1 WPC No. 1040 of 2016 2025:CGHC:1039 NAFR HIGH COURT OF CHHATTISGARH AT BILASPUR Order reserved on 28-11-2024 Order delivered on 08-01-2025 WPC No. 1040 of 2016 M/s Real Power Pvt. Ltd. Formerly Known As N R I Power And Steel Power Pvt. Ltd. Having Its Works At Village Khamardeeh, Post Sargaon, Distt. Mungeli And Registered Office At Vrindavan, Civil Lines, Raipur Chhattisgarh Through Its Vice President And Authorized Signatory Mr. Ritesh Jindal, S/o Shri Kuldeep Agrawal, Aged About 37 Years, R/o B- 103, Chhattisgarh Heights, Mova, Raipur Chhattisgarh, Chhattisgarh ... Petitioner versus 1 - State of Chhattisgarh Through Its Secretary Department of Industries And Commerce, Secretariat, Capital Complex, Naya Raipur, P.O. and P.S. Naya Raipur Chhattisgarh, Chhattisgarh 2 - Directorate of Industries, Udyog Bhawan, Ring Road No. 1, Opposite Sonakhan Building, Raipur Chhattisgarh AMARDEEP CHOUBEY Digitally signed by AMARDEEP CHOUBEY Date: 2025.01.08 17:49:07 +0530 2 WPC No. 1040 of 2016 3 - Chief General Manager, District Trade And Industries Centre, Bilaspur,Chhattisgarh 4 - Chief General Manager, District Trade And Industries Centre, Mungeli, Chhattisgarh ... Respondents For Petitioner : Mr. Neelabh Dubey, Advocate with Ms. Smriti Sharma, Advocate. For Respondents/State : Mr. Abhishek Singh, Panel Lawyer. Hon'ble Shri Bibhu Datta Guru , J C A V Order 1. The petitioner, who is a private limited company engaged in generation of power by non-conventional mode and is a thrust sector industry under the Industrial Policy of 2001-06, preferred the present writ petition seeking quashment of order dated 09/10/2015 passed by the State Appellate Forum and also seeking a direction towards a respondents to declare the petitioner company is entitled for grant of Capital-cum-cost subsidy under the Industrial Policy 2001- 06. 2. (i) Facts of the case, in brief, are that the petitioner is engaged in the business of power generation by non- conventional mode and is a thrust sector industry under the Industrial Policy of 2001-06. The petitioner has Bio Mass 3 WPC No. 1040 of 2016 based power generation unit having a capacity of 7.5 MW and began power generation on 26/12/2006. The petitioner company was established after the Industrial Policy of 2001- 06 came into existence and the said policy provides favorable conditions for industrial growth in the State of Chhattisgarh. The policy 2001-06 provides large number of incentives for establishing bio mass based integrated power plant. The policy provides special emphasis on cluster based industrial development which can be seen from clause 3.1 which provides that five major clusters and thrust areas emphasis are:- Agro based and forest based industries, Mineral bases industries, Traditional industries, Sunrise industries, Infrastructure provisioning as industries. The strategy one of the policy talks about the cluster based industrial development and strategy for directed incentives. (ii) The Government of Chhattisgarh came out with a notification dated 26/04/2002, under which laid down the criteria and requirement in pursuance to the Industrial Policy, 2001-06, in that context, list of thrust sector industries were declared. In the said list, the petitioner’s industry finds clear and specific mention as being an industry based on agricultural, forest and food items. Clause 1.1 talks about the 4 WPC No. 1040 of 2016 units based on agricultural and forest produce and sub- clause (2) of clause 1.1 clearly talks about rice husk based power plant, hence, the petitioner’s industry was a thrust sector industry under the Industrial Policy of 2001-06. (iii) Clause 3.4 of the Industrial Policy, 2001-06 talks about direct incentives to be granted to various kinds of industries. Under the said heading, there is sub-heading which reads as “thrust sector industries including export oriented unit”. It also provides that there will be a electricity duty exemption to all new units from the payment of electricity duty for period of ten years from the date of commercial production. There was no condition provided except for infrastructure support to the extent of Rs.1 Crore. Keeping into consideration these incentives, the petitioner took effective steps to establish its unit by 01/01/2004 so as to make itself eligible for these incentives. It made an investment of Rs.32,26,22,417/-, thus, making it eligible to the benefit of Rs.7,26,50,214/- but since there is a limit of Rs.1 Crore it will be restricted to said amount. The petitioner’s biomass based power generation unit has a capacity of 7.5 MW for which it began generation of power on 26/12/2006. After coming into operation, the petitioner applied for infrastructure subsidy under the 5 WPC No. 1040 of 2016 Industrial Policy of 2001-06. The petitioner filed its application for grant of infrastructure cost capital subsidies. This application dated 24/02/2010 was filed under Industrial Police 2001-06 vide Annexure P-4. Vide letter dated 26/02/2010, the General Manager, District Trade Industry Center (DTIC), Bilaspur wrote to M/s NRI Power and Steel Pvt Ltd through its Director Shri Ramesh Agrawal. The said letter stated that the department had received petitioner’s application for grant of infrastructure cost capital subsidy and on perusal