M/S. ULTRATECH CEMENT LTD. & ANR. versus STATE OF RAJASTHAN & ORS. on 17 July 2020

SUPREME COURT REPORTS

[2020] 7 S.C.R.

AM/S. ULTRATECH CEMENT LTD. & ANR.

v.

STATE OF RAJASTHAN & ORS.

(Civil Appeal No. 2773 of 2020)

BJULY 17, 2020

[A. M. KHANWILKAR AND DINESH MAHESHWARI, JJ.]

Industrial Development:

Capital Investment Subsidy – Under Rajasthan InvestmentCPromotion Scheme 2003 – Clauses 7(i)(a), 7(i)(b), 7(vi) and 7(vii),10 and 13 – Request by the appellant-Company for customizedpackage of incentives for setting up a cement plant – Pre-BIDI (PreBoard of Infrastructure Development and Investment Institution)meeting, after considering the request recommended that the cementDpackage and the Scheme of 2003 was applicable to the Company –BIDI also resolved that recently announced cement package andthe 2003 Scheme would be applicable to the Company – TheCompany addressed letter dated 26.4.2006 to Commissioner ofIndustries seeking registration in terms of sub-clause (vii) of clause7 of the 2003 Scheme – Before any decision could be taken on theEletter, State Government deleted sub-clauses (vi) and (vii) fromClause 7 by Notification dated 28.4.2006 – Company’srepresentation seeking withdrawal of Notification dated 28.4.2006– State replied that the Company would be eligible for concessionsas per the 2003 Scheme – Company also entered into MOU withthe State – After establishment of the cement plant and startingFproduction therein, Company sought Entitlement Certificate underthe 2003 Scheme – State Level Screening Committee (SLSC) allowedCapital Investment Subsidy to the Company to the extent of 75% ofdeposited VAT and Entitlement Certificate was issued – Companyavailed the benefit of 75% subsidy in terms of Entitlement CertificateG– After Finance Department of the State raised doubts about thedecision in respect of grant of subsidy upto 75% to the Company,SLSC re-examined the matter and suggested appropriate actionunder Clause 13 of the 2003 Scheme – In Revision proceedingsunder Clause 13, the competent Authority decided that SLSC haderroneously issued Entitlement Certificates and the Company wasH

not entitled to the subsidy beyond 50% of the tax payable anddeposited – Pursuant thereto revised Entitlement Certificates wereissued allowing subsidy upto 50% – The Company was directed torefund the amount of excess availed subsidy together with interest@ 18% – Writ petition challenging the orders was dismissed byHigh Court – Appeal to Supreme Court – Held: Extending of anyincentive in the form of exemption, rebate, concession or subsidy isthe matter of policy of Government – A Government is entitled toframe a particular policy and to alter the same – Whether the cementindustry was to be granted 75% subsidy under 2003 Scheme was amatter of policy – The policy of extending 75% subsidy to cementindustry was withdrawn by the Government by deleting sub-clauses(vi) and (vii) of clause 7 of the 2003 Scheme – As the policy ofextending 75% subsidy was not in existence at the time when theapplication of the Company was considered, no benefit could havebeen claimed under non-existent policy – Company is entitled tosubsidy only to the extent of 50% and hence liable to refund theexcess 25% – Since the disbursement of 75% subsidy to the Companywas on the basis of erroneous decision and was not relatable tobreach of any of the conditions of the Scheme on the part of theCompany, the Revenue is not entitled to demand interest on the excessamount @ 18% p.a. – However, as the Company had obtained undueadvantage by availing 25% extra subsidy and had undertaken torefund extra subsidy with interest @ 12% p.a. Company is liable torefund excess amount with interest @ 12% p.a.

Doctrines/ Principles

Doctrine of Contemporanea Expotio – is a guide to theinterpretation of Statute or a document by referring the expositionthat the same had received from competent Authority at relevantpoint of time – Held, not applicable in present case.

Principle of Promissory Estoppel – Applicability of – Heldnot applicable in the facts of the present case.

Maxims:

‘Contemporanea exposition est optima et fortissimo in lege’ –Meaning of.

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APartly allowing the appeal, the Court

HELD: 1.1. The application earlier made by the Companywas considered in the Pre-BIDI (Board of InfrastructureDevelopment and Investment Institution) meeting dated28.03.2006 and the recommendations therein had only been toBthe effect that the cement package recently announced and RIPS-2003 (Rajasthan Investment Promotion Scheme, 2003) shouldbe applicable to the Company. The decision of BIDI in its meetingdated 01.04.2006 had also been specifically in line of the Pre-BIDI recommendations where it was directed that ‘the recentlyannounced cement package and RIPS-2003 will be applicable onCthe Company’. At the given stage of Pre-BIDI recommendationsdated 28.03.2006 and the decision of BIDI dated 01.04.2006, sub-clauses (vi) and (vii) of Clause 7 of RIPS-2003 were in existenceand, in fact, the phrase “recently announced cement package”precisely referred to the said provisions of sub-clauses (vi) andD(vii), which had been inserted to Clause 7 of RIPS-2003 on02.12.2005. Moreover, even when BIDI stated that ‘recentlyannounced 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 dated01.04.2006, the Company, in its letter dated 26.04.2006 to theECommissioner of Industries, sought registration in terms of sub-clause (vii) of Clause 7 of RIPS-2003 for a new cement plant/captive power plant. However, there had been significantdevelopments/revisions in relation to RIPS-2003 after the saiddecision of BIDI dated 01.04.2006 and the application of theFCompany dated 26.04.2006, where the said sub-clauses (vi) and(vii) of Clause 7 were specifically deleted from the Scheme on28.04.2006. Noticeably, no decision had been taken by SLSC (StateLevel Screening Committee) to grant subsidy to the Company interms of the then existing sub-clauses (vi) and (vii) of Clause 7

until 28.04.2006. The application later made by the Company onG21.02.2010 and the decision thereupon taken by SLSC on17.03.2011 do not and cannot co-relate with the decision of BIDIdated 01.04.2006 whose initial part, i.e., ‘recently announcedcement package’ became redundant with the aforesaid amendmentof Clause 7 of RIPS-2003 and deletion of its sub-clauses (vi) andH(vii). [Para 19.1][458-B-G]

1.2 It is not correct to say that BIDI had granted 75%subsidy under proviso to Clauses 7(i)(a) and 7(i)(b) of RIPS-2003.It is apparent on the face of the record that neither in Pre-BIDI’srecommendation dated 28.03.2006 nor in the final decision ofBIDI dated 01.04.2006, there had at all been any proposition forinvocation and application of the said proviso to Clauses 7(i)(a)and 7(i)(b) of RIPS-2003. The application made on behalf of theCompany had precisely been with reference to the contents ofthe said sub-clauses (vi) and (vii) of Clause 7 seeking 75% subsidy,45% being allowable upfront and remaining 30% in the form ofinterest and wage/employment subsidy, with cap of interestsubsidy to the extent of 5% of the documented rate of interest.There had never been any proposal before BIDI in the case ofthe appellant Company to invoke the said proviso to Clauses7(i)(a) and 7(i)(b) of RIPS-2003 so as to increase the maximumlimit of subsidy to 75%. Proceeding ahead of the decision ofBIDI dated 01.04.2006, the fact that the Company was consciouslyseeking 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 atthe contents of its application dated 26.04.2006. Invocation ofproviso to Clauses 7(i)(a) and 7(i)(b) of RIPS-2003 seems to haveonly been a creation of SLSC in its meeting dated 17.03.2011while dealing with the application made by the appellant on21.02.2010. Significantly, even in the said application, what theappellant claimed had only been the concession in terms of sub-clause (vi) of Clause 7 of RIPS-2003. The claim precisely wasthat the benefits may be allowed in terms of the said notificationdated 02.12.2005. The SLSC, while taking up the said application,on its own, connected the prayer of the appellant to the decisionof BIDI and, for that matter, read as if BIDI’s decision had beento grant subsidy to the extent of 75% in terms of the said provisoto Clauses 7(i)(a) and 7(i)(b) of RIPS-2003. There is no rationaleor logic that SLSC, in its meeting dated 17.03.2011, importedthe said proviso to Clauses 7(i)(a) and 7(i)(b) of RIPS-2003 intothe decision of BIDI dated 01.04.2006 and then, applied suchincorrect reading of BIDI’s order in its decision making processso as to grant 75% subsidy. The SLSC, who had the power togrant subsidy upto 50% could not have granted beyond this limitby unwarranted application of the decision of BIDI dated AB

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A01.04.2006 and that too with its misconstruction; by reading intoit such powers, which had neither been invoked nor exercisedby BIDI. The decision of SLSC dated 17.03.2011 and its repeatdecision dated 24.11.2011, turn out to be wholly perverse andcould only be disapproved. [Paras 20 and 20.2][459-C-F][460-C-G]B

1.3 The competent authority, to sanction subsidy underRIPS-2003, had only been SLSC in terms of Clause 6 thereof.Even if BIDI had been a high-powered body, its resolutions oreven directives could have only been read in conformity with theprovisions applicable to any particular proposition; and the factCthat one of the Secretary had been a member of both BIDI andSLSC, the resolution of BIDI could not have been imported intothe decision making process of SLSC beyond what waspermissible under the Scheme. [Para 19.2][458-H][459-A-C]

1.4 Grant of customised incentive package for any particularDCompany or establishment was governed by Clause 6-A of RIPS-2003 that had an entirely different prescribed authority in theform of a Committee, who was supposed to examine individualcases and could have made recommendation for sanction of thecustomised incentive package through BIDI. There is no suchEdecision by the Committee referred to in Clause 6-A and anyrecommendation for customised incentive package in relation tothe appellant. The decision of BIDI dated 01.04.2006 also doesnot refer to nor is relatable with any customised package meantfor the appellant Company. [Para 21][460-G-H][461-A-B]

F1.5 In an overall conspectus of the record and variousamendments/revisions of RIPS-2003, it appears that though atone stage (i.e., on 02.12.2005), the State Government thought itproper to announce an entirely different treatment to cement unitsby extending 75% subsidy to them with a different methodologyand hence, inserted sub-clauses (vi) and (vii) to Clause 7 of RIPS-G2003 but, it did not continue with that policy and deleted the saidsub-clauses on 28.04.2006. It remains trite that extending of anyincentive in the form of exemption, rebate, concession or subsidyis a matter of the policy of the Government and for that matter,fiscal policy. Ordinarily, such framing of the policy remains within H

the domain of the Government; and the Government is entitledto frame a particular policy and to alter the same, as deemed fitand proper. As to whether the cement industry was to be granted75% subsidy under RIPS-2003 or not was definitely a matter ofthe policy of the Government; and when such a policy was not inexistence at the time of consideration of the application of theappellant, no benefit could have been claimed under a non-existent policy. [Para 22][461-B-E]

1.6 Thus, it cannot be deduced, by any stretch ofimagination, that a conscious decision was ever taken by BIDI atany stage that the appellant Company would be extended anydifferential and advantageous treatment by allowing 75% subsidyin place of the ordinarily allowable 50%. The Additional ChiefSecretary has rightly held that SLSC’s decision dated 17.03.2011and its repeat decision dated 24.11.2011 had been erroneous onthe very fundamentals where it was assumed as if BIDI had alreadysanctioned 75% subsidy to the Company. The High Court hasalso independently examined the entire matter in requisite detailsand there is no infirmity when the High Court has held that theappellant Company was only entitled to subsidy to the extent of50% of the tax payable and deposited and not to the extent of75%. [Paras 20.1 and 23][460-B][461-E-G]

J.K. Cotton Spinning & Weaving Mills Co. Ltd. v. Stateof U.P. [1961] 3 SCR 185 – referred to.

2. There is not an iota of doubt that the initial decision ofSLSC had not only been erroneous but had been highly perverse,reaching the level of absurdity. The view of SLSC cannot beregarded as a possible view of the matter from any standpoint orany angle. Apart from the above, even if it be assumed for thesake of argument that there was any ambiguity in the applicableprovisions of RIPS-2003 or the decision of BIDI, the benefit ofany such ambiguity could not have been extended to the appellantCompany. The benefit thereof would have only gone in favour ofrevenue for the simple reason that under the provisions inquestion, the State had agreed, by way of incentive, to part with aportion of its revenue. Such provisions, whether in the statute orin the non-statutory document, by their very nature, are subject ABC

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Ato strict interpretation so far as their applicability is concerned.[Paras 24.1 and 24.2][462-C-F]

Commissioner of Customs (Import), Mumbai v. DilipKumar & Co. and Ors. (2018) 9 SCC 1 : [2018] 7 SCR1191 – followed.

BRamnath & Co. v. Commissioner of Income Tax 2020(8) SCALE 585 – relied on.

