As per the case facts, Ultratech Cement Ltd. sought land for a cement plant. After a single judge dismissed their petition, the High Court directed the State to process land ...
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REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 2773 OF 2020
(Arising out of SLP(Civil) No. 2252 of 2019)
M/S. ULTRATECH CEMENT LTD. & ANR. ….APPELLANT(S)
VERSUS
STATE OF RAJASTHAN & ORS. ….RESPONDENT(S)
JUDGMENT
Dinesh Maheshwari, J.
PRELIMINARY AND BRIEF OUTLINE
Leave granted.
2.This appeal is directed against the judgment and order dated 11.01.2019
passed in D.B. Civil Writ Petition No. 9090 of 2018, whereby the High Court of
Judicature for Rajasthan, Bench at Jaipur, dismissed the writ petition filed by
the appellants while upholding the order of revision dated 12.03.2018 as
passed by the Additional Chief Secretary, Finance, Government of Rajasthan,
Jaipur
1
in revision proceedings under Clause 13 of the Rajasthan Investment
Promotion Scheme-2003
2
.
1 ‘ACS’ for short
2 Hereinafter also referred to as ‘RIPS-2003’ or simply ‘the Scheme’.
1
2.1.The appellant No.1, M/s Ultratech Cement Limited (Unit-Kotputli
Cement Works), is a public limited company registered under the Companies
Act, 1956 and engaged in the business of manufacturing and marketing of
cement and allied products. It may be noted that previously, the appellant was
carrying on its business in the name of M/s Grasim Industries Limited
3
, a
company of the Aditya Birla Group, which was engaged in manufacturing
staple fiber, cement, textiles, sponge iron, aluminum etc. The company
originally had two cement plants, one situated in Chittorgarh District and
another in Jodhpur District in the State of Rajasthan. The appellant No.2 is
said to be the Senior General Manager of the said Kotputli Unit of the
appellant No.1. The matter in issue in the present case essentially relates to
the extent to which the appellant No.1 company was entitled, under RIPS-
2003, to avail the Capital Investment Subsidy
4
in relation to its Kotputli Unit.
5
2.2.The respondent No.1 herein is the State of Rajasthan and respondent
Nos.2 to 5 are its officers related with respective departments whereas
respondent No.6 is the State Level Screening Committee, who was the
prescribed authority for determining eligibility for subsidy under the Scheme in
question.
6
3 The company’s name was changed to M/s Ultratech Cement Limited w.e.f. 01.08.2010.
4 Hereinafter also referred to as ‘the subsidy’.
5 For continuity of discussion, we shall refer only to the appellant No.1 as ‘the appellant’ or ‘the
company’.
6 For continuity of discussion, we shall refer to the respondents collectively and shall refer to the
particular respondent only when necessary in the context.
2
2.3.By the aforesaid order of revision dated 12.03.2018, the ACS held
that the Kotputli Unit of the company was entitled to Capital Investment
Subsidy only to the extent of 50% of the payable and deposited Sales Tax/VAT
and not to the extent of 75%, as availed by it pursuant to the Entitlement
Certificates dated 29.04.2011 and 24.11.2011 erroneously issued by the State
Level Screening Committee
7
. The SLSC was directed to issue a new
Entitlement Certificate for subsidy to the limit of 50% of total tax to the said
Kotputli Unit of the company; and the company was directed to refund the
amount of subsidy availed in excess of 50% of the payable and deposited tax
together with interest at the rate of 18% per annum.
3. Put in a nutshell, case of the appellant is that the subsidy in question,
to the extent of 75% of tax payable and deposited, was availed by it under the
Rajasthan Investment Promotion Scheme-2003 only in terms of and pursuant
to: (a) the decision taken by the high-powered Board of Infrastructure
Development and Investment Institution
8
on 01.04.2006; (b) the Memorandum
of Understanding
9
entered with the State Government on 30.11.2007; and (c)
the Entitlement Certificates issued by SLSC on 29.04.2011 and 24.11.2011.
Therefore, according to the appellant, there was no occasion for the ACS to
invoke Clause 13 of the Scheme; and the appellant can neither be forced to
repay the amount of subsidy already availed of nor could any interest be
charged. Per contra, stand of the respondents is that the decision of BIDI
7 ‘SLSC’ for short.
8 “BIDI” for short.
9 “MoU” for short.
3
dated 01.04.2006 is of no good for the appellant because the package
referred therein was withdrawn and the corresponding provisions in the
Scheme were deleted on 28.04.2006; and the benefits under the deleted
provisions could have been granted only until the date of their deletion, i.e.,
28.04.2006. Thus, according to the respondents, understanding of the State
Government with the company had only been to extend the benefit of incentive
in terms of subsidy to the extent permissible under the Scheme and not
beyond. The respondents would assert that the aforesaid Entitlement
Certificates were erroneously issued by SLSC and the matter being related to
public exchequer, the appellant is not entitled to claim any relief contrary to the
applicable provisions/stipulations.
4. The factual aspects of the matter are not of much controversy but, for
what has been noticed hereinabove and for what has been contended on
behalf of the parties before us, the major questions involved in this matter,
including those relating to the effect of the decision of BIDI as also the MoU
entered into between the parties, revolve around the terms and stipulations of
the Rajasthan Investment Promotion Scheme-2003. Hence, at the outset, it
shall be apposite to take note of the relevant Clauses of this Scheme having
bearing on the case.
Rajasthan Investment Promotion Scheme-2003: Relevant Clauses and
their amendments/revisions up to 05.08.2010
5. Rajasthan Investment Promotion Scheme-2003, with which we are
concerned in this case, had been a non-statutory Scheme announced by the
4
Government of Rajasthan through its Finance Department Order dated
28.07.2003
10
. It is apparent from the material placed before us that this
Scheme had undergone umpteen number of amendments/revisions from time
to time. We may refer to the relevant Clauses as also their important
amendments/revisions as infra.
11
5.1.As per the Preamble, the Scheme was introduced by the State
Government with a view to ‘provide investors an attractive opportunity to
invest in the State of Rajasthan’. As per its revised Clause 2, the Scheme was
to come into operation w.e.f. 01.07.2003 and was to remain in force up to
31.03.2011
12
. The applicability of the Scheme, in its amended form, had been
specified as follows:-
“3.APPLICABILITY OF THE SCHEME
The Scheme shall be applicable to all new investments and
investments made by existing units and enterprises for
Modernization/Expansion/Diversification, including the units/
enterprise, covered under policy for promotion of Agro-processing
and Agri-business, 2010 subject to the condition that such units
shall commence commercial production/operations owing to such
investment during the operative period of the Scheme.”
5.2.Some of the expressions and phrases used in the text of the Scheme
had been defined in Clause 4 thereof. Then, the eligibility for availing Capital
Investment Subsidy had been provided in Clause 5 of the Scheme as
follows
13
:-
“5.ELIGIBILITY:
10 ‘Finance Department’ has appeared in short form ‘FD’ in some of the expressions.
11 A copy of this Scheme, as amended upto 05.08.2010, has been placed on record as Annexure P-1
and another copy of this Scheme, as amended upto 25.01.2010, has been placed for perusal in
compilation by the respondents. The extractions herein are from the copy of Scheme as amended
upto 05.08.2010.
12 As per amendment dated 06.08.2008
13 Clause 5A, dealing with eligibility in case of Sick Industrial Units and Clause 5B, dealing with
eligibility in case of Biotechnology Units, are not relevant in the present case.
5
The benefits Capital Investment subsidy as per Clause 7 and
exemptions as per Clause 8 under the Scheme shall be available
to all units, other than those covered in the list of ineligible units,
subject to the fulfilment of the following conditions:
(i)the term loan sanctioned by the State/Central financial
institution(s)/International Financial Institution/Corporation
and/or Scheduled Commercial Bank(s) including co-
operative Bank(s), has been sanctioned and utilized during
the operative period of the Scheme;
Provided that this condition shall not apply for the benefits
pertaining to purchase/use of land.
(ii)the unit shall have a minimum borrowing for investment of
Rs. 10 lacs or having an investment of at least Rs. 10 lacs in
land and /or building calculated on the basis of DLC/RIICO
rate for land, and Rs. 3228/- per sq. metre (Rs. 300/- per sq.
ft.) for building, during the operative period;
provided that the above limit of Rs. 10 lacs shall be Rs. 5
lacs in case of Small Scale Industries.
(iii)to claim Capital Investment Subsidy (Wage component) the
unit shall provide:
(a)direct employment to at least ten persons in case of a
new unit; and
(b)twenty five percent additional direct employment subject
to a minimum of ten persons in case of diversification,
modernization or expansion.
(iv)the unit shall be eligible for Capital Investment Subsidy
(Interest component) and/or Capital Investment Subsidy
(Wage component) only if it commences first commercial
production/operation during the operative period of the
Scheme;
(v)there has been no default in repayment of dues against term
loan of the concerned financial institution(s) and/or Bank(s);
and
(vi)the applications as required under this Scheme are
presented with full particulars and supporting documents, as
required, before the appropriate authority within 90 days of
commencement of commercial production/operation of the
project in respect of which the Capital Investment Subsidy
(Wage component)/Capital Investment Subsidy (Interest
component) is sought. Such commercial
production/operation should however commence during the
operative period of the Scheme, i.e., on or before March 31
st
2011.
5.3.The provisions relating to the prescribed authority for granting
benefits under the Scheme and the prescribed authority to recommend grant
6
of customized incentive package, as contained in Clauses 6 and 6A had been
as follows
14
:-
“6. AUTHORITY TO GRANT BENEFITS UNDER THE SCHEME:
The prescribed authority for determining the eligibility, except for
exemption from stamp duty and/ or conversion charges, under this
Scheme shall be the following Screening Committees, whose
decisions, subject to other provisions of the Scheme, shall be final:
S.N.Investment
amount
Prescribed Authority Status
1. Investment
above Rs.
10.00
crores
State Level Screening
Committee (SLSC) consisting
of the following:
a) Pr. Secretary, Industries Chairman
b) Secretary, Finance (Rev.) or
his representative not below the
rank of Deputy Secretary
Member
c) Commissioner, Commercial
Taxes or his representative not
below the rank of Additional
commissioner.
Member
d) CMD, RFC or his
Representative, not below the
rank of ED
Member
e) MD, RIICO or his
Representative, not below the
rank of ED
Member
f) Commissioner, Industriesmember-
Secretary
2. Investment
up to
Rs. 10.00
cores
District Level Screening
Committee (DLSC) consisting
of the following:
a) District Collector Chairman
b) Concerned Branch Manager
of RFC in the District
Member
c) Concerned Senior Regional
Manager/ Regional Manager of
RIICO in the District.
Member
d) Deputy/ Asstt.
Commissioner, Commercial
Taxes/ Commercial Taxes
Member
14 Clause 6B, dealing with incentives for quality and standards upgradation, is also not relevant in the
present case.
7
Officer (CTO)
e) General Manager DIC
Member-
Secretary
“6A. Authority to recommend grant of customized incentive
package:
Notwithstanding anything contained under any clause/(s) of the
scheme, the following committee shall examine individual cases of
investment and may recommend for sanction of the Customized
Incentive Package through BIP or BIDI.
S.N.Investment
amount
Prescribed officers Status
1 2 3 4
1.
More than
500 crores
Principal Secretary, Finance or
his representative not below the
rank of Secretary
Member
2. Principal Secretary, Industries/
Secretary Industries.
Member
3. Commissioner, Commercial
Taxes.
Member
4. Commissioner (Investment &
NRI)
Convenor
”
5.4.The extent and limit of Capital Investment Subsidy under the
Rajasthan Investment Promotion Scheme-2003 was specified in Clause 7 of
this Scheme, which had undergone a vast number of amendments/revisions
over the course of time. In fact, the amendments/revisions of this Clause with
insertion of sub-clauses (vi) and (vii) (with effect from 02.12.2005) and their
deletion (with effect from 28.04.2006) form the bone of contention in this case.
We may take note of the entire Clause 7 with its sub-clauses (i) to (v) as
amended/revised from time to time while also pointing out the dates of
relevant amendments/revisions, which have bearing on the present case as
follows
15
:-
15 Sub-clause (va), providing for additional direct employment based subsidy, inserted by FD order
dated 05.08.2010, is omitted for being not relevant in the present case.
8
“7.Capital Investment Subsidy:
(i)(a)In case of new investments made, the sum total of Capital
Investment Subsidy (Interest component) and Capital
Investment Subsidy (wage component) would be subject to
a maximum limit of fifty percent of the tax payable and
deposited under the Rajasthan Sales Tax Act, 1994, the
Central Sales Tax Act, 1956 and Rajasthan Value Added
Tax Act, 2003
(b)“In case of investment made in Modernization/ Expansion,
the amount of Capital Investment Subsidy shall be subject
to maximum of fifty percent of the amount of the Central
Sales Tax and VAT payable or deposited by the unit on its
additional capacity, so created over and above the installed
capacity before Expansion/Modernization.
illustration:- Installed capacity of unit ‘A’ before
expansion/Modernization was 100 tons and after expansion
it becomes 150 tons but the unit ‘A’ produce 140 tons. Tax
paid on (140 tons – 100 tons) = 40 tons shall qualify for
calculation of Capital Investment Subsidy.
For diversification the amount of Capital Investment subsidy
shall be subject to a maximum of fifty percent of the amount
of Central Sales Tax and VAT payable or deposited by the
unit over and above the highest tax payable or deposited
whichever is higher, in any of the three immediately
preceding years.”
provided that the maximum limit of fifty percent
prescribed under clause 7(i)(a) and clause 7(i)(b) may be
raised by the BIDI (Board of Infrastructure Development &
Investment Promotion, Government or Rajasthan) to sixty
percent in such cases where the investment exceed Rs.
100 crores but are less than or equal to Rs. 200 cores; and
this maximum limit may be raised further to seventy five
percent in cases where the investments exceed Rs. 200
crores
16
.
and provided further that the maximum limit of 50%
prescribed under clause 7 (i) a and clause 7 (i) b shall be
raised up to 75% for the Biotechnology Unit established in
terms of the Biotechnology Policy, 2004.
provided also that for the new investment in textile
sector, the maximum limit of 50% prescribed under clause
7(i)(b) shall stand raised to, sixty percent in such cases
where such investment exceeds Rs. 50 crores but is less
than or equal to Rs. 100 crores and to seventy five percent
in cases where such investment exceeds Rs. 100 crores.
(ii) Subject to clause (i) Capital Investment Subsidy (Interest
component) shall be 5% (percentage points). An additional
16 This proviso amended by FD order dated 22.10.2003.
9
Capital Investment Subsidy (Interest component) of one percent
shall be available to Schedule Caste/Schedule Tribe
entrepreneurs. In case the documented rate of interest is less
than 5% or less than 6% in case of SC/ST entrepreneurs, the
entitlement of the Capital Investment Subsidy (Interest
component) will be limited to the documented rate of interest
and the amount actually paid as interest but shall not include
penal interest.
(iii) The Capital Investment Subsidy shall be available to the
investors for seven years from the date of first repayment of
interest in case of Capital Investment Subsidy (Interest
component) and first payment of wages/employment in case of
Capital Investment Subsidy (wage component). In case of
Expansion/Modernizing the unit shall be eligible for Capital
Investment Subsidy under the scheme from the date of
payment of tax deposited on their additional production after
Expansion/ Modernization and for diversification, the amount in
excess of the Central Sales Tax and VAT deposited by the unit
over and above the highest tax payable or deposited whichever
is higher, in any of the three immediately preceding years.
Provided that for the first cement plant, having minimum
capacity of 3 million tons per annum and minimum investment
of Rs. 1000 crores, to be established in Jaisalmer district, the
Capital Investment Subsidy shall be available to the investor for
12 years from the date of first repayment of interest in case of
Capital Investment Subsidy (Interest component) and first
payment of wage/employment in case of Capital Investment
Subsidy (wage component) if the 25% of its manpower is local.
Provided that for the new investments in the units being
established in Special Economic Zones located entirely in
backward and rural areas (as may be specified by the State
Government by an order), the period of seven years shall stand
raised to ten years.
Provided further that the investment made or committed before
22.05.2008 or under MOU signed during Resurgent Rajasthan
Summit for both new cement unit or under expansion, having
capacity more than 200 tons per day, shall be eligible for Capital
Investment Subsidy under this clause on the condition that such
unit shall start commercial production by 31.03.2011.
17
Captive Power Plant: The existing unit under expansion/
modernization, investing in captive power plant shall qualify for
Capital Investment Subsidy under this clause.
(iv) Where a unit has claimed and/or is availing benefit of the
Capital Investment Subsidy (Interest component) the Capital
Investment Subsidy (Wage component), shall be available to
the extent of twenty five percent of wages/salary paid by the
17 This proviso inserted by FD order dated 30.09.2008.
10
investors to workers for whom the employee and employers are
both contributing in the approved provident funds. However, in
case of the unit is not claiming or availing Capital Investment
Subsidy (Interest component), the amount of Capital Investment
Subsidy (Wage component) shall be thirty percent of the
wages/salary paid to the workers for whom the employee and
the employer are both contributing in the approved provident
funds,
provided however that notwithstanding anything contained in
this clause, Capital Investment Subsidy (Wage component) in
the case of diversification/expansion of modernization shall be
available only with respect to additional numbers of such
workers engaged for whom the employee and the employer are
both contributing in the approved provident funds,
and provided further that such additional number of workers in
the case of diversification, modernisation or expansion is at
least twenty five percent of the existing direct employment
subject to a minimum of ten additional persons as already
provided under Clause 5(iii)(a)(b) of this Scheme.