of the same, it was found that the same has been claimed under the Industrial Policy 2001-06, whereas the case for exemption from Entry tax was considered under the Industrial Policy, 2004-09 and hence, the petitioner may apply for infrastructure under the same. Since the petitioner’s application was returned and rejected, the petitioner was constrained to apply for exemption under the Industrial Policy 2004-09 and also under Infrastructure Cost Fixed Capital Investment Subsidy Rules, 2004 notified on 18/08/2005 issued under the Industrial Policy 2004-09. (iv) The petitioner’s application was rejected by the State Level Committee on 14/10/2014 on the ground that subsidy under Infrastructure Cost Fixed Capital Investment Subsidy 6 WPC No. 1040 of 2016 Rules, 2004 can be granted only when the industry pays commercial tax/central sales tax and since the company is engaged in generation of power and thus, the benefit cannot be extended to it. The petitioner challenged the order before the State Appellate Forum, however, the appellate forum rejected the appeal of the petitioner by the impugned order Annexure P/11 dated 09/10/2015 even though the petitioner has taken effective steps to establish its unit under the industrial Policy 2001-06, it would not be entitled to benefits under it as then it would avail benefit under two different policies. It came to the conclusion that the petitioner can avail benefits only under only policy being 2004-09 and cannot avail the benefits under 2001-06 policy. 3. (I) Learned counsel for the petitioner would submit that the order of respondent Appellate forum by denying the infrastructure subsidy to the petitioner on the ground that the petitioner cannot avail benefit under two different policies i.e. exemption from payment of entry tax which it has availed under 2004-09 Policy and Infrastructure Subsidy claimed under 2001-06 policy is absolutely illegal. The petitioner can avail the benefit under the Policy of 2001-06 also, because in a decision of this Court in the matter of R.R. Ispat Ltd & 7 WPC No. 1040 of 2016 Anr. Vs. State of Chhattisgarh and Ors (WPT No.5819/2011, this Court observed that on a reading of notification, it does not appear that there is any bar of movement of one notification to another and on the contrary, once an investment of more than Rs.10 Crore having been entered in the eligibility certificate, by amending the same, the State government had acknowledge that the investment is more than 10 Crores. Once the eligibility certificate itself declare in pursuance of the decision taken by the State Level Committee on 21/10/2004 that the capital investment in fixed assets be now read as Rs.12.53 Crores in place of 4.74 crores, all such consequences arising from the said amendment including the movement from one notification to another appears permissible, in absence of any express bar in the notification and in fact such movement has earlier been permitted by the State Government in the cases of M/s Jindal Strips Ltd. and M/s Chhattisgarh Electricity Supply Co. Ltd. (II) He further submits that in the instant case, there is no dispute regarding the fact that the petitioner did not take effective steps to establish the unit prior to 01/11/2004 to avail benefits under the Industrial Policy 2001-06. He further 8 WPC No. 1040 of 2016 submits that many other industries enjoyed distinct benefits under different policies. He referred a list of the industries and vide Annexure P-7 who has been provided different benefit under different policies. (III) He also submits that in the present case also, there is no bar has been provided under the Industrial Policy 2001-06 or 2004-09 from availing benefits under the two different policies. He submits that the contention of the respondent regarding that the petitioner did not make its application for claim of benefit within the specified of time is concerned, there is no inordinate delay and the contention of the respondent is misleading. The recommendation of the Directorate Industries (Annexure P-8) itself shows that there is no delay in submission of the application. The petitioner took all effective steps to establish its industrial unit in order to avail the benefits promised under the Industrial Policy of 2001-06. It has legitimate expectation that his unit would be granted exemption as per law applicable in absence of anything to the contrary. The petitioner altered its position and made huge capital investment taking into account the benefits promised to it under the Industrial Policy of 2001-06. Its calculation of financial viability of the project and making 9 WPC No. 1040 of 2016 investment was based on these benefits. He would further submit that the petitioner had to move its application from availing exemption from payment of entry tax from 2001-06 policy to 2004-09 because the respondent authorities failed to issue a follow-up notification under the Entry Tax Act, to fulfill the promised made under the Industrial Policy of 2001- 06. In a similar issue, this Court in the matter of State of Chhattisgarh Vs. V.M. Extrusions Pvt. Ltd. has decided and confirmed the order of the Single Bench in WPT No.6057/2011. 