the introduction of the GST, it was perceived by certain
industries that the incentives offered by the government to
incentivize industries and promote development in backward areas
may have been curtailed. In this regard the decision of the
Nagpur Bench of the Bombay High Court in the case of K. M.
Refineries & Infraspace Pvt Ltd. is a welcome decision on the
continuity of the erstwhile incentives in the GST regime. The
decision directs the state authorities to implement the incentive
scheme as amended up-to-date with a discretion to modify the
scheme to bring it in line with the new tax structure under the
General Sales Tax scheme, but without reducing or restricting the
benefits as conferred.
The Petitioner, K. M. Refineries & Infraspace Pvt Ltd., set up a factory unit at village Dabha, Tahil Nandgaon Khandeshwar, District Amravati in view of the incentives offered under the state government scheme intending to have industries at disperse places all over Maharashtra under the “New Package Scheme of Incentives, 1993” (Incentive Scheme). The Incentive Scheme would offset the increased cost of production and the Petitioner would be able to compete with other similar industries in marketing its products at affordable rates, without causing any loss to the Petitioner. Under the Incentive Scheme, monetary and other incentives in the nature of tax subsidy or tax exemption at the rates prescribed in the scheme and other benefits were given. On introduction of the GST, the benefits under the scheme were claimed to have been curtailed and the government stated that the benefits would be available in terms of the Government Resolution dated 12.06.2018. This was challenged by the Petitioner inter alia invoking doctrine of promissory estoppel.
High Court on analysis of the Scheme and the law has held:-