(v) For Capital Investment Subsidy (Interest component) the
interest actually being paid on the additional capital borrowed
shall be the only basis for computation of Capital Investment
Subsidy. In case of Capital Investment Subsidy (Wage
component) the wages/salary paid for the additional
employment generated shall be the basis for the computation of
Capital Investment Subsidy (Wage component).”
5.4.1.As observed, sub-clauses (vi) and (vii) were inserted to the aforesaid
Clause 7 of the Scheme on 02.12.2005 and were deleted on 28.04.2006; but
these sub-clauses (vi) and (vii) of Clause 7 form the core of issues involved in
this matter and hence, for ready reference, are extracted as under :-
“(vi) Notwithstanding anything contained in sub clauses (i) to (v)
above, in case of new cement unit having investment exceeding
Rs.400 crores and with a minimum regular employment of 200
persons, the amount of subsidy shall be subject to a maximum
limit of 75% of the tax payable or deposited under Rajasthan
Sales Tax, 1994 or Value Added Tax Act(as and when
introduced in the State) and Central Sales Tax Act, 1956 for a
period of 7 years from the date of the commencement of
production, subject to the following conditions, namely-
1.The investor shall submit an option to the Member Secretary,
SLSC to avail benefit under this scheme within 180 days of
this amendment;
11
2.The unit shall start commercial production within 5 years of
filing of application for option; and
3.The sum total of 75% subsidy shall be calculated in the
following manner:-
(a)Subsidy of 45% of the Rajasthan Sales Tax or Value
Added Tax and Central Sales Tax shall be allowed upfront
on the basis of actual tax liability; and
(b)The remaining subsidy to the extent of 30% of Rajasthan
Sales Tax or Value Added Tax and Central Sales Tax liability
shall be allowed in form of interest subsidy,
wage/employment subsidy out of which interest subsidy
shall be limited to 5% of the documented rate of interest and
the amount actually paid as interest shall not include penal
interest, and wage/ employment subsidy. A unit not claiming
any interest subsidy can claim wage/ employment subsidy
to the extent of 30%, subject to other conditions under this
amendment.
4.The claim of subsidy shall be as per the provisions of this
Scheme.
(vii) Notwithstanding anything contained in sub clause(i) to (v)
above, in case of investments for expansion of existing cement
unit having investment exceeding Rs.200 crores and with a
minimum regular employment of 100 persons, the amount of
subsidy shall be subject to a maximum limit of 75% of the
additional tax( calculated by taking the average of last 3 years)
payable or deposited under Rajasthan Sales Tax Act, 1994 or
Value Added Tax Act(as and when introduced in the State) and
Central Sales Tax Act, 1956 for a period of 7 years from the
date of commencement of production, subject to the following
conditions, namely-
1.The investor shall submit an option to the Member Secretary,
SLSC to avail benefit under this scheme within 180 days of
this amendment;
2.The unit shall start commercial production within 5 years of
filing of application for option; and
3.The sum total of 75% subsidy shall be calculated in the
following manner:-
(a)Subsidy of 45% of the Rajasthan Sales Tax or Value
Added Tax and Central Sales Tax shall be allowed upfront
on the basis of actual tax liability; and
(b)The remaining subsidy to the extent of 30% of the
Rajasthan Sales Tax or Value Added Tax and Central Sales
Tax liability shall be allowed in form of interest subsidy,
wage/ employment subsidy out of which interest subsidy
12
shall be limited to 5% of the documented rate of interest
and the amount actually paid as interest shall not include
penal interest, and wage/ employment subsidy. A unit not
claiming any interest subsidy can claim wage/ employment
subsidy to the extent of 30% subject to other conditions
under this amendment.
4.The claim of subsidy shall be as per the provisions of this
Scheme.”
5.4.2.A few material aspects concerning the amendments/revisions of
Clause 7 of the Scheme had been that by way of Notification bearing No.
F.12(20) FD/Tax/2005 dated 22.05.2008, the Government of Rajasthan
proceeded to issue clarification to resolve the ambiguity relating to
admissibility of subsidy with regard to cement industry in the wake of aforesaid
amendment dated 28.04.2006, deleting sub-clauses (vi) and (vii) of Clause 7.
In the said Notification dated 22.05.2008, the State Government clarified, in
specific terms and by way of illustrations, that none of the benefits under the
deleted sub-clauses (vi) and (vii) of Clause 7 of RIPS-2003 would be available
on and after 28.04.2006 as follows:-
“State Government hereby clarifies that the benefits under the
deleted provision cannot be granted on and after 28.04.2006, that
is to reiterate that none of the types enumerated at Sl. No. 1 to 6
below, quality for benefits under deleted sub-clause (vi) and (vii) of
clause 7 of RIPS-2003 on or after 28.04.2006.
1. Where the option was submitted before 28.04.2006 and benefits
were also granted by SLSC before 28.04.2006.
2. Where the option was submitted before 28.04.2006 and benefits
were granted by SLSC after 27.04.2006.
3. Where the option was submitted before 28.04.2006 and benefits
had not been granted by SLSC,
4. Where the option was submitted after 27.04.2006 but within 180
days of 02.12.2005 and the benefits had not been granted by
SLSC,
5.Where the option was submitted after 27.04.2006 but within 180
days of 02.12.2005 and the case has not been considered by
SLSC, and
13
6. Where the option was submitted after 27.04.2006 but within 180
days of 02.12.2005 and the unit has still not applied for the
benefits.”
5.4.3.The aforementioned clarification was followed by the amendment
bearing No. F.12(20)FD/Tax/2005-Pt dated 30.09.2008 whereby, the
Government of Rajasthan inserted proviso to sub-clause (iii) of Clause 7 of
RIPS 2003 to the effect that the investment made or committed before
22.05.2008 or under the MOU, for both a new cement unit or under expansion,
having capacity of more than 200 tons per day, shall be eligible for subsidy on
the condition that the commercial production shall commence by 31.03.2011.
Similar proviso was also inserted to Clause 8 of the Scheme.
5.5.Clause 8 of the Scheme related to various exemptions for the eligible
beneficiary, in addition to the subsidies. Then, the procedure for claim of
incentives under the Scheme was specified in Clause 9 and its sub-clause (B)
may be usefully taken note of as under:-
“9.PROCEDURES:
(A) CLAIM OF EXEMPTIONS OF STAMP DUTY AND
CONVERSION CHARGES:
*** *** ***
(B) CLAIM OF CAPITAL INVESTMENT SUBSIDY:
(i)A unit entitled to claim Capital Investment Subsidy under this
Scheme should submit duly completed application in
prescribed Form, to the Member Secretary of the appropriate
Screening Committee (SLSC/DLSC). Such application shall
be accompanied with the following documents, as may be
applicable,-
(a)Loan sanction letter issued by the term lending
institution(s)/bank(s);
(b)Proof of investment in case of self finance and
(c)Approved Provident Fund deposit receipt.
(ii)The Member Secretary shall complete the formalities for
placing the completed application before the appropriate
Screening Committees within fifteen days from the receipt of
14
the application. Where an application has not been
completed within 15 days such cases shall separately be
placed before the committee with reasons.
Note: the District Level Screening Committee or the State
Level Screening Committee, as the case may be, on being
satisfied may condone the delay not exceeding 180 days in
filing of the application from the prescribed date of
application.
(iii)The Screening Committee shall dispose of the application
within fifteen days of its presentation by the Member
Secretary. If the Committee approves the case, the Member
Secretary shall issue Entitlement Certificate in the prescribed
format, within three days of such decision and convey the
decision to all concerned Departments, financial institutions,
Banks, Assistant Commissioner/ Commercial Taxes Officer of
the Circle where the dealer is registered under the RST/
CST/ VAT provisions, for necessary compliance.
(iv)In case the Committee rejects the application, the same shall
be communicated to the applicant within a week of the date
of such decision.
(v)The Assistant Commissioner/ Commercial Taxes Officer of
the area where the eligible unit is registered shall be the
Nodal Officer to give effect to the decision of the Screening
Committee.
(vi)The units declared eligible for availing Capital Investment
Subsidy under the Scheme, shall submit an application to the
Assistant Commissioner/ Commercial Taxes Officer for
claiming the Capital Investment Subsidy who shall provide
the Capital Investment Subsidy as per the order of the
Government issued in this regard.
(vii) The payment of Capital Investment Subsidy (Interest
component) shall be made only for the period for which the
unit deposits State and/or Central sales tax and/or and
makes regular repayment of loan and interest due to the
financial institution(s). Capital Investment Subsidy shall be
disallowed for the period the unit defaults in depositing sales
tax or defaults in regular repayment of loan or interest. It
shall be restored on the recommendation of the Assistant
Commissioner/ Commercial Taxes Officer from the
Commercial Taxes Department and the concerned Financial
Institution in case such unit clears all its over dues, and starts
making regular repayment of sales tax and the term
loan/interest.
(viii) “Rectification of mistake”, With a view to rectify mistake
apparent on the record, subsidy sanctioned by the assessing
authority of the Commercial Taxes Department, under this
scheme may rectify suo moto or otherwise any order passed
15
by him as per the provision of section 33 of the Rajasthan
Value Added Tax Act-2003.”
(ix)The periodicity for computation of subsidy under the scheme
will be on quarterly basis.”
5.6.The State Government extended the incentives under this Scheme
subject to the terms and conditions stipulated in Clause 10 thereof. This
Clause also carries its own bearing on the questions involved in this matter
including the question of interest sought to be claimed by the respondents.
Clause 11 specified the authorities for implementation/interpretation of the
Scheme; and Clause 12 provided for review and appeal by the authorities
concerned as also by the aggrieved party. Clause 13 of this Scheme, which
has been invoked for passing the impugned order dated 12.03.2018, provided
for revision by the State Government in its Finance Department, suo motu or
otherwise, where any order was found to be erroneous and prejudicial to the
interest of the State revenue. Lastly, Clause 14 provided for the general power
of the State Government to review or modify the Scheme as and when needed
in public interest. These Clauses 10 to 14 may also be reproduced as under:-
“10. TERMS & CONDITIONS:
The Capital Investment Subsidy (Interest component) and/or
Capital Investment Subsidy (Wage component) sanctioned and
paid under the Scheme and the exemption of luxury tax, electricity
duty, mandi tax, entertainment tax, stamp duty, conversion
charges and other benefits availed under the Scheme shall be
subject to the following conditions. Breach of any of these
conditions shall make the Capital Investment Subsidy/ exemption
amount liable to be recovered as Tax or arrears of land
revenue/alongwith interest @ 18% per annum from the date from
which the Capital Investment Subsidy was provided.
(a)The unit availing Capital Investment Subsidy (Interest
component) and/or Capital Investment Subsidy (Wage
component) and availing exemption of luxury tax, electricity
duty, mandi tax, entertainment tax, stamp duty, conversion
charges and other benefits under the Scheme shall comply
16
with all statutory laws and regulations. Non-compliance may
result in cancellation/withdrawal of the benefits under the
Scheme.
(b)The unit availing Capital Investment Subsidy (Interest
component) and/or Capital Investment Subsidy (Wage
component) and availing exemption of luxury tax, electricity
duty, mandi tax, entertainment tax, stamp duty, conversion
charges and other benefits under the Scheme shall be subject
to the conditions, procedures, instructions, clarifications, or
amendments issued from time to time under the Scheme.
(c) If any subsidy under any other scheme of Government of India
or Government of Rajasthan is received by the unit in respect
of interest payment, or as a wage/employment subsidy then
the total Capital Investment Subsidy payable under the
scheme shall be reduced to the extent of subsidy so received.
Provided, that if a unit is availing interest subsidy benefit under
Technology Upgradation Fund” (TUF) scheme of Government
of India, for textile sector, then it would be eligible to avail the
benefit up to 2.5% of Capital Investment Subsidy (Interest
component) under this scheme in addition to the interest
subsidy availed under the TUF Scheme.”
This benefit would be available with prospective effect from
the date of issue of this order.
Note: Interest @ 5 percent per annum would be payable to
investor in case the payment of Capital Investment Subsidy is
delayed for a period of more than 30 days once the Capital
Investment Subsidy release order is issued.
11. AUTHORITY FOR IMPLEMENTATION/ INTERPRETATION:
All the related departments shall implement the scheme. The
Industries Department shall act as the nodal coordinating,
monitoring and implementing department. Any matter pertaining to
interpretation of any Clause of the Scheme shall be referred to the
Government of Rajasthan in the Finance Department whose
decision shall be final in such a matter.
12. REVIEWS AND APPEAL:
The State Level Screening Committee and District Level
Screening Committee described under clause 6 and clause 6C of
this Scheme, shall also be empowered to review their decision.
The State Level Screening Committee shall hear and decide
appeals against the orders of District Level Screening Committee.
Provided that the aggrieved party has filed review application or
the appeal within the period of 60 days from the date of
communication of the decision of the committee.
13. REVISION BY THE STATE GOVERNMENT:
(a)The State Government in Finance Department may suo motu
or otherwise revise an order passed by any Screening
17
Committee wherever it is found to be erroneous and
prejudicial to the interest of the State revenue, after affording
an opportunity of being heard to the beneficiary industrial unit.
(b)No order under the sub-clause (a) shall be passed by the
State Government after the expiry of a period five years after
the date by which the benefits under this scheme are fully
availed of.
14.REVIEW OR MODIFICATION OF SCHEME:
The State Government in the Finance Department reserves
the right to review or modify the Scheme as and when needed
in public interest.”
BIDI: Composition and Mandate
6. Having taken note of salient features as also the relevant provisions
of the Scheme i.e., RIPS-2003 and their amendments, we may also take note
of a few facts relating to BIDI, whose decision carries a material bearing on the
questions involved in this case.
6.1.The restructuring of BIDI and its mandate was specified by the State
Government in its Administrative Reforms (Gr.3) Department by the order
dated 15.01.2005 in the following terms:-
“In superannuation of department’s Order No. F.6(51)AR/Gr.3/96
dated 26
th
January, 1999, the Governor is pleased to re-structure
the BOARD OF INFRASTRUCTURE DEVELOPMENT AND
INVESTMENT INSTITUTION (BIDI) to the following members:-
1. Chief Minister - Chairman
2. Industry Minister - Vice-Chairman
3. Planner Minister - Member
4. Energy Minister - Member
5. UDH Minister - Member
6. Chief Secretary - Member-Secretary
*** *** ***
1. To consider and review schemes and provide directions for
accelerating investment in to the State.
18
2. To consider these matters relating to investment, which have
not been disposed off by the concerned Departments/
Corporation/ Authorities within the time schedule prescribed by the
State Government.
3. To make amendments in investment policies and procedure to
accelerate economic development of the State.
4. To decide policy matters bearing direct/ indirect impact on
investment promotion.
5. To give projects pertaining to investment involving Rs. 25.00
Crores and above.
6. To approve a customized package of incentives where the
Board feels that the investment would catalyze employment and/
or further investments into the State.
7. To consider and dispose off, inter-departmental issues
pertaining to investment proposals.
8. To give any other directions which the Board considers to
encourage investment.”
6.2.One of the significant and relevant aspect emerging from the material
placed on record is that in supersession of the aforesaid order dated
15.01.2005 of reconstitution of BIDI, the State Government, in its
Administrative Reforms Department, by way of order No.F.6(51)AR/Gr.3/96
dated 08.06.2009, constituted another body in the name of Rajasthan
Investment Promotion Board. Hence, BIDI was not in existence after
07.06.2009 for having been disbanded.
Relevant factual and background aspects
7. Keeping the aforesaid provisions and features of Rajasthan
Investment Promotion Scheme-2003 as also BIDI in view, we may now take
note of the relevant factual and background aspects of this case in their
feasible chronology.
19
7.1.As noticed at the outset, the appellant M/s Ultratech Cement Limited
(Unit-Kotputli Cement Works), is a public limited company engaged in the
business of manufacturing and marketing of cement and allied products;
previously, the appellant was carrying on its business in the name of M/s
Grasim Industries Limited and acquired the present name from 01.08.2010.
The company originally had two cement plants, one situated in Chittorgarh
District and another in Jodhpur District in the State of Rajasthan.
7.2.It appears from the material placed on record that the company (then
carrying the name M/s Grasim Industries Limited), proposed to put up a
cement plant with installed capacity of 3 MTPA
18
at Kotputli, District Jaipur in
the State of Rajasthan and pursuant to a decision taken in BIDI meeting dated
10.01.2002, the mining lease for an area measuring 5.02 sq. kms. was
transferred to the company at the cost of Rs. 46.50 lakhs with the condition
that the company shall put up the cement plant within a period of three years.
However, this task of putting up the cement plant at Kotputli could not be
accomplished within the expected time, perhaps due to various pending
litigations. Be that as it may, after the aforesaid sub-clauses (vi) and (vii) were
added to Clause 7 of the Scheme w.e.f. 02.12.2005, the company made a
request for grant of incentives; and this request was duly considered in 11
th
Pre-BIDI meeting held on 28.03.2006.
7.2.1.The relevant agenda proposal of the said 11
th
Pre-BIDI meeting
19
fairly
gives insight into the nature of request made by the company, the views of the
18 ‘MTPA’ stands for metric ton per annum
19 At pp. 175-178 of the paper-book
20
Finance Department as also Industries Minister and the recommendations of
Pre-BIDI. Therefore, the same is reproduced in extenso as under:-
“Request of the Company:
The Company has requested for a customized package of
incentives on the ground that this a Mega Project with an
investment of more than Rs. 1000 crores. Details of the
concessions/incentives sought by the Company are as follows:-
Sl.
No.
Company’s
request
Existing PolicyFinancial
implications
given by the
company
1.Interest subsidy
@ 7.75% per
annum for a
period of 15
years on the
total investment.
Wage subsidy @
25% per annum
for a period of 15
years.
