Calcutta High Court
Dollon'S Food Products Pvt. Ltd vs The State Of West Bengal & Ors on 19 July, 2019
Author: Arijit Banerjee
Bench: Arijit Banerjee
In The High Court At Calcutta
Civil Appellate Jurisdiction
Original Side
APO 25 of 2017
WP 133 of 2011
Dollon's Food Products Pvt. Ltd.
-Vs.-
The State of West Bengal & Ors.
Before : The Hon'ble The Chief Justice Thottathil B.
Radhakrishnan
&
The Hon'ble Justice Arijit Banerjee
For the appellant : Mr. Abhrajit Mitra, Sr. Adv.
Mr. Satadeep Bhattacharyya, Adv.
Mr. Rajest Upadhyay, Adv.
For the State : Mr. Abhratosh Majumder, Addl. Advocate General
Mr. Amitava Mitra, Adv.
Heard On : 24.01.2018, 09.04.2019, 23.04.2019 &
02.07.2019
CAV on : 03.07.2019
Judgment On : 19.07.2019
Arijit Banerjee, J.:-
(1) This appeal is directed against the judgement and order dated 15
December, 2016 passed by the learned Single Judge whereby the
appellant's writ petition being W.P. No. 133 of 2011 was dismissed.
The writ petitioner had challenged an order of the Executive Director,
West Bengal Industrial Development Corporation Limited (hereinafter
referred to as "WBIDC Ltd.") which was communicated to the writ
petitioner under cover of a letter dated 30 November, 2010. In the said
order it has been essentially held that the petitioner company is not
entitled to get subsidy under the West Bengal Incentive Scheme, 2000.
The operative portion of the said order is extracted below:
"West Bengal Incentive Scheme 2000 does not lay
down in any of its provisions that a unit may get
subsidy from both the Central as well as the State
Government. According to Clause 17-A of the West
Bengal Incentive Scheme 2000, a unit enjoying
benefit from any other source will not be entitled to
benefit under the West Bengal Incentive Scheme
2000. As such the Petitioner Company is not entitled
to get subsidy under the West Bengal Incentive
Scheme 2000. Thus the representation of the
Company is disposed."
2. The West Bengal Incentive Scheme, 2000, (in short "the said
Scheme") was introduced by the State Government through WBIDC Ltd.
with effect from 01 January, 2000 for a period of five years for
promotion of industries in the State. Clause 8.1 of the said scheme
which is the relevant clause reads as follows:
"8.1. An eligible industrial unit located in a Group
'B' area and set up in the State on or after the 1st
January 2000, will be entitled to State Capital
Investment Subsidy @ 15% of the Fixed Capital
Investment subject to a limit of Rs. 150.00 Lakhs."
3. Cause 3(xi) and clause 3(xvii) which define 'New Unit' and
'Eligible Unit' respectively, in so far as they are material read as
follows:
"xi) 'New Unit' means an industrial unit in the
large/medium/small scale sector having investment
in capital assets which is established and
commissioned by the entrepreneur for the
manufacture of goods in West Bengal for the first
time on or after the 1st January, 2000 and is
registered with the Directorate of
Industries/Directorate of Cottage & Small Scale
Industries/ Directorate of Tourism as the case may
be;
xvii) 'Eligible Unit' means a unit in the
large/medium/small scale sector having registration
certificate issued by the Directorate of Industries
and eligibility certificate by the W.B.I.D.C. or
registration certificate issued by the District
Industries Centre, as the case may be."
4. By a notification dated 12 December, 2001, clause 17(A) was
inserted in the said scheme which reads as follows:
"Incentives to service related activities in Food
Processing sector and development of post harvest
infrastructure:
1. Units set up having the following mechanised
facilities jointly or severally.
a. Grading, sorting, washing and pre-cooling
b. Controlled atmosphere/modified
atmosphere, packaging system
c. Cold storage
d. Refrigerated vehicle.
2. Multi-purpose cold storage units suitable for
storing fruits, vegetables, flowers, fish, meat,
milk and milk products.
3. Units based on application of bio-technology
tissue-culture laboratory, hybrid seed production
centre, plant health clinic.