3.1 The doctrine of Contemporanea Expositio is embodiedin the maxim ‘Contemporanea exposition est optima et fortissimoin lege’ which means that the best way to construe a document isCto read it as it would have read when made. In essence, thedoctrine of Contemporanea Expositio is applied as a guide to theinterpretation of a statute or even document by referring to theexposition that the same had received from competent authorityat the relevant point of time. This doctrine is also relatable to the Ddoctrine of stare decisis whereunder, an exposition standing for along length of time, is considered to be a law settled and is appliedas such. As regards the contemporaneous construction placedby the administrative or executive officers charged with executingstatute, the Courts lean in favour of attaching considerable weightto the same but, it cannot be laid down that understanding of aEparticular administrative or executing authority is always faitaccompli and has to be applied even if erroneous. The trueprinciple is just to the contrary: that is, if a construction placedby the contemporary authority is found to be clearly wrong orerroneous, the same deserves to be disregarded. [Paras 25, 25.1Fand 25.3][464-B-C][465-F][466-A-C]

Spentex Industries Ltd v. C.C.E. (2016) 1 SCC 780 :[2015] 11 SCR 487 – held inapplicable.

Desh Bandhu Gupta v. Delhi Stock ExchangeAssociation Ltd. AIR 1979 SC 1049 : [1979] 3 SCRG373 – referred to.

Principles of Statutory Interpretation by Justice G.P.Singh 14[th] Edition, pp. 375-376 – referred to.

3.2 On the facts and in the circumstances of the presentcase, invocation of the doctrine of Contemporanea Expositio onH

behalf the appellant remains entirely inapt. If at all this doctrineis applied. It is not far to seek that if at all this doctrine is applied,the consequence would be that howsoever erroneous a decisionby the executive or administrative authority may be, once itemanates from the understanding of some of the officers orauthorities, the same would acquire immunity from scrutiny forall time to come. Such has never been the intent of the doctrineof Contemporanea Expositio nor could such a result becountenanced. [Paras 25.4 and 25.5.][466-F-H]

4.1 The High Court observed that the doctrine ofpromissory estoppel cannot be invoked against a statute. RIPS-2003 had admittedly been a non-statutory scheme but that hardlymakes a difference looking to the nature of purport of this Schemewhereby the State was ultimately to extend the benefit byreducing its intake of the amount of Sales Tax/VAT; and such anintake is indeed governed by the statute. This apart, it cannot bededuced that a conscious decision was ever taken at any stage orat any level that the appellant was to be extended any differentialand advantageous treatment by SLSC and was to be allowed 75%subsidy in place of the ordinarily allowable 50%. BIDI neverissued any direction to SLSC to grant 75% subsidy to theappellant. It merely directed that “the recently announced cementpackage and RIPS-2003 shall be applicable on the Company.”Obviously, the case of the appellant was required to be dealt withby SLSC only in accordance with the applicable provisionscontained in RIPS-2003. The provisions under which the appellantcould 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 twodays after the Company submitted the application dated26.04.2006 for availing benefit thereunder. The repeat requestof the Company to withdraw such deletion and to allow benefitunder the said deleted sub-clauses, under its representation dated26.05.2006, did not meet with any success and the only responseof 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 Stateundertook was only to provide incentives as permissible underRIPS-2003 together with additional support as per the prevalent AB

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Apolicy. So far availing 75% subsidy under proviso to Clauses7(i)(a) and 7(i)(b) is concerned, the appellant was required to makean application to SLSC for that purpose whereupon SLSC couldhave referred it to BIDI but, neither any such application wasmade by the appellant nor any such matter was ever placed beforeBIDI until it remained in existence i.e., 07.06.2009. In an overallBview of the matter, it is difficult to find that at any stage, any suchrepresentation was made by the State Government which led theCompany to alter its position. Besides the above, when thedecisions of SLSC dated 17.03.2011 and 24.04.2011 turn out tobe unauthorised and not in accord with the applicable provisionsCof the Scheme, the principles of promissory estopple cannot beinvoked for their enforcement. [Paras 26, 26.1 and 26.2][467-A-H]

Dr. Ashok Kumar Maheshwari v. State of U.P. & Anr.(1998) 2 SCC 502 : [1998] 1 SCR 147 – relied on.

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4.2 Even otherwise, when the decision of SLSC, or anydecision of any authority for that matter, was subject to revisionby the Government in terms of Clause 13 of the Scheme, it cannotbe suggested that the said power of revision cannot be invoked.In other words, the principles of promissory estoppel cannotEoperate against such revisional power of the Government.[Para 26.3][468-D-E]

5. The exercise of power of revision as per Clause 13 ofthe Scheme remains unexceptionable in the present case. Theinitial decision of SLSC was entirely erroneous and cannot beFsaid to be a possible view of the matter. Coupled with that, thesaid decision was directly prejudicial to the interest of revenuewhere the State exchequer was to part with extra 25% of the taxamount received or receivable from the appellant. The Authority,while passing the order dated 12.03.2008 in exercise of suchGpower of revision under Clause 13 of the Scheme, has meticulouslyexamined the entire material and has recorded each and everyfinding with due regard to the dealings of the parties and theprovisions of Scheme as applicable. [Para 27.2][470-E-F]

Malabar Industrial Co. Ltd. v. Commissioner of IncomeTax, Kerala State (2000) 2 SCC 718 : [2000] 1 SCR744 – held inapplicable.

6.1 It cannot be accepted that the subsidy cannot berevoked or withdrawn with retrospective effect and after havingbeen fully availed of. Sub-clause (b) of Clause 13 of the Schemespecifically provides for a period of five years from the date bywhich benefits under the Scheme are availed of. Sub-clause (b) ofClause 13 of the Scheme specifically provides for a period of fiveyears from the date by which benefits under the Scheme areavailed of, to be the period within which the power of revisioncould be exercised by the State Government. Admittedly, in thepresent case, the appellant Company had availed the benefitsuntil the month of February 2017 and the order of revision waspassed on 12.03.2018, well within the period of five yearsstipulated in the Scheme. [Para 28][470-G-H][471-A-B]

6.2 The fundamental questions on the correctness of thedecision of SLSC dated 17.03.2011 were indeed raised by theFinance Department of the Government by its letter dated17.11.2011. The Industries Department chose not to respond tothe said communication and reminders of the Finance Departmentfor an abnormal length of time and sent a reply only in the monthof February 2017. By that time, the appellant had practicallyavailed the entire advantage under the questioned decision ofthe SLSC. Thereafter, the SLSC re-examined the matter only on22.05.2017 and left it for the Finance Department to takeproceedings under Clause 13 of RIPS-2013. In the given set offacts and circumstances, the suggestion that already availedbenefit cannot be withdrawn turn out to be hollow and baselessbecause whatever was obtained by the appellant, beyond itsentitlement, had only been based on an erroneous andunauthorised decision of SLSC. In any case, RIPS-2003 being amatter of concession in the form of subsidy, securing an advantageby the appellant at the cost of public exchequer could not havebeen allowed and, for the Scheme itself having reserved thepowers in the State Government to revise the erroneous andprejudicial order within a period of five years from the date of A

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Afully availing of the benefits, such powers have rightly beeninvoked and exercised by the State Government. [Para 29][471-C--F]

Birla Jute & Industries Ltd. v. State of M.P. 119 STC 14(S.C.) - distinguished.

BCommissioner, Commercial Taxes, Rajasthan, Jaipur andAnr. v. Rajasthan Taxation Tribunal and Ors. 38 TaxUp-date 131 – referred to.

7.1 Clause 10 of RIPS-2003, providing Terms andCConditions attached to the benefits availed under the Scheme,envisaged that the ‘breach’ of any of the condition would ‘makethe Capital Investment Subsidy/ exemption amount liable to berecovered as Tax or arrears of land revenue along with interest @

18% per annum from the date from which the Capital InvestmentDSubsidy was provided’. It is not the case of the respondents thatthe appellant had committed breach of any of the conditionsenumerated in Clause 10 of the Scheme and that the excessiveamount of subsidy (25%) was being recovered because of anysuch breach. Entitlement of the appellant to 50% subsidy hasnot been questioned. Disbursement of such 75% subsidy to theEappellant was only on the basis of the erroneous decisions takenand Entitlement Certificates dated 29.04.2011 and 24.11.2011issued by SLSC. Even when the said decisions of SLSC are founderroneous and invalid; and the appellant Company is foundentitled to subsidy only to the extent of 50%, it cannot be saidFthat the excess 25% is relatable to breach of any of the conditionsof the Scheme on the part of the appellant nor the appellant couldbe said to have availed the excessive amount of subsidy by wayof any misrepresentation. The basic fault had been on the part ofSLSC in taking erroneous decisions and in issuing unauthorisedEntitlement Certificates dated 29.04.2011 and 24.11.2011. TheGrespondent State took an abnormally long time in realising themistake on the part of its functionaries and took correctivemeasures only after the entire benefit had already been availedof inasmuch as the proceedings for recall were initiated only inthe month of July 2017 which led to the impugned order datedH

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12.03.2018 and then, the Re-revised Entitlement Certificate wasissued only on 02.04.2018. [Paras 33 and 33.1][473-E-H][474-A-C]

7.2 Even when the Scheme envisaged interest at the rateof 18% per annum, in Form 2 filed by the appellants, undertakingwas stated to repay the amount of subsidy, in case of availingexcessive benefits or non-compliance with the provisions of theScheme, with interest at the rate of 12% per annum. Both theparties had proceeded with reference to the said undertakingfurnished on behalf of the appellant and the same is required tobe treated as a binding term of contract between them.[Para 33.2][474-C-D]

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7.3 Therefore, the respondent cannot be held entitled todemand interest at the rate stipulated in Clause 10 of RIPS-2003.However, and at the same time, when the appellant Companyhad obtained undue advantage in monetary terms by availing 25%extra subsidy; and had given undertaking to refund any excessivebenefit with interest at the rate of 12% per annum, the appellantCompany remains liable to refund the excess amount togetherwith interest at the rate agreed upon, i.e., 12% per annum.[Para 33.3][474-E-F]

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India Carbon Ltd. & Ors. v. State of Assam (1997) 6SCC 479 : [1997] 3 Suppl. SCR 1; Maruti WireIndustries Pvt. Ltd. v. Sales Tax Officer (2001) 3 SCC735 : [2001] 2 SCR 829; J.K. Synthetics Ltd. v. C.T.O(1994) 4 SCC 276 : [1994] 3 SCR 964 – referred to.

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Case Law Reference

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[2020] 7 S.C.R.

From the Judgment and Order dated 11.01.2019 of the High Courtof Judicature for Rajasthan at Jaipur Bench, Jaipur in D.B. Civil WritCPetition No. 9090 of 2018.

S. Ganesh, Sr. Adv., U.A. Rana, M.L. Patodi, Himanshu Mehta(for M/S. Gagrat And Co.), Advs. for the Appellants.

Dr. Manish Singhvi, Sr. Adv., Satyendra Kumar, Ms. Shailja NandaDMishra, Ms. Harsha Vinoy, Irshad Ahmad, Advs. for the Respondents.

The Judgment of the Court was delivered by DINESH MAHESHWARI, J.

PRELIMINARY AND BRIEF OUTLINE

E1. Leave granted.

2. This appeal is directed against the judgment and order dated11.01.2019 passed in D.B. Civil Writ Petition No. 9090 of 2018, wherebythe High Court of Judicature for Rajasthan, Bench at Jaipur, dismissedthe writ petition filed by the appellants while upholding the order of revisionFdated 12.03.2018 as passed by the Additional Chief Secretary, Finance,Government of Rajasthan, Jaipur[1] in revision proceedings under Clause13 of the Rajasthan Investment Promotion Scheme-2003[2].

2.1. The appellant No.1, M/s Ultratech Cement Limited (Unit-Kotputli Cement Works), is a public limited company registered under Gthe Companies Act, 1956 and engaged in the business of manufacturingand marketing of cement and allied products. It may be noted thatpreviously, the appellant was carrying on its business in the name ofM/s Grasim Industries Limited[3], a company of the Aditya Birla Group, 1 ‘ACS’ for short2 Hereinafter also referred to as ‘RIPS-2003’ or simply ‘the Scheme’.H3 The company’s name was changed to M/s Ultratech Cement Limited w.e.f. 01.08.2010.

which was engaged in manufacturing staple fiber, cement, textiles, spongeiron, aluminum etc. The company originally had two cement plants, onesituated in Chittorgarh District and another in Jodhpur District in theState of Rajasthan. The appellant No.2 is said to be the Senior GeneralManager of the said Kotputli Unit of the appellant No.1. The matter inissue in the present case essentially relates to the extent to which theappellant No.1 company was entitled, under RIPS-2003, to avail theCapital Investment Subsidy[4] in relation to its Kotputli Unit.[5]

2.2. The respondent No.1 herein is the State of Rajasthan andrespondent Nos.2 to 5 are its officers related with respective departmentswhereas respondent No.6 is the State Level Screening Committee, whowas the prescribed authority for determining eligibility for subsidy underthe Scheme in question.[6]

2.3. By the aforesaid order of revision dated 12.03.2018, the ACSheld that the Kotputli Unit of the company was entitled to CapitalInvestment Subsidy only to the extent of 50% of the payable and depositedSales Tax/VAT and not to the extent of 75%, as availed by it pursuant tothe Entitlement Certificates dated 29.04.2011 and 24.11.2011 erroneouslyissued by the State Level Screening Committee[7]. The SLSC was directedto issue a new Entitlement Certificate for subsidy to the limit of 50% oftotal tax to the said Kotputli Unit of the company; and the company wasdirected to refund the amount of subsidy availed in excess of 50% of thepayable and deposited tax together with interest at the rate of 18% perannum.

