Apex Court hearing on Punjab suit in April

R Sedhuraman

New Delhi, January 16

The Supreme Court today said it would hear in April preliminary arguments on the maintainability of Punjab’s suit against Centre’s 2010 circular offering duty sops to industrial units in Himachal Pradesh, Jammu and Kashmir and Uttarakhand.

A Bench comprising Justices Kurian Joseph and AM Khanwilkar passed an order slating the hearing for the last week of April.

Another SC Bench had observed in 2013 that Punjab’s suit was prima facie not maintainable. Punjab should have challenged the circular instead of filing a suit which was meant for resolving inter-state disputes, a Bench comprising Justices Gyan Sudha Misra (since retired) and PC Ghose had remarked.

Punjab, however, maintained that the Centre had no right to offer duty concessions to the industrial units moving from Punjab to the three hill states just to avail of the tax sops. Such concessions should be given only to new units, not re-located units.

Earlier, the SC-appointed mediators had failed in their efforts to find a solution. The sops were offered for 10 years from June 2002 for Jammu and Kashmir and from January 2003 to the other two states.

Before the 10-year period was over, the Centre issued a circular on December 12, 2010 offering continued excise duty exemption for 10 years even to plants that were added or upgraded by the industrial units to step up output. This prompted Punjab to amend its 2009 suit for challenging the circular.

The amended suit said the renewed duty exemption would hit the existing industrial units in Punjab and result in unemployment and revenue loss to the government. Himachal has defended the need for duty concessions for the industries in the hill state. HP has pleaded that because of the “peculiar and tough geographical conditions and industrial backwardness” of the state, enterprises should be encouraged to set up shop in the hilly region. Punjab had no legal right to challenge the sops through a suit, it has maintained.