4. (A) Learned counsel for the respondents by referring the reply submits that the petitioner's case was taken up by the State Level Committee in its 27th meeting dated 14/10/2014 in the said meeting the information was given by the Commercial Tax department that Commercial Tax/Central Sales Tax is not applicable in the Bio-Mass Power Generation done by the petitioner firm and due to which the paid amount towards this head is zero. The SLC after careful perusal of clause 4.16 of the notification dated 18/08/2005 and taking into account the fact that the petitioner has not paid any amount to the commercial tax central sales tax 10 WPC No. 1040 of 2016 rejected the application for investment Infrastructure Cost Fixed Capital Subsidy. (B) He further submits that the appeal filed by the petitioner firm was decided by the State Appellate Forum and the State Appellate Forum on careful perusal of the entire records as well as notification dismiss the appeal on the same grounds. From bare perusal of the original order dated 14/10/2014 as well as the appellate order dated 09/10/2015 it is crystal clear that there is no illegality in the same the impugned orders are just and proper and the same are based on the notification and the rules with respect to investment Infrastructure Cost Fixed Capital Subsidy issued by the State Government and the orders are in conformity with the said provisions. (C) He submits that the petitioner unit is not at all entitled for benefit as it is barred in the light of the provisions contained in 4.16. On behalf of the answering respondents it is most respectfully submitted that although the petitioner unit is not entitled for subsidy under the Infrastructure Cost Fixed Capital Subsidy, but it is entitled for various concessions such as exemption from "payment of entry tax, exemption 11 WPC No. 1040 of 2016 from payment of electricity duty" and the same benefit have been properly extended in favour of the petitioner firm. (D) He further submits that the petitioner firm has contended that the State authorities have been granted the benefit of fixed cost investment subsidy to various other firms whereas this case the same has been denied on erroneous basis it is submitted that the said contention of the petitioner is not at all true because the other firms have been granted under the provisions of the Chhattisgarh State Infrastructure Subsidy Rules, 2001. The Rule 5.5 specifically provides that to avail the benefit under these rules, the industry has to submit its application within one year of the commencement of commercial production. 5. I have heard learned counsel for both the parties and perused the pleadings. 6. The Industrial Policy, 2001-06 provides direct incentives to thrust sector industry, which are as follows:- Infrastructure Support – Whenever industries are located in places other tan designated industrial areas, the government will provide assistance to meet a part of the cost of developing infrastructure like land, power, water facilities, construction of approach roads, to medium and 12 WPC No. 1040 of 2016 large industrial projects. This assistance will be to the extent of 25% of the infrastructure cost subject to a maximum of Rs. Million (Rs. 1 Crore) 7. The petitioner is a Bio Mass based power generation unit and began its generation power on 26/12/2006 and after coming into operation, the petitioner filed its application for grant of infrastructure cost capital subsidy under the Industrial Policy of 2001-06, the said application was responded by the General Manager, DTIC vide letter dated 23/04/2009 stating that the petitioner’s application has been made under the Industrial Policy 2001-06, whereas the case for exemption from entry tax was considered under the Industrial Policy of 2004-09 and hence, the petitioner may applied for infrastructure under the same. Since the petitioner’s application was returned and rejected, the petitioner was constrained to apply for exemption under the Industrial Policy 2004-09. The petitioner’s application was rejected by the State Level committee on 14/10/2014 on the ground that subsidy under the Infrastructure Cost Fixed Capital Investment Subsidy Rules, 2004 cannot be granted only when the industry pays commercial tax/Central sales tax and since the company is engaged in generation of 13 WPC No. 1040 of 2016 power and thus, pays no taxes, the benefit cannot be extended to it. Even the Appellate Forum rejected the appeal of the petitioner vide order dated 09/10/2015 on the ground that, even though the petitioner has taken effective steps to establish its unit under Industrial Policy 2001-06, it would not be entitled to benefits under it as then it would avail benefit under two different policies and the Appellate Forum observed that that the petitioner can avail benefit only under the one policy i.e. being Policy 2004-09 and he cannot avail the benefit under the Policy 2001-06. 8. 