KHUSHBU VINYL PVT.LTD Vs. STATE OF GUJARAT

JUDGEMENT

(1.) By this petition, under Article 226 of the Constitution of India, the petitioners seeks the following substantive reliefs:-

(2.) The petitioners are engaged in the business of manufacture and sale of cotton fabrics. The Industries and Mines Department of the State of Gujarat vide Resolution No.TEX/10212/65117/T dated 25.6.2013 declared the Textile Policy which was amended by Resolution No.TEX/10213/432/T dated 11.10.2013 so as to give incentive to the textile industry in the State of Gujarat. Paragraph 5.5.1 of the resolution dated 25.6.2013 of the Industries and Mines Department which is relevant of the present purpose reads as under:-

(3.) Mr. Uchit Sheth, learned advocate for the petitioners submitted that the entire situation has arisen because of non-disbursement of refund validly due to the petitioners and that the retrospective cancellation of certificate of entitlement on the ground of alleged tax arrears is arbitrary and illegal. Elaborating upon the said submission, it was submitted that the petitioners had made investment of Rs. 20.11 crore relying on the promise of granting incentives by the Government of Gujarat under the Gujarat Textile Policy 2012. While the commercial production of the petitioners started on 14.7.2013, the eligibility certificate was granted by the Industries Department on 24.12.2014 and the Finance Department granted certificate of entitlement on 7.3.2015 with retrospective effect from 14.7.2013. It was submitted that thereafter there was an impasse regarding the mode of operating the scheme for the interregnum period between effective date of certificate of entitlement and the actual date of issuance of such certificate inasmuch as the dealers had filed returns as normal dealers since eligibility/entitlement certificate was yet to be granted. Ultimately on 4.10.2017, by way of an addendum to the policy, it was formally declared that only net tax would be payable for such interregnum period and that refund of input tax credit as well as the net tax paid would be granted by the Industries Department. However till date, such refund has not been released by the Industries Department. It was urged that even for the subsequent period, the petitioners are clearly entitled to refund of tax paid on purchases of raw materials used in the manufacturing process; however, the Finance Department has not released a single rupee of such refund till date nor have they given any explanation for non-release of such refund. It was submitted that retrospective cancellation of certificate of entitlement by the impugned order on the ground of arrears of tax dues under the GVAT Act without taking into consideration the huge refund due to the petitioners under the GVAT Act is arbitrary, bad and illegal.