4. Centre for production of intermediate products
and semi processed products for preservation of
raw materials to supply the processing unit.
5. Units engaged in production of fermented
vegetables dehydrated fruit pulp, pickling,
nutrient pulp and fruit and vegetable crude oil
extraction from aromatic and medicinal plant.
6. Bee keeping units and mash room cultivation and
processing units in artificially controlled
atmosphere will be entitled to the benefits under
WBIS, 2000.
The units registered with District Industries Centre or with
the Director of Industries will only be eligible for being
considered for benefits under the Scheme. The project will have
to be approved by FPI & H Department Cold storage including
Multi-purpose cold storage will have to obtain licence, if
required from Agriculture Marketing Department of the Govt. Of
West Bengal for getting registration from the District Industries
Centre in respect of small scale unit and from Director of
Industries for large and medium scale units. Release of
Incentives will be subject to the technical opinion of FPI & H
Deptt, in case of any doubt.
State capital investment subsidy will be released on
completion of total work. Project completion certificate should
be issued by FPI & H Department of the Govt. of West Bengal.
Such units enjoying benefits from any other source will not,
however, be entitled to the benefits under West Bengal
Incentive Scheme, 2000. This provision will come into force with
effect from 1.1.2002. This notification is issued with the
concurrence of the Finance Deptt. Vide there U.O. No. FPI-46
dated 15.11.2001."
5. Subsequently, the appellant set up a project in the State for
processing of milk and manufacture of milk related products. On 2
May, 2003 the appellant made an application to the Director of
Industries, West Bengal for registration and issuance of Eligibility
Certificate under the said scheme. Certificate of registration was
issued in favour of the appellant on 19 May, 2003 by the Director of
Industries, West Bengal. The items of manufacture noted in the said
certificate were milk and ghee. The said certificate was amended on
25th March, 2004 whereby an additional item of manufacture viz. khoa,
was added and the annual capacities of the other products were
increased.
6. On 10 June, 2004 WBIDC Ltd. issued an Eligibility Certificate for
incentives under the said scheme in favour of the appellant for
manufacturing ghee and khoa.
7. On 22 December, 2004 the appellant received the first instalment
of Rs. 25 lakhs as aid under a Central Incentive Scheme. On 16
November, 2005 the appellant made an application for grant of State
Investment Subsidy under the said scheme. On 28 December, 2005 the
Central Government released the second instalment of aid in the sum
of Rs. 25 lakhs in favour of the appellant under the Central scheme. In
the aggregate, the appellant received Rs. 50 lakhs under the Central
Incentive Scheme for setting up the project in question.
8. On 22 August, 2006 WBIDC Ltd. sanctioned State Incentive
Subsidy in favour of the appellant to the extent of Rs. 10.80 lakhs. The
appellant had, in fact, claimed Rs. 61.54 lakhs. By a letter dated 23
August, 2006 the appellant sought to enquire from WBIDC Ltd. as to
whether while granting subsidy, the State authority had deducted a
sum of Rs. 50 lakhs on account of grant-in-aid received by the
appellant from the Central Government. By a letter dated 29 August,
2006 the appellant conveyed its acceptance of the terms and
conditions of disbursement of subsidy by the State Government as
contained in the sanction letter dated 22 August, 2006, without
prejudice to the appellant's rights and contentions.
9. On 14 March, 2008 the appellant made a representation to the
Joint Secretary, Commerce and Industries Department, Government of
West Bengal regarding deduction of Rs. 50 lakhs from the State
Investment Subsidy under the said scheme. In response, by a letter
dated 13 January, 2009 the Deputy Secretary informed the appellant
that a unit is not entitled to get benefit of the scheme if it has already
availed of benefits under a different scheme.
10. Thereafter, the appellant made several representations dated 6
February, 2009, 2 March, 2009, 5 March, 2009, 22 May, 2009, 15 March,
2009 and 17 June, 2010 to various high officials in the State
Government as also the WBIDC Ltd.
