Industrial incentive claims cannot be rejected solely for procedural delay; authorities must consider them on merits.

The petitioner, an industrial unit, claimed a 3% Central Interest Subsidy under the North East Industrial Policy, 2007 and the scheme framed thereunder.

The policy and scheme did not prescribe any limitation period for submitting subsidy claims.

The petitioner submitted its claim in March 2016 for the relevant period, stated to be 1 April 2013 to 31 March 2014.

As the claim was not processed, the petitioner approached the Gauhati High Court in WP(C)/135/2018. By order dated 12 January 2018, the authorities were directed to consider the claim and pass appropriate orders.

On reconsideration, the Additional Director rejected the claim by communication dated 11 July 2018, solely on the ground that it had been submitted beyond the one-year period contemplated by a circular dated 16 September 2013.

The petitioner challenged that rejection under Article 226 of the Constitution.

Whether the authorities could reject the petitioner’s Central Interest Subsidy claim as time-barred when neither the North East Industrial Policy, 2007 nor the scheme prescribed a limitation period for making such claims.

Whether the procedural timeline prescribed by the circular dated 16 September 2013 was mandatory so as to defeat the petitioner’s substantive claim without consideration on merits.

Whether the petitioner’s claim ought to be remanded for consideration on merits in light of the beneficial objective of the industrial-development scheme.

Although authorities may prescribe a reasonable procedural module for implementing a policy or scheme, such a procedural requirement cannot ordinarily defeat the substantive benefit where the policy and scheme themselves prescribe no limitation period.

Eligibility conditions under an exemption or incentive scheme must be construed strictly, but procedural requirements should be construed liberally so as to advance, rather than frustrate, the scheme’s beneficial objective.

The Court relied on M.K. Jokai Agri Plantations (P) Ltd. v. Commissioner, CEST, (2018) 4 GLR 74, on liberal construction of beneficial industrial incentives; Tata Iron & Steel Co. Ltd. v. State of Jharkhand, (2005) 4 SCC 272, which held that courts should not prescribe limitations or restrictions where none exist and that industrial-incentive notifications should be interpreted to advance their objective; and State of Orissa v. Tata Sponge Iron Ltd., (2007) 8 SCC 189, concerning liberal construction of procedural conditions.

The Court also considered the respondents’ reliance on Sant Ram Sharma v. State of Rajasthan, AIR 1967 SC 1910, and M/s Pran Beverage (I) Pvt. Ltd. v. Union of India, but preferred the Supreme Court’s principles requiring substantive claims under industrial-development policies to be considered on merits.

The Court found that the governing policy and scheme contained no limitation period for filing a Central Interest Subsidy claim.

Although the authorities were entitled to prescribe an administrative timeline through the 16 September 2013 circular, that timeline could not automatically operate as an absolute bar to the petitioner’s claim, particularly because the rejection was based solely on delay and did not examine eligibility or the merits.

The petitioner’s other subsidy claims had been considered on merits, while the present claim alone was rejected as time-barred, reinforcing the need for a substantive examination.

Applying the principle that eligibility requirements are strict but procedural requirements must be liberally construed, the Court held that rejection on technical grounds would undermine the objective of promoting industrial development in the North-Eastern region.

The communication dated 11 July 2018 was quashed and set aside.

The matter was remanded to the competent authorities for consideration of the petitioner’s Central Interest Subsidy claim on merits, preferably within four months from receipt of the certified copy of the order.

The petitioner was also to be given an opportunity to provide clarification, if required.

The writ petition was allowed, with no order as to costs.