In WP (C) No. 1830/2020 - J&K HC - Jammu and Kashmir High Court denies interest claim to M/s VJ Jindal Cocoa Pvt. Ltd. under Budgetary Support Scheme, says amount under the Scheme was not arbitrarily withheld by the competent authority
Justice Sanjeev Kumar & Justice Puneet Gupta [26-05-2023]

Read Order: M/s VJ Jindal Cocoa Pvt. Ltd v. Union of India and others

Chahat Varma

New Delhi, June 6, 2023: The Jammu and Kashmir High Court has denied the claim of M/s VJ Jindal Cocoa Pvt. Ltd. (petitioner) for interest on the disbursed amount under the Budgetary Support Scheme. The court found it difficult to conclude that the amount payable to the petitioner under the Scheme was illegally, arbitrarily or without any reason withheld by the respondents.

Factual background of the case was that after the implementation of Goods and Services Tax Act, 2017, the petitioner, formerly known as M/s Jindal Drugs Private Ltd., (Cocoa Division) got itself registered under the new regime. Since the withdrawal of exemptions under the Central Excise Act caused financial hardship to the Industrial units availing such exemptions, the Government came up with Budgetary Support Scheme (Scheme). Since the unit of the petitioner fell under the category of eligible units, the petitioner filed its claim under the Scheme. The competent Authority sanctioned the claim and forwarded the same for disbursement as and when the funds were received from Department of Industrial Policy and Promotion (DIPP).

The petitioner's claim under the Scheme was sanctioned but could not be released in a timely manner due to the unavailability of funds from the DIPP. Feeling aggrieved by the delay, the petitioner filed the present petition seeking directions from the court to disburse the sanctioned amount with interest. It appeared that during the pendency of the petition, the sanctioned amount was released to the petitioner. However, the petitioner continued to pursue the petition to claim interest on the delayed payment.

The court observed that having regard to the nature of Scheme, the benefit under the Scheme was not claimable as a matter of right. The benefit envisaged was in the nature of concession/incentive extended by the Government of India to enable the industrial units to tide over the financial hardship to which they may have been exposed with the withdrawal of area-based exemptions under the Central Excise Act.

The court further observed that the Commissionerate was facing acute shortage of funds and the funds placed at its disposal by DIPP were not sufficient enough, however, the amount was disbursed immediately when the funds became available.

The court lastly observed that there was no provision in the Scheme which provided for payment of interest in case of any delay in actual release of the benefit envisaged under the Scheme.

The court stated that unless it was proven that the respondents withheld the amount payable under the Scheme without any valid reason, it would be inappropriate to impose a penalty on them by ordering the payment of interest.