100% budgetary support in lieu of the pre-existing 100% outright excise duty exemption —– The  appellant challenged the judgment and order dated 2nd March, 2020, passed by the High Court of Delhi and another order of Sikkim High Court, rejecting the appellants claim of 100% budgetary support in lieu of the pre-existing 100% outright excise duty exemption for ten years, as provided for by the said O.M. of 2003. The court observed that vide Notification No.21/2017-CE dated 18th July 2017, the exemption notifications came to be rescinded on or after the appointed day, i.e. 1st July 2017. As a result, the tax exemption which was granted by the said O.M. of 2003 ceased to continue with effect from 1st July 2017.  Further, the Central Government notified the Budgetary Support Scheme vide Notification dated 5th October 2017, which provided to refund/reimburse the Central share of CGST and IGST to the affected eligible industrial units for the residual period in the North Eastern and the Himalayan States. The Central share was determined at 58% of CGST and 29% of IGST. The court observed that when an exemption granted earlier is withdrawn by a subsequent notification based on a change in policy, even in such cases, the doctrine of promissory estoppel could not be invoked. Where the change of policy is in the larger public interest, the State cannot be prevented from withdrawing an incentive which it had granted through an earlier notification. The court further observed that in the deliberations of the GST Council itself, it was observed that the States also need to correspondingly reimburse the industrial units which were entitled to exemption under any existing incentive scheme, which, as per the Finance Commission, stands at 42%. The State of Jammu & Kashmir has issued a notification dated 21st December 2017 thereby resolving to reimburse the remaining 42% of the CGST of the Union. This is limited until the period the Union Scheme is valid. It would be appropriate that such States should also consider to correspondingly reimburse such units out of the share of revenue received by them.

Held that:- The Hon’ble Court dismissed the appeals and permitted the appellants to make representations to the respective State Governments as well as to the GST Council. Who will consider such representations, if made, in accordance with what has been observed herein above in an expeditious manner.