3. Put in a nutshell, case of the appellant is that the subsidy inquestion, to the extent of 75% of tax payable and deposited, was availedby it under the Rajasthan Investment Promotion Scheme-2003 only interms of and pursuant to: (a) the decision taken by the high-poweredBoard of Infrastructure Development and Investment Institution[8] on01.04.2006; (b) the Memorandum of Understanding[9] entered with the 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 shallrefer to the particular respondent only when necessary in the context.

7 ‘SLSC’ for short.

8 “BIDI” for short.

9 “MoU” for short.

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AState Government on 30.11.2007; and (c) the Entitlement Certificatesissued by SLSC on 29.04.2011 and 24.11.2011. Therefore, according tothe appellant, there was no occasion for the ACS to invoke Clause 13 ofthe Scheme; and the appellant can neither be forced to repay the amountof subsidy already availed of nor could any interest be charged. Percontra, stand of the respondents is that the decision of BIDI datedB01.04.2006 is of no good for the appellant because the package referredtherein was withdrawn and the corresponding provisions in the Schemewere deleted on 28.04.2006; and the benefits under the deleted provisionscould have been granted only until the date of their deletion, i.e.,28.04.2006. Thus, according to the respondents, understanding of theCState Government with the company had only been to extend the benefitof incentive in terms of subsidy to the extent permissible under the Schemeand not beyond. The respondents would assert that the aforesaidEntitlement Certificates were erroneously issued by SLSC and the matterbeing related to public exchequer, the appellant is not entitled to claim any relief contrary to the applicable provisions/stipulations.D

4. The factual aspects of the matter are not of much controversybut, for what has been noticed hereinabove and for what has beencontended on behalf of the parties before us, the major questions involvedin this matter, including those relating to the effect of the decision ofBIDI as also the MoU entered into between the parties, revolve aroundEthe terms and stipulations of the Rajasthan Investment Promotion Scheme-2003. Hence, at the outset, it shall be apposite to take note of the relevantClauses of this Scheme having bearing on the case.

Rajasthan Investment Promotion Scheme-2003: RelevantClauses and their amendments/revisions up to 05.08.2010F

5. Rajasthan Investment Promotion Scheme-2003, with which weare concerned in this case, had been a non-statutory Scheme announcedby the Government of Rajasthan through its Finance Department Orderdated 28.07.2003[10]. It is apparent from the material placed before usthat this Scheme had undergone umpteen number of amendments/Grevisions from time to time. We may refer to the relevant Clauses asalso their important amendments/revisions as infra.[11]

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 asAnnexure P-1 and another copy of this Scheme, as amended upto 25.01.2010, has beenplaced for perusal in compilation by the respondents. The extractions herein are fromHthe copy of Scheme as amended upto 05.08.2010.

5.1. As per the Preamble, the Scheme was introduced by theState Government with a view to ‘provide investors an attractiveopportunity to invest in the State of Rajasthan’. As per its revisedClause 2, the Scheme was to come into operation w.e.f. 01.07.2003 andwas 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 andinvestments made by existing units and enterprises forModernization/Expansion/Diversification, including the units/enterprise, covered under policy for promotion of Agro-processingand Agri-business, 2010 subject to the condition that such unitsshall commence commercial production/operations owing to suchinvestment during the operative period of the Scheme.”

5.2. Some of the expressions and phrases used in the text of theScheme had been defined in Clause 4 thereof. Then, the eligibility foravailing Capital Investment Subsidy had been provided in Clause 5 ofthe Scheme as follows[13]:- “5. ELIGIBILITY:

The benefits Capital Investment subsidy as per Clause 7 andexemptions as per Clause 8 under the Scheme shall be availableto 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 financialinstitution(s)/International Financial Institution/Corporationand/or Scheduled Commercial Bank(s) including co-operative Bank(s), has been sanctioned and utilized duringthe operative period of the Scheme; Provided that this condition shall not apply for the benefitspertaining to purchase/use of land.

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 presentcase.

A

B

C

D

E

F

G

H

A(ii)the unit shall have a minimum borrowing for investmentof Rs. 10 lacs or having an investment of at least Rs. 10lacs in land and /or building calculated on the basis ofDLC/RIICO rate for land, and Rs. 3228/- per sq. metre(Rs. 300/- per sq. ft.) for building, during the operativeperiod; B

provided that the above limit of Rs. 10 lacs shall be Rs. 5lacs 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 ofa new unit; and C

(b) twenty five percent additional direct employmentsubject to a minimum of ten persons in case ofdiversification, 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 commercialproduction/operation during the operative period of theScheme; D

(v) there has been no default in repayment of dues againstEterm loan of the concerned financial institution(s) and/orBank(s); and

(vi) the applications as required under this Scheme arepresented with full particulars and supporting documents,as required, before the appropriate authority within 90Fdays of commencement of commercial production/operation of the project in respect of which the CapitalInvestment Subsidy (Wage component)/CapitalInvestment Subsidy (Interest component) is sought. Suchcommercial production/operation should howevercommence during the operative period of the Scheme,Gi.e., on or before March 31[st] 2011.

5.3. The provisions relating to the prescribed authority for grantingbenefits under the Scheme and the prescribed authority to recommend H

M/S. ULTRATECH CEMENT LTD. & ANR. v. STATE OFRAJASTHAN & ORS. [DINESH MAHESHWARI, J.]

grant of customized incentive package, as contained in Clauses 6 and6A had been as follows[14]:- A

“6. AUTHORITY TO GRANT BENEFITS UNDER THESCHEME:

The prescribed authority for determining the eligibility, except forexemption from stamp duty and/ or conversion charges, underBthis Scheme shall be the following Screening Committees, whosedecisions, subject to other provisions of the Scheme, shall be final:

S.N.Investment Prescribed Authority Status amount 1.Investment above State Level Screening Committee (SLSC) Rs. 10.00 crores consistina) Pr. Secretarg of the followiny, Industries g: ChairmanCb) Secretary, Finance (Rev.) or his Memberrepresentative not below the rank of Deputy Secretaryc) Commissioner, Commercial Taxes or his Memberrepresentative not below the rank of Additional commissioner. d) CMD, RFC or his Representative, not Memberbelow the rank of ED e) MD, RIICO or his Representative, not MemberDbelow the rank of ED f) Commissioner, Industriesmember-Secretary2.Investment up to District Level Screening Committee (DLSC) Rs. 10.00 cores consisting of the following: a) District CollectorChairmanb) Concerned Branch Manager of RFC in the MemberDistrict c) Concerned SeniorRegional Manager/ MemberERegional Manager of RIICO in the District. Memberd) Deputy/ Asstt. Commissioner, Commercial Taxes/ Commercial Taxes Officer (CTO) Member-e) General Manager DIC Secretary “6A. Authority to recommend grant of customized incentivepackage:

F

Notwithstanding anything contained under any clause/(s) of thescheme, the following committee shall examine individual casesof investment and may recommend for sanction of the CustomizedIncentive Package through BIP or BIDI.

G

14 Clause 6B, dealing with incentives for quality and standards upgradation, is also notrelevant in the present case.

[2020] 7 S.C.R.

5.4. The extent and limit of Capital Investment Subsidy under theRajasthan Investment Promotion Scheme-2003 was specified in ClauseC7 of this Scheme, which had undergone a vast number of amendments/revisions over the course of time. In fact, the amendments/revisions ofthis Clause with insertion of sub-clauses (vi) and (vii) (with effect from02.12.2005) and their deletion (with effect from 28.04.2006) form thebone of contention in this case. We may take note of the entire Clause 7with its sub-clauses (i) to (v) as amended/revised from time to timeDwhile also pointing out the dates of relevant amendments/revisions, whichhave bearing on the present case as follows[15]:- “7. Capital Investment Subsidy:

(i) (a) In case of new investments made, the sum total of CapitalEInvestment Subsidy (Interest component) and CapitalInvestment Subsidy (wage component) would be subjectto a maximum limit of fifty percent of the tax payable anddeposited under the Rajasthan Sales Tax Act, 1994, theCentral Sales Tax Act, 1956 and Rajasthan Value AddedTax Act, 2003F

(b) “In case of investment made in Modernization/ Expansion,the amount of Capital Investment Subsidy shall be subjectto maximum of fifty percent of the amount of the CentralSales Tax and VAT payable or deposited by the unit on itsadditional capacity, so created over and above the installedGcapacity before Expansion/Modernization.

illustration:- Installed capacity of unit ‘A’ beforeexpansion/Modernization was 100 tons and after expansionit becomes 150 tons but the unit ‘A’ produce 140 tons. Tax 15 Sub-clause (va), providing for additional direct employment based subsidy, insertedHby FD order dated 05.08.2010, is omitted for being not relevant in the present case.

paid on (140 tons – 100 tons) = 40 tons shall qualify forcalculation of Capital Investment Subsidy.

For diversification the amount of Capital Investment subsidyshall be subject to a maximum of fifty percent of the amountof Central Sales Tax and VAT payable or deposited by theunit over and above the highest tax payable or depositedwhichever is higher, in any of the three immediatelypreceding years.

provided that the maximum limit of fifty percentprescribed under clause 7(i)(a) and clause 7(i)(b) may beraised by the BIDI (Board of Infrastructure Development& Investment Promotion, Government or Rajasthan) tosixty percent in such cases where the investment exceedRs. 100 crores but are less than or equal to Rs. 200 cores;and this maximum limit may be raised further to seventyfive percent in cases where the investments exceedRs. 200 crores[16].

and provided further that the maximum limit of 50%prescribed under clause 7 (i) a and clause 7 (i) b shall beraised up to 75% for the Biotechnology Unit established interms of the Biotechnology Policy, 2004.

provided also that for the new investment in textilesector, the maximum limit of 50% prescribed under clause7(i)(b) shall stand raised to, sixty percent in such caseswhere such investment exceeds Rs. 50 crores but is lessthan or equal to Rs. 100 crores and to seventy five percentin cases where such investment exceeds Rs. 100 crores.

(ii) Subject to clause (i) Capital Investment Subsidy (Interestcomponent) shall be 5% (percentage points). An additionalCapital Investment Subsidy (Interest component) of onepercent shall be available to Schedule Caste/Schedule Tribeentrepreneurs. In case the documented rate of interest isless than 5% or less than 6% in case of SC/STentrepreneurs, the entitlement of the Capital InvestmentSubsidy (Interest component) will be limited to the AB

C

D

E

F

G

H

A

B

C

D

E

F

G

documented rate of interest and the amount actually paidas interest but shall not include penal interest.

(iii) The Capital Investment Subsidy shall be available to theinvestors for seven years from the date of first repaymentof interest in case of Capital Investment Subsidy (Interestcomponent) and first payment of wages/employment incase of Capital Investment Subsidy (wage component).In case of Expansion/Modernizing the unit shall be eligiblefor Capital Investment Subsidy under the scheme fromthe date of payment of tax deposited on their additionalproduction after Expansion/ Modernization and fordiversification, the amount in excess of the Central SalesTax and VAT deposited by the unit over and above thehighest tax payable or deposited whichever is higher, inany of the three immediately preceding years.

Provided that for the first cement plant, having minimumcapacity of 3 million tons per annum and minimuminvestment of Rs. 1000 crores, to be established in Jaisalmerdistrict, the Capital Investment Subsidy shall be availableto the investor for 12 years from the date of first repaymentof interest in case of Capital Investment Subsidy (Interestcomponent) and first payment of wage/employment in caseof Capital Investment Subsidy (wage component) if the25% of its manpower is local.

Provided that for the new investments in the units beingestablished in Special Economic Zones located entirely inbackward and rural areas (as may be specified by theState Government by an order), the period of seven yearsshall stand raised to ten years.

Provided further that the investment made or committedbefore 22.05.2008 or under MOU signed during ResurgentRajasthan Summit for both new cement unit or underexpansion, having capacity more than 200 tons per day,shall be eligible for Capital Investment Subsidy under thisclause on the condition that such unit shall start commercialproduction by 31.03.2011.[17]

Captive Power Plant: The existing unit under expansion/modernization, investing in captive power plant shall qualifyfor Capital Investment Subsidy under this clause.

(iv) Where a unit has claimed and/or is availing benefit of theCapital Investment Subsidy (Interest component) theCapital Investment Subsidy (Wage component), shall beavailable to the extent of twenty five percent of wages/salary paid by the investors to workers for whom theemployee and employers are both contributing in theapproved provident funds. However, in case of the unit isnot claiming or availing Capital Investment Subsidy(Interest component), the amount of Capital InvestmentSubsidy (Wage component) shall be thirty percent of thewages/salary paid to the workers for whom the employeeand the employer are both contributing in the approvedprovident funds, provided however that notwithstanding anything containedin this clause, Capital Investment Subsidy (Wagecomponent) in the case of diversification/expansion ofmodernization shall be available only with respect toadditional numbers of such workers engaged for whomthe employee and the employer are both contributing inthe approved provident funds, and provided further that such additional number ofworkers in the case of diversification, modernisation orexpansion is at least twenty five percent of the existingdirect employment subject to a minimum of ten additionalpersons as already provided under Clause 5(iii)(a)(b) ofthis Scheme.

