Page 210 - GSTL_2nd April 2020_Vol 35_Part 1

112 GST LAW TIMES [ Vol. 35
Kashmir, Uttarakhand, Himachal Pradesh and North East including Sikkim
should be granted Budgetary Support Scheme as a measure of goodwill for a
residual period for which each of the units was earlier eligible, it cannot be held
that the support is in lieu of exemptions. Recognizing hardships arising out to
withdrawal of exemptions notifications cannot be understood or categorized as
an admission of any such right in favour of the Petitioner.
25. Even otherwise, the Respondents acknowledgment cannot vest a
right in favour of the Petitioner, if they did not have such right in law. We also
do not perceive that the Petitioners have acquired vested right in terms of the
policy. The fiscal benefits promised in return for making investments in the State
of Uttarakhand were privileges which were granted under law that no longer
holds the field. The rights and the obligations that were flowing under the tax
regime originated from the tax structure that existed when the policy was
framed. Such obligations cannot stay alive, if the legislation itself has undergone
a complete overhaul by advent of introduction of GST legislations. Therefore, the
Budgetary Support Scheme cannot said to be in contravention of the fiscal incen-
tive policies or promise made by Respondent No. 1 at the time of introducing
area-based exemptions. In the previous tax regime, taxes were being levied on
different incidents, such as ‘manufacturing’ in the case of the levy of excise duty.
This is no longer a relevant consideration. GST is a destination based tax, the area
based exemptions, under the GST regime have entirely different dimensions and
therefore, for this reason, there are no area-based exemptions envisaged under
the GST regime. Government has, instead, provided the necessary support to the
industry for its economic development and has grandfathered the incentive
Scheme.
26. Now let us also examine as to whether the Budgetary Support
Scheme reveals the half-hearted approach of Respondent No. 1, as has been
sought to be projected by the Petitioner. The Respondent No. 1 is giving Budget-
ary Support Scheme to the extent of 58% on the premise that, to that extent, the
share is devolved upon the Central Government and the remaining 42% is ap-
portioned to the State Government and, likewise, in the case of IGST, the Budg-
etary Support Scheme is restricted to the Central Government’s share of 29%. The
aforesaid figures are the recommendations of the 14th Finance Commission. We
do not find anything irrational or arbitrary with respect to partial tax budgetary
support. Firstly, the Budgetary Support is not an exemption under the Act. The
rationale of providing support to the extent of Central Government’s share of
CGST and the IGST is also based on the reasoning which cannot be questioned
by the Petitioner. Article 279A of the Constitution provides that the GST Council
shall make recommendations to the Union and States, inter alia, on issues relating
to special provision with respect to the States of Arunachal Pradesh, Assam,
Jammu & Kashmir, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura,
Himachal Pradesh and Uttarakhand. The GST Council in its meeting held on
30-9-2016, left it to the discretion of the Central Government and State Govern-
ment to notify schemes of Budgetary Support to units where the erstwhile
schemes were in operation on 18-7-2017. Accordingly, the Central Government
provided the Budgetary Support to eligible units for the residual period by way
of part re-imbursement of goods and Service Tax paid by the unit, limited to
Central Government’s share of CGST and IGST retained after devolution of part
of these taxes to the States. The apportionment of the tax between Central and
States has also undergone complete reorganisation. In this regard, we may spe-

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