11. On 6 October, 2010 the appellant moved a writ application in this
Court, being W.P. 1253 of 2010 on the issue of incentives. The writ
petition was disposed of by a learned Single Judge by directing the
appropriate authority to consider the appellant's representation by a
reasoned order within four weeks from the date of receipt of the
representation. By a letter dated 25 October 2010 the appellant
communicated the said order to the Executive Director, WBIDC Ltd.
and also made a fresh representation regarding deduction of Rs. 50
lakhs from the State Investment Subsidy.
12. On 30 November, 2010 WBIDC Ltd. communicated the order
passed by the Executive Director, WBIDC Ltd. to the appellant
rejecting the appellant's representation.
13. The appellant challenged the said order by filing the writ petition
from which this appeal arises. The learned Single Judge by his
judgement and order dated 15 December, 2016 which is impugned in
this appeal dismissed the writ petition. The operative portion of the
impugned judgement and order reads as follows:
"The Central Government granted aid to the
petitioner for setting up of a new unit for manufacture of
milk and milk products. Such unit was treated to be under
food storage and warehousing by the Central Government.
The petitioner has such a unit. Manufacture of milk and its
storage requires service. The unit may have an integrated
service mechanism or it may hire service providers for such
purpose. It has not been demonstrated that, the petitioner
had appointed service providers. In absence of such
evidence, it may be inferred that, the petitioner has a
provision for integrated service in relation to its activities
that would draw the petitioner within the scope and ambit
of Clause 17A. The petitioner being governed by such
Clause 17A, the prohibition engrafted therein operates to
deny the petitioner receipt of the benefits of the Incentive
under the Scheme of 2000 having received the benefit
under the Central Scheme.
The impugned order has taken into consideration
Clause 17A of the West Bengal Incentive Scheme, 2000 and
has negated the claim of the petitioner on such basis.
In such circumstances, I do not find any infirmity in
the impugned order warranting an interference under
Article 226 of the Constitution of India.
W.P. No. 133 of 2011 is dismissed. No order as to
costs."
14. Being aggrieved the writ petitioner is before us by way of the
present appeal.
15. Learned Senior Counsel for the appellant submitted that clause
17A was inserted in the said scheme by way of amendment to provide
incentives to service related activities in food processing sector and
development of post-harvest infrastructure as enumerated in the said
clause. The appellant runs a manufacturing unit. The appellant is not a
service provider. Hence, clause 17A of the said scheme has no manner
of application to the appellant. In the certificate of registration issued
by the Director of Industries, Government of West Bengal under the
said scheme it is noted that the items of manufacture are milk and
ghee. In paragraph 4(Viiii) of the affidavit filed by WBIDC Ltd. before
the learned Single Judge it is admitted that the appellant's unit is for
manufacturing milk, ghee and khoa. Hence, it is an admitted fact that
the appellant operates a manufacturing unit and does not carry on
service related activities in the food processing sector.
16. It was further submitted that the fact that the appellant has a
cold storage, per se would not bring the appellant within the purview
of clause 17A of the said scheme. The cold storage is used to preserve
the milk and milk products processed/manufactured by the appellant.
It is a captive cold storage. Nobody but the appellant has access to it
or has the benefit of its user. It is an integral and inseparable part of
the appellant's manufacturing unit. The appellant does not carry on
cold storage business. Hence, the restriction regarding receipt of
incentive under the said scheme as envisaged by clause 17A would not
apply to the appellant. The appellant is covered by clause 8.1 of the
scheme and is entitled to State Investment Subsidy @ 15% of the fixed
capital investment subject to a limit of Rs. 1.5 crores. Hence,
deduction of Rs. 50 lakhs from the incentive under the said scheme is
unlawful.
17. Appearing for the State respondents, Mr. Abhratosh Majumder,
learned Additional Advocate General submitted that there is no error or infirmity in the order passed by the Executive Director of WBIDC Ltd. which was challenged before the learned Single Judge. Admittedly, the appellant has a cold storage. Operating a cold storage amounts to rendering service of preservation food items which would perish if not kept in cold storage. It is, therefore, service related activity in the food processing sector. It is immaterial that the service is being rendered by the appellant to itself. Since service is being rendered, clause 17A of the said scheme would be attracted in the facts of this case. Therefore, the deduction of Rs. 50 lakhs from the incentive was justified, since admittedly the appellant received grant- in-aid of Rs. 50 lakhs in two instalments from the Ministry of Food Processing Industries, Government of India.
