Appellants request a time-bound mandate for interest on compensation, claiming delay due to funding shortage from DIPP - HC rules that they are not entitled to the same under the GST Scheme by the government for industrial units

Case title:

M/S VJ Jindal Cocoa Pvt. Ltd. V/s Union of India and others 

Date of Order:

26 May 2023

Bench:

HON’BLE MR. JUSTICE SANJEEV KUMAR, JUDGE

HON’BLE MR. JUSTICE PUNEET GUPTA, JUDGE

Parties:

M/S VJ Jindal Cocoa Pvt. Ltd.

[Appellant (s)]

V/s

Union of India and others 

[Respondent(s)]

SUBJECT

• The petitioner’s claim was delayed due to a shortage of funding from DIPP, and they sought a time-bound mandate to secure the approved amount and interest.
• The HC held that the appellants were not entitled to interest on compensation under the Scheme, as it was not claimable by eligible industrial units.
• The government provided an incentive to only help industrial units cope with financial hardships. 

IMPORTANT PROVISIONS

• The GST is a tax on products and services that are sold domestically for consumer use. Consumers pay the tax at the time of sale and the vendor passes it along to the government. It is included in the final price.
• Typically, a country will levy the GST at a single rate.

OVERVIEW

• Before the Area-Based Exclusions under the Goods and Services Tax Act were removed, the petitioner, M/S Jindal Drugs Private Ltd., registered with the Central Excise Department. In order to assist qualifying units, the government established the Budgetary Support Scheme. 
• The petitioner then submitted a claim that was authorised by the appropriate authority in order to get funding from the Division of Industrial Policy and Promotion.
• The petitioner’s sanctioned claim was delayed due to insufficient funds from DIPP. The petitioner filed a petition seeking direction to disburse the sanctioned amount with interest and direct respondent No.5 to decide the remaining quarters’ applications. 
• Despite the sanctioned amount being released during the petition’s pendency, the petitioner continued to pursue interest on the delayed payment.
• Respondent No.4 contested the petition, arguing that the Budgetary Support could not be disbursed to the petitioner for the quarter ending March 2019 to December 2019 due to insufficient funds from the DIPP in the Ministry of Commerce and Industry. 

ARGUMENTS ADVANCED BY THE APPELLANTS 

• A shortage of funding from the Department of Industrial Policy and Promotion (DIPP) prevented the release of the petitioner’s claim, despite it having been granted earlier.
• The appellants anticipated rapid reimbursement but became impatient by the respondents’ conduct. In order to get the latter to provide the approved amount of funding combined with interest in their favour,  appellants filed an appeal asking for a time-bound mandate.

ARGUMENTS ADVANCED BY THE RESPONDENTS

• The respondents claimed that the claims under the Scheme must be disposed of within two weeks, but DIPP allocated only Rs.14.66 crores to UT of Jammu and Kashmir for the 2019-20 financial year.
• Respondents argue the Scheme does not offer interest on delayed payments, as it is a government-provided concession for eligible industries, not a right.

JUDGEMENT ANALYSIS

• The Scheme does not provide a specific provision for interest on delayed benefit payments. Petitioners cannot claim interest for each day’s delay in disbursement. 
• The claims must be disposed of within two weeks, but no complaint is filed about not being considered or disposed of. The release of the sanctioned amount was granted in time, but disbursement took time.
• The Commissionerate’s funds were less than claims received, making it difficult to determine if the sanctioned amount was illegally withheld by respondents.
• The petitioner is not entitled to interest on the amount compensated under the Scheme due to the nature of the benefit, which is not claimable by eligible industrial units as a matter of right.
•  The benefit is a concession/incentive extended by the Government of India to help industrial units cope with financial hardships caused by the withdrawal of area-based exemptions under the Central Excise Act. 
• The respondents had valid reasons not to disburse the sanctioned amount, as the Commissionerate faced a shortage of funds and the funds were not sufficient to meet the petitioner’s claim. 
• The high court dismissed the petition, stating it did not merit it. 
• However, the respondents were to process and dispose of pending claims according to the Scheme and release payable amounts without delay.