RIPS 2003, provides
that in the case of new
cement units having
investment exceeding
Rs. 400 crore with a
minimum regular
employment to 200
persons, interest
subsidy and
wage/employment
subsidy will be subject
to a maximum limit of
75% of the tax payable
and deposited under
RST/CST/VAT. Out of
this 75% subsidy, 45%
subsidy shall be
allowed upfront on the
basis of actual tax
liability and balance
subsidy to the extent of
30% shall be allowed in
the form of interest
subsidy and
wage/employment
subsidy of which
interest subsidy shall
be limited to 5% of the
documented rate of
interest.
These subsidies are
admissible for a period
of 7 years.
If the
Company’s
request is
accepted, total
financial
implication will
be Rs. 1102.50
crores over a
period of 15
years whereas
the financial
implication as
per RIPS 2003
will be Rs. 448
crores over a
period of 7
years.
In
correspondence
with the
company, they
had indicated
that the
company is self
sufficient and
no appraisal by
a financial
institution was
envisaged the
concession on
interest subsidy
has been asked
on total
investment.
21
2.Waiver of Entry
Tax for a period
15 years
No such policy exists.
However, BIDI has
granted 50% exemption
from entry tax of raw
materials, processing
materials, consumables
and packaging material
in the case of RAS
Cement Limited vide
notification No.
F.4(10)FD/Tax Div/02-
197 dated 21
st
Feb,
2003.
Total financial
implication on
plant &
machinery
would be Rs. 10
crores.
3.Waiver of
Royalty on lime
stone for a
period 15 years
No such policy existsThe total
financial
implication over
a period of 15
years will be
Rs. 290.70
crores.
4.100% exemption
of Electricity duty
for a period of 15
years
As per RIPS-2003,
50% exemption from
Electricity duty is
available for seven
years.
Furthermore, for new
investment exceeding
Rs. 400 crores, 100%
exemption from
Electricity duty is
admissible on self
generated energy in
respect of investment in
Captive power plant.
If power is
purchased from
Grid
(DISCOMs), the
total financial
implication over
a period of 15
years will be
Rs. 30.90
crores.
5.Subsidies will be
subject to a
maximum the
total investment
in the project i.e.
Rs. 1200 crores.
No such policy exists.In that case, the
company is
asking the total
benefit up to the
extent of Rs.
1200 crores.
Views of the Finance Department
The value of the enhanced incentives/exemptions will be
approximately Rs. 1130 crores which would be almost equal to the
cost of the plant being set up by the company (at a cost of Rs. 1200
crores). Finance Department is of the view that
incentives/exemptions beyond RIPS-2003 should not be given. If
further incentives/exemptions are granted, the 18 other companies
22
which are operating within the State will face competitive price
disadvantage. It would also be contrary to the declared policy of
providing level playing field for all.
Further, department has added that in the VAT regime, the
concessions may not be possible in any case. Therefore, limiting
benefit to RIPS in future reinforced (sic).
Views of the Industry Minister
If RIPS-2003 would have been good enough, investment would
have flown. Moreover, expansion and setting up has to be
differentiated. An expansion process costs around 250 to 400
crores. Now, new plants with 2 MT capacity single kiln is one factor,
which is putting Koria, China, ahead of all other players. The matter
must be taken to BIDI for discussions and decision.
Pre-BIDI recommendation
The Pre-BIDI recommended that the Cement Package as
announced recently and RIPS-2003 should be applicable to the
company.
Proposed decision
BIDI may take a view.”
7.3.The said proposal was considered under Agenda item No. 13 in the
21
st
Meeting of BIDI held on 01.04.2006 under the chairmanship of the then
Chief Minister and it was resolved that ‘the recently announced cement
package and RIPS 2003 will be applicable on the company’; and that ‘any
changes post VAT regime will also be available to other units’. The relevant
contents of the minutes of the said 21
st
Meeting of BIDI dated 01.04.2006 read
as under:
“Agenda No. 13
Grasim Industries Limited
BIDI directed that the recently announced cement package and
RIPS 2003 will be applicable on the company. Any changes post
VAT regime will also be available to other units.”
7.4.Thereafter, the company addressed a letter dated 26.04.2006 to the
Commissioner of Industries, seeking registration in terms of sub-clause (vii) of
23
Clause 7 of RIPS-2003 (as inserted by way of amendment dated 02.12.2005)
for a new cement plant/captive power plant, intended to be established at
Kotputli. The relevant contents of this letter dated 26.04.2006 could also be
usefully extracted as under:-
“This is in reference to the Notification No. F 4(18)FD/Tax-
Div/2001 amended on 2.12.05. Kindly note that our group has
intention to set up a new plant for manufacturing of 3.5 million
tons/annum cement plant at Kotputli along with a 2 X 23 MW
Captive Power Plant. Details are as under :
Proposed total cost : Rs. 1,100 crore
Total Capacity : 3.5 million ton/annum
Minimum Employment : 250
Expected Date of Completion: March 2008
We request you to register the above in Rajasthan Investment
Promotion Policy 2003 Scheme of sub clause (vii) of clause 7 vide
Notification No. F.12(20)FD/Tax/05-Pt dated 2/12/2005.
We also request that in case any special package of incentives is
approved for any other similar cement plant, then the same may
be granted to our aforesaid plant also.”
7.5.However, before any decision was taken on the aforementioned
application dated 26.04.2006, the State Government proceeded to delete the
aforesaid sub-clauses (vi) and (vii) of Clause 7 of RIPS-2003 by way of its
amendment Notification No. F.12(63)FD/Tax/05 dated 28.04.2006.
7.6.The company felt distressed with the aforesaid amendment dated
28.04.2006 and deletion of sub-clauses (vi) and (vii) of Clause 7 of the
Scheme and hence, on 26.05.2006, its Group Executive President made a
representation to the Chief Minister of Rajasthan, stating the steps taken by
the company after submitting the option for availing benefit under the
Notification dated 02.12.2005; and the setback likely to be caused to the
investment plans of the company upon withdrawal of 45% upfront subsidy.
24
While pointing out that the company had, in fact, represented to the
Government for customized package of incentives, it was prayed in this
representation that the Notification dated 28.04.2006 may be withdrawn. The
relevant contents of this representation dated 26.05.2006 read as under:-
“This has reference to above-mentioned notification, vide which
Sub-clause (vi) and (vii) of clause 7 of the Rajasthan Investment
Promotion Policy 2003 have been deleted. Clause 7 was added to
the aforesaid policy vide notification no. F.4(18)FD/Tax Div/2001
dt. 02
nd
December 2005.
After the above notification dated 28
th
April 2006, the benefit of
45% upfront subsidy of the actual tax liability in VAT and CST will
not be allowed.
We would like to mention that based on 2
nd
December 2005
Notification number F.4(18)FD/Tax/Div/2001 our company has
decided to set up 2 cement plants of 3.5 million tons per annum
capacity each at Grasim Cement – Kotputli , District Jaipur &
Aditya Cement – Shambhupura Dist. Chittorgarh involving total
investment of above Rs. 2200/- crores.
The withdrawal of 45% upfront subsidy would have major set back
to company’s investment plan in Rajasthan. The cement plants are
capital intensive plants and most of the states are offering
subsidy/incentives in one form or the other form and in previous
cases Government of Rajasthan has announced specific schemes
for specific companies i.e. incentives even up to 75% exemption of
Tax up to 11 years by issuing separate notifications on case to
case basis.
We have already submitted option to avail the benefit under
notification dated 2
nd
December 2005 as provided in Para 7 (vi) (1)
of the afforsaid scheme and our intention is to commence
commercial production in both these plants by March 2008 i.e.
within 5 years of filing of the option as provided in the scheme. We
have taken the effective seps like placement of orders for major
items of plant & machineries on the basis of incentives/subsidy
offered vide notification dated 2
nd
December 2005.
We are distressed to know about the withdrawals of incentives
provided to cement industry within 5-6 months of notification,
which will make our proposed plants unviable. In fact we had
represented to the Government of Rajasthan for customized
package of incentives as provided under the Rajasthan Investment
Policy 2003 for investment of Rs 1000 crores and above.
Both the above proposed plants are expected to contribute over
Rs. 225 crores each to the exchequer & substantial part of which
will be shared by the State Government.
25
In the present high growth environment of Indian economy,
cement industry being one of the prominent infrastructure industry
is providing support to other industries & such retrogatory steps
may affect the growth of the cement industry & ultimately overall
growth of the Indian economy.
We sincerely request your goodself to reconsider & withdraw the
above notification dated 28
th
April 2006 which will also be in the
natural justice as we have planned investments based on the
notification dated 02
nd
December 2005.
We hope that our request shall be considered favourably enabling
us to take further steps for implementation of the proposed plants
in a time bound manner.”
7.6.1.It appears that the request so made by the company evoked only a
pithily tight response from the State Government in the form of letter No.
BIP/IP/DGM(NS)/61 dated 17.06.2006 of the Bureau of Investment Promotion,
Rajasthan
20
, stating that ‘company would be eligible for concessions as
contained in RIPS-2003’.
7.7.On the other hand, during the summit named ‘Resurgent Rajasthan’,
the company entered into an MoU with the State Government on 30.11.2007,
proposing to set up new Cement Plants at Kotputli and Nawalgarh as also to
expand the existing plant at Shambhupura with the projection of generating
direct employment of 1000 persons and significant multiplier impact on local
economy and consequent indirect employment. As against this proposal, the
State undertook to extend support in the form of providing incentives as
permissible under RIPS-2003 together with additional support as per the
prevalent policy apart from facilitating the approvals etc., by offering a ‘single
window service’. This MoU was to remain valid for the initial period of five
20 Hereinafter referred as ‘BIP’
26
years and upon considering the progress made, its term was extendable for
such period as mutually agreed upon.
7.8.It had been the case of the appellant that pursuant to BIDI’s decision
dated 01.04.2006 and the MoU dated 30.11.2007, the company made
investment to the tune of Rs.1661.88 crores on its Kotputli Unit; provided
employment to 254 persons as on 31.12.2009; and availed the loan facility
amounting to Rs.798.82 crores from various financial institutions and banks.
Thus, according to the appellant, all the required conditions stipulated under
RIPS-2003 stood fulfilled.
7.9.With reference to the aforementioned facts and with the assertion that
commercial production in the said Kotputli Unit commenced on 20.01.2010,
the company made an application, on or about 21.02.2010, to the Member
Secretary SLSC for grant of Entitlement Certificate under RIPS-2003
21
.
Several aspects related with the contents of this application and its
accompanying form, affidavit and annexures do form the areas of conflict and
divergence of the parties and, therefore, appropriate it could be to take note of
their relevant features too.
7.9.1.In the aforesaid application, the company, after stating that it had
commenced commercial production on 20.01.2010 and had made investment
of a sum of Rs.1661.88 crores, also referred to the fact that it had filed the
option on 26.04.2006 pursuant to the notification dated 02.12.2005
22
. The
21 A copy of this application is placed on record as Annexure P-11 that bears the date 04.02.2010 but
its contents and annexures carry the later dates too, like VAT deposit dated 05.02.2010 and Chartered
Accountant’s certificate dated 16.02.2010. It appears from the receipt endorsement that the
application was submitted on 21.02.2010 and hence, we have taken this to be the date of application.
22 Whereby the aforesaid sub-clauses (vi) and (vii) were added to Clause 7 of RIPS-2003.
27
aforesaid decision of BIDI dated 01.04.2006, the letter of BIP dated
17.06.2006, and the amendment dated 30.09.2008 of sub-clause (iii) of
Clause 7 of the Scheme were also referred and then, the applicant submitted
as under:-
“6….In accordance with above amendment the Applicant
Company is eligible for subsidy as investments have already been
made of significant amount of Rs.1184.47 crores upto 30
th
April,
2008 (before 22.05.2008) and also signed the MOU during
Resurgent Rajasthan Summit on dated 30
th
November, 2007 for
setting up the 40 Lac MT/annum cement plants at Mohanpura,
Tehsil Kotputli, Distt. Jaipur and the copy of the Memorandum of
Understanding is enclosed herewith as Annexure – 6. We are also
enclosing herewith the certificate of Chartered Accountants
certifying the investment of Rs.1184.47 crores up to 30
th
April,
2008 in Grasim Cement – Kotputli as Annexure – 7.
7.That we have already filed the option under the notification
dated 02.12.2005, within 180 days and also commenced the
commercial production on 20.01.2020 i.e. within five years from
the date of filing the option, investments were made of Rs.1661.88
crores i.e. more than Rs.400 crores and have given the
employment to 254 persons up to 31.12.2009 i.e. more than 200
persons, hence fulfill all the conditions of the notification dated
02.12.2005 i.e. as per sub-clause (vi) of Clause 7 of the RIPS-
2003.
Considering the above facts, kindly grant the Entitlement
Certificate and the benefits may also be allowed in terms of the
notification dated 2
nd
December, 2005. In case you require any
further information, please intimate so that the same may be
furnished.”
7.9.2.The application was submitted in Form 2 referable to Clause 9(B)(i) of
the Scheme and therein, a request was made to ‘grant 5% of the interest
subsidy, and 25% of the employment/wage subsidy 45% Up-Front subsidy’
under the Scheme. The said Form 2 also carried declaration and undertaking
of the Vice-President of company in the following terms:-
“I hereby declare that I have fully understood the provisions of the
Rajasthan Investment Promotion Scheme, 2003 and agree to
comply with the same. In case of availing excess benefits or non
28
compliance with the provisions of this Scheme, I undertake to
repay whole of the amount actually availed under the Scheme and
shall also be liable to pay interest at the rate of 12% per annum on
such amount.”
7.10.The matter relating to the aforesaid application was considered by
SLSC in its 29
th
meeting held on 17.03.2011. As noticed, by that time, the
name of company had changed to that of the present appellant. In the said
meeting dated 17.03.2011, the SLSC proceeded to take the decision of
allowing Capital Investment Subsidy to the appellant to the extent of 75% of
deposited VAT. This decision was taken by SLSC purportedly on the basis of
the approval of BIDI. The relevant part of the Minutes of SLSC meeting dated
17.03.2011, in their translated version
23
read as under:-
“13….Committee after observing & examining the submitted
documents by the unit & available provision in the plan & earlier
decision taken by the finance department, this decision has been
taken that unit has appended signatures on MoU in Rajasthan
Resurgent Summit. Therefore, as per the orders of finance
department dated 30/9/2008 unit is free from negativeness.
Committee has also observed that although finance department
has not given any consent for the amendment regarding available
loan borrowing schemes, thereafter units are eligible under rule
5(i) of the plan for seeking term loan from financial institutions &
local body. And earlier in many cases the State Level Screening
Committee have on the basis of Capital Investment (Interest
component) allowed eligibility. Therefore, in this case the unit is
covered under the definition of term loan for seeking term loan
from ECB & Buyers Credit then unit should be given the benefit of
eligibility of interest subsidy. On the basis of advise of the
representative of finance department Secretary, Finance
committee has take the decision that unit is for the time being
allowed for the starting from the first date of commercial
production, first VAT challan deposit date 5/2/2010 for 7 years
capital investment subsidy (interest component) eligibility & loan
received from HDFC bank of 250 crore & axis bank 200 crores
means total 450/ crore etc may be granted eligibility for term loan
and already received ECB credit & Buyers matters & in
consideration of earlier matters, matter may be referred to finance
23 pp.160-161 of the paper-book
29
department. The eligibility certificate may be amended as per the
decision of the Finance Department decision.
Committee has also taken decision that unit may be allowed for
Capital Investment (25 percent employment component) from
5/2/2010 the date of starting of commercial production for 7 years.
Committee has also taken decision that on the basis of approval
from the BIDI rule 7(i)(a) & (b) basis Capital Investment subsidy
(Interest Component) of total payable and 75% of the deposited
VAT will be the limit. Committee has also taken the decision that
the eligibility for rebate in electricity for 50% will be from
commercial production date 5/2/2010 for 7 years.”
7.10.1.On the basis of, and pursuant to, the decision aforesaid, the Member-
Secretary, SLSC proceeded to issue the necessary Entitlement Certificate to
the appellant on 29.04.2011.
7.11.Thereafter, the matter relating to the appellant company was re-
examined in the SLSC meeting dated 17.10.2011, particularly with reference
to the quantum of investment and borrowings; and the decision finally taken
by SLSC reads, in its translated version, as follows
24
:-
“The committee under the plan has after the completion & on the
basis of desirable eligibility terms by the unit & guidelines of
finance department dated 11-7-2011 & in the series of guidelines
of the committee dated 17-3-2011, the decision taken by the
committee, accordingly the committee, & information received
from the unit ECB credit of 216.25 crore has also been added
under Capital Investment Plan, total 666.25 crore rupees from 5-2-
2010 on the basis of new unit the capital investment subsidy (5
percent interest component & 25 percent vet component) eligibility
for 7 years period from 5-2-2010 taking the decision, amended
eligibility certificate will be issued for the unit. The total pay ability
for the unit under capital investment subsidy, the total limit of 75
percent of the vat deposit, the decision taken in the meeting dated
17-3-2011 as per the series of decision will be payable by the
unit.”
7.12. Pursuant to the aforesaid decision of SLSC dated 17.10.2011, the
Office of the Commissioner Industries, Rajasthan issued a revised Entitlement
24 pp.165-166 of the paper-book
30
Certificate to the appellant company on 24.11.2011, superseding the earlier
Certificate dated 29.04.2011 and certifying the entitlement of the appellant to
Capital Investment Subsidy in the following terms:-
“8.Capital Investment
subsidy:
(i)Interest Component
(ii) Wage & Emp.
Component
@ 5% from 05.02.2010
(Interest Comp. eligibility
available on Rs.450 crs.
Term loan and 216.25 crs.
