{"id":309559,"date":"2023-12-18T12:00:07","date_gmt":"2023-12-18T06:30:07","guid":{"rendered":"https:\/\/www.scconline.com\/blog\/?p=309559"},"modified":"2023-12-21T18:07:48","modified_gmt":"2023-12-21T12:37:48","slug":"calcutta-high-court-directs-issuance-of-eligibility-cum-registration-certificate-under-wb-incentive-scheme-2013-scc-blog","status":"publish","type":"post","link":"https:\/\/www.scconline.com\/blog\/post\/2023\/12\/18\/calcutta-high-court-directs-issuance-of-eligibility-cum-registration-certificate-under-wb-incentive-scheme-2013-scc-blog\/","title":{"rendered":"\u2018Howrah unit qualifies as small enterprise under MSMED Act\u2019; Calcutta High Court directs issuance of Eligibility-cum-Registration Certificate under W.B. Incentive Scheme, 2013"},"content":{"rendered":"
\n

Calcutta High Court:<\/span> In a writ petition seeking to set aside the decision communicated through letters dated 16-07-2018, 31-07-2018, and 03-01-2019, rejecting petitioner’s application for incentives under the West Bengal Incentive Scheme, 2013, a single-judge bench comprising of Hiranmay Bhattacharyya, J., allowed the writ petition and set aside the rejection of the petitioner’s incentive application, with specific directions for the issuance of the Eligibility-cum-Registration Certificate and the extension of benefits under the West Bengal Incentive Scheme, 2013 (the Incentive Scheme). While upholding the petitioner’s claim, the Court emphasised the importance of considering applications based on the rules in force at the time of consideration and highlighted that the circular on clubbing investments had no application on the relevant date.<\/p>\n

Factual Matrix<\/p>\n

In the instant matter, the petitioner, a detergent manufacturer with units across the country, sought to set up a unit in Howrah under the Incentive Scheme. The company, following the stipulations of the scheme, established the unit and applied for various certificates. However, the General Manager, District Industries Centre, Howrah, rejected the petitioner’s application for incentives under the scheme, stating that the unit did not fall within the purview of the Micro, Small, and Medium Enterprises (MSME) sector, as investments in plant and machinery at various units exceeded the threshold limit. The petitioner preferred the present writ petition seeking to set aside the decision communicated through letters dated 16-07-2018, 31-07-2018, and 03-01-2019, rejecting their application for incentives under the West Bengal Incentive Scheme, 2013.<\/p>\n

Parties’ Contentions<\/p>\n

The petitioner contended that the Incentive Scheme constituted a clear promise to extend incentives to encourage entrepreneurs and the principle of promissory estoppel should apply. While citing circulars dated 03-03-2016 and 29-09-2015, it was contended that clubbing investments from different units for classification as MSME was improper.<\/p>\n

The State contended that the unit in Howrah cannot be considered new as it does not manufacture new items. It was stated that investments from different units under the same ownership were clubbed based on a circular dated 29-09-2015. It was contended that the petitioner had availed benefits under the West Bengal Industrial Promotion (Assistance to Industrial Units) Scheme, 2010.<\/p>\n

Court’s Analysis<\/p>\n

The Court observed that the circular relied upon by the respondent, dated 29-09-2015, was withdrawn by a subsequent circular on 03.03.2016. As of the date of consideration (18-05-2018), the withdrawn circular had no legal force. Therefore, the clubbing of investments from different units was not justified. The Court further stated that for classification as an MSME, investments in plant and machinery of different enterprises under the same ownership cannot be clubbed.<\/p>\n

The Court observed that the definition of a “new industrial unit” under the Incentive Scheme clarified that the requirement to manufacture new items applied only when an existing unit set up a branch as a second or third unit in a different location.<\/p>\n

The rejection of the petitioner’s application was solely based on the clubbing of investments and not on any substantive grounds. The Court found no legal basis for such clubbing, and the rejection lacked a foundational basis.<\/p>\n

The Court rejected the argument that the petitioner’s previous benefits under the West Bengal Industrial Promotion (Assistance to Industrial Units) Scheme, 2010, would disentitle them from claiming benefits under the Incentive Scheme, 2013 and held that the petitioner’s previous benefits under the 2010 Scheme do not disentitle them from the Incentive Scheme, 2013.<\/p>\n

Court’s Decision<\/p>\n

The court set aside and quashed the decision of the General Manager, District Industries Centre, Howrah, rejecting the petitioner’s application. The Court directed the issuance of the Eligibility-cum-Registration Certificate for the Howrah unit as a small enterprise under the Incentive Scheme, 2013. The respondent was further directed to extend the benefits of the scheme within four weeks from the date of issuance of the certificate.<\/p>\n

[Fena (P) Ltd.<\/span> v. State of W.B.<\/span>, 2023 SCC OnLine Cal 5110<\/a>, order dated 14-12-2023<\/span>]<\/p>\n

*Judgment by Justice Hiranmay Bhattacharyya<\/span><\/strong><\/p>\n\n

Advocates who appeared in this case :<\/p>\n

Mr. Saptansu Basu, Sr. Adv and Mr. Sayan Sinha, Counsel for the Petitioner<\/p>\n

Mr. Anirban Ray, Ld. GP, Mr. Tanoy Chakraborty and Ms. Saptak Sanyal, Counsel for the Respondent\/State<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

The definition of a “new industrial unit” does not require manufacturing new items; it applies when an existing unit sets up a branch in a different location.<\/p>\n","protected":false},"author":67514,"featured_media":290502,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[3,10],"tags":[2689,63634,49113,59104,51158,63633],"class_list":["post-309559","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-casebriefs","category-highcourts","tag-Calcutta_High_Court","tag-eligibility-cum-registration-certificate","tag-industrial-unit","tag-justice-hiranmay-bhattacharyya","tag-msmed-act-2006","tag-w-b-incentive-scheme-2013"],"yoast_head":"\nCalcutta High Court directs issuance of Eligibility-cum-Registration Certificate under W.B. 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