(v) For Capital Investment Subsidy (Interest component) theinterest actually being paid on the additional capitalborrowed shall be the only basis for computation of CapitalInvestment Subsidy. In case of Capital Investment Subsidy(Wage component) the wages/salary paid for the additionalemployment generated shall be the basis for thecomputation of Capital Investment Subsidy (Wagecomponent).”

A

B

C

DEF

G

H

A5.4.1. As observed, sub-clauses (vi) and (vii) were inserted to theaforesaid Clause 7 of the Scheme on 02.12.2005 and were deleted on28.04.2006; but these sub-clauses (vi) and (vii) of Clause 7 form thecore of issues involved in this matter and hence, for ready reference,are extracted as under :- B“(vi) Notwithstanding anything contained in sub clauses (i) to (v)above, in case of new cement unit having investment exceedingRs.400 crores and with a minimum regular employment of 200persons, the amount of subsidy shall be subject to a maximumlimit of 75% of the tax payable or deposited under Rajasthan SalesTax, 1994 or Value Added Tax Act(as and when introduced in theCState) and Central Sales Tax Act, 1956 for a period of 7 yearsfrom the date of the commencement of production, subject to thefollowing conditions, namely-

1. The investor shall submit an option to the Member Secretary,SLSC to avail benefit under this scheme within 180 days ofDthis amendment;

2. The unit shall start commercial production within 5 years offiling of application for option; and

3. The sum total of 75% subsidy shall be calculated in the followingEmanner:- (a) Subsidy of 45% of the Rajasthan Sales Tax or ValueAdded Tax and Central Sales Tax shall be allowedupfront on the basis of actual tax liability; and (b) The remaining subsidy to the extent of 30% of RajasthanFSales Tax or Value Added Tax and Central Sales Taxliability shall be allowed in form of interest subsidy, wage/employment subsidy out of which interest subsidy shallbe limited to 5% of the documented rate of interest andthe amount actually paid as interest shall not include penalinterest, and wage/ employment subsidy. A unit notGclaiming any interest subsidy can claim wage/employment subsidy to the extent of 30%, subject toother conditions under this amendment.

4. The claim of subsidy shall be as per the provisions of thisScheme.

H

RAJASTHAN & ORS. [DINESH MAHESHWARI, J.]

(vii) Notwithstanding anything contained in sub clause(i) to (v)above, in case of investments for expansion of existing cementunit having investment exceeding Rs.200 crores and with aminimum regular employment of 100 persons, the amount ofsubsidy shall be subject to a maximum limit of 75% of theadditional tax( calculated by taking the average of last 3 years)payable or deposited under Rajasthan Sales Tax Act, 1994or Value Added Tax Act(as and when introduced in the State)and Central Sales Tax Act, 1956 for a period of 7 years fromthe date of commencement of production, subject to thefollowing conditions, namely-

1. The investor shall submit an option to the MemberSecretary, SLSC to avail benefit under this scheme within180 days of this amendment;

2. The unit shall start commercial production within 5 yearsof filing of application for option; and

3. The sum total of 75% subsidy shall be calculated in thefollowing manner:- (a) Subsidy of 45% of the Rajasthan Sales Tax or ValueAdded Tax and Central Sales Tax shall be allowedupfront on the basis of actual tax liability; and (b) The remaining subsidy to the extent of 30% of theRajasthan Sales Tax or Value Added Tax and CentralSales Tax liability shall be allowed in form of interestsubsidy, wage/ employment subsidy out of whichinterest subsidy shall be limited to 5% of thedocumented rate of interest and the amount actuallypaid as interest shall not include penal interest, andwage/ employment subsidy. A unit not claiming anyinterest subsidy can claim wage/ employment subsidyto the extent of 30% subject to other conditions underthis amendment.

4. The claim of subsidy shall be as per the provisions of thisScheme.”

5.4.2. A few material aspects concerning the amendments/revisions of Clause 7 of the Scheme had been that by way of Notification A

B

C

D

E

F

G

H

Abearing No. F.12(20) FD/Tax/2005 dated 22.05.2008, the Governmentof Rajasthan proceeded to issue clarification to resolve the ambiguityrelating to admissibility of subsidy with regard to cement industry in thewake of aforesaid amendment dated 28.04.2006, deleting sub-clauses(vi) and (vii) of Clause 7. In the said Notification dated 22.05.2008, theState Government clarified, in specific terms and by way of illustrations,Bthat none of the benefits under the deleted sub-clauses (vi) and (vii) ofClause 7 of RIPS-2003 would be available on and after 28.04.2006 asfollows:- “State Government hereby clarifies that the benefits under thedeleted provision cannot be granted on and after 28.04.2006, thatCis to reiterate that none of the types enumerated at Sl. No. 1 to 6below, 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 benefitswere also granted by SLSC before 28.04.2006.D2. Where the option was submitted before 28.04.2006 and benefitswere granted by SLSC after 27.04.2006.

3. Where the option was submitted before 28.04.2006 and benefitshad not been granted by SLSC, E4. Where the option was submitted after 27.04.2006 but within180 days of 02.12.2005 and the benefits had not been granted bySLSC,

5. Where the option was submitted after 27.04.2006 but within180 days of 02.12.2005 and the case has not been considered byFSLSC, and

6. Where the option was submitted after 27.04.2006 but within180 days of 02.12.2005 and the unit has still not applied for thebenefits.”

5.4.3. The aforementioned clarification was followed by theGamendment bearing No. F.12(20)FD/Tax/2005-Pt dated 30.09.2008whereby, the Government of Rajasthan inserted proviso to sub-clause(iii) of Clause 7 of RIPS 2003 to the effect that the investment made orcommitted before 22.05.2008 or under the MOU, for both a new cement H

unit or under expansion, having capacity of more than 200 tons per day,shall be eligible for subsidy on the condition that the commercial productionshall commence by 31.03.2011. Similar proviso was also inserted toClause 8 of the Scheme.

A

5.5. Clause 8 of the Scheme related to various exemptions for theeligible beneficiary, in addition to the subsidies. Then, the procedure forclaim of incentives under the Scheme was specified in Clause 9 and itssub-clause (B) may be usefully taken note of as under:- B

“9. PROCEDURES:

(A) CLAIM OF EXEMPTIONS OF STAMP DUTY ANDCONVERSION CHARGES:

C

*********

(B) CLAIM OF CAPITAL INVESTMENT SUBSIDY:

(i) A unit entitled to claim Capital Investment Subsidy underthis Scheme should submit duly completed application inDprescribed Form, to the Member Secretary of theappropriate Screening Committee (SLSC/DLSC). Suchapplication shall be accompanied with the followingdocuments, as may be applicable,- (a) Loan sanction letter issued by the term lendinginstitution(s)/bank(s); E

(b) Proof of investment in case of self finance and

(c) Approved Provident Fund deposit receipt.

(ii) The Member Secretary shall complete the formalities forplacing the completed application before the appropriateScreening Committees within fifteen days from the receiptof the application. Where an application has not beencompleted within 15 days such cases shall separately beplaced before the committee with reasons.

F

G

Note: the District Level Screening Committee or the StateLevel Screening Committee, as the case may be, on beingsatisfied may condone the delay not exceeding 180 days infiling of the application from the prescribed date ofapplication.

H

418SUPREME COURT REPORTS

A(iii)The Screening Committee shall dispose of the applicationwithin fifteen days of its presentation by the MemberSecretary. If the Committee approves the case, the MemberSecretary shall issue Entitlement Certificate in the prescribedformat, within three days of such decision and convey thedecision to all concerned Departments, financial institutions,BBanks, Assistant Commissioner/ Commercial Taxes Officerof 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 sameshall be communicated to the applicant within a week ofCthe date of such decision.

(v) The Assistant Commissioner/ Commercial Taxes Officerof the area where the eligible unit is registered shall be theNodal Officer to give effect to the decision of the ScreeningCommittee.D

(vi) The units declared eligible for availing Capital InvestmentSubsidy under the Scheme, shall submit an application tothe Assistant Commissioner/ Commercial Taxes Officer forclaiming the Capital Investment Subsidy who shall providethe Capital Investment Subsidy as per the order of theEGovernment issued in this regard.

(vii) The payment of Capital Investment Subsidy (Interestcomponent) shall be made only for the period for which theunit deposits State and/or Central sales tax and/or and makesregular repayment of loan and interest due to the financialFinstitution(s). Capital Investment Subsidy shall be disallowedfor the period the unit defaults in depositing sales tax ordefaults in regular repayment of loan or interest. It shall berestored on the recommendation of the AssistantCommissioner/ Commercial Taxes Officer from theGCommercial Taxes Department and the concerned FinancialInstitution in case such unit clears all its over dues, andstarts making regular repayment of sales tax and the termloan/interest.

(viii) “Rectification of mistake”, With a view to rectify mistakeapparent on the record, subsidy sanctioned by the assessingH

M/S. ULTRATECH CEMENT LTD. & ANR. v. STATE OFRAJASTHAN & ORS. [DINESH MAHESHWARI, J.]

authority of the Commercial Taxes Department, under thisscheme may rectify suo moto or otherwise any order passedby him as per the provision of section 33 of the RajasthanValue Added Tax Act-2003.

(ix) The periodicity for computation of subsidy under the schemewill be on quarterly basis.”

5.6. The State Government extended the incentives under thisScheme subject to the terms and conditions stipulated in Clause 10thereof. This Clause also carries its own bearing on the questions involvedin this matter including the question of interest sought to be claimed bythe respondents. Clause 11 specified the authorities for implementation/interpretation of the Scheme; and Clause 12 provided for review andappeal by the authorities concerned as also by the aggrieved party. Clause13 of this Scheme, which has been invoked for passing the impugnedorder dated 12.03.2018, provided for revision by the State Governmentin its Finance Department, suo motu or otherwise, where any order wasfound to be erroneous and prejudicial to the interest of the State revenue.Lastly, Clause 14 provided for the general power of the State Governmentto 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 andpaid under the Scheme and the exemption of luxury tax, electricityduty, mandi tax, entertainment tax, stamp duty, conversion chargesand other benefits availed under the Scheme shall be subject tothe following conditions. Breach of any of these conditions shallmake the Capital Investment Subsidy/ exemption amount liable tobe recovered as Tax or arrears of land revenue/alongwith interest@ 18% per annum from the date from which the CapitalInvestment Subsidy was provided.

(a) The unit availing Capital Investment Subsidy (Interestcomponent) and/or Capital Investment Subsidy (Wagecomponent) and availing exemption of luxury tax, electricityduty, mandi tax, entertainment tax, stamp duty, conversioncharges and other benefits under the Scheme shall complywith all statutory laws and regulations. Non-compliance may A

B

G

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420SUPREME COURT REPORTS

A

result in cancellation/withdrawal of the benefits under theScheme.

(b) The unit availing Capital Investment Subsidy (Interestcomponent) and/or Capital Investment Subsidy (Wagecomponent) and availing exemption of luxury tax, electricityBduty, mandi tax, entertainment tax, stamp duty, conversioncharges and other benefits under the Scheme shall besubject to the conditions, procedures, instructions,clarifications, or amendments issued from time to time underthe Scheme.

(c) If any subsidy under any other scheme of Government ofIndia or Government of Rajasthan is received by the unit inrespect of interest payment, or as a wage/employmentsubsidy then the total Capital Investment Subsidy payableunder the scheme shall be reduced to the extent of subsidyso received.

C

D

Provided, that if a unit is availing interest subsidy benefitunder Technology Upgradation Fund (TUF) scheme ofGovernment of India, for textile sector, then it would beeligible to avail the benefit up to 2.5% of Capital InvestmentSubsidy (Interest component) under this scheme in additionEto the interest subsidy availed under the TUF Scheme.”

This benefit would be available with prospective effect fromthe date of issue of this order.

Note: Interest @ 5 percent per annum would be payable toinvestor in case the payment of Capital Investment Subsidyis delayed for a period of more than 30 days once the CapitalInvestment Subsidy release order is issued.

F

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 pertainingto interpretation of any Clause of the Scheme shall be referred to G

H

the Government of Rajasthan in the Finance Department whosedecision shall be final in such a matter.

A

12. REVIEWS AND APPEAL:

The State Level Screening Committee and District LevelScreening Committee described under clause 6 and clause 6C ofthis Scheme, shall also be empowered to review their decision.The State Level Screening Committee shall hear and decideappeals against the orders of District Level Screening Committee.Provided that the aggrieved party has filed review application orthe appeal within the period of 60 days from the date ofcommunication of the decision of the committee.

B

C

13. REVISION BY THE STATE GOVERNMENT:

(a) The State Government in Finance Department may suo motuor otherwise revise an order passed by any ScreeningCommittee wherever it is found to be erroneous andprejudicial to the interest of the State revenue, after affordingDan opportunity of being heard to the beneficiary industrialunit.