ECB Credit Total 666.25 crs.
only)
@ 25% from 05.02.2010
Note:
1. In case of new units, the maximum amount of interest and wage/
employment subsidy shall not exceed 75% of the State Sales
Tax/ VAT and the Central Sales Tax paid by the applicant dealer.
2.This certificate is liable to amendment/suspension/revocation, if
obtained on misrepresentation or concealment of facts or by
fraud or on breach of any of the terms and conditions,
mentioned in the relevant notification.
3. This certificate shall be valid for a period of seven years from
05.02.2010.
4.This certificate may be revoked by the issuing authority in case
the applicant violates any of the conditions of the Scheme or the
certificate.
5. This Revised Entitlement Certificate is being issued
superseding earlier Entitlement Certificate issued being No.
02/190 on 29.04.2011. ”
(bold as in original)
7.13. It is not a matter of much dispute that the appellant fully availed
the benefit of 75% subsidy in terms of the Entitlement Certificate dated
24.11.2011 from the month of February 2010 and until the month of February
2017.
8. The foregoing narration of facts relating to the propositions of the
appellant company as also the decisions taken by the authorities concerned
31
at different stages depicts only one part of the spectrum of this case. For
comprehension of the overall scenario, several other equally significant
aspects also need to be taken note of.
8.1.As noticed, one of the significant aspects had been that after
07.06.2009, BIDI ceased to exist for having been disbanded by the State
Government with constitution of another body in the name of Rajasthan
Investment Promotion Board w.e.f. 08.06.2009.
8.2.Another remarkable aspect had been that upon receipt of the
Minutes of SLSC meeting dated 17.03.2011, the Finance Department of the
State Government sent a letter dated 17.11.2011 to the Member-Secretary,
SLSC raising doubts on the correctness of the decision of SLSC with
reference to the decision of BIDI, particularly when it was not clear as to when
did BIDI issue the order for increasing maximum limit of subsidy from 50% to
75% in the cases pertaining to the units the appellant. The contents of this
letter dated 17.11.2011 have been reproduced in extenso in the impugned
order of ACS dated 12.03.2018 and the relevant passage therefrom could be
usefully extracted as under
25
:-
“In both the matters of M/s. UltraTech Cement grant of benefit up
to 75% limit of VAT has been referred while as per proviso to
clause 7(1)(a) and (b) of the Scheme 50% maximum limit can be
extended only by Board of Infrastructure Development and
Investment Promotion. (BIDI)
BIDI was reconstituted by the Administrative Reforms
Department by its Order No. F.6 (51) / AR / Gr.3 / 96 dated
15.1.2005. In supersession of the said Order dated 15.1.2005 the
Administrative Reforms Department by its Order No. F.6 (51) AR /
Gr.3 / 96 dated 8.6.2009 constituted Rajasthan Investment
Promotion Board (RIPB). As such after 7.6.2009 BIDI has not
25 pp. 462-464 of paper-book.
32
been in existence. In these cases Applications under RIPS-2003
has been filed on 23.2.2010 and 19.6.2009 respectively and it is
not clear from the available information that when BIDI issued
order for increasing maximum limit from 50% to 75% of capital
investment subsidy in these cases.
In regard to promotion sanctioned under RIPS-2003 all the
relevant facts remained available in the file of Finance
Department, therefore with regard to the order issued by the BIDI
for increasing maximum limit of capital investment subsidy from
50% to 75% in these matters the requisite factual comments may
be forwarded to the Finance Department at the earliest possible.”
8.3.It appears that the aforesaid communication and its reminders from
the Finance Department to the Industries Department remained unanswered
for a long length of time.
26
Ultimately, a reply dated 09.02.2017 was
forwarded by the Member-Secretary, SLSC, which too was carrying certain
typographical errors and hence, another reply was sent by the said Member-
Secretary on 17.02.2017, seeking to furnish ‘factual comments in respect of
grant of capital investment subsidy upto 75%’ to the appellant in the Meeting
dated 17.03.2011. Therein, the said Member-Secretary stated, inter alia, that
“perhaps” the benefit was given on the basis of decision taken by BIDI. This
communication dated 17.02.2017 has also been reproduced in the impugned
order dated 12.03.2018 and the relevant passage thereof may be reproduced
for ready reference as under
27
:-
“Notably, in clause 7(vi) of the Scheme provision was for cement
units to give capital investment subsidy up to 75% of payability/
26 During the course of submissions, the facts have also been placed before us that the Industries
Department did not send reply to the aforesaid letter dated 17.11.2011 despite repeated reminders
dated 18.05.2012, 20.05.2013, 17.06.2013, 29.07.2013 and 12.09.2013. In regard to these aspects of
wanton avoidance and in regard to the sanction made in favour of the appellant, a departmental
inquiry for major penalty was also proposed against the then Additional Director, Industries, who was
working at the relevant time as the Functional Officer under RIPS-2003. It has been pointed out that
the inquiry could not proceed further for the said officer having retired and inquiry having gone time
barred under the Rajasthan Civil Services (Pension) Rules, 1996.
27 pp.470-472 of paper-book
33
deposition of VAT subject to providing employment to minimum
200 persons and investment of Rs.400 Crore. Later the said
provision was deleted and Clause 7(1)(b) of the Scheme remained
as it is according to which upon recommendation of BIDI the unit
invested more than Rs.100 Crore but below Rs.200.00 Crore
could have granted subsidy up to 60% of the payable / deposit
tax/VAT and more than 200 Crore Rupees it could have increased
up to 75% of the payable / deposit tax /VAT. Perhaps benefit to the
unit was given on the basis of decision taken in the BIDI meeting
dated 1.1.2006 (sic) under the aforesaid clause. Besides, no other
record is available in this office. Hence in this regard it is
requested to the Finance Department to examine the matter at its
own and take decision.”
8.4.After having received the aforesaid reply dated 17.02.2017, the
Finance Department of the State Government expressed its reservations on
the decision taken by SLSC in the purported reference to the directions of
BIDI and sent its communication dated 03.04.2017 to the Industries
Department, expecting appropriate action in the matter while observing, inter
alia, as under:-
“In this regard from the information and documents received
from Finance Department it is appeared that in respect of M/s.
UltraTech Shambhupura District Chittorgarh (Unit Aditya Cement
Works-II) matter of grant of 75% subsidy as per proviso of clause
7(i)(a) and (b) of RIPS 2003 was not placed before BIDI therefore
no approval by the BIDI was found to be done. In 21
st
Meeting of
BIDI dated 1.4.2006 under Agenda Item No. 13 matter of Kotputli
Cement plant of Grasim Industries was placed before BIDI in
regard to which BIDI passed following orders:-
“BIDI directed that the recently announced cement
package and RIPS-2003 will be applicable on the
company. Any changes post VAT regime will also be
available on other units”
As such it is clear that no approval was made by BIDI for grant
of subsidy 75% as per proviso to clause 7(i)(a) and (b) of RIPS
2003 in the matter of M/s. Utratech Cement Limited (Unit – Kotputli
Cement Works).
In respect of M/s. UltraTech Shambhupura District Chittorgarh
(Unit Aditya Cement Works-II) and M/s. Utratech Cement Limited
(Unit – Kotputli Cement Works) Brief Notes (Note-A and Note-B)
are being enclosed which concludes that in Agenda Notes placed
34
being SLSC being shown approval of 75% capital investment
subsidy to these matters by the BIDI the SLSC has taken defective
decision. In these matters decision of SLSC is defective and
contrary to the revenue interest therefore it is necessary to again
place the matters along with all facts and documents before SLSC.
By the even number Letter dated 17.11.2011 of the Finance
Department on seeking information of the order pertaining to
extending subsidy limit up to 75% by BIDI your office has replied
after lapse of more than 5 years. Need of fixing responsibility for
such delay is also appeared. (sic)
Take action accordingly and up date to the Finance
Department.”
9. In the above-noted background, the SLSC proceeded to re-examine
the matter in its 20
th
meeting held on 22.05.2017. In the Minutes of this
meeting dated 22.05.2017, the SLSC underscored the very same doubts as
raised by the Finance Department on the purport and effect of the decision of
BIDI and suggested for appropriate action under Clause 13 of RIPS-2003. The
relevant part of this resolution of SLSC dated 22.05.2017 could also be
usefully extracted as under
28
:-
“This is not clear from the action detail letter dated 17- 5-2006 of
BIP that what should be meaning in which it was said that
according RIPS-2003 provision these units are eligible for the
benefit. Likewise it has been observed from the meeting of BIDI
dated 01-04-2006 its agenda item no.13 that discussions were
made only for the Kotputli plant & the matter for Shambhupura
district Chittorgarh plant has not been placed before BIDI for
discussion. The meeting dated 1-4-2006 of the BIDI on detailed
action in agenda no. 13 the following has been mentioned –
BIDI directed that the recently announced cement package and
RIPS-2003 will be applicable on the company. Any changes post
VAT regime will also be available to other units.
Possibly, BIP in its letter dated 17-6-2006 has written on BIDI
decisions for its as it is implementation. This is also mentioned that
the said package is for cement units, this has been withdrawn &
this is not applicable for these units.
Prima facie, it has been clear that the matter of Shambhupura
(District-Chittorgarh) was not put up before BIDI. Whereas the
matter of Kotputli (District-Jaipur) plant, the consent for
28 pp. 170-171 of paper-book
35
enhancement of investment subsidy limit of 75% of the deposited
tax limit is not clear.
Attention is invited of the committee on the following legal
provisions regarding expected action by the Finance Department –
(i)According to rule 12 of the plan provision if the State level
screening committee a letter has been received within 60
days of its decision, then the committee will review its
decision.
(ii)(ii)Under rule 13 there is a provision that on the basis of
Finance Department suo motto or information received from
any other source may review the decision of the screening
committee. If the decision is against the interest of Govt.
Although before the changing the decision, the beneficiaries
units will be given opportunity for hearing. For this purpose
the time limit after 5 years of the complete benefits.
The eligibility certificate was issued on 29-4-2011 in favour of unit.
The time limit was 6 months which has already been exhausted.
But the given benefit time period was for 7 years, possibly, still it is
continuing. Therefore, under rule 13, the time limit for action by
Finance Department has not been exhausted. Therefore, it has
been decided that in this matter under rule 13 recommendation
may be sent to Finance Department and for fixing the
responsibility action may be taken on file.
In the last, thanks given to President & the meeting is closed.”
Revision proceeding under Clause 13 of RIPS-2003: impugned order
dated 12.03.2018
10. Following the aforesaid recommendation of SLSC, a notice bearing
No. P12 (55) Fin/tax/2017-Part-I dated 10.07.2017 was issued to the appellant
by the State Government informing about the proposed action of the Finance
Department under Clause 13 of RIPS-2003, because the decision taken by
SLSC on 17.03.2011 was found to be erroneous and against the interest of
revenue. The appellant was called upon to enter into defence with relevant
documents and evidences.
10.1.Having received the aforesaid notice dated 10.07.2017 from the State
Government, the appellant made an application under the Right to Information
Act to obtain a copy of agenda note regarding item No. 13 in the minutes of
36
meeting dated 01.04.2006 of BIDI and minutes of Pre-BIDI meeting dated
28.03.2006. After obtaining necessary documents, the appellant submitted its
objections and reply to the show cause notice, inter alia, to the effect that it
had availed the benefit under RIPS-2003 with effect from 05.10.2010 on the
basis of the Entitlement Certificate granted to it and the period of seven years
having been completed, the availed benefit cannot be withdrawn. It was also
submitted that the earlier decision by SLSC had been a bonafide and
reasonable decision, being that of permissible interpretation; and if more than
one interpretation was possible, the interpretation in favour of the assessee
ought to be accepted. The appellant also submitted that it had made a huge
investment to the tune of Rs. 1661.88 crores on the basis of Notification dated
02.12.2005 and invoked the principles of promissory estopple. It was also
contended that SLSC had no locus standi to refer the matter for revision by
the State Government. On behalf of the Department, reply to the objections of
the appellant were filed contending, inter alia, that the matter of appellant’s
unit was not approved by BIDI and the benefit availed were much beyond the
permissible limit under RIPS-2003. It was also contended that the power of
the State Government under Clause 13 was wide enough to revise any order
granting undue benefits which was erroneous and prejudicial to the interest of
revenue. The appellant filed a detailed rejoinder with the submissions, inter
alia, that the subsidy was granted not under sub-clauses (vi) and (vii) of
Clause 7 of RIPS-2003 but that had been on the basis of the MoU entered into
37
with the State Government and under the proviso to Clause 7(i)(a) of RIPS-
2003.
11. The learned Additional Chief Secretary examined the entire record
and took note of all the objections of the appellants and then, in his elaborate
order dated 12.03.2018, held that the SLSC had erroneously issued the
aforesaid Entitlement Certificates dated 29.04.2006 and 24.11.2011; and that
the appellant was not entitled to the subsidy beyond 50% of the tax payable
and deposited. The relevant observations and findings in the impugned order
dated 12.03.2018 read as under :-
“27. In light of conclusion derive on the aforesaid each point under
consideration as stated above overall conclusion is drawn as
under:-
i)The decision taken under Agenda No. 13 of Meeting dated
17.03.2011 of State Level Screening Committee (SLSC) is
erroneous because while considering the matter the Committee
presumed that increasing of capital investment subsidy of
deposited tax from 50% limit to 75% limit as per first proviso to
clause 7(i)(a) and 7(i)(b) of the Rajasthan Investment Promotion
Scheme, 2003 (RIPS-2003) has been approved by the Board of
Infrastructure Development and Investment Promotion (BIDI) in
its meeting dated 01.04.20016 (sic) whereas no such order was
passed by the Board of Infrastructure Development and
Investment Promotion (BIDI) for increasing available capital
investment subsidy from 50% limit to 75% of payable and
deposited tax in view of provision of clause 7(i)(a) and 7(i)(b) of
Rajasthan Investment Promotion Scheme 2003 (RIPS-2003).
ii)In furtherance to the decision taken under Agenda No. 13 of
Meeting dated 17.3.2011 of State Level Screening Committee
(SLSC) under Agenda No. 18 of in next meeting dated
17.10.2011 of State Level Screening Committee (SLSC)
reference of capital investment subsidy up to 75% of total
payable tax is also erroneous.
iii) Decision taken under Agenda No. 13 of Meeting dated
17.3.2011 of State Level Screening Committee (SLSC) and in
furtherance thereto reference of capital investment subsidy of
75% of total payable tax under Agenda No. 18 of in next
meeting dated 17.10.2011 of State Level Screening Committee
(SLSC) is prejudicial to the interest of the State revenue
38
because for investment made in the unit capital investment
subsidy was available up to 50% of payable and deposited tax
only as per clause 7(i)(a) of Rajasthan Investment promotion
Scheme, 2003 (RIPS-2003) but State Level Screening
Committee (SLSC) has taken decision to increase it up to 75%
of payable and deposited tax. As such, the company has
received amount from the State treasury in excess of capital
investment subsidy payable under Rajasthan Investment
Promotion Scheme, 2003 (RIPS-2003).
iv)As stated above Decision taken under Agenda No. 13 of
Meeting dated 17.3.2011 of State Level Screening Committee
(SLSC) and in furtherance thereto reference of capital
investment subsidy of 75% of total payable tax under Agenda
No. 18 of in next meeting dated 17.10.2011 of State Level
Screening Committee (SLSC) is erroneous and prejudicial to
the interest of the State Revenue therefore amendment in
decision dated 17.3.2011 of the State Level Screening
Committee (SLSC) under clause 13 of the rajasthan Investment
Promotion Scheme, 2003 (RIPS-2003) in revision proceeding
by the Finance Department is needed and lawful.
v)On proposal of revising of decision dated 17.3.2011 of State
Level Screening Committee (SLSC) adequate opportunity of
hearing as per provision has been given to the beneficiary
industrial unit. Preliminary objections, Objections and
Arguments advanced by the Beneficiary Industrial Unit has
been discussed in detail.
vi)The decision dated 17.3.2011 of State Level Screening
Committee (SLSC) is revising within limitation prescribed in
clause 13(b) of Rajasthan Investment Promotion Scheme, 2003
(RIPS-2003).
11.1.In view of the above, the learned Additional Chief Secretary issued
directions to the appellant as also to SLSC in the following terms:-
28. Hence, in this revision proceeding proposal is accepted in
context of points referred to Finance Department for revising under
clause 13 of Rajasthan Investment Promotion Scheme, 2003
(RIPS-2003) the decision taken by the State Level Screening
Committee (SLSC) in its meeting dated 17.03.2011 as decided in
meeting dated 22.05.2017 by the State Level Screening
committee (SLSC) this order is issued in this revision proceeding
that-
i) Kotputli Cement Works Unit of the Company would be able to
get capital investment subsidy as per provision of clause 7(i)(a) of
Rajasthan Investment Promotion Scheme, 2003 (RIPS-2003) to
the extent of 50% of payable and deposited tax because no order
has been passed by Board of Infrastructure Development and
Investment Promotion (BIDI) for increasing capital investment
39
subsidy as per provision of clause 7(i)(a) and 7(i)(b) of Rajasthan
Investment Promotion Scheme, 2003 (RIPS-2003) from 50% to
75% of the payable and deposited tax.
ii) The Entitlement Certificate dated 29.04.2011 issued in
furtherance to State Level Screening Committee (SLSC) Meeting
dated 17.03.2011 and also Revised Entitlement Certificate dated
24.11.2011 issued in furtherance to Meeting dated 17.10.2011 of
State Level Screening Committee (SLSC) are hereby cancelled
and it is ordered to State Level Screening Committee (SLSC) to
issue new Entitlement Certificate for investment subsidy up to 50%
limit of total tax to Kotputli Cement Works Unit of the Company.
iii) Disbursement officers of the Capital Investment Subsidy
(Assessing Authority) is directed to calculate payable capital
investment subsidy as per New Entitlement Certificate to be
issued by the State Level Screening Committee (SLSC) in
reference to this revision order and in case the company in the
context of this unit has already received excess benefit then
payable capital investment subsidy under this revision Order then
to recover the said excess amount from the company.
iv) Under provisions of Rajasthan Investment Promotion Scheme,
2003 (RIPS-2003) interest @ 18% on available excess benefits is
chargeable. The company has given Undertaking in Form-2 for
repayment of availing excess benefits with 18% hence on availing
excess benefits interest @ 18% is chargeable which may be
recovered from the company.
v) The company is ordered that to refund the benefits of capital
investment subsidy availed in excess from 50% of payable and
deposited tax under erroneous order of State Level screening
committee (SLSC) together with 18% interest to the to the State
Government.”
