Court in its judgement held that the respondents are duty bound to apply the same yardstick to the petitioners as was done in the cases of others similarly situated industrial units.

By

Staff Reporter