Jammu & Kashmir HC Refuses Interest On Delayed Disbursal Under 'Budgetary Support Scheme', Says Its Not A Right But Concession For Industrial Units
The Jammu & Kashmir and Ladakh High Court has recently ruled that the benefit provided under the Budgetary Support Scheme is not a 'right' of industrial units. Instead, it is regarded as a concession or incentive granted by the Government of India to assist these units in overcoming financial challenges resulting from the withdrawal of area-based exemptions under the Central Excise Act,...
The Jammu & Kashmir and Ladakh High Court has recently ruled that the benefit provided under the Budgetary Support Scheme is not a 'right' of industrial units. Instead, it is regarded as a concession or incentive granted by the Government of India to assist these units in overcoming financial challenges resulting from the withdrawal of area-based exemptions under the Central Excise Act, it clarified.
A bench comprising Justice Sanjeev Kumar and Justice Puneet Gupta thus rejected a plea for interest on delayed disbursal under the scheme. It observed there is no provision in the Scheme which provides for payment of interest in case of any delay in actual release of the benefit envisaged under the Scheme. It opined,
"Unless, it is pleaded and demonstrated that the amount payable under the Scheme was unauthorisedly and, without any reason, withheld by the respondents, it would be difficult for this Court to penalize the respondents by directing them to pay interest."
The case revolved around M/S Jindal Drugs Private Ltd. and their claim for the release of funds under the scheme. The petitioner had registered under the new Goods and Services Tax Act after the repeal of area-based exemption notifications. To mitigate the financial hardships faced by industrial units affected by the withdrawal of these exemptions, the Government introduced the Budgetary Support Scheme.
Under this scheme, eligible units could claim support for the residual period, subject to inspection by the Department of Industrial Policy and Promotion (DIPP). M/S Jindal Drugs Private Ltd., falling within the category of eligible units, had filed a claim under the scheme.
Although the petitioner's claim was sanctioned, the funds were not immediately disbursed due to the non-availability of necessary funds from the DIPP. The petitioner, feeling aggrieved by the delay, filed a petition seeking a direction from the court to release the sanctioned amount with interest and decide on the pending applications for subsequent quarters.
During the pendency of the petition, the sanctioned amount was eventually released to the petitioner. However, the petitioner persisted with the petition, specifically seeking interest on the delayed payment.
Per contra, the respondents contested the petition and explained that the delay in disbursing the sanctioned amount was due to the Commissionerate facing a shortage of funds. The allocated funds from the DIPP were insufficient to cover the petitioner's claim, along with other pending claims from units falling under the jurisdiction of the CGST Commissionerate, they submitted.
The respondents further argued that the scheme itself did not provide for the payment of interest in case of delayed disbursement and submitted that the scheme's benefits were concessions or incentives extended by the government, not an inherent right for industrial units.
After hearing the arguments from both sides and examining the facts, the bench concurred with the respondents' contentions, emphasizing that the scheme's benefits were not claimable as a matter of right.
"...Benefit envisaged under the Scheme is in the nature of concession/incentive granted by the Government in favour of eligible industries, so as to provide them necessary cushion to face the financial hardship that may have visited such units/industries due to withdrawal of area based exemption notifications issued under the Central Excise Act. Such being the nature of concession given, no unit could lay a claim to the payment of amount under the Scheme as a matter of right", the bench underscored.
While dismissing the petition, the court made it clear that the dismissal would not impede the processing and disposal of any pending claims by the petitioners and the respondents were directed to ensure timely release of amounts, if applicable, to the petitioner without undue delay.
Case Title: M/S VJ Jindal Cocoa Pvt. Ltd Vs Union of India and others
Citation: 2023 LiveLaw (JKL) 168