12. Pursuant to the aforesaid order of ACS dated 12.03.2018, a meeting
of SLSC was held on 28.03.2018 wherein, it was decided that the entitlement
certificate issued in favour of the appellant on 24.11.2011 be cancelled and in
its place, a revised entitlement certificate be issued allowing Capital
Investment Subsidy to the extent of 50% in place of 75% of deposited Sales
Tax/Value Added Tax/Goods and Services Tax. Accordingly, Re-revised
Entitlement Certificate dated 02.04.2018 was issued to the effect that ‘the
maximum amount of interest and wage/employment subsidy shall not exceed
40
50% of the State Sales tax/VAT and the Central Sales Tax paid by the
applicant dealer.’
12.1.In sequel to the above, an order dated 04.04.2018 was issued by the
ACS wherein, the total tax and excess subsidy availed by the company were
calculated for the period from 05.02.2010 to 31.12.2016 and whereby, the
appellant was directed to refund the amount of excess availed subsidy
together with interest in the following terms:-
“Hence you are directed to deposit excess availed capital
investment subsidy amount Rs. 15,96,37,794/- together with
interest Rs. 17,18,33,816/- payable thereon totaling to Rs.
33,14,71,610/- till 3.5.2008 through E-Grass under Budget Head
(VAT-OTHER MISC PAYMENTS) in the State treasury and submit
evidence thereof before the undersigned. Please note that
undertaking in Form No.2 for payment of 18% interest in case of
availing excess benefits has already been given by the company.
It is also informed that in case the aforesaid amount of Rs.
33,14,71,610/- is not deposited till 31.05.2018 under the provisions
of the Rajasthan Investment Promotion Scheme 2003 then the
said amount shall be recovered from the company as land
revenue dues.”
The writ petition before the High Court: impugned order dated 11.01.2019
13. Aggrieved by the order dated 12.03.2018 as passed by the ACS in
revision proceedings under Clause 13 of RIPS-2003; issuance of the Re-
revised Entitlement Certificate; and the order dated 04.04.2018 of the ACS
demanding the excess subsidy amounting to Rs. 15,96,37,794/- together with
interest amount of Rs. 17,18,33,816/-, the appellant preferred the writ petition,
being W.P. No. 9090 of 2018, before the High Court of Judicature for
Rajasthan, Bench at Jaipur, challenging Clause 13 of RIPS-2003 as being
arbitrary and unconstitutional as also seeking the relief of quashing the orders
41
dated 12.03.2018, 02.04.2018 and 28.03.2018 amongst other prayers. The
High Court has dismissed the writ petition by the impugned order dated
11.01.2019. Having regard to the subject-matter and the questions involved,
we may also take note of the reasons that prevailed with the High Court in
rejecting the case of the appellant.
13.1.The High Court in the first place rejected the contention of appellant
that if there was any mistake in granting subsidy, that could have been
rectified with reference to Clause 9(B)(vii) only within a period of four years, as
prescribed by Section 33 of the Rajasthan Value Added Tax Act, 2003 while
pointing out that the said provision was intended to be applied by the
Assessing Officer of the Commercial Taxes Department and was of no
impediment for the action under Clause 13 of RIPS-2003.
13.2.Thereafter, the High Court minutely analysed Clause 7 of RIPS-2003
while also taking note of its various amendments/revisions, as described
hereinbefore. The High Court also referred to the dealings of parties including
the application made by the company directly to BIDI; the minutes of Pre-BIDI
meeting dated 28.03.2006; the minutes of BIDI meeting dated 01.04.2006; the
other application made by the company on 26.04.2006; and the representation
made by the company on 26.05.2006. Having thus examined the relevant
material on record, the High Court observed that though the company prayed
for the benefits under newly inserted sub-clause (vii) of Clause 7 by way of the
application dated 26.04.2006 but, both sub-clauses (vi) and (vii) of Clause 7
were deleted by the Government on 28.04.2006. The High Court also
42
observed that the company was fully conscious of the fact that it would not
receive the tax subsidy under deleted sub-clause (vii) of Clause 7, which was
also borne out from the representation made by it on 26.05.2006, stating that
the withdrawal of 45% upfront subsidy of actual tax liability was a major
setback to the company’s investment plan; and making a request that the
newly inserted clauses under Notification dated 28.04.2006 be reconsidered.
The High Court also observed that BIP in its communication dated
17.06.2006, with regard to the request for customized package, merely stated
that ‘the company will be eligible for concessions as contained in RIPS-2003’;
and even in the MoU dated 30.11.2007, ‘all that stated was that the State will
extend to the project incentives permissible to the project under the RIPS-
2003 as amended from time to time’.
13.3.The High Court further took note of the aforementioned clarification
dated 22.05.2008 whereby the State Government made it clear that ‘on
deletion of sub-clauses (vi) and (vii) of Clause 7 of the RIPS-2003 w.e.f.
28.04.2006, none of the types enumerated at Serial No. 1 to 6 in the
clarification will qualify for benefits under the deleted sub-clauses’. The High
Court also referred to the amendment dated 30.09.2008, whereby another
proviso was added after sub-clause (iii) of Clause 7 to the effect that the
investment made or committed before 22.05.2008 or under MoU signed
during Resurgent Rajasthan Summit, for both new cement unit or unit under
expansion having capacity of more than 200 tons per day, shall be eligible for
43
subsidy under Clause 7 on the condition that the unit shall start commercial
production by 31.03.2011.
13.4.Having thus traversed through the whole gamut of Clause 7 of RIPS-
2003 with its amendments/revisions as also the background aspects relating
to the propositions of the company, the High Court took note of the
application
29
made by the company for issuance of entitlement certificate and
for benefits under the amendment dated 02.12.2005 and pointed out the
fundamental flaw therein that the amendment dated 02.12.2005 had already
been deleted on 28.04.2006. The High Court also took note of the decision of
SLSC dated 17.03.2011 and pointed out the basic error therein that the
decision of BIDI dated 01.04.2006 was utterly misconstrued. The High Court
further took note of the corrective decision taken by SLSC on 22.05.2017 and
observed as follows:
“…..The petitioners however submitted an application on
04.02.2010 for issuance of entitlement certificate and benefits
under the notification dated 02.12.2005 whereas the amendments
made under that notification were already deleted on 28.04.2006.
It was at that stage that the SLSC considered this application of
the petitioners in its meeting dated 17.03.2011 and directed for
granting the subsidy to it upto the limit of 75% under proviso to
Clause 7(i)(a) and (b) in view of the approval allegedly granted by
the BIDI. A careful examination of the minutes of 21st meeting
of the BIDI held on 01.04.2006 does not reveal any such
decision on the part of the BIDI. The BIDI simply directed that
recently announced cement package in RIPS-2003 shall be
applicable on the company. The SLSC further considered the
matter in its meeting dated 17.10.2011 for revision of the
entitlement certificate. Consequently, the entitlement certificate
issued on 29.04.2011 was revised on 24.11.2011. The petitioners
accordingly availed the subsidy. However, the SLSC in its meeting
dated 22.05.2017 considered the issue on the letter received from
the department, which found that the BIDI never approved raising
29 This application bears the date 04.02.2010 but was filed on 21.02.2010, vide paragraph 7.9.1 and
footnote 21 hereinbefore.
44
of the subsidy upto 75% and accordingly recommended to the
Government for proceeding under Clause 13 of the RIPS-2003.”
(emphasis in bold supplied)
13.5.The invocation of the doctrine of Contemporanea Expositio on behalf
of the appellant for the submission that SLSC, consisting mostly of the officers
from the Finance Department of the State, was in the best position to construe
the decision of BIDI was also negated by the High Court in the following
words:-
“The argument that the SLSC which consisted of the officers
mostly from the Finance Department of the State by virtue of
doctrine of Contemporanea Expositio was in the best position to
consider decision of the BIDI is noted to be rejected firstly because
there is no ambiguity whatsoever in the decision of the BIDI and
secondly, such decision has to be read in context of the facts. The
BIDI never explained its understanding subsequently on
01.04.2006. The SLSC thus misunderstood the decision of the
BIDI. The RIPS-2003 also does not provide any clarification for
such a decision. In the cited judgments on this aspect, it has been
indicated that such interpretation by a particular authority has
by no means a controlling effect upon the courts and if
occasion arises, has to be disregarded for cogent and
perspective reason and in a clear case of error, the court
would without hesitation refuse to follow such
construction….”
(emphasis in bold supplied)
13.6.Another line of submissions on behalf of the appellant that tax
incentives cannot be withdrawn retrospectively was also rejected by the High
Court with reference to the nature of benefits availed by the appellant. The
High Court, inter alia, observed as follows:-
“…..Cited judgments arose out of the matters where the
beneficiary having not collected tax by virtue of acceptance of
exemption by the Government could not be saddled with liability
retrospectively. In the present case, the situation is entirely
different in that the petitioners availed undue advantage at the
time when it established the plant, which is being sought to be
recovered after its full establishment in business. It is not a case
where the petitioners did not recover taxes and did not
45
deposit due to exemption. The cited judgments are therefore not
applicable and are only the expression of the doctrine of
impossibility and are based on reasons of equity which are not
applicable in this case. Clause 13 of the RIPS-2003 clearly
indicates that the benefit wrongly given can be withdrawn after its
being fully availed and the petitioners availed the benefits with
open eyes and full knowledge. Such was not the position in the
judgments cited on behalf of the petitioners.”
(emphasis in bold supplied)
13.7.The High Court further examined the amendment dated 30.09.2008
and found the same to be of no avail to the appellant; and pointed out the root
cause of error in the decision of SLSC dated 17.03.2011 where it had
proceeded beyond the ambit of its power and authority in the following words:-
“As regards the contention that amendment made in Clause 7(iii)
of RIPS-2003 vide notification dated 30.09.2008 protected
investments made under MOU signed during Resurgent Rajasthan
Summit, provided commercial production started by 31.03.2011
also does not improve the case of the petitioners. Even though
Clause 7(iii) had protected MOUs signed during Resurgent
Rajasthan Summit but this amendment does not in any manner
confer any additional power on the SLSC to grant more subsidy
than what it otherwise wielded. On the date of aforesaid
amendment, the SLSC was competent to grant subsidy to the
extent of 50% and no more than that. The SLSC, however,
wrongly accepted the application of the petitioner-company under
the proviso to Clause 7(i)(a) by incorrectly relying upon the
decision of the BIDI dated 01.04.2006 in raising the limit of subsidy
upto 75%. The SLSC at the maximum could have granted the
tax subsidy to the extent of 50% and could have, till the BIDI
was in existence, referred the case of the petitioner-company
for extending the limit of tax subsidy from 50% to 75%. Since
the BIDI was disbanded on 07.06.2009, therefore, it was not in
existence when the SLSC took up the case of the petitioner
for consideration in its meeting held on 17.03.2011. Thus
obviously, it could not have granted tax subsidy beyond
50%.”
(emphasis in bold supplied)
13.8.Proceeding further, the High Court dealt with the submission made on
behalf of the appellant that the respondents were bound by the principles of
promissory estopple and rejected the same with two-fold observations: one
46
that there could be no estopple against the statute; and secondly, that there
was no such representation held out to the appellant by BIDI or SLSC as
alleged. The High Court observed and held as under:-
“The argument that impugned revisional order constituted breach
of the promise held out to the petitioner company which was
binding on the respondents by doctrine of promissory estoppel
and equitable estoppel cannot be countenanced for the
simple reason that there could be no estoppel against the
statute. The BIDI did not direct the SLSC to grant 75% tax
subsidy to the petitioner-company. It merely directed that "the
recently announced cement package and RIPS-2003 shall be
applicable on the company." When the BIDI had itself not taken
the decision and directed for extending the recently announced
cement package as per RIPS-2003, that would mean that the
provisions contained in RIPS-2003 would have to be adhered to
and the case of the petitioner-company would be dealt with in
accordance therewith. The two provisions under which the
petitioner-company could have availed tax subsidy upto 75% were
the sub-clauses namely Sub-clause (vi) and (vii) of Clause 7
inserted vide notification dated 02.12.2005 but both these sub-
clauses were deleted vide notification dated 28.04.2006, merely
two days after the petitioner-company submitted option for availing
benefit thereunder on 26.04.2006. Another provision under which
the petitioner-company could have availed tax incentive of 75%
was proviso to Clause 7(i)(a) and 7(i)(b) in which case the
petitioner-company was required to make an application to SLSC
whereupon the SLSC could have referred it to the BIDI. The BIDI
remained in existence till 07.06.2009 and till that time, no such
reference was made by the SLSC to it. There is therefore hardly
any justification to contend that any representation was held
out to the petitioner-company by the BIDI or the SLSC.”
(emphasis in bold supplied)
13.9.The High Court also referred to the Constitution Bench decision in the
case of Commissioner of Customs (Import), Mumbai v. Dilip Kumar & Co.
and Ors: (2018) 9 SCC 1 to point out that where there is ambiguity in an
exemption notification or exemption clause, the benefit of such ambiguity
cannot be extended to the assessee; and the question whether assessee falls
47
within the exemption clause, has to be strictly construed. The High Court
referred to the nature of benefit obtained by the appellant and reiterated the
fact that case of the appellant had not even been considered by BIDI. The
High Court said,-
“…In the present matter, case of the petitioners has not even been
considered by the BIDI which merely relegated it to SLSC, as such
the provisions of the RIPS-2003 are to be strictly adhered to.
Unlike the exemption schemes where the assessee is not
collecting the taxes from the customer/purchaser, here in the
present case of subsidy, the tax is collected from the
customers/purchasers and after depositing the same with the
department, the amount to the extent of 50% or 75%, as per the
entitlement certificate, is refunded to the assessee.”
13.10.The High Court also reiterated the basic flaw in the approach of
SLSC where it had misconstrued the decision of BIDI and observed that the
view taken by SLSC in extending unwarranted benefit to the appellant under
the non-existing sub-clauses (vi) and (vii) of Clause 7 of RIPS-2003 was not at
all a possible view of the matter; and that the appellant ‘fully understood this
situation’, which was evident from its representation made on 26.05.2006.
13.11.Yet further, the High Court examined the contention on behalf of the
appellant that every loss of revenue as a consequence of an order of the
subordinate authority cannot be treated as prejudicial to the interest of the
revenue and also referred to the cited decision in the case of Malabar
Industrial Co. Ltd. v. Commissioner of Income Tax, Kerala State : (2000) 2
SCC 718 while pointing out that the phrase “prejudicial to the interest of
revenue” is of wide import and not confined to loss of tax alone. After
extracting relevant passages from the cited decision, the High Court applied
the principles to the case at hand as follows:-
48
“Applying the ratio of the aforesaid judgment on the facts of the
present case, it has to be accepted that due to erroneous reading
of the order of the BIDI, which did not by itself direct for grant of
75% tax subsidy but merely directed that “the recently announced
cement package and the RIPS-2003 shall be applicable on the
company”, the SLSC could have extended only such tax subsidy
which it was competent to do. The SLSC by erroneously
misconstruing the aforesaid decision of the BIDI extended the
benefit of sub- clause (vii) whereas the said clause stood deleted
only two days after the option was exercised by the petitioner-
company. Order of the SLSC was therefore certainly
“prejudicial to interest of the revenue” in the sense this
phrase has been used in Clause 13 of the RIPS-2003.
Although in a different way, allowing the petitioners to retain
25% differential amount would tantamount to loss of Revenue
and gain of the petitioner-company at the cost of State
exchequer which is after all public money. The petitioner-
company was entitled to grant of 50% tax subsidy only as on the
date on which the SLSC met to consider its case and resolved to
grant subsidy of 75%, it was not competent for that. Money from
coffers of the State has been undersevely paid to the petitioner-
company even though it was not entitled to receive the same.”
(emphasis in bold supplied)
13.12.As regards the challenge to Clause 13 of RIPS-2003, the High Court
observed that the appellant was very much aware of the provisions envisaged
therein at the time of filing its application and it was not the case of the
appellant that the Government did not have the authority to provide such a
Clause in the Scheme or frame the policy in question nor was it demonstrated
that Clause 13 violated any fundamental right or otherwise.
13.13.As regards validity of the action taken under Clause 13 of RIPS-2003,
the High Court observed that in the case at hand, the appellant started availing
the benefit of 75% subsidy from the month of February 2010 and availed the
same until the month of February 2017; and as the show cause notice was
sent within six months from February 2017, it was well within the limitation
49
period of five years, as provided under Clause 13. The High Court held and
concluded as follows:-
“…Admittedly, in the present case, the petitioners started availing
benefits of the subsidy from February, 2010 and fully availed the
benefits of subsidy to the extent of 75% up to February, 2017.
