STATE OF JAMMU.AND KASHMIR versus M/S. TRIKUTA ROLLER FLOUR MILLS PVT. LTD.

Citation: [2017] 9 S.C.R. 642 · Decided: 18-08-2017 · Supreme Court of India · Bench: RANJAN GOGOI · Disposal: Appeal(s) allowed

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Judgment (excerpt)

A 
B 
[2017] 9 S.C.R. 642 
STATE OF JAMMU.AND KASHMIR 
v. 
Mis. TRIKUTA ROLLER FLOUR MILLS PVT. LTD. 
AND ANOTHER 
(Civil Appeal No. 9844 of201 l) 
AUGUST 18, 2017 
[RANJAN GOGOi, PRAFULLA C. PANT AND 
NAVIN SINHA, JJ.I 
C 
Judicial review - Of policy decision - Scope - G.O. issued by 
appellant-State in 1990 granting 100% refund of Central Sales Tax 
(CST). paid by small scale industrial units (SSl units) in the State, 
on raw materials purchased from outside the State, for a period of 
five"years - G.O. of 1990 superseded by G.O. of 1993 which 
restricted the said refund - Writ petitions by respondents assailing 
D the said GO. of 1993 contending that the State could not have 
withdrawn or modified the benefit before the time period mentioned 
in the notification - High Court allowed the writ petitions holding 
that the State was bound to provide refund for a period of 5 years -
Held: Scope fo.r judicial scrutiny and interference with economic 
E 
p_~licy decision has to pe restricted to arbitrariness and 
unreasonableness - Grant of refund on CST paid to boost 
entrepreneur investment was primarily an executive economic policy 
decision and it included the power of the State to review the. policy 
from time to time - Policy was modified by the State on account of 
refunds being availedfraudulently which was causing revenue loss 
F 
to the State, thereby affecting the larger public interest - Respondents 
had no legal or ind~feasible right to claim r~fund of CST paid by 
them - Order of High Court is unsustainable and is set aside -
However, such claims which have already been granted and the 
financial benefit availed, shall not be reopened or withdrawn, and 
G no refund shall be made by any unit to the State - Sales Tax -
Administrative law. 
H 
Administrative law - Administrative policy - Economic policy 
decision - Judicial review - Scope of- Restrictions on - Held: 
Judicial review of a policy decision, especially on economic policy, 
shall have to be restricted to the presence o,fjust and valid reasons 
642 
STATE OF JAMMU AND KASHMIR v. M/s. TRIKUTA ROLLER 
643 
FLOUR MILI:S PVT. LTD. 
eschewing arbitrariness, so as not to fall foul of Art.14 -
A 
Constitution of India - Art. 14. 
Allowing the appeals with directions, the Court 
HELD: 1.1 The grant of refund on CST paid to boost 
entrepreneur investment was primarily an executive economic 
policy decision. The scope for judicial scrutiny and interference B 
with the same, is to be restricted to arbitrariness and 
unreasonableness. (Para 9) [646-E] 
Ugar Sugar Works Ltd. v. DelhiAdmn. (2001) 3 SCC 
635 : 12001) 2 SCR 630 - relied on. 
c 
1.2 The respondents had no legal or indefeasible right to 
claim refund of CST paid by them. The policy rested on an 
executive decision to. encourage e.ntrepreneur investment. It 
naturally included the power of th.e State to review the policy 
from time to time, including on considerations for the manner in 
which the policy was proving beneficial or detrimental to the larger D 
public intere~t, and the State exchequer. The policy could 
therefore well be withdrawn or modified at any time for just, valid 
and cogent reasons. Judicial review of a policy decision, especially 
an economic policy decision, shall have to be restricted to the 
presence of just and valid reasons eschewing arbitrariness, so as 
E 
not to fall foul of Article 14 of the Constitution. But, in the garb 
. of judicial review, the Court will not examine the sufficiency or 
adequacy of the reasons or materials, in the manner of an appellate 
authority, to substitute its own wisdom for that of the government. 
That would tantamount to taking over of the eirncutive decision 
making process. The appellant contended before the High Court F 
that based on verification of complaints regarding refunds ·having 
been obtained without any payment of CST, causing revenue loss 
to the State, the decision was taken in larger public interest. The 
High Court unfortunately dealt with it very cursorily. Misuse of 
exemption, fraudulent claims for refund, affecti,ng the financial · G 
health and coffers of the State can certainly be valid and germane 
reasons in the larger public interest, to restrict or revoke the 
benefit. The policy wisdom of the State that the grant of refund 
was eroding non- plan resources is a matter exclusively in the 
executive domain. [Paras 10, 11 and 13) [647-A-F; 648-GJ 
H 
644 
SUPREME COURT REPORTS 
[2017] 9 S.C.R. 
A 
Commissioner of Comme

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