(b) No order under the sub-clause (a) shall be passed by theState Government after the expiry of a period five yearsafter the date by which the benefits under this scheme arefully availed of.

E

14. REVIEW OR MODIFICATION OF SCHEME:

The State Government in the Finance Department reservesthe right to review or modify the Scheme as and when neededin public interest.

F

BIDI: Composition and Mandate

6. Having taken note of salient features as also the relevantprovisions of the Scheme i.e., RIPS-2003 and their amendments, wemay also take note of a few facts relating to BIDI, whose decisioncarries a material bearing on the questions involved in this case.

G

6.1. The restructuring of BIDI and its mandate was specified bythe State Government in its Administrative Reforms (Gr.3) Departmentby 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 H

A

the BOARD OF INFRASTRUCTURE DEVELOPMENT ANDINVESTMENT INSTITUTION (BIDI) to the followingmembers:-

1. Chief Minister-Chairman2.Industry Minister-Vice-Chairman3.Planner Minister-Member4.Energy Minister-Member5.UDH Minister-Member6.Chief Secretary-Member-Secretary*********

B

1. To consider and review schemes and provide directions forCaccelerating investment in to the State.

2. To consider these matters relating to investment, which havenot been disposed off by the concerned Departments/ Corporation/Authorities within the time schedule prescribed by the StateGovernment.

D3. To make amendments in investment policies and procedure toaccelerate economic development of the State.

4. To decide policy matters bearing direct/ indirect impact oninvestment promotion.

E5. To give projects pertaining to investment involving Rs. 25.00Crores and above.

6. To approve a customized package of incentives where the Boardfeels that the investment would catalyze employment and/ orfurther investments into the State.

F

7. To consider and dispose off, inter-departmental issues pertainingto investment proposals.

8. To give any other directions which the Board considers toencourage investment.”

G6.2. One of the significant and relevant aspect emerging from thematerial placed on record is that in supersession of the aforesaid orderdated 15.01.2005 of reconstitution of BIDI, the State Government, in itsAdministrative Reforms Department, by way of order No.F.6(51)AR/Gr.3/96 dated 08.06.2009, constituted another body in the name ofRajasthan Investment Promotion Board. Hence, BIDI was not inHexistence after 07.06.2009 for having been disbanded.

Relevant factual and background aspects

7. Keeping the aforesaid provisions and features of RajasthanInvestment Promotion Scheme-2003 as also BIDI in view, we may nowtake note of the relevant factual and background aspects of this case intheir feasible chronology.

7.1. As noticed at the outset, the appellant M/s Ultratech CementLimited (Unit-Kotputli Cement Works), is a public limited companyengaged in the business of manufacturing and marketing of cement andallied products; previously, the appellant was carrying on its business inthe name of M/s Grasim Industries Limited and acquired the presentname from 01.08.2010. The company originally had two cement plants,one situated in Chittorgarh District and another in Jodhpur District in theState 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 toput 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 takenin BIDI meeting dated 10.01.2002, the mining lease for an area measuring5.02 sq. kms. was transferred to the company at the cost of Rs. 46.50lakhs with the condition that the company shall put up the cement plantwithin a period of three years. However, this task of putting up the cementplant at Kotputli could not be accomplished within the expected time,perhaps due to various pending litigations. Be that as it may, after theaforesaid sub-clauses (vi) and (vii) were added to Clause 7 of the Schemew.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 on28.03.2006.

7.2.1. The relevant agenda proposal of the said 11[th] Pre-BIDImeeting[19] fairly gives insight into the nature of request made by thecompany, the views of the Finance Department as also Industries Ministerand the recommendations of Pre-BIDI. Therefore, the same isreproduced in extenso as under:- “Request of the Company:

The Company has requested for a customized package ofincentives on the ground that this a Mega Project with an 18 ‘MTPA’ stands for metric ton per annum 19 At pp. 175-178 of the paper-book A

BC

DE

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G

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424SUPREME COURT REPORTS

Ainvestment of more than Rs. 1000 crores. Details of theconcessions/incentives sought by the Company are as follows:- B

C

D

E

F

G

Views of the Finance Department

The value of the enhanced incentives/exemptions will beapproximately Rs. 1130 crores which would be almost equal tothe 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 furtherincentives/exemptions are granted, the 18 other companies whichare operating within the State will face competitive pricedisadvantage. It would also be contrary to the declared policy ofproviding level playing field for all.

Further, department has added that in the VAT regime, theconcessions may not be possible in any case. Therefore, limitingbenefit to RIPS in future reinforced (sic).

Views of the Industry Minister

If RIPS-2003 would have been good enough, investment wouldhave flown. Moreover, expansion and setting up has to bedifferentiated. An expansion process costs around 250 to 400crores. Now, new plants with 2 MT capacity single kiln is onefactor, 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 asannounced recently and RIPS-2003 should be applicable tothe company.

Proposed decision

BIDI may take a view.

7.3. The said proposal was considered under Agenda item No. 13in the 21[st] Meeting of BIDI held on 01.04.2006 under thechairmanship of the then Chief Minister and it was resolved that‘the recently announced cement package and RIPS 2003 willbe applicable on the company’; and that ‘any changes postVAT regime will also be available to other units’. The relevantcontents of the minutes of the said 21[st] Meeting of BIDI dated01.04.2006 read as under:

“Agenda No. 13

Grasim Industries Limited

BIDI directed that the recently announced cement package andRIPS 2003 will be applicable on the company. Any changes postVAT regime will also be available to other units.”

7.4. Thereafter, the company addressed a letter dated 26.04.2006to the Commissioner of Industries, seeking registration in terms A

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Aof sub-clause (vii) of Clause 7 of RIPS-2003 (as inserted by wayof amendment dated 02.12.2005) for a new cement plant/captivepower plant, intended to be established at Kotputli. The relevantcontents of this letter dated 26.04.2006 could also be usefullyextracted as under:- B“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 intentionto set up a new plant for manufacturing of 3.5 million tons/annumcement plant at Kotputli along with a 2 X 23 MW Captive PowerPlant. Details are as under :

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DWe request you to register the above in Rajasthan InvestmentPromotion Policy 2003 Scheme of sub clause (vii) of clause 7vide Notification No. F.12(20)FD/Tax/05-Pt dated 2/12/2005.

We also request that in case any special package of incentives isapproved for any other similar cement plant, then the same mayEbe granted to our aforesaid plant also.”

7.5. However, before any decision was taken on theaforementioned application dated 26.04.2006, the State Governmentproceeded to delete the aforesaid sub-clauses (vi) and (vii) of Clause 7of RIPS-2003 by way of its amendment Notification No. F.12(63)FD/FTax/05 dated 28.04.2006.

7.6. The company felt distressed with the aforesaid amendmentdated 28.04.2006 and deletion of sub-clauses (vi) and (vii) of Clause 7of the Scheme and hence, on 26.05.2006, its Group Executive Presidentmade a representation to the Chief Minister of Rajasthan, stating theGsteps taken by the company after submitting the option for availing benefitunder the Notification dated 02.12.2005; and the setback likely to becaused to the investment plans of the company upon withdrawal of 45%upfront subsidy. While pointing out that the company had, in fact,represented to the Government for customized package of incentives, itwas prayed in this representation that the Notification dated 28.04.2006H

may be withdrawn. The relevant contents of this representation dated26.05.2006 read as under:- “This has reference to above-mentioned notification, vide whichSub-clause (vi) and (vii) of clause 7 of the Rajasthan InvestmentPromotion Policy 2003 have been deleted. Clause 7 was added tothe aforesaid policy vide notification no. F.4(18)FD/Tax Div/2001dt. 02[nd] December 2005.

After the above notification dated 28[th] April 2006, the benefit of45% upfront subsidy of the actual tax liability in VAT and CSTwill not be allowed.

We would like to mention that based on 2[nd] December 2005Notification number F.4(18)FD/Tax/Div/2001 our company hasdecided to set up 2 cement plants of 3.5 million tons per annumcapacity each at Grasim Cement – Kotputli , District Jaipur &Aditya Cement – Shambhupura Dist. Chittorgarh involving totalinvestment of above Rs. 2200/- crores.

The withdrawal of 45% upfront subsidy would have major setback to company’s investment plan in Rajasthan. The cementplants are capital intensive plants and most of the states are offeringsubsidy/incentives in one form or the other form and in previouscases Government of Rajasthan has announced specific schemesfor specific companies i.e. incentives even up to 75% exemptionof Tax up to 11 years by issuing separate notifications on case tocase basis.

We have already submitted option to avail the benefit undernotification dated 2[nd] December 2005 as provided in Para 7 (vi)(1) of the afforsaid scheme and our intention is to commencecommercial 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 formajor 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 incentivesprovided to cement industry within 5-6 months of notification, whichwill make our proposed plants unviable. In fact we had representedto the Government of Rajasthan for customized package of A

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Aincentives as provided under the Rajasthan Investment Policy 2003for investment of Rs 1000 crores and above.

Both the above proposed plants are expected to contribute overRs. 225 crores each to the exchequer & substantial part of whichwill be shared by the State Government.

B

In the present high growth environment of Indian economy, cementindustry being one of the prominent infrastructure industry isproviding support to other industries & such retrogatory steps mayaffect the growth of the cement industry & ultimately overallgrowth of the Indian economy.

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We sincerely request your goodself to reconsider & withdraw theabove notification dated 28[th] April 2006 which will also be in thenatural justice as we have planned investments based on thenotification dated 02[nd] December 2005.

We hope that our request shall be considered favourably enablingDus to take further steps for implementation of the proposed plantsin a time bound manner.”

7.6.1. It appears that the request so made by the company evokedonly a pithily tight response from the State Government in the form ofletter No. BIP/IP/DGM(NS)/61 dated 17.06.2006 of the Bureau ofEInvestment Promotion, Rajasthan[20], stating that ‘company would beeligible for concessions as contained in RIPS-2003’.

7.7. On the other hand, during the summit named ‘ResurgentRajasthan’, the company entered into an MoU with the State Governmenton 30.11.2007, proposing to set up new Cement Plants at Kotputli andFNawalgarh as also to expand the existing plant at Shambhupura with theprojection of generating direct employment of 1000 persons and significantmultiplier impact on local economy and consequent indirect employment.As against this proposal, the State undertook to extend support in theform of providing incentives as permissible under RIPS-2003 togetherwith additional support as per the prevalent policy apart from facilitatingGthe approvals etc., by offering a ‘single window service’. This MoUwas to remain valid for the initial period of five years and upon consideringthe progress made, its term was extendable for such period as mutuallyagreed upon.

H20 Hereinafter referred as ‘BIP’

7.8. It had been the case of the appellant that pursuant to BIDI’sdecision dated 01.04.2006 and the MoU dated 30.11.2007, the companymade 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 theloan facility amounting to Rs.798.82 crores from various financialinstitutions and banks. Thus, according to the appellant, all the requiredconditions stipulated under RIPS-2003 stood fulfilled.

7.9. With reference to the aforementioned facts and with theassertion that commercial production in the said Kotputli Unit commencedon 20.01.2010, the company made an application, on or about 21.02.2010,to the Member Secretary SLSC for grant of Entitlement Certificate underRIPS-2003[21]. Several aspects related with the contents of this applicationand its accompanying form, affidavit and annexures do form the areasof conflict and divergence of the parties and, therefore, appropriate itcould be to take note of their relevant features too.

7.9.1. In the aforesaid application, the company, after stating thatit had commenced commercial production on 20.01.2010 and had madeinvestment of a sum of Rs.1661.88 crores, also referred to the fact thatit had filed the option on 26.04.2006 pursuant to the notification dated02.12.2005[22]. The aforesaid decision of BIDI dated 01.04.2006, the letterof 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, theapplicant submitted as under:- “6….In accordance with above amendment the ApplicantCompany is eligible for subsidy as investments have already beenmade of significant amount of Rs.1184.47 crores upto 30[th] April,2008 (before 22.05.2008) and also signed the MOU duringResurgent Rajasthan Summit on dated 30[th] November, 2007 forsetting up the 40 Lac MT/annum cement plants at Mohanpura,Tehsil Kotputli, Distt. Jaipur and the copy of the Memorandum ofUnderstanding is enclosed herewith as Annexure – 6. We are 21 A copy of this application is placed on record as Annexure P-11 that bears the date04.02.2010 but its contents and annexures carry the later dates too, like VAT depositdated 05.02.2010 and Chartered Accountant’s certificate dated 16.02.2010. It appearsfrom the receipt endorsement that the application was submitted on 21.02.2010 andhence, 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.

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also enclosing herewith the certificate of Chartered Accountantscertifying 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 notificationdated 02.12.2005, within 180 days and also commenced theBcommercial production on 20.01.2020 i.e. within five years fromthe date of filing the option, investments were made of Rs.1661.88crores i.e. more than Rs.400 crores and have given the employmentto 254 persons up to 31.12.2009 i.e. more than 200 persons, hencefulfill all the conditions of the notification dated 02.12.2005 i.e. asper sub-clause (vi) of Clause 7 of the RIPS-2003.C

Considering the above facts, kindly grant the Entitlement Certificateand the benefits may also be allowed in terms of the notificationdated 2[nd] December, 2005. In case you require any furtherinformation, please intimate so that the same may be furnished.”