Show cause notice for revising the order under Clause 13 of the
RIPS-2003 was issued to the petitioner-company by the
Government on 10.07.2017, which was well within the period of
five years, given in Clause 13(b) of the RIPS-2003. In fact, the
show cause notice was issued/received within six months from
February, 2017, up to which time, subsidy was fully availed by the
petitioner-company. Therefore, the argument that exercise of
power of revision within five years after the expiry of seven years
during which benefit was availed by the petitioner-company,
makes the said provision as unreasonable, arbitrary, oppressive
and violative of fundamental rights of the petitioners, has no merit.”
14. The order so passed by the High Court dismissing the writ petition
and the action of the respondents recalling 25% part of the subsidy have been
questioned in this appeal.
Rival Contentions
The Appellants
15. Assailing the orders passed by the High Court as also the Additional
Chief Secretary, learned senior counsel for the appellants has painstakingly
taken us through the facts of the case and has made elaborate submissions
that grant of 75% subsidy to the appellant company had been valid in law and
justified on facts.
15.1.The learned senior counsel would submit that the company had
applied to BIDI for a customized package of incentives for the proposed
cement plant at Kotputli; and this application was disposed of by BIDI on
01.04.2006, where it was directed that the recently announced package be
50
granted to the company and also the RIPS-2003 benefits. While pointing out
that this package, providing for 75% Sales Tax subsidy to newly established or
substantially expanded cement undertaking, was introduced on 02.12.2005
with insertion of sub-clauses (vi) and (vii) to Clause 7 of RIPS-2003 and these
sub-clauses were deleted on 28.04.2006, the learned senior counsel has
argued that BIDI had the authority to grant subsidy to the extent of 75%, of the
tax payable and deposited, to any industrial undertaking with an investment of
over Rs. 400 crores under the proviso to Clauses 7(i)(a) and 7(i)(b) of the
Scheme; and such a decision of BIDI in relation to the appellant company had
rightly been implemented by SLSC.
15.1.1.The learned counsel would also submit that subsidy under Clauses
7(vi) and 7(vii) consisted of 45% upfront subsidy, which was payable
straightaway without being dependant on the wages and interest amounts
spent by the undertaking; and the balance 30% subsidy consisted of wage and
interest subsidy but, in contrast, the subsidy granted to the appellant did not
include any upfront subsidy; rather it only consisted of 75% wage and interest
subsidy and hence, it remains beyond the cavil that the subsidy so granted to
the appellant had been under the proviso to Clauses 7(i)(a) and 7(i)(b) of
RIPS-2003, particularly when it did not include any upfront subsidy and only
consisted of 75% wage and interest subsidy. According to the learned counsel,
the Minutes of SLSC meeting dated 17.03.2011 make it crystal clear that the
decision to grant 75% subsidy was the decision of BIDI and not that of SLSC.
51
15.2.The learned senior counsel has also invoked the principles of
Contemporanea Expositio with the submissions that in all the exchanges at the
relevant time, it was plainly and clearly understood by the authorities
concerned that the appellant company was entitled to subsidy to the extent of
75% in the true interpretation of the provisions of the Scheme and on their
correct application to the facts of the case; and, therefore, the respondents are
not entitled to alter their stand at the later stage. The learned counsel has
argued, while placing reliance on the decision of this Court in Spentex
Industries Ltd v. C.C.E.: (2016) 1SCC 780, that SLSC’s understanding of the
record and the factual position deserves to be accepted by the Court on the
doctrine of Contemporanea Expositio.
15.2.1.The learned senior counsel has further submitted that though it was
expressly admitted in the Show Cause Notice dated 10.07.2017 that BIDI did
take a decision on 01.04.2006, but it was alleged that BIDI did not expressly
grant 75% subsidy; and the same view is reflected in the revisional order,
which has been approved by the High Court. However, according to the
learned counsel, this view would render the words ‘recently announced
cement package’ in BIDI’s decision dated 01.04.2006 completely meaningless;
and this view is also contrary to the contemporaneous understanding of the
SLSC, as set out in the Minutes of its meeting dated 17.03.2011. The learned
counsel would maintain that the words of BIDI, giving ‘recently announced
cement package’ to the company, could only mean granting of 75% subsidy,
52
though it was not under or in terms of Clauses 7(vi) or 7(vii) but, was relatable
to the proviso to Clauses 7(i)(a) and 7(i)(b) of RIPS-2003.
15.3.It has also been submitted by the learned counsel that the appellant
made its entire investment of over Rs.1,600 crores on its Kotputli plant only
after the decision of BIDI dated 01.04.2006 and after entering into the MoU
dated 30.11.2007 in Resurgent Rajasthan Summit under which, the
respondent State Government gave a commitment to extend all concessions
and benefits which were available under RIPS-2003. The learned counsel
would argue that the decision of BIDI dated 01.04.2006 and commitment of the
State Government dated 30.112007 clearly attracted the doctrine of promissory
estoppel against the respondents but the High Court has rejected this
contention only on the ground that promissory estoppel is of no avail against a
statute, which is a patent error on part of the High Court because RIPS-2003
has been a totally non-statutory Scheme. According to the learned counsel, the
appellant is entitled to succeed on the ground of promissory estoppel alone;
and the respondents cannot deny the entitlement of appellant to avail subsidy
to the extent of 75% of the Sales Tax/VAT payable and deposited, as rightly
allowed and rightfully availed.
15.4.It has further been submitted by the learned senior counsel that BIDI
was a high-powered body presided over by the Chief Minister and its decision
could not have been revised under Clause 13 of RIPS-2003. According to the
learned counsel, only the decision of SLSC could be revised under Clause 13
of RIPS-2003 but, in the present case, SLSC only implemented BIDI’s decision
53
dated 01.04.2006 and did not take any decision on its own to grant subsidy
and hence, SLSC’s directions dated 17.03.2011 were not open to revision
under Clause 13. The learned senior counsel would submit that the certificates
in question had rightly been issued by the SLSC acting in terms of the decision
of BIDI, which remains binding on the respondents and, therefore, the
respondents are not entitled to suggest any different interpretation after the
subsidy in question had already been availed of.
15.5.In regard to the scope of such powers of revision, the learned senior
counsel has referred to the decision of this Court in the case of Malabar
Industries Co. Ltd. v. Commissioner of Income Tax, Kerala State.: (2002) 2
SCC 718 and has submitted that Clause 13 of RIPS-2003, which confers
power on the State Government to revise SLSC’s orders, is identical to Section
263 of the Income Tax Act, 1961, which has been interpreted by this Court in
the manner that if the adjudication order constitutes one of the possible views,
then no revision would lie. According to the learned counsel, the view taken by
SLSC, as set out in its Minutes of the meeting dated 17.03.2011, had certainly
been a possible view and, therefore, in any event, no proceedings for revision
under Clause 13 of RIPS-2003 were maintainable against this decision of
SLSC.
15.6.The learned senior counsel has also argued, while relying on various
decisions, including that of this Court in Birla Jute & Industries Ltd. v. State
of M.P.: 119 STC 14 (S.C.) and that of Rajasthan High Court in
Commissioner, Commercial Taxes, Rajasthan, Jaipur and Anr. v.
54
Rajasthan Taxation Tribunal and Ors.: 38 Tax Up-date 131, that when the
incentives granted to the assessee had been fully availed of and the incentive
period had already been completed, the incentives cannot thereafter be
revoked or recalled with retrospective effect.
15.7.The learned senior counsel has also questioned the levy of interest
with the submissions that the grant of 25% subsidy has been revoked not
because of any default committed by the appellant but only because of a
sudden change of opinion by the respondents after about eight years. In this
fact situation, according to the learned counsel, Clause 10 of RIPS-2003,
authorising levy of interest, has no application at all. With reference to the
decisions in India Carbon Ltd. & Ors. v. State of Assam.: (1997) 6 SCC
479, Maruti Wire Industries Pvt. Ltd. v. Sales Tax Officer.: (2001) 3 SCC
735 and J.K. Synthetics Ltd. v. C.T.O.: (1994) 4 SCC 276, the learned
counsel has contended that a provision for charge of interest has to be
construed strictly like the charging provision for levy of a tax; and unless the
conditions of the provision for levy of interest are strictly fulfilled, no interest
can be charged. The conditions being not fulfilled, the learned counsel would
urge, interest cannot be charged in the present case.
The Respondents
16. The learned Additional Advocate General, appearing for the
respondents, has vehemently countered the submissions made on behalf of
the appellants while maintaining that the appellant company was entitled to
subsidy only to the extent of 50% of Sales Tax/VAT payable and deposited;
55
and the appellant is bound to refund the excess subsidy to the tune of 25%
that had been wrongfully obtained under the erroneous decisions of SLSC.
16.1.In an equally detailed reference to the chronicle of facts, the learned
AAG has submitted that the special cement package announced on
02.12.2005 came to be incorporated in RIPS-2003 by insertion of sub-clauses
(vi) and (vii) to Clause 7; and this was the position obtainable on 01.04.2006
when BIDI took the decision on the prayer made by the company; and hence,
the decision of BIDI dated 01.04.2006 to grant subsidy could only have been
with respect to the said sub-clauses (vi) and (vii) of Clause 7 because the
specific provision always overrides the general one, as explained in J.K.
Cotton Spinning & Weaving Mills Co. Ltd. v. State of U.P. : (1961) 3 SCR
185. Thus, according to the learned AAG, the appellants herein could have
sought, if at all, the relief flowing from the said sub-clauses (vi) and (vii) of
Clause 7 but, those sub-clauses were consciously deleted by the State
Government on 28.04.2006; and being aware of this position, the appellants
have abandoned their plea of claiming relief under those sub-clauses (vi) and
(vii) and have started relying on the proviso to Clauses 7(i)(a) and 7(i)(b) of the
Scheme.
16.1.1.While refuting the claim of the appellant, as based on the proviso to
Clauses 7(i)(a) and 7(i)(b) of RIPS-2003, the learned AAG has contended that
the general powers under the said proviso could not have been exercised by
BIDI on 01.04.2006, because on that date, the said sub-clauses (vi) and (vii) of
Clause 7 were in existence and they co-related with cement units alone. The
56
learned AAG would submit that the appellant company is a cement unit and the
contemporaneous correspondence amply demonstrates that even the
appellants construed at the relevant point of time that the subsidy was given
under the said sub-clauses (vi) and (vii) of Clause 7 of RIPS-2003; and only in
order to circumvent the deletion of the said sub-clauses (vi) and (vii), the
appellants started to claim subsidy under proviso to Clause 7(i)(a) and 7(i)(b)
of RIPS-2003. According to the learned AAG, the claim so made by the
appellant had only been an afterthought and cannot be countenanced, for it
would result in conferring a benefit that had ceased to exist post 28.04.2006.
With repeat reference to the Minutes of BIDI meeting dated 01.04.2006, the
learned AAG has submitted that not a single document existed at the relevant
point of time, i.e., around 01.04.2006, which could even remotely suggest that
the subsidy was granted in terms of proviso to Clauses 7(i)(a) and 7(i)(b) of
RIPS-2003.
16.2.While countering other parts of submissions, the learned AAG has
submitted that the doctrine of Contemporaneous Expositio applies to ancient
statutes and has no application to the present case. The learned AAG would
further submit that even if this doctrine is held applicable to current statutes, it
would only apply if one particular view has been taken by the executive and
there is ambiguity in the construction of the clauses in question but, in the
present case, there is no ambiguity with regard to construction of the Scheme.
The learned AAG would yet further argue that this doctrine would not apply
when an administrative body had granted exemption on an erroneous view of
57
the matter because the competent administrative body is entitled to revoke
such a decision after being apprised of the correct facts.
16.3.The learned AAG has further submitted that the MoU signed on
30.11.2007 clearly stated about grant of the incentives under RIPS-2003 as
available from time to time and, for the said sub-clauses (vi) and (vii) of
Clause 7 having been withdrawn, the understanding could not have gone
beyond allowing 50% subsidy, as available under the Scheme on that date.
Thus, according to the learned AAG, even the principles of promissory
estopple are not applicable to the present case inasmuch as 75% subsidy
under the proviso to Clauses 7(i)(a) and 7(i)(b) was neither stipulated in the
MoU nor was granted in the BIDI meeting dated 01.04.2006.
16.4. The learned AAG would lay emphasis on submissions that the
State Government has rightly exercised the power of revision to set aside the
order of SLSC, which had erroneously granted 75% subsidy, even though the
related provisions in the Scheme stood withdrawn on 28.04.2006; and that the
grant of subsidy by SLSC will not create any issue of estoppel because it was
a wrongful grant and the same was corrected in exercise of revisional powers
reserved under the Scheme.
16.4.1. It has also been argued that the revisional authority has clearly
exercised the power under Clause 13 of RIPS-2003 within the period of five
years prescribed therein from the last date of availing the benefit. According to
the learned AAG, the last date of availing the benefit by the appellant
company being in the month of February 2017, the revisional order passed on
58
12.03.2018 remains well within the stipulated period under Clause 13(b) of
RIPS-2003.
16.5.Levy of interest has also been justified on behalf of the respondents
with reference to the terms and conditions of RIPS-2003 and with the
submissions that the appellant company is bound to refund the amount
wrongfully received while also compensating the Government in terms of
interest stipulated in the Scheme or at least as agreed to in the undertaking
submitted to the Government.
16.5.1. It has been argued by the learned AAG that the subsidy was in the
form of a contract between the State Government and the appellant company
and hence, the appellant is bound by the undertaking that if any excess benefit
is availed, the same shall be returned with 12% per annum interest. The
learned AAG has submitted that even on the principles embodied in Section 72
of the Indian Contract Act, any benefit received by mistake must be returned
with interest so as to avoid unjust enrichment.
Points for determination
17. For what has been noticed hereinabove, the basic point arising for
determination in this case is the extent to which the appellant company was
entitled to Sales Tax/VAT subsidy under RIPS-2003 i.e., as to whether the
company was entitled to the subsidy to the extent of 75% of tax payable and
deposited or was entitled only to 50%? For effectual determination of this basic
and principal point, we need to examine the purport and effect of the decision
of BIDI dated 01.04.2006. The other equally relevant points arising for
59
determination are: as to whether the view taken by SLSC in its initial decisions
to grant 75% subsidy to the appellant on the basis of the decision of BIDI had
been a possible view of the matter; as to whether the doctrine of
Contemporanea Expositio applies to this case and inures to the benefit of
appellant; as to whether the respondent cannot recall 25% subsidy on the
principles of promissory estopple; as to whether the State Government was
entitled to exercise the powers of revision under Clause 13 of RIPS-2003 and
has rightly exercised such powers; and what is the effect of the fact that 75%
subsidy had already been availed by the appellant before the decision in that
regard was sought to be questioned and re-opened by the respondents. Lastly,
if the decision of State Government to recall 25% component of availed
subsidy is upheld, the point still requiring consideration would be as to whether
the State is justified in seeking to recover interest @ 18% per annum?
18. We have given anxious consideration to the points so arising in this
case with reference to the rival submissions and the law applicable; and have
scanned through the entire record.
Entitlement of the Appellant to Capital Investment Subsidy : The extent
thereof : effect of the decision of BIDI
19. For what has been noticed hereinabove, the main plank of
submissions on behalf of the appellant is that granting of subsidy to the extent
of 75% was permissible under the proviso to Clauses 7(i)(a) and 7(i)(b) of
RIPS-2003 and the BIDI could have and indeed granted such sanction in its
favour. According to the appellant, the decision to grant 75% subsidy was
60
taken by BIDI on 01.04.2006 while SLSC only implemented the same. It has
also been suggested that the company applied for a customised package of
incentives and the decision of BIDI ought to be equally viewed in the light of
the provision authorising grant of customised package. In our view, these
submissions suffer from several shortcomings, where a fine but well-defined
line of separation between the resolution/decision of BIDI dated 01.04.2006
and the decision of SLSC dated 17.3.2011, is ignored.
19.1. As noticed, the application earlier made by the company was considered in the
Pre-BIDI meeting dated 28.03.2006 and the recommendations therein had only been to the
effect that the cement package recently announced and RIPS-2003 should be applicable to
the company. The decision of BIDI in its meeting dated 01.04.2006 had also been
specifically in line of the Pre-BIDI recommendations where it was directed that ‘the recently
announced cement package and RIPS-2003 will be applicable on the company’. At the given
stage of Pre-BIDI recommendations dated 28.03.2006 and the decision of BIDI dated
01.04.2006, the aforesaid sub-clauses (vi) and (vii) of Clause 7 of RIPS-2003 were in
existence and, in fact, the phrase “recently announced cement package” precisely referred
to the said provisions of sub-clauses (vi) and (vii), which had been inserted to Clause 7 of
RIPS-2003 on 02.12.2005. Moreover, even when BIDI stated that ‘recently announced
cement package’ would be applicable to the company, it was coupled with the requirement of
applicability of the Scheme, i.e., RIPS-2003. After the aforesaid decision of BIDI dated
01.04.2006, the company, in its letter dated 26.04.2006 to the Commissioner of Industries,
sought registration in terms of sub-clause (vii) of Clause 7 of RIPS-2003 for a new cement
plant/captive power plant, intended to be established at Kotputli. However, there had been
significant developments/revisions in relation to RIPS-2003 after the said decision of BIDI
dated 01.04.2006 and the application of the company dated 26.04.2006, where the said sub-
clauses (vi) and (vii) of Clause 7 were specifically deleted from the Scheme on 28.04.2006.
61
Noticeably, no decision had been taken by SLSC to grant subsidy to the company in terms of
the then existing sub-clauses (vi) and (vii) of Clause 7 until 28.04.2006. The application later
made by the company on 21.02.2010 and the decision thereupon taken by SLSC on
17.03.2011 do not and cannot co-relate with the decision of BIDI dated 01.04.2006 whose
initial part, i.e., ‘recently announced cement package’ became redundant with the aforesaid
amendment of Clause 7 of RIPS-2003 and deletion of its sub-clauses (vi) and (vii).