8. In the matter of R.R. Ispat ltd. (supra), this Court observed in a similar issue where the petitioner's claim was rejected when the petitioner’s prayer for movement from one notification to another was rejected by the authority, observed that:- “Similarly on a reading of the notification, it does not appear that there is any bar for movement from one notification to another and on the contrary once an investment of more than 10 crores having been entered in the eligibility certificate by amending the same, the State Government has acknowledged that the 14 WPC No. 1040 of 2016 investment is more than 10 crores. Once the eligibility certificate itself declares in pursuance of the decision taken by the State Level Committee on 21.10.2004 that the capital investment in fixed assets be now read as Rs. 12.53 crores in place of 4.74 crores, all such consequences arising from the said amendment including the movement from one notification to another appears admissible and permissible, in the absence of any express bar in the notification and in fact such movement has earlier been permitted by the State Government in the cases of M/s Jindal Strips ltd and M/s Chhattisgarh Electricity Supply Co. Ltd. On reading of the contents of the notification, it further appears to this Court that in view of Rule 7/Condition No.7 of the notification, the petitioner has legitimate expectation of consideration of his case as he has made capital investment in fixed assets which is permissible under the said Rule. 15 WPC No. 1040 of 2016 Accordingly, this Court is of the considered opinion that the case of the petitioner has not been considered in proper perspective keeping in view the contents of the fortification and the intent of the policy granting exemption to new industries, therefore, the matter deserves to be reconsidered by the State Appellate Forum. The impugned orders of the State Appellate Forum are thus quashed and the matter is remitted back to the State Appellate Forum for fresh consideration of the petitioner’s case for movement from Notification No.108 to Notification No.96 as early as possible and preferably within a period of 3 months from the date of receipt of certified copy of this order.” 9. In the present case, the application/appeal of the petitioner has been rejected on the ground that though the petitioner has taken effective steps to establish its unit under the Industrial Policy 2001-06, it would not be entitled to the benefit under it and observed that the petitioner can avail benefit only i.e. 2004-09. The observation of the respondent while refusing the benefit under policy 2001-06 is appears to 16 WPC No. 1040 of 2016 be discriminative in nature because the petitioner has placed on examples of some of the industries who were enjoying distinct benefit under the different policies vide Annexure P- 7. The Industrial Policy 2001-06 and 2004-09 nowhere provided any bar or their exist any provisions that prohibits the industry from availing the benefit under two different policies. Hence, the mere refusal to avail the benefit under two different policies to the petitioner’s unit is contrary to the observation made by this Court in R.R. Ispat Limited (Supra) as well as the fact that some of the industries are enjoying distinct benefit under different policies. Hence, it appears that the respondents/State refused the petitioner to grant benefit under Industrial Policy 2001-06 be adopting a pick & choose method which is discriminative in nature. As far as the contention of the respondent, the application of the petitioner was at a belated stage is concerned, it would be appropriate to see the recommendation of the Directorate Industries vide Annexure P-8 which itself shows that the delay in submission of the application has been condoned and the recommendation was sent, hence, the refusal of benefit under the Industrial Policy 2001-06 cannot be made on the ground of delay. It would also be appropriate to see 17 WPC No. 1040 of 2016 that the petitioner took all effective steps to establish the industrial unit in order to avail the benefits promised under the Industrial Policy 2001-06. He has legitimate expectation that its unit would be granted exemption as per law applicable. The petitioner altered its position and made huge capital investment taking into account the benefits promised to it under the Industrial Policy of 2001-06 and the petitioner had moved its application from availing exemption from payment of entry tax from 2001-06 policy to 2004-09, because the respondent authorities failed to issue a follow- up notification under the Entry Tax Act to fulfill the promises made under the Industrial Policy of 2001-06. 10. From the aforesaid discussion, this Court is of the considered opinion that the case of the petitioner has not been considered in proper prospective keeping in view the contents of the Industrial Policy 2001-06 and 2004-09 and the object of policy granting exemption to new industries, the Appellate Forum has not considered the fact that there is no bar in both the Industrial Policy i.e. 2001-06 and 2004-09 which provide any bar or prohibits the industries from availing benefits under two different industries, therefore, the matter deserves to be reconsidered by the State Appellate 18 WPC No. 1040 of 2016 Forum. The impugned order of the State Appellate Forum is quashed and the matter is remitted back to the State Appellate Forum for fresh consideration of the petitioner’s case preferably within a period of 4 months from the date of receipt of certified copy of this order. 11. In the result, the writ petition is allowed in part to the above extent. No order as to costs. SD/- (Bibhu Datta Guru) Judge Amardeep