18. Mr. Majumder referred to two decisions of the Hon'ble Apex Court in the cases of Delhi Cold Storage Pvt. Ltd. -vs- Commissioner of Income Tax Delhi-I, New Delhi reported in (1991) 4 SCC 239 and State of Rajasthan & Ors. -vs- Rajasthan ICE & Cold Storage, Jodhpur & Ors. reported in (2003) 11 SCC 697 in which the phrases 'industrial process', 'manufacturing process' and 'processing of goods' have been explained. With great respect, we are of the opinion that those two decisions are not germane to the facts of the present case and hence we refrain from discussing the same.
19. We have given our anxious consideration to the facts of the case and the rival contentions of the parties.
20. The short question that arises for our determination is whether or not the appellant comes within the scope and purview of clause 17A of the said scheme. The Executive Director of WBIDC LTD. has come to the conclusion that the appellant is covered by clause 17A. The learned Single Judge has upheld such finding by dismissing the writ petition.
21. It is indisputable that the appellant carries on business in the food processing sector. The question is whether or not the appellant carries on or can be deemed to carry on service related activities by reason of it being the owner of a cold storage. The answer would depend on whether or not the cold storage is such an integral part of the appellant's unit that the appellant would be unable to carry on its business activities without the cold storage and also whether the appellant is permitting others to utilise the cold storage. If it is found that the cold storage is an inseparable part of the appellant's business and the appellant uses the cold storage only for itself, then, in our opinion, clause 17A of the said scheme would not be attracted since it cannot be said that the appellant is carrying on service related activities.
22. In the several representations made by the appellant it has consistently contended that its activities are purely in the nature of 'manufacturing of milk and milk products', and, therefore, clause 17A of the said scheme is not applicable. This aspect was not at all addressed by the Executive Director of the WBIDC Ltd.. He has not come to a finding of fact after due investigation that the appellant is involved in service related activities. He has proceeded on the basis of the assumption that clause 17A applies. Why it should apply, has not been discussed. In that sense, the order is not a reasoned order at all. It is the mere ipse dixit of the Executive Director that clause 17A is attracted in the facts of this case. It is well settled that an unreasoned order, be it judicial, quasi- judicial, administrative or executive in nature, is anathema to the rule of law and is violative of the principles of natural justice. This issue has not been discussed by the learned Single Judge. We are of the considered view that this matter needs reconsideration by the Executive Director of WBIDC Ltd. He has to undertake a fact finding exercise and come to the conclusion as to whether or not the appellant's contention that it carries on purely manufacturing activities is correct. If it is found to be correct, obviously, clause 17A of the said scheme will not apply and the appellant would be entitled to the incentive that has been deducted. If, however, the Executive Director comes to a finding of fact that the appellant is engaged in service related activities also, then, of course, the appellant's claim would fail. We, however, clarify that rendering service to one's own self would not amount to carrying on service related activities. Clause 17A as we read it, contemplates grant of incentive to such persons who carry on activities which result in rendering service to others.
23. In view of the aforesaid this appeal succeeds. The order impugned in this appeal as also the order of the Executive Director of WBIDC, Ltd. which was impugned in the writ petition are set aside. Consequently, the matter is remitted back to the Executive Director of WBIDC Ltd. for fresh consideration in the light of the observations made in this judgement. The fact finding exercise referred to above is necessary to come to an informed decision as regards the validity and legitimacy of the appellant's claim. We as the writ court are not inclined to undertake such an exercise. Hence, we have deemed it appropriate to send the matter back to the appropriate executive authority. The Executive Director of WBIDC Ltd. shall hold a local inspection of the appellant's business unit, upon adequate prior notice to the appellant, and shall come to an informed decision supported by cogent reasons as regards the appellant's claim. This exercise shall be completed within a period of three months from the date of receipt of a copy of this order.
24. APO 25 of 2017 is, accordingly, disposed of.
25. Urgent certified photocopy of this judgment and order, if applied for, be given to the parties upon compliance of necessary formalities. I agree.
(Thottathil B. Radhakrishnan, CJ.) (Arijit Banerjee, J.)