19.2. Apart from the above, it is also significant to notice that the competent authority, to
sanction subsidy under RIPS-2003, had only been SLSC in terms of Clause 6 thereof.
Though it has been strenuously argued by the learned senior counsel for the appellant that
BIDI was a high-powered body with the Chief Minister being its Chairperson and it has also
been asserted that the Secretary Finance had equally been a Member of BIDI as also SLSC,
but, we are afraid, these submissions do not advance the cause of the appellant in any
manner. Even if BIDI had been a high-powered body, its resolutions or even directives could
have only been read in conformity with the provisions applicable to any particular
proposition; and the fact that one of the Secretary had been a member of both BIDI and
SLSC, the resolution of BIDI could not have been imported into the decision making process
of SLSC beyond what was permissible under the Scheme.
20. The other limb of submissions that BIDI had granted 75% subsidy
under proviso to Clauses 7(i)(a) and 7(i)(b) of RIPS-2003 remains
unacceptable for a variety of reasons. It is apparent on the face of the record
that neither in Pre-BIDI’s recommendation dated 28.03.2006 nor in the final
decision of BIDI dated 01.04.2006, there had at all been any proposition for
invocation and application of the said proviso to Clauses 7(i)(a) and 7(i)(b) of
RIPS-2003. The application made on behalf of the company had precisely
been with reference to the contents of the said sub-clauses (vi) and (vii) of
Clause 7 seeking 75% subsidy, 45% being allowable upfront and remaining
62
30% in the form of interest and wage/employment subsidy, with cap of interest
subsidy to the extent of 5% of the documented rate of interest. There had
never been any proposal before BIDI in the case of the appellant company to
invoke the said proviso to Clauses 7(i)(a) and 7(i)(b) of RIPS-2003 so as to
increase the maximum limit of subsidy to 75%. Proceeding ahead of the
decision of BIDI dated 01.04.2006, the fact that the company was consciously
seeking the benefit under sub-clause (vii) of Clause 7 of RIPS-2003 is again
evident on the face of the record on a bare look at the contents of its
application dated 26.04.2006. No decision on this application was taken; and
within two days of making of this application, the State Government amended
RIPS-2003 and deleted the aforesaid sub-clauses (vi) and (vii) of Clause 7.
The company made a desperate attempt to persuade the State Government to
withdraw such amendment of deletion of sub-clauses (vi) and (vii) of Clause 7
of the Scheme and to grant benefit of those deleted provisions by way of its
representation dated 26.05.2006 but, the communication thereafter sent on
17.06.2006 to the company by BIP was again to the effect that the ‘company
would be eligible for the concessions as contained in RIPS-2003’. Even in the
MoU dated 30.11.2007, what the State Government undertook was to extend
support in the form of providing incentives as permissible under RIPS-2003
together with additional support as per the prevalent policy.
20.1.In our view, whether each of the aforesaid background aspects is
seen in isolation or whether all these aspects are put together, it cannot be
deduced, by any stretch of imagination, that a conscious decision was ever
63
taken by BIDI at any stage that the appellant company would be extended any
differential and advantageous treatment by allowing 75% subsidy in place of
the ordinarily allowable 50%.
20.2.Invocation of proviso to Clauses 7(i)(a) and 7(i)(b) of RIPS-2003
seems to have only been a creation of SLSC in its meeting dated 17.03.2011
while dealing with the application made by the appellant on 21.02.2010.
Significantly, even in the said application, what the appellant claimed had only
been the concession in terms of sub-clause (vi) of Clause 7 of RIPS-2003.
The claim precisely was that the benefits may be allowed in terms of the said
notification dated 02.12.2005. The SLSC, while taking up the said application,
on its own, connected the prayer of the appellant to the decision of BIDI and,
for that matter, read as if BIDI’s decision had been to grant subsidy to the
extent of 75% in terms of the said proviso to Clauses 7(i)(a) and 7(i)(b) of
RIPS-2003. We are unable to find any rationale and any logic that SLSC, in
its meeting dated 17.03.2011, imported the said proviso to Clauses 7(i)(a) and
7(i)(b) of RIPS-2003 into the decision of BIDI dated 01.04.2006 and then,
applied such incorrect reading of BIDI’s order in its decision making process
so as to grant 75% subsidy. The SLSC, who had the power to grant subsidy
upto 50% could not have granted beyond this limit by unwarranted application
of the decision of BIDI dated 01.04.2006 and that too with its misconstruction;
by reading into it such powers, which had neither been invoked nor exercised
by BIDI. The decision of SLSC dated 17.03.2011 and its repeat decision dated
24.11.2011, turn out to be wholly perverse and could only be disapproved.
64
21. Taking up the question if the decision of BIDI is relatable to the grant of a
customised package, the answer would be in the negative without requiring much discussion
because such grant of customised incentive package for any particular company or
establishment was governed by Clause 6-A of RIPS-2003 that had an entirely different
prescribed authority in the form of a Committee, who was supposed to examine individual
cases and could have made recommendation for sanction of the customised incentive
package through BIDI. In the entire length of dealings in this matter, we are unable to find
any such decision by the Committee referred to in Clause 6-A and any recommendation for
customised incentive package in relation to the appellant. The decision of BIDI dated
01.04.2006 also does not refer to nor is relatable with any customised package meant for
the appellant company.
22. In an overall conspectus of the record and various amendments/revisions of RIPS-
2003, it appears that though at one stage (i.e., on 02.12.2005), the State Government
thought it proper to announce an entirely different treatment to cement units by extending
75% subsidy to them with a different methodology and hence, inserted sub-clauses (vi) and
(vii) to Clause 7 of RIPS-2003 but, it did not continue with that policy and deleted the said
sub-clauses on 28.04.2006. It remains trite that extending of any incentive in the form of
exemption, rebate, concession or subsidy is a matter of the policy of the Government and for
that matter, fiscal policy. Ordinarily, such framing of the policy remains within the domain of
the Government; and the Government is entitled to frame a particular policy and to alter the
same, as deemed fit and proper. As to whether the cement industry was to be granted 75%
subsidy under RIPS-2003 or not was definitely a matter of the policy of the Government; and
when such a policy was not in existence at the time of consideration of the application of the
appellant, no benefit could have been claimed under a non-existent policy.
23. In the given set of facts and circumstances, in our view, the Additional
Chief Secretary has rightly held that SLSC’s decision dated 17.03.2011 and its
repeat decision dated 24.11.2011 had been erroneous on the very
65
fundamentals where it was assumed as if BIDI had already sanctioned 75%
subsidy to the company. The High Court has also independently examined the
entire matter in requisite details and we are unable to find any infirmity when
the High Court has held that the appellant company was only entitled to
subsidy to the extent of 50% of the tax payable and deposited and not to the
extent of 75%.
SLSC’s decision of granting 75% subsidy to the appellant: whether a
possible view of the matter
24. The suggestion on behalf of the appellant company, that if two views were
possible and the SLSC in its earlier decision had taken one of the views, then the same
could not have been interfered with, has its own shortcomings.
24.1. In the first place, the possibility of so called other view (the wrong one) could arise
only if SLSC is held entitled to simply turn itself away from the applicable provisions of the
Scheme while ignoring the fact that sub-clauses (vi) and (vii) of Clause 7 had already been
deleted; and is simultaneously conferred with dubious discretion to interpret the decision of
BIDI in whatever manner it would chose to. Obviously, such arbitrary authority or unfettered
discretion is not available to any decision taking body; and could least be countenanced for
a responsible body of the Government, like SLSC, who deals with public exchequer. Having
examined the record in its totality, we have not an iota of doubt that the initial decision of
SLSC had not only been erroneous but had been highly perverse, reaching the level of
absurdity. The view of SLSC cannot be regarded as a possible view of the matter from any
standpoint or any angle.
24.2.Apart from the above, even if it be assumed for the sake of argument
that there was any ambiguity in the applicable provisions of RIPS-2003 or the
decision of BIDI, we are clearly of the view that the benefit of any such
ambiguity could not have been extended to the appellant company. If at all
66
there had been any ambiguity, the benefit thereof would have only gone in
favour of revenue for the simple reason that under the provisions in question,
the State had agreed, by way of incentive, to part with a portion of its revenue.
Such provisions, whether in the statute or in the non-statutory document, by
their very nature, are subject to strict interpretation so far as their applicability
is concerned. The principles of law in this regard are well settled with the
Constitution Bench decision of this Court in the case of Dilip Kumar & Co.
(supra). Recently, in the case of Ramnath & Co. v. Commissioner of
Income Tax: Civil Appeal Nos.2506-2509 of 2020 decided on 05.06.2020,
while dealing with an incentive provision contained in Section 80-O of the
Income Tax Act, 1961
30
, this Court has taken note of the principles laid down in
Dilip Kumar & Co. and has held, inter alia, as under :-
"17.3. In view of above and with reference to several other
decisions, in Dilip Kumar & Co., the Constitution Bench summed
up the principles as follows:-
“66. To sum up, we answer the reference holding as under:
66.1. Exemption notification should be interpreted strictly;
the burden of proving applicability would be on the assessee to
show that his case comes within the parameters of the
exemption clause or exemption notification.
66.2. When there is ambiguity in exemption notification
which is subject to strict interpretation, the benefit of
such ambiguity cannot be claimed by the
subject/assessee and it must be interpreted in favour of
the Revenue. 66.3. The ratio in Sun Export case is not
correct and all the decisions which took similar view as in
Sun Export case stand overruled.”
(emphasis in bold supplied)
17.4. Obviously, the generalised, rather sweeping, proposition
stated in the case of Sun Export Corporation (supra) as also in
other cases that in the matters of taxation, when two views are
30 Hereinafter referred to as ‘the Act of 1961’
67
possible, the one favourable to assessee has to be preferred,
stands specifically disapproved by the Constitution Bench in Dilip
Kumar & Co. (supra). It has been laid down by the Constitution
Bench in no uncertain terms that exemption notification has to be
interpreted strictly; the burden of proving its applicability is on the
assessee; and in case of any ambiguity, the benefit thereof cannot
be claimed by the subject/assessee, rather it would be interpreted
in favour of the revenue.
*** *** ***
19. Without expanding unnecessarily on variegated provisions
dealing with different incentives, suffice would be to notice that the
proposition that incentive provisions must receive “liberal
interpretation” or to say, leaning in favour of grant of relief to the
assessee is not an approach countenanced by this Court. The law
declared by the Constitution Bench in relation to exemption
notification, proprio vigore, would apply to the interpretation and
application of any akin proposition in the taxing statutes for
exemption, deduction, rebate et al., which all are essentially the
form of tax incentives given by the Government to incite or
encourage or support any particular activity……”
24.3. In view of the above, contention on the part of the appellant about existence of
any ambiguity in the matter and extending the benefit of ambiguity to itself could only be,
and is, rejected.
Doctrine of Contemporanea Expositio : if applicable?
25. The learned senior counsel for the appellant has endeavoured to persuade us that
SLSC’s understanding of the record and factual position deserves to be accepted on the
doctrine of Contemporanea Expositio. In our view, neither this doctrine could be invoked in
the present case nor the principles related therewith could be applied.
25.1. The referred doctrine is embodied in the maxim ‘Contemporanea exposition est
optima et fortissimo in lege’ which means that the best way to construe a document is to
read it as it would have read when made. The doctrine has been tersely explained by this
Court in the case of Desh Bandhu Gupta v. Delhi Stock Exchange Association Ltd.: AIR
1979 SC 1049 in the following terms (at p. 1054) :
“… The principle of contemporanea exposition (interpreting a
statute or any other document by reference to the exposition it has
received from contemporary authority) can be invoked though the
68
same will not always be decisive of the question of construction.
(Maxwell 12th Edn. p. 268). In Crawford on Statutory Construction
(1940 Edn.) in para 219 (at pp. 393-395) it has been stated that
administrative construction (i.e. contemporaneous construction
placed by administrative or executive officers charged with
executing a statute) generally should be clearly wrong before it is
overturned; such a construction, commonly referred to as practical
construction, although not controlling, is nevertheless entitled to
considerable weight; it is highly persuasive. In Baleshwar Bagarti
v. Bhagirathi Dass I.L.R. 35 Cal. 713 the principle, which was
reiterated in Mathura Mohan Sana v. Ram Kumar Saha I.L.R. 43
Cal. 790 has been stated by Mukerjee J. thus:
It is a well-settled principle of construction that courts in
construing a statute will give much weight to the
interpretation put upon it, at the time of its enactment and
since, by those whose duty it has been to construe, execute
and apply it. I do not suggest for a moment that such
interpretation has by any means a controlling effect upon the
Courts; such interpretation may, if occasion arises, have to
be disregarded for cogent and persuasive reasons, and in a
clear case of error, a Court would without hesitation refuse to
follow such construction.”
25.2. Some of the basic features of this doctrine of Contemporanea Expositio and its
applicability as also non-applicability, as explained with reference to the decided cases in the
Principles of Statutory Interpretation by Justice G.P. Singh
31
, could also be usefully extracted
as under:-
“Usage or practice developed under a statute is indicative of the
meaning ascribed to its words by contemporary opinion and in case
of an ancient statute is an admissible external aid to its
construction.
32
Referring to Magna Carta, Lord Coke said: “This and
the like were the forms of ancient Acts and graunts, and the ancient
Act and graunts must be construed and taken as the law was
holden at that time when they were made”.
33
..… The doctrine of
stare decisis may also be applied when the law is settled in a State
for over 100 years by considered view of the High Court of that
State.
34
…..Even if the persons who dealt with the Act understood it in a
particular manner, that does not prevent the court in giving to the
Act its true construction.
35
...The Supreme Court has refused to apply
31 14
th
Edition, pp.375-376
32 Optimus legume interpres est consuetudo; Contemporanea exposition est Optima et fortissimo in
lege
33 Senior Electric Inspector v. Laxminarayan Chopra, AIR 1962 SC 159, p. 162 : 1962 (3) SCR 146
34 Ram Adhar Singh v. Bansi, (1987) 2 SCC 482, p. 485 : AIR 1987 SC 987
35 Punjab Traders v. State of Punjab, AIR 1990 SC 2300, p. 2304 : 1991 (1) SCC 86
69
the principle of Contemporanea Expositio to the Telegraph Act,
1885
36
and the Evidence Act, 1872.
37
Further, an interpretation to a
statute received from contemporary authority is not binding upon the
Courts and may have to be disregarded if such interpretation is
clearly wrong….”
25.3. Suffice it to observe for the present purpose that in essence, the doctrine of
Contemporanea Expositio is applied as a guide to the interpretation of a statute or even
document by referring to the exposition that the same had received from competent authority
at the relevant point of time. This doctrine is also relatable to the doctrine of stare decisis
whereunder, an exposition standing for a long length of time, is considered to be a law
settled and is applied as such. As regards the contemporaneous construction placed by the
administrative or executive officers charged with executing statute, the Courts lean in favour
of attaching considerable weight to the same but, it cannot be laid down that understanding
of a particular administrative or executing authority is always fait accompli and has to be
applied even if erroneous. The true principle is just to the contrary: that is, if a construction
placed by the contemporary authority is found to be clearly wrong or erroneous, the same
deserves to be disregarded.
25.4.In the case of Spentex Industries (supra), the question was as to whether the
manufacturer/exporter was entitled to rebate of excise duty paid both on the inputs and on
the manufactured product, when the excise duty was paid on the manufactured product and
also on the input, which had gone into manufacturing and the manufactured product was
exported. It was in the context of the aforesaid question that this Court, in the process of
interpretation of the relevant Central Excise Rules, 2002 and the notification thereunder,
referred to Contemporanea Expositio in regard to the notifications issued by the Government
in giving effect to the Rule in question; and it was observed that when the Centre, who had
framed the Rules as also issued notifications, had been of the opinion that rebate was to be
allowed on both forms of excise duty, the Government was bound thereby. This decision
does not even remotely apply to the case at hand and the erroneous decisions of SLSC are
36 Senior Electric Inspector v. Laxminarayan Chopra, AIR 1962 SC 159, pp. 162, 163 : 1962 (3) SCR
146.
37 Raja Ram Jaiswal v. State of Bihar, AIR 1964 SC 828, p. 836: 1964 (2) SCR 752
70
not fait accompli merely because SLSC chose to put a wrong construction on the decision of
BIDI. On the facts and in the circumstances of the present case, invocation of the doctrine of
Contemporanea Expositio on behalf the appellant remains entirely inapt and the contentions
in that regard could only be rejected.
25.5. That the doctrine of Contemporanea Expositio cannot be invoked in the case of
present nature would also be clear by visualising the result, if at all this doctrine is applied. It
is not far to seek that if at all this doctrine is applied, the consequence would be that
howsoever erroneous a decision by the executive or administrative authority may be, once it
emanates from the understanding of some of the officers or authorities, the same would
acquire immunity from scrutiny for all time to come. Such has never been the intent of the
doctrine of Contemporanea Expositio nor could such a result be countenanced.
Whether principles of Promissory Estoppel apply?
26. Another line of submissions on behalf of the appellant based on the
principles of promissory estoppel remains equally baseless. Of course, while
rejecting such a contention, the High Court observed that this doctrine cannot
be invoked against a statute but, at the same time, the High Court also
categorically found that in fact, no representation was held out to the appellant
by BIDI or SLSC as sought to be alleged.
26.1.RIPS-2003 had admittedly been a non-statutory scheme but that
hardly makes a difference looking to the nature of purport of this Scheme
whereby the State was ultimately to extend the benefit by reducing its intake of
the amount of Sales Tax/VAT; and such an intake is indeed governed by the
statute. This apart, as noticed hereinbefore, it cannot be deduced that a
conscious decision was ever taken at any stage or at any level that the
appellant was to be extended any differential and advantageous treatment by
71
SLSC and was to be allowed 75% subsidy in place of the ordinarily allowable
50%. BIDI never issued any direction to SLSC to grant 75% subsidy to the
appellant. It merely directed that "the recently announced cement package and
RIPS-2003 shall be applicable on the company." Obviously, the case of the
appellant was required to be dealt with by SLSC only in accordance with the
applicable provisions contained in RIPS-2003. The provisions under which the
appellant could have availed tax subsidy upto 75% i.e., the said sub-clauses
(vi) and (vii) of Clause 7, were deleted on 28.04.2006, only two days after the
company submitted the application dated 26.04.2006 for availing benefit
thereunder. The repeat request of the company to withdraw such deletion and
to allow benefit under the said deleted sub-clauses, under its representation
dated 26.05.2006, did not meet with any success and the only response of the
Government through BIP was to the effect that the ‘company would be eligible
for concessions as contained in RIPS-2003’. Even in the MoU dated
30.11.2007, what the State undertook was only to provide incentives as
permissible under RIPS-2003 together with additional support as per the
prevalent policy. So far availing 75% subsidy under proviso to Clauses 7(i)(a)
and 7(i)(b) is concerned, the appellant was required to make an application to
SLSC for that purpose whereupon SLSC could have referred it to BIDI but,
neither any such application was made by the appellant nor any such matter
was ever placed before BIDI until it remained in existence i.e., 07.06.2009. In
an overall view of the matter, it is difficult to find that at any stage, any such
72
representation was made by the State Government which led the company to
alter its position.
26.2.Besides the above, when the decisions of SLSC dated 17.03.2011
and 24.04.2011 turn out to be unauthorised and not in accord with the
applicable provisions of the Scheme, the principles of promissory estopple
cannot be invoked for their enforcement. In this regard, reference to the
following passage from the decision of this Court in the case of Dr. Ashok
Kumar Maheshwari v. State of U.P. & Anr.: (1998) 2 SCC 502 would
suffice :-
“22. Whether a promissory estoppel, which is based on a
“promise” contrary to law can be invoked has already been
considered by this Court in Kasinka Trading v. Union of India :
(1995) 1 SCC 274 as also in Shabi Construction Co. v. City &
Industrial Development Corpn.: (1995) 4 SCC 301 wherein it is laid
down that the rule of “promissory estoppel” cannot be invoked
for the enforcement of a “promise” or a “declaration” which
is contrary to law or outside the authority or power of the
Government or the person making that promise.”
(emphasis in bold supplied)
26.3.Even otherwise, when the decision of SLSC, or any decision of any
authority for that matter, was subject to revision by the Government in terms of
Clause 13 of the Scheme, it cannot be suggested that the said power of
revision cannot be invoked. In other words, the principles of promissory
estoppel cannot operate against such revisional power of the Government.
Hence, this part of the contentions also deserves to be, and is, rejected.
Exercise of powers of revision by the State Government under Clause 13
73
27. For the self-same reasons aforesaid, the contentions urged on behalf of the
appellant against the exercise of power of revision under Clause 13 of RIPS-2003 with
reference to the decision of this Court in the case of Malabar Industrial Co. (supra) turn out
to be totally devoid of substance.
27.1. In Malabar Industrial Co. (supra), this Court construed Section 263 of the Act of
1961 wherein too, the basis for exercise of power of revision by the Principal Commissioner
or Commissioner is akin to Clause 13 of RIPS-2003 but with a little difference. Under Section
263 of the Act of 1961, the Commissioner concerned could exercise the power of revision, if
he considers that the order passed by the Assessing Officer is ‘erroneous insofar as it is
prejudicial to the interests of the Revenue’ whereas in Clause 13 of RIPS-2003, such power
could be exercised by the State Government in Finance Department in relation to an order
passed by any screening committee ‘wherever it is found to be erroneous and prejudicial to
the interest of the State Revenue’
27.1.1.For the construction of the aforesaid statutory provision, this Court observed in
Malabar Industrial Co. (supra) that the phrase ‘prejudicial to the interest of the Revenue’
has to be read in conjunction with the expression ‘erroneous’ for the order passed by the
Assessing Officer. In fact, such a process of interpretation is not even required in the present
case because the two aspects, i.e., ‘erroneous’ and ‘prejudicial to the interest of Revenue’
have already been stated with the conjunction “and” in Clause 13 of the Scheme.
27.1.2.It is also noteworthy that even in the case of Malabar Industrial Co. (supra), this
Court, ultimately, upheld the exercise of jurisdiction by the Commissioner under Section
263(1) of the Act of 1961, particularly when it was found that there was no material to
support the view taken; and the Assessing Officer had failed to make the requisite enquiry,
rather the questioned order was found to have been passed by the Assessing Officer without
application of mind. This Court, inter alia, observed and held as under :-
“10. The phrase “prejudicial to the interests of the Revenue” has to
be read in conjunction with an erroneous order passed by the
Assessing Officer. Every loss of revenue as a consequence of an
order of the Assessing Officer cannot be treated as prejudicial to the
74
interests of the Revenue, for example, when an Income Tax Officer
adopted one of the courses permissible in law and it has resulted in
loss of revenue; or where two views are possible and the Income
Tax Officer has taken one view with which the Commissioner does
not agree, it cannot be treated as an erroneous order prejudicial to
the interests of the Revenue unless the view taken by the Income
Tax Officer is unsustainable in law. It has been held by this Court
that where a sum not earned by a person is assessed as income in
his hands on his so offering, the order passed by the Assessing
Officer accepting the same as such will be erroneous and prejudicial
to the interests of the Revenue. (See Rampyari Devi Saraogi v. CIT:
(1868) 67 ITR 84 (SC) and in Tara Devi Aggarwal v. CIT: (1973) 88
ITR 323.)
11. In the instant case, the Commissioner noted that the Income Tax
Officer passed the order of nil assessment without application of
mind. Indeed, the High Court recorded the finding that the Income
Tax Officer failed to apply his mind to the case in all perspective and
the order passed by him was erroneous. It appears that the
resolution passed by the Board of the appellant Company was not
placed before the Assessing Officer. Thus, there was no material to
support the claim of the appellant that the said amount represented
compensation for loss of agricultural income. He accepted the entry
in the statement of the account filed by the appellant in the absence
of any supporting material and without making any inquiry. On these
facts the conclusion that the order of the Income Tax Officer was
erroneous is irresistible. We are, therefore, of the opinion that the
High Court has rightly held that the exercise of the jurisdiction by the
Commissioner under Section 263(1) was justified.”
27.1.3.The observations and conclusions aforesaid, do not advance the cause of the
appellant; and if at all of any application, they operate only against the case of the appellant.
27.2. In the present case, as observed hereinbefore, the initial decision of SLSC was
entirely erroneous and cannot be said to be a possible view of the matter. Coupled with that,
the said decision was directly prejudicial to the interest of revenue where the State
exchequer was to part with extra 25% of the tax amount received or receivable from the
appellant. As noticed, the learned ACS, while passing the order dated 12.03.2008 in
exercise of such power of revision under Clause 13 of the Scheme, has meticulously
examined the entire material and has recorded each and every finding with due regard to the
dealings of the parties and the provisions of Scheme as applicable. The exercise of power of
revision as per Clause 13 of the Scheme remains unexceptionable in the present case.
75
Effect of availing 75% subsidy for 7 years
28. It has also been submitted on behalf of the appellants that the subsidy cannot be
revoked or withdrawn with retrospective effect and after having been fully availed of. Such a
contention does not carry any substance for the simple reason that sub-clause (b) of Clause
13 of the Scheme specifically provides for a period of five years from the date by which
benefits under the Scheme are availed of, to be the period within which the power of revision
could be exercised by the State Government. Admittedly, in the present case, the appellant
company had availed the benefits until the month of February 2017 and the order of revision
was passed on 12.03.2018, well within the period of five years stipulated in the Scheme. In
this view of the matter, reference to the decisions like that of this Court in the case of Birla
Jute & Industries Ltd. (supra) remains entirely misplaced. The observations in the referred
decisions are not relatable to the specific stipulation of the Scheme in question and need no
further dilation.
29. It is also noteworthy that the fundamental questions on the correctness of the
decision of SLSC dated 17.03.2011 were indeed raised by the Finance Department of the
Government by its letter dated 17.11.2011. As noticed, the Industries Department chose not
to respond to the said communication and reminders of the Finance Department for an
abnormal length of time and sent a reply only in the month of February 2017. By that time,
the appellant had practically availed the entire advantage under the questioned decision of
the SLSC. Thereafter, the SLSC re-examined the matter only on 22.05.2017 and left it for
the Finance Department to take proceedings under Clause 13 of RIPS-2013. In the given
set of facts and circumstances, the suggestion that already availed benefit cannot be
withdrawn turn out to be hollow and baseless because whatever was obtained by the
appellant, beyond its entitlement, had only been based on an erroneous and unauthorised
decision of SLSC. In any case, RIPS-2003 being a matter of concession in the form of
subsidy, securing an advantage by the appellant at the cost of public exchequer could not
have been allowed and, for the Scheme itself having reserved the powers in the State
Government to revise the erroneous and prejudicial order within a period of five years from
76
the date of fully availing of the benefits, such powers have rightly been invoked and
exercised by the State Government.
Summation on major points for determination
30. The discussion foregoing leads to the clear answers that BIDI, in its decision
dated 01.04.2006 never directed for grant of 75% subsidy to the appellant company in terms
of proviso to Clauses 7(i)(a) and 7(i)(b) of RIPS-2003 nor allowed any customised package
to the company. The position of record is crystal clear that BIDI’s decision dated 01.04.2006
had only been for allowing ‘recently announced cement package’
38
to the company and that
was also coupled with the requirement of applicability of RIPS-2003. The initial part of this
decision of BIDI dated 01.04.2006 and the company’s prayer dated 26.04.2006 for
registration in terms of sub-clause (vii) of Clause 7 of RIPS-2003 became redundant on
28.04.2006 with the amendment of Clause 7 of RIPS-2003 and deletion of sub-clauses (vi)
and (vii) thereof because no decision had been taken by SLSC to grant subsidy to the
company in terms of the said sub-clauses (vi) and (vii) of Clause 7 by that date i.e.,
28.04.2006. Further, the view taken by SLSC in its initial decisions, to grant 75% subsidy to
the appellant on the basis of the decision of BIDI, while reading as if BIDI had taken such
decision under proviso to Clauses 7(i)(a) and 7(i)(b) of RIPS-2003, had been entirely
perverse and unauthorised; and had not been a possible view of the matter. There had not
been any ambiguity in the decision of BIDI; and if at all there was any doubt or ambiguity, the
benefit thereof could not have gone to the appellant. The appellant company was entitled to
subsidy under RIPS-2003 only to the extent of 50% of tax payable and deposited and not
75% as allowed by SLSC.
30.1. It is also clear that the doctrine of Contemporanea Expositio neither applies to this
case nor inures to the benefit of appellant. The principles of promissory estopple are equally
inapplicable and the State Government has rightly exercised the powers of revision under
Clause 13 of RIPS-2003 to interfere with the erroneous decisions of SLSC whereby the
38 As noticed repeatedly, the said expression ‘recently announced cement package’ is only referable
to sub-clauses (vi) and (vii) of Clause 7 of RIPS-2003.
77
appellant was allowed 25% extra subsidy and which was, obviously, prejudicial to the
interest of revenue; and mere availing of the benefits by the appellant under the erroneous
decisions of SLSC is of no effect, particularly when the State Government has exercised the
powers of revision within the time stipulated in Clause 13 of RIPS-2003.
31. In view of the above, we have no hesitation in affirming the order of the High Court
dated 11.01.2019 and in turn, approving the order of revision dated 12.03.2018 insofar the
Additional Chief Secretary held that the Kotputli Cement Works Unit of the appellant
company was entitled to Capital Investment Subsidy only to the extent of 50% of the payable
and deposited tax and not to the extent of 75%, as availed by it pursuant to the Entitlement
Certificates dated 29.04.2011 and 24.11.2011 erroneously issued by the State Level
Screening Committee. The SLSC was rightly directed to issue the new Entitlement
Certificate for subsidy to the limit of 50% of total tax to the said Kotputli Unit of the appellant
company; and the company was rightly directed to refund the amount of subsidy availed in
excess of 50% of payable and deposited tax.
31.1. However, in the impugned order dated 12.03.2018, the appellant was also
directed to make such refund together with interest at the rate of 18% per annum. As
observed hereinbefore, even if the decision of State Government to recall 25% availed
subsidy is upheld, the point still requiring consideration would be as to whether the State is
justified in seeking to recover interest at this rate of 18% per annum?
Levy of Interest
32. Coming to the question of levy of interest on the amount sought to be recovered, it
has been contended on behalf of the appellants that Clause 10 of RIPS-2003 providing for
charging of interest has no application to the present case because grant of 25% subsidy
has been revoked not because of any default committed by the appellants but only because
of a change of opinion by the respondents after about eight years. The respondents, on the
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other hand, assert that if benefits have been received under a mistake, the same must be
returned with interest so as to avoid unjust enrichment.
33. It remains undeniable that Clause 10 of RIPS-2003, providing Terms and
Conditions attached to the benefits availed under the Scheme, envisaged that the ‘breach’ of
any of the condition would ‘make the Capital Investment Subsidy/ exemption amount liable
to be recovered as Tax or arrears of land revenue along with interest @ 18% per annum
from the date from which the Capital Investment Subsidy was provided’. It is not the case of
the respondents that the appellant had committed breach of any of the conditions
enumerated in Clause 10 of the Scheme and that the excessive amount of subsidy (25%)
was being recovered because of any such breach. As noticed, entitlement of the appellant to
50% subsidy has not been questioned; and the only question had been as to whether the
appellant company could have availed 75% subsidy? However, disbursement of such 75%
subsidy to the appellant was only on the basis of the erroneous decisions taken and
Entitlement Certificates dated 29.04.2011 and 24.11.2011 issued by SLSC.
33.1. Even when the said decisions of SLSC are found erroneous and invalid; and the
appellant company is found entitled to subsidy only to the extent of 50%, it cannot be said
that the excess 25% is relatable to breach of any of the conditions of the Scheme on the part
of the appellant nor the appellant could be said to have availed the excessive amount of
subsidy by way of any misrepresentation. The basic fault had been on the part of SLSC in
taking erroneous decisions and in issuing unauthorised Entitlement Certificates dated
29.04.2011 and 24.11.2011. The respondent State took an abnormally long time in realising
the mistake on the part of its functionaries and took corrective measures only after the entire
benefit had already been availed of inasmuch as the proceedings for recall were initiated
only in the month of July 2017 which led to the impugned order dated 12.03.2018 and then,
the Re-revised Entitlement Certificate was issued only on 02.04.2018.
33.2. Apart from the above, it is also noticed that even when the Scheme envisaged
interest at the rate of 18% per annum, in Form 2 filed by the appellants, undertaking was
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stated to repay the amount of subsidy, in case of availing excessive benefits or non-
compliance with the provisions of the Scheme, with interest at the rate of 12% per annum
39
.
Both the parties had proceeded with reference to the said undertaking furnished on behalf of
the appellant and the same is required to be treated as a binding term of contract between
them.
33.3. Hence, when availing of subsidy to the tune of 75% (and thereby availing 25% in
excess) is not referable to any misrepresentation by the appellants and there is no allegation
of breach of any of the conditions of RIPS-2003 by the appellants while availing such
benefit, the respondent cannot be held entitled to demand interest at the rate stipulated in
Clause 10 of RIPS-2003. However, and at the same time, when the appellant company had
obtained undue advantage in monetary terms by availing 25% extra subsidy; and had given
undertaking to refund any excessive benefit with interest at the rate of 12% per annum, in
our view, the appellant company remains liable to refund the excess amount together with
interest at the rate agreed upon, i.e., 12% per annum.
33.4. In the given set of facts and circumstances of this case, reliance on the decisions
of this Court in India Carbon Ltd., J.K. Synthetics Ltd. and Maruti Wire Industries Pvt.
Ltd. (supra), dealing the scheme of particular taxing statutes for charging of interest, does
not make out a case of total waiver of interest because the fact remains that the appellant
company had indeed availed excessive 25% subsidy under the non-statutory scheme and
unequivocal undertaking was stated on its behalf to refund the excess amount together with
interest @ 12% per annum.
33.5. It is also noticed that as per the submissions of the appellants, by way of recovery
proceedings adopted by the State after the decision of High Court, entire of the principal
amount of excess subsidy, i.e., Rs.15,96,37,794/- has already been recovered. In the totality
of circumstances and relevant features of this case, in our view, interest of justice shall be
39 Vide the declaration extracted in paragraph 7.9.2.
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served if the respondents are allowed interest at the rate of 12% per annum from the date of
availing of excessive (25%) subsidy by the appellants and until recovery/payment.
CONCLUSION
34. Accordingly, this appeal is partly allowed to the extent and in the manner indicated
above. The impugned order of the High Court dated 11.01.2019, upholding the order dated
12.03.2018 passed by the Additional Chief Secretary, Finance Department, Government of
Rajasthan, Jaipur is affirmed but with the modification that the respondents shall be entitled
to recover interest at the rate of 12% per annum from the date of availing of excessive
subsidy (25%) by the appellants until payment/recovery. In the circumstances of the case,
the parties are left to bear their own costs.
…………………………….J.
(A.M.KHANWILKAR)
.…………………………….J.
(DINESH MAHESHWARI)
New Delhi,
Dated: 17
th
July, 2020.
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Legal Notes
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