D7.9.2. The application was submitted in Form 2 referable to Clause9(B)(i) of the Scheme and therein, a request was made to ‘grant 5% ofthe interest subsidy, and 25% of the employment/wage subsidy 45%Up-Front subsidy’ under the Scheme. The said Form 2 also carrieddeclaration and undertaking of the Vice-President of company in thefollowing terms:-E

“I hereby declare that I have fully understood the provisions ofthe Rajasthan Investment Promotion Scheme, 2003 and agree tocomply with the same. In case of availing excess benefits or noncompliance with the provisions of this Scheme, I undertake torepay whole of the amount actually availed under the SchemeFand shall also be liable to pay interest at the rate of 12% perannum on such amount.”

7.10. The matter relating to the aforesaid application wasconsidered 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 presentGappellant. In the said meeting dated 17.03.2011, the SLSC proceeded totake the decision of allowing Capital Investment Subsidy to the appellantto the extent of 75% of deposited VAT. This decision was taken bySLSC purportedly on the basis of the approval of BIDI. The relevant H

part of the Minutes of SLSC meeting dated 17.03.2011, in their translatedversion[23] read as under:-

“13….Committee after observing & examining the submitteddocuments by the unit & available provision in the plan & earlierdecision taken by the finance department, this decision has beentaken that unit has appended signatures on MoU in RajasthanResurgent Summit. Therefore, as per the orders of financedepartment dated 30/9/2008 unit is free from negativeness.Committee has also observed that although finance departmenthas not given any consent for the amendment regarding availableloan borrowing schemes, thereafter units are eligible under rule5(i) of the plan for seeking term loan from financial institutions &local body. And earlier in many cases the State Level ScreeningCommittee have on the basis of Capital Investment (Interestcomponent) allowed eligibility. Therefore, in this case the unit iscovered under the definition of term loan for seeking term loanfrom ECB & Buyers Credit then unit should be given the benefitof eligibility of interest subsidy. On the basis of advise of therepresentative of finance department Secretary, Financecommittee has take the decision that unit is for the time beingallowed for the starting from the first date of commercialproduction, first VAT challan deposit date 5/2/2010 for 7 yearscapital investment subsidy (interest component) eligibility & loanreceived from HDFC bank of 250 crore & axis bank 200 croresmeans total 450/ crore etc may be granted eligibility for term loanand already received ECB credit & Buyers matters & inconsideration of earlier matters, matter may be referred to financedepartment. The eligibility certificate may be amended as per thedecision of the Finance Department decision.

Committee has also taken decision that unit may be allowed forCapital Investment (25 percent employment component) from5/2/2010 the date of starting of commercial production for 7 years.Committee has also taken decision that on the basis of approvalfrom the BIDI rule 7(i)(a) & (b) basis Capital Investment subsidy(Interest Component) of total payable and 75% of the depositedVAT will be the limit. Committee has also taken the decision that ABCDE

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Athe eligibility for rebate in electricity for 50% will be fromcommercial 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 necessaryEntitlement Certificate to the appellant on 29.04.2011.

B7.11. Thereafter, the matter relating to the appellant companywas re-examined in the SLSC meeting dated 17.10.2011, particularlywith reference to the quantum of investment and borrowings; and thedecision finally taken by SLSC reads, in its translated version, asfollows[24]:- C“The committee under the plan has after the completion & on thebasis of desirable eligibility terms by the unit & guidelines of financedepartment dated 11-7-2011 & in the series of guidelines of thecommittee dated 17-3-2011, the decision taken by the committee,accordingly the committee, & information received from the unitECB credit of 216.25 crore has also been added under CapitalDInvestment Plan, total 666.25 crore rupees from 5-2-2010 on thebasis of new unit the capital investment subsidy (5 percent interestcomponent & 25 percent vet component) eligibility for 7 yearsperiod from 5-2-2010 taking the decision, amended eligibilitycertificate will be issued for the unit. The total pay ability for theunit under capital investment subsidy, the total limit of 75 percentEof the vat deposit, the decision taken in the meeting dated17-3-2011 as per the series of decision will be payable by theunit.”

7.12. Pursuant to the aforesaid decision of SLSC dated17.10.2011, the Office of the Commissioner Industries, Rajasthan issuedFa revised Entitlement Certificate to the appellant company on 24.11.2011,superseding the earlier Certificate dated 29.04.2011 and certifying theentitlement of the appellant to Capital Investment Subsidy in the followingterms:-

“8.Capital Investment subsidy:G(i)Interest 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 (ii) Wage & Emp. Component H24 pp.165-166 of the paper-book Note:

1. In case of new units, the maximum amount of interest andwage/ employment subsidy shall not exceed 75% of the StateSales Tax/ VAT and the Central Sales Tax paid by the applicantdealer.

2. This certificate is liable to amendment/suspension/revocation,if obtained on misrepresentation or concealment of facts orby 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 from05.02.2010.

4. This certificate may be revoked by the issuing authority incase the applicant violates any of the conditions of the Schemeor the certificate.

5. This Revised Entitlement Certificate is being issuedsuperseding earlier Entitlement Certificate issued beingNo. 02/190 on 29.04.2011.’’

(bold as in original)

7.13. It is not a matter of much dispute that the appellant fullyavailed the benefit of 75% subsidy in terms of the Entitlement Certificatedated 24.11.2011 from the month of February 2010 and until the monthof February 2017.

8. The foregoing narration of facts relating to the propositions ofthe appellant company as also the decisions taken by the authoritiesconcerned at different stages depicts only one part of the spectrum ofthis case. For comprehension of the overall scenario, several other equallysignificant aspects also need to be taken note of.

8.1. As noticed, one of the significant aspects had been that after07.06.2009, BIDI ceased to exist for having been disbanded by the StateGovernment with constitution of another body in the name of RajasthanInvestment Promotion Board w.e.f. 08.06.2009.

8.2. Another remarkable aspect had been that upon receipt of theMinutes of SLSC meeting dated 17.03.2011, the Finance Department ofthe State Government sent a letter dated 17.11.2011 to the Member-Secretary, SLSC raising doubts on the correctness of the decision of A

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ASLSC with reference to the decision of BIDI, particularly when it wasnot clear as to when did BIDI issue the order for increasing maximumlimit of subsidy from 50% to 75% in the cases pertaining to the units theappellant. The contents of this letter dated 17.11.2011 have beenreproduced in extenso in the impugned order of ACS dated 12.03.2018and the relevant passage therefrom could be usefully extracted asBunder[25]:- “In both the matters of M/s. UltraTech Cement grant of benefitup to 75% limit of VAT has been referred while as per proviso toclause 7(1)(a) and (b) of the Scheme 50% maximum limit can beextended only by Board of Infrastructure Development andCInvestment Promotion. (BIDI)

BIDI was reconstituted by the Administrative ReformsDepartment by its Order No. F.6 (51) / AR / Gr.3 / 96 dated15.1.2005. In supersession of the said Order dated 15.1.2005 theAdministrative Reforms Department by its Order No. F.6 (51)DAR / Gr.3 / 96 dated 8.6.2009 constituted Rajasthan InvestmentPromotion Board (RIPB). As such after 7.6.2009 BIDI has notbeen in existence. In these cases Applications under RIPS-2003has been filed on 23.2.2010 and 19.6.2009 respectively and it isnot clear from the available information that when BIDI issuedEorder for increasing maximum limit from 50% to 75% of capitalinvestment subsidy in these cases.

In regard to promotion sanctioned under RIPS-2003 all therelevant facts remained available in the file of Finance Department,therefore with regard to the order issued by the BIDI for increasingFmaximum limit of capital investment subsidy from 50% to 75% inthese matters the requisite factual comments may be forwardedto the Finance Department at the earliest possible.”

8.3. It appears that the aforesaid communication and its remindersfrom the Finance Department to the Industries Department remainedGunanswered for a long length of time.[26] Ultimately, a reply dated 25 pp. 462-464 of paper-book.

26 During the course of submissions, the facts have also been placed before us that theIndustries Department did not send reply to the aforesaid letter dated 17.11.2011despite repeated reminders dated 18.05.2012, 20.05.2013, 17.06.2013, 29.07.2013 and12.09.2013. In regard to these aspects of wanton avoidance and in regard to the sanctionHmade in favour of the appellant, a departmental inquiry for major penalty was also 09.02.2017 was forwarded by the Member-Secretary, SLSC, which toowas carrying certain typographical errors and hence, another reply wassent by the said Member-Secretary on 17.02.2017, seeking to furnish‘factual comments in respect of grant of capital investment subsidyupto 75%’ to the appellant in the Meeting dated 17.03.2011. Therein,the said Member-Secretary stated, inter alia, that “perhaps” the benefitwas given on the basis of decision taken by BIDI. This communicationdated 17.02.2017 has also been reproduced in the impugned order dated12.03.2018 and the relevant passage thereof may be reproduced forready reference as under[27]:- “Notably, in clause 7(vi) of the Scheme provision was for cementunits to give capital investment subsidy up to 75% of payability/deposition of VAT subject to providing employment to minimum200 persons and investment of Rs.400 Crore. Later the saidprovision was deleted and Clause 7(1)(b) of the Scheme remainedas it is according to which upon recommendation of BIDI the unitinvested more than Rs.100 Crore but below Rs.200.00 Crore couldhave granted subsidy up to 60% of the payable / deposit tax/VATand more than 200 Crore Rupees it could have increased up to75% of the payable / deposit tax /VAT. Perhaps benefit to the unitwas given on the basis of decision taken in the BIDI meetingdated 1.1.2006 (sic) under the aforesaid clause. Besides, no otherrecord is available in this office. Hence in this regard it is requestedto the Finance Department to examine the matter at its own andtake decision.”

8.4. After having received the aforesaid reply dated 17.02.2017,the Finance Department of the State Government expressed itsreservations on the decision taken by SLSC in the purported referenceto the directions of BIDI and sent its communication dated 03.04.2017to the Industries Department, expecting appropriate action in the matterwhile observing, inter alia, as under:- “In this regard from the information and documents receivedfrom Finance Department it is appeared that in respect of proposed against the then Additional Director, Industries, who was working at therelevant time as the Functional Officer under RIPS-2003. It has been pointed out thatthe inquiry could not proceed further for the said officer having retired and inquiryhaving gone time barred under the Rajasthan Civil Services (Pension) Rules, 1996.27 pp.470-472 of paper-book A

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AM/s. UltraTech Shambhupura District Chittorgarh (Unit AdityaCement Works-II) matter of grant of 75% subsidy as per provisoof clause 7(i)(a) and (b) of RIPS 2003 was not placed beforeBIDI therefore no approval by the BIDI was found to be done. In21[st] Meeting of BIDI dated 1.4.2006 under Agenda Item No. 13matter of Kotputli Cement plant of Grasim Industries was placedBbefore BIDI in regard to which BIDI passed following orders:- “BIDI directed that the recently announced cement packageand RIPS-2003 will be applicable on the company. Any changespost VAT regime will also be available on other units”

As such it is clear that no approval was made by BIDI forgrant of subsidy 75% as per proviso to clause 7(i)(a) and (b) ofRIPS 2003 in the matter of M/s. Utratech Cement Limited (Unit– Kotputli Cement Works).

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In respect of M/s. UltraTech Shambhupura DistrictChittorgarh (Unit Aditya Cement Works-II) and M/s. UtratechCement Limited (Unit – Kotputli Cement Works) Brief Notes(Note-A and Note-B) are being enclosed which concludes that inAgenda Notes placed being SLSC being shown approval of 75%capital investment subsidy to these matters by the BIDI the SLSChas taken defective decision. In these matters decision of SLSCis defective and contrary to the revenue interest therefore it isnecessary to again place the matters along with all facts anddocuments before SLSC.

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By the even number Letter dated 17.11.2011 of the FinanceDepartment on seeking information of the order pertaining toFextending subsidy limit up to 75% by BIDI your office has repliedafter lapse of more than 5 years. Need of fixing responsibility forsuch delay is also appeared. (sic)

Take action accordingly and up date to the FinanceDepartment.”

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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 Minutesof this meeting dated 22.05.2017, the SLSC underscored the very samedoubts as raised by the Finance Department on the purport and effect ofthe decision of BIDI and suggested for appropriate action under Clause H

13 of RIPS-2003. The relevant part of this resolution of SLSC dated22.05.2017 could also be usefully extracted as under[28]:- “This is not clear from the action detail letter dated 17- 5-2006 ofBIP that what should be meaning in which it was said that accordingRIPS-2003 provision these units are eligible for the benefit.Likewise it has been observed from the meeting of BIDI dated01-04-2006 its agenda item no.13 that discussions were madeonly for the Kotputli plant & the matter for Shambhupura districtChittorgarh plant has not been placed before BIDI for discussion.The meeting dated 1-4-2006 of the BIDI on detailed action inagenda no. 13 the following has been mentioned –

BIDI directed that the recently announced cement package andRIPS-2003 will be applicable on the company. Any changes postVAT regime will also be available to other units.

Possibly, BIP in its letter dated 17-6-2006 has written on BIDIdecisions for its as it is implementation. This is also mentionedthat 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 thematter of Kotputli (District-Jaipur) plant, the consent forenhancement of investment subsidy limit of 75% of the depositedtax limit is not clear.

Attention is invited of the committee on the following legalprovisions regarding expected action by the Finance Department–

(i) According to rule 12 of the plan provision if the State levelscreening committee a letter has been received within 60 daysof its decision, then the committee will review its decision.

(ii) (ii) Under rule 13 there is a provision that on the basis ofFinance Department suo motto or information received fromany other source may review the decision of the screeningcommittee. If the decision is against the interest of Govt.Although before the changing the decision, the beneficiariesunits will be given opportunity for hearing. For this purposethe time limit after 5 years of the complete benefits.

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AThe eligibility certificate was issued on 29-4-2011 in favour ofunit. The time limit was 6 months which has already beenexhausted. But the given benefit time period was for 7 years,possibly, still it is continuing. Therefore, under rule 13, the timelimit for action by Finance Department has not been exhausted.Therefore, it has been decided that in this matter under rule 13Brecommendation may be sent to Finance Department and for fixingthe responsibility action may be taken on file.

In the last, thanks given to President & the meeting isclosed.”

CRevision proceeding under Clause 13 of RIPS-2003:impugned order dated 12.03.2018

10. Following the aforesaid recommendation of SLSC, a noticebearing No. P12 (55) Fin/tax/2017-Part-I dated 10.07.2017 was issuedto the appellant by the State Government informing about the proposedDaction of the Finance Department under Clause 13 of RIPS-2003, becausethe decision taken by SLSC on 17.03.2011 was found to be erroneousand against the interest of revenue. The appellant was called upon toenter into defence with relevant documents and evidences.

10.1. Having received the aforesaid notice dated 10.07.2017 fromEthe State Government, the appellant made an application under the Rightto Information Act to obtain a copy of agenda note regarding item No.13 in the minutes of meeting dated 01.04.2006 of BIDI and minutes ofPre-BIDI meeting dated 28.03.2006. After obtaining necessarydocuments, the appellant submitted its objections and reply to the showcause notice, inter alia, to the effect that it had availed the benefitFunder RIPS-2003 with effect from 05.10.2010 on the basis of theEntitlement Certificate granted to it and the period of seven years havingbeen completed, the availed benefit cannot be withdrawn. It was alsosubmitted that the earlier decision by SLSC had been a bonafide andreasonable decision, being that of permissible interpretation; and if moreGthan one interpretation was possible, the interpretation in favour of theassessee ought to be accepted. The appellant also submitted that it hadmade a huge investment to the tune of Rs. 1661.88 crores on the basisof Notification dated 02.12.2005 and invoked the principles of promissoryestopple. It was also contended that SLSC had no locus standi to referthe matter for revision by the State Government. On behalf of theH

Department, reply to the objections of the appellant were filed contending,inter alia, that the matter of appellant’s unit was not approved by BIDIand the benefit availed were much beyond the permissible limit underRIPS-2003. It was also contended that the power of the StateGovernment under Clause 13 was wide enough to revise any ordergranting undue benefits which was erroneous and prejudicial to the interestof 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 theMoU entered into with the State Government and under the proviso toClause 7(i)(a) of RIPS-2003.

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11. The learned Additional Chief Secretary examined the entirerecord and took note of all the objections of the appellants and then, inhis elaborate order dated 12.03.2018, held that the SLSC had erroneouslyissued the aforesaid Entitlement Certificates dated 29.04.2006 and24.11.2011; and that the appellant was not entitled to the subsidy beyond50% of the tax payable and deposited. The relevant observations andfindings in the impugned order dated 12.03.2018 read as under :- D

“27. In light of conclusion derive on the aforesaid each point underconsideration as stated above overall conclusion is drawn as under:-

i)The decision taken under Agenda No. 13 of Meeting dated17.03.2011 of State Level Screening Committee (SLSC) isEerroneous because while considering the matter theCommittee presumed that increasing of capital investmentsubsidy of deposited tax from 50% limit to 75% limit as perfirst proviso to clause 7(i)(a) and 7(i)(b) of the RajasthanInvestment Promotion Scheme, 2003 (RIPS-2003) has beenFapproved by the Board of Infrastructure Development andInvestment Promotion (BIDI) in its meeting dated 01.04.20016(sic) whereas no such order was passed by the Board ofInfrastructure Development and Investment Promotion(BIDI) for increasing available capital investment subsidy from50% limit to 75% of payable and deposited tax in view ofGprovision of clause 7(i)(a) and 7(i)(b) of Rajasthan InvestmentPromotion Scheme 2003 (RIPS-2003).

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ii)In furtherance to the decision taken under Agenda No. 13 ofMeeting dated 17.3.2011 of State Level Screening Committee H

A(SLSC) under Agenda No. 18 of in next meeting dated17.10.2011 of State Level Screening Committee (SLSC)reference of capital investment subsidy up to 75% of totalpayable tax is also erroneous.

iii) Decision taken under Agenda No. 13 of Meeting datedB17.3.2011 of State Level Screening Committee (SLSC) andin furtherance thereto reference of capital investment subsidyof 75% of total payable tax under Agenda No. 18 of in nextmeeting dated 17.10.2011 of State Level Screening Committee(SLSC) is prejudicial to the interest of the State revenuebecause for investment made in the unit capital investmentCsubsidy was available up to 50% of payable and depositedtax only as per clause 7(i)(a) of Rajasthan Investmentpromotion Scheme, 2003 (RIPS-2003) but State LevelScreening Committee (SLSC) has taken decision to increaseit up to 75% of payable and deposited tax. As such, theDcompany has received amount from the State treasury inexcess of capital investment subsidy payable under RajasthanInvestment Promotion Scheme, 2003 (RIPS-2003).

iv) As stated above Decision taken under Agenda No. 13 ofMeeting dated 17.3.2011 of State Level Screening CommitteeE(SLSC) and in furtherance thereto reference of capitalinvestment subsidy of 75% of total payable tax under AgendaNo. 18 of in next meeting dated 17.10.2011 of State LevelScreening Committee (SLSC) is erroneous and prejudicial tothe interest of the State Revenue therefore amendment indecision dated 17.3.2011 of the State Level ScreeningFCommittee (SLSC) under clause 13 of the rajasthanInvestment Promotion Scheme, 2003 (RIPS-2003) in revisionproceeding by the Finance Department is needed and lawful.

v)On proposal of revising of decision dated 17.3.2011 of StateLevel Screening Committee (SLSC) adequate opportunity ofGhearing as per provision has been given to the beneficiaryindustrial unit. Preliminary objections, Objections andArguments advanced by the Beneficiary Industrial Unit hasbeen discussed in detail.

vi) The decision dated 17.3.2011 of State Level ScreeningHCommittee (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 Secretaryissued directions to the appellant as also to SLSC in the following terms:-

28. Hence, in this revision proceeding proposal is accepted incontext of points referred to Finance Department for revisingunder clause 13 of Rajasthan Investment Promotion Scheme, 2003(RIPS-2003) the decision taken by the State Level ScreeningCommittee (SLSC) in its meeting dated 17.03.2011 as decided inmeeting 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 toget capital investment subsidy as per provision of clause 7(i)(a) ofRajasthan Investment Promotion Scheme, 2003 (RIPS-2003) tothe extent of 50% of payable and deposited tax because no orderhas been passed by Board of Infrastructure Development andInvestment Promotion (BIDI) for increasing capital investmentsubsidy as per provision of clause 7(i)(a) and 7(i)(b) of RajasthanInvestment Promotion Scheme, 2003 (RIPS-2003) from 50% to75% of the payable and deposited tax.

ii) The Entitlement Certificate dated 29.04.2011 issued infurtherance to State Level Screening Committee (SLSC) Meetingdated 17.03.2011 and also Revised Entitlement Certificate dated24.11.2011 issued in furtherance to Meeting dated 17.10.2011 ofState Level Screening Committee (SLSC) are hereby cancelledand it is ordered to State Level Screening Committee (SLSC) toissue new Entitlement Certificate for investment subsidy up to50% limit of total tax to Kotputli Cement Works Unit of theCompany.

iii) Disbursement officers of the Capital Investment Subsidy(Assessing Authority) is directed to calculate payable capitalinvestment subsidy as per New Entitlement Certificate to be issuedby the State Level Screening Committee (SLSC) in reference tothis revision order and in case the company in the context of thisunit has already received excess benefit then payable capitalinvestment subsidy under this revision Order then to recover thesaid excess amount from the company.

A

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A

iv) Under provisions of Rajasthan Investment Promotion Scheme,2003 (RIPS-2003) interest @ 18% on available excess benefits ischargeable. The company has given Undertaking in Form-2 forrepayment of availing excess benefits with 18% hence on availingexcess benefits interest @ 18% is chargeable which may berecovered from the company.

B

v) The company is ordered that to refund the benefits of capitalinvestment subsidy availed in excess from 50% of payable anddeposited tax under erroneous order of State Level screeningcommittee (SLSC) together with 18% interest to the to the StateGovernment.”

C

12. Pursuant to the aforesaid order of ACS dated 12.03.2018, ameeting of SLSC was held on 28.03.2018 wherein, it was decided thatthe entitlement certificate issued in favour of the appellant on 24.11.2011be cancelled and in its place, a revised entitlement certificate be issuedallowing Capital Investment Subsidy to the extent of 50% in place ofD75% of deposited Sales Tax/Value Added Tax/Goods and Services Tax.Accordingly, Re-revised Entitlement Certificate dated 02.04.2018 wasissued to the effect that ‘the maximum amount of interest and wage/employment subsidy shall not exceed 50% of the State Sales tax/VAT and the Central Sales Tax paid by the applicant dealer.’

E

12.1. In sequel to the above, an order dated 04.04.2018 was issuedby the ACS wherein, the total tax and excess subsidy availed by thecompany were calculated for the period from 05.02.2010 to 31.12.2016and whereby, the appellant was directed to refund the amount of excessavailed subsidy together with interest in the following terms:- F

“Hence you are directed to deposit excess availed capitalinvestment subsidy amount Rs. 15,96,37,794/- together with interestRs. 17,18,33,816/- payable thereon totaling to Rs. 33,14,71,610/-till 3.5.2008 through E-Grass under Budget Head (VAT-OTHERMISC PAYMENTS) in the State treasury and submit evidenceGthereof before the undersigned. Please note that undertaking inForm No.2 for payment of 18% interest in case of availing excessbenefits 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 provisionsof the Rajasthan Investment Promotion Scheme 2003 then the H

said amount shall be recovered from the company as land revenuedues.”

The writ petition before the High Court: impugned orderdated 11.01.2019

13. Aggrieved by the order dated 12.03.2018 as passed by theACS in revision proceedings under Clause 13 of RIPS-2003; issuanceof the Re-revised Entitlement Certificate; and the order dated 04.04.2018of the ACS demanding the excess subsidy amounting to Rs. 15,96,37,794/- together with interest amount of Rs. 17,18,33,816/-, the appellantpreferred the writ petition, being W.P. No. 9090 of 2018, before theHigh Court of Judicature for Rajasthan, Bench at Jaipur, challengingClause 13 of RIPS-2003 as being arbitrary and unconstitutional as alsoseeking the relief of quashing the orders dated 12.03.2018, 02.04.2018and 28.03.2018 amongst other prayers. The High Court has dismissedthe writ petition by the impugned order dated 11.01.2019. Having regardto the subject-matter and the questions involved, we may also take noteof the reasons that prevailed with the High Court in rejecting the case ofthe appellant.

13.1. The High Court in the first place rejected the contention ofappellant that if there was any mistake in granting subsidy, that couldhave been rectified with reference to Clause 9(B)(vii) only within aperiod of four years, as prescribed by Section 33 of the Rajasthan ValueAdded Tax Act, 2003 while pointing out that the said provision wasintended to be applied by the Assessing Officer of the Commercial TaxesDepartment and was of no impediment for the action under Clause 13of RIPS-2003.

13.2. Thereafter, the High Court minutely analysed Clause 7 ofRIPS-2003 while also taking note of its various amendments/revisions,as described hereinbefore. The High Court also referred to the dealingsof parties including the application made by the company directly toBIDI; the minutes of Pre-BIDI meeting dated 28.03.2006; the minutesof BIDI meeting dated 01.04.2006; the other application made by thecompany on 26.04.2006; and the representation made by the companyon 26.05.2006. Having thus examined the relevant material on record,the High Court observed that though the company prayed for the benefitsunder newly inserted sub-clause (vii) of Clause 7 by way of the applicationdated 26.04.2006 but, both sub-clauses (vi) and (vii) of Clause 7 were A

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Adeleted by the Government on 28.04.2006. The High Court also observedthat the company was fully conscious of the fact that it would not receivethe tax subsidy under deleted sub-clause (vii) of Clause 7, which wasalso borne out from the representation made by it on 26.05.2006, statingthat the withdrawal of 45% upfront subsidy of actual tax liability was amajor setback to the company’s investment plan; and making a requestBthat the newly inserted clauses under Notification dated 28.04.2006 bereconsidered. The High Court also observed that BIP in its communicationdated 17.06.2006, with regard to the request for customized package,merely stated that ‘the company will be eligible for concessions ascontained in RIPS-2003’; and even in the MoU dated 30.11.2007, ‘allCthat stated was that the State will extend to the project incentivespermissible to the project under the RIPS-2003 as amended fromtime to time’.

13.3. The High Court further took note of the aforementionedclarification dated 22.05.2008 whereby the State Government made itDclear that ‘on deletion of sub-clauses (vi) and (vii) of Clause 7 ofthe RIPS-2003 w.e.f. 28.04.2006, none of the types enumerated atSerial No. 1 to 6 in the clarification will qualify for benefits underthe deleted sub-clauses’. The High Court also referred to theamendment dated 30.09.2008, whereby another proviso was added aftersub-clause (iii) of Clause 7 to the effect that the investment made orEcommitted before 22.05.2008 or under MoU signed during ResurgentRajasthan Summit, for both new cement unit or unit under expansionhaving capacity of more than 200 tons per day, shall be eligible for subsidyunder Clause 7 on the condition that the unit shall start commercialproduction by 31.03.2011.F13.4. Having thus traversed through the whole gamut of Clause7 of RIPS-2003 with its amendments/revisions as also the backgroundaspects relating to the propositions of the company, the High Court tooknote of the application[29] made by the company for issuance of entitlementcertificate and for benefits under the amendment dated 02.12.2005 andGpointed out the fundamental flaw therein that the amendment dated02.12.2005 had already been deleted on 28.04.2006. The High Courtalso took note of the decision of SLSC dated 17.03.2011 and pointed outthe basic error therein that the decision of BIDI dated 01.04.2006 was 29 This application bears the date 04.02.2010 but was filed on 21.02.2010, vide paragraphH7.9.1 and footnote 21 hereinbefore.

utterly misconstrued. The High Court further took note of the correctivedecision taken by SLSC on 22.05.2017 and observed as follows:

“…..The petitioners however submitted an application on04.02.2010 for issuance of entitlement certificate and benefitsunder the notification dated 02.12.2005 whereas the amendmentsmade under that notification were already deleted on 28.04.2006.It was at that stage that the SLSC considered this application ofthe petitioners in its meeting dated 17.03.2011 and directed forgranting the subsidy to it upto the limit of 75% under proviso toClause 7(i)(a) and (b) in view of the approval allegedly grantedby the BIDI. A careful examination of the minutes of 21stmeeting of the BIDI held on 01.04.2006 does not revealany such decision on the part of the BIDI. The BIDI simplydirected that recently announced cement package in RIPS-2003 shall be applicable on the company. The SLSC furtherconsidered the matter in its meeting dated 17.10.2011 for revisionof the entitlement certificate. Consequently, the entitlementcertificate issued on 29.04.2011 was revised on 24.11.2011. Thepetitioners accordingly availed the subsidy. However, the SLSCin its meeting dated 22.05.2017 considered the issue on the letterreceived from the department, which found that the BIDI neverapproved raising of the subsidy upto 75% and accordinglyrecommended to the Government for proceeding under Clause13 of the RIPS-2003.”

13.5. The invocation of the doctrine of Contemporanea Expositioon behalf of the appellant for the submission that SLSC, consisting mostlyof the officers from the Finance Department of the State, was in thebest position to construe the decision of BIDI was also negated by theHigh Court in the following words:- “The argument that the SLSC which consisted of the officersmostly from the Finance Department of the State by virtue ofdoctrine of Contemporanea Expositio was in the best position toconsider decision of the BIDI is noted to be rejected firstly becausethere is no ambiguity whatsoever in the decision of the BIDI andsecondly, such decision has to be read in context of the facts. TheBIDI never explained its understanding subsequently on ABC

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446SUPREME COURT REPORTS

A01.04.2006. The SLSC thus misunderstood the decision of theBIDI. The RIPS-2003 also does not provide any clarification forsuch a decision. In the cited judgments on this aspect, it has beenindicated that such interpretation by a particular authorityhas by no means a controlling effect upon the courts and ifoccasion arises, has to be disregarded for cogent andBperspective reason and in a clear case of error, the courtwould without hesitation refuse to follow suchconstruction….”

C13.6. Another line of submissions on behalf of the appellant thattax incentives cannot be withdrawn retrospectively was also rejected bythe High Court with reference to the nature of benefits availed by theappellant. The High Court, inter alia, observed as follows:- “…..Cited judgments arose out of the matters where theDbeneficiary having not collected tax by virtue of acceptance ofexemption by the Government could not be saddled with liabilityretrospectively. In the present case, the situation is entirely differentin that the petitioners availed undue advantage at the time when itestablished the plant, which is being sought to be recovered afterits full establishment in business. It is not a case where theEpetitioners did not recover taxes and did not deposit dueto exemption. The cited judgments are therefore not applicableand are only the expression of the doctrine of impossibility andare based on reasons of equity which are not applicable in thiscase. Clause 13 of the RIPS-2003 clearly indicates that the benefitFwrongly given can be withdrawn after its being fully availed andthe petitioners availed the benefits with open eyes and fullknowledge. Such was not the position in the judgments cited onbehalf of the petitioners.”

G13.7. The High Court further examined the amendment dated30.09.2008 and found the same to be of no avail to the appellant; andpointed out the root cause of error in the decision of SLSC dated17.03.2011 where it had proceeded beyond the ambit of its power andauthority in the following words:- H

“As regards the contention that amendment made in Clause 7(iii)of RIPS-2003 vide notification dated 30.09.2008 protectedinvestments made under MOU signed during Resurgent RajasthanSummit, provided commercial production started by 31.03.2011also does not improve the case of the petitioners. Even thoughClause 7(iii) had protected MOUs signed during ResurgentRajasthan Summit but this amendment does not in any mannerconfer any additional power on the SLSC to grant more subsidythan what it otherwise wielded. On the date of aforesaidamendment, the SLSC was competent to grant subsidy to theextent of 50% and no more than that. The SLSC, however, wronglyaccepted the application of the petitioner-company under theproviso to Clause 7(i)(a) by incorrectly relying upon the decisionof the BIDI dated 01.04.2006 in raising the limit of subsidy upto75%. The SLSC at the maximum could have granted thetax subsidy to the extent of 50% and could have, till theBIDI 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 upthe case of the petitioner for consideration in its meetingheld on 17.03.2011. Thus obviously, it could not havegranted tax subsidy beyond 50%.”

13.8. Proceeding further, the High Court dealt with the submissionmade on behalf of the appellant that the respondents were bound by theprinciples of promissory estopple and rejected the same with two-foldobservations: one that there could be no estopple against the statute; andsecondly, that there was no such representation held out to the appellantby BIDI or SLSC as alleged. The High Court observed and held asunder:- “The argument that impugned revisional order constituted breachof the promise held out to the petitioner company which was bindingon the respondents by doctrine of promissory estoppel andequitable estoppel cannot be countenanced for the simplereason that there could be no estoppel against the statute.The BIDI did not direct the SLSC to grant 75% tax subsidy to thepetitioner-company. It merely directed that “the recently announced AB

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SUPREME COURT REPORTS

Acement package and RIPS-2003 shall be applicable on thecompany.” When the BIDI had itself not taken the decision anddirected for extending the recently announced cement packageas per RIPS-2003, that would mean that the provisions containedin RIPS-2003 would have to be adhered to and the case of thepetitioner-company would be dealt with in accordance therewith.BThe two provisions under which the petitioner-company could haveavailed tax subsidy upto 75% were the sub-clauses namely Sub-clause (vi) and (vii) of Clause 7 inserted vide notification dated02.12.2005 but both these sub-clauses were deleted videnotification dated 28.04.2006, merely two days after the petitioner-Ccompany submitted option for availing benefit thereunder on26.04.2006. Another provision under which the petitioner-companycould have availed tax incentive of 75% was proviso to Clause7(i)(a) and 7(i)(b) in which case the petitioner-company wasrequired to make an application to SLSC whereupon the SLSCcould have referred it to the BIDI. The BIDI remained in existenceDtill 07.06.2009 and till that time, no such reference was made bythe SLSC to it. There is therefore hardly any justification tocontend that any representation was held out to thepetitioner-company by the BIDI or the SLSC.”

E

(emphasis in bold supplied)

E

13.9. The High Court also referred to the Constitution Benchdecision in the case of Commissioner of Customs (Import), Mumbaiv. Dilip Kumar & Co. and Ors: (2018) 9 SCC 1 to point out thatwhere there is ambiguity in an exemption notification or exemption clause,the benefit of such ambiguity cannot be extended to the assessee; andFthe question whether assessee falls within the exemption clause, has tobe strictly construed. The High Court referred to the nature of benefitobtained by the appellant and reiterated the fact that case of the appellanthad not even been considered by BIDI. The High Court said,- “…In the present matter, case of the petitioners has not evenGbeen considered by the BIDI which merely relegated it to SLSC,as such the provisions of the RIPS-2003 are to be strictly adheredto. Unlike the exemption schemes where the assessee is notcollecting the taxes from the customer/purchaser, here in thepresent case of subsidy, the tax is collected from the customers/Hpurchasers and after depositing the same with the department, the amount to the extent of 50% or 75%, as per the entitlementcertificate, is refunded to the assessee.”

13.10. The High Court also reiterated the basic flaw in the approachof SLSC where it had misconstrued the decision of BIDI and observedthat the view taken by SLSC in extending unwarranted benefit to theappellant under the non-existing sub-clauses (vi) and (vii) of Clause 7 ofRIPS-2003 was not at all a possible view of the matter; and that theappellant ‘fully understood this situation’, which was evident from itsrepresentation made on 26.05.2006.

13.11. Yet further, the High Court examined the contention onbehalf of the appellant that every loss of revenue as a consequence ofan order of the subordinate authority cannot be treated as prejudicial tothe interest of the revenue and also referred to the cited decision in thecase 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 confinedto loss of tax alone. After extracting relevant passages from the citeddecision, the High Court applied the principles to the case at hand asfollows:- “Applying the ratio of the aforesaid judgment on the facts of thepresent case, it has to be accepted that due to erroneous readingof the order of the BIDI, which did not by itself direct for grant of75% tax subsidy but merely directed that “the recently announcedcement package and the RIPS-2003 shall be applicable on thecompany”, the SLSC could have extended only such tax subsidywhich it was competent to do. The SLSC by erroneouslymisconstruing the aforesaid decision of the BIDI extended thebenefit of sub- clause (vii) whereas the said clause stood deletedonly 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 thisphrase has been used in Clause 13 of the RIPS-2003.Although in a different way, allowing the petitioners to retain25% differential amount would tantamount to loss ofRevenue and gain of the petitioner-company at the cost ofState exchequer which is after all public money. The petitioner-company was entitled to grant of 50% tax subsidy only as on thedate on which the SLSC met to consider its case and resolved to AB

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Agrant subsidy of 75%, it was not competent for that. Money fromcoffers 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, theBHigh Court observed that the appellant was very much aware of theprovisions envisaged therein at the time of filing its application and itwas not the case of the appellant that the Government did not have theauthority to provide such a Clause in the Scheme or frame the policy inquestion nor was it demonstrated that Clause 13 violated any fundamentalCright or otherwise.

13.13. As regards validity of the action taken under Clause 13 ofRIPS-2003, the High Court observed that in the case at hand, the appellantstarted availing the benefit of 75% subsidy from the month of February2010 and availed the same until the month of February 2017; and as theDshow cause notice was sent within six months from February 2017, itwas well within the limitation period of five years, as provided underClause 13. The High Court held and concluded as follows:- “…Admittedly, in the present case, the petitioners started availingbenefits of the subsidy from February, 2010 and fully availed theEbenefits of subsidy to the extent of 75% up to February, 2017.Show cause notice for revising the order under Clause 13 of theRIPS-2003 was issued to the petitioner-company by theGovernment on 10.07.2017, which was well within the period offive years, given in Clause 13(b) of the RIPS-2003. In fact, theshow cause notice was issued/received within six months fromFFebruary, 2017, up to which time, subsidy was fully availed by thepetitioner-company. Therefore, the argument that exercise ofpower of revision within five years after the expiry of seven yearsduring which benefit was availed by the petitioner-company, makesthe said provision as unreasonable, arbitrary, oppressive andGviolative of fundamental rights of the petitioners, has no merit.”

14. The order so passed by the High Court dismissing the writpetition and the action of the respondents recalling 25% part of the subsidyhave been questioned in this appeal.

Rival Contentions

The Appellants

15. Assailing the orders passed by the High Court as also theAdditional Chief Secretary, learned senior counsel for the appellants haspainstakingly taken us through the facts of the case and has madeelaborate submissions that grant of 75% subsidy to the appellant companyhad been valