Beneficial incentive schemes must be interpreted liberally to prevent procedural technicalities from defeating substantive entitlement to subsidies.

The Petitioner No. 1, a manufacturing unit recognized by the Directorate of Micro, Small and Medium Enterprises (MSME), challenged an order dated February 22, 2019, issued by the Joint Secretary to the Government of West Bengal.

The impugned order rejected the petitioners' claim for "Interest Subsidy" under the West Bengal Incentive Scheme, 2013 (WBIS 2013).

The Department contended that because the petitioners commenced commercial production on February 10, 2015, prior to the project's appraisal (April 2, 2015) and term loan disbursement (June 8, 2015) by SIDBI, the unit was deemed an "own financed unit" and thus ineligible for interest subsidy.

Previously, by a letter dated April 12, 2017, the State had relaxed eligibility conditions to treat the unit as eligible under WBIS 2013, and the petitioners were already receiving "Power Subsidy" under the same scheme.

However, the State maintained that this relaxation did not guarantee eligibility for all components, specifically interest subsidy.

The Court applied the West Bengal Incentive Scheme, 2013, specifically Clause 7 (eligibility), Clause 10 (interest subsidy), and Clause 22 (power to relax).

Regarding statutory interpretation of incentive schemes, the Court relied on Union of India v. Wood Paper Ltd., which held that while eligibility for an exemption is construed strictly, the scope of the benefit once eligible is construed liberally.

It further applied Mangalore Chemicals and Fertilizers Ltd. v. Deputy Commissioner, asserting that procedural conditions should not defeat substantive benefits.

On administrative law, it cited Mohinder Singh Gill v. Chief Election Commissioner regarding the finality of written orders.

BSNL v. BPL Mobile Cellular Ltd. regarding the necessity of natural justice when rectifying administrative decisions.

The Court found the State's classification of the unit as "own financed" to be factually and legally erroneous.

It noted that the petitioners had secured machinery on credit with an explicit understanding that the bank loan would directly reimburse the vendor, which SIDBI eventually did.

The Court observed a logical inconsistency in the State's position: the State had already granted "Power Subsidy" to the petitioners, which required fulfillment of the same eligibility criteria as the "Interest Subsidy".

Once the State exercised its power under Clause 22 to relax eligibility via the April 2017 letter, it could not subsequently "fragment" those benefits by denying the core component of interest subsidy based on the same facts.

The Court emphasized that for beneficial incentive schemes, a "strict construction" that elevates procedural sequence (loan timing) over substantive compliance (existence of a loan) defeats the legislative intent of MSME promotion.

The Court held that the unilateral reversal of the petitioners' perceived benefits without a hearing violated natural justice.

The High Court allowed the writ petition, set aside the impugned order dated February 22, 2019, and directed the respondent authorities to disburse the "Interest Subsidy" on the SIDBI term loan in accordance with Clause 10 of WBIS 2013 within eight weeks.