Page 201 - GSTL_2nd April 2020_Vol 35_Part 1

2020 ] HERO MOTOCORP. LTD. v. UNION OF INDIA 103
in favour of the Petitioner. He elucidated that the object of the afore-noted policy
decision and exemption notification was to grant incentive for promoting in-
vestment and industrial development in the State of Uttarakhand by granting
complete exemption from excise duty for a period of 10 years from the date of
commencement of commercial production. This is evident from the Office Mem-
orandum No. 1(10)/2001-NER, dated 7-1-2003 issued by Respondent No. 1
which provides that the new industrial units and existing industrial units on
their substantial expansion, as defined, are entitled to 100% outright excise duty
exemption “for a period of 10 years from the date of commencement of commercial
production”. He argues that, even though the said exemption notification uses
the words “for a period not exceeding 10 years”, the period of exemption has to be
understood in line with the office memorandum/policy statement. He submits
even though the GST enactments have taken the place of, inter alia, Central Excise
laws with effect from 1-7-2017, the burden of GST should have been relieved for
the residual balance of the period of 10 years, i.e, the benefit of the exemption
notification should have been available to the petitioner till 6-4-2018. Mr. Ganesh
has placed reliance on the decision of the Supreme Court in State of Bihar and Ors.
v. Supraphat Steel and Ors., (1999) 1 SCC 31, to advance his submission that the
exemption notification was issued by the Government to carry out the objectives
of the policy decisions taken in the industrial policy itself, and in case the notifi-
cation is found to be repugnant to the industrial policy declared in a government
resolution, then the said notification must be held to be bad to that extent, mean-
ing thereby, that the declared policy decision would take precedence over the
statutory exemption notification.
10. Mr. Ganesh also placed strong reliance upon the judgment of the
Supreme Court in Manuelsons Hotels Private Limited v. State of Kerala and Ors.,
(2016) 6 SCC 766, to advance his submission on the principle of promissory es-
toppel. He argued that where the Government holds out a promise which has
been acted upon, subject to certain restrictions, such as overriding public interest,
the government cannot resile from such promise and it will have to adhere to the
doctrine of ‘Promissory Estoppel’. In this perspective, he also relied upon the
recent judgment of the High Court of Bombay in the case of K.M. Refineries and
Infraspace (P) Ltd.v. State of Maharashtra, 2019 SCC OnLine Bom 1485, wherein the
Court held that the reduction under the Incentive Scheme - in the name of new
policy of GST, was clearly not permissible and the Incentive Scheme that was in
operation on the date of issuance of Eligibility Certificate would have to be en-
forced against the State. It was held that the State should modify the Incentive
Scheme in such a way that it is consistent with the new tax structure and does
not result in reducing or restricting the benefits which have been conferred upon
an industrial unit, like that of the Petitioner, under the Incentive Scheme.
11. Mr. Ganesh also argued that in the previous tax regime, the ex-
empted taxes were in respect of Central Indirect Taxes. Therefore, the first Re-
spondent should have either granted total exemption from CGST and IGST in
exercise of its statutory powers under the respective charging Acts or, alterna-
tively, grant full budgetary support instead of limiting it to 58% of the cash pay-
ments of CGST and 29% of IGST paid to industrial Units. He argued that the ra-
tionale behind the aforesaid limited budgetary support being the devolution of
taxes on goods and services to the States as per the recommendation of the 14th
Finance Commission, is totally irrelevant and an immaterial consideration. This
aspect is of no consequence or relevance to the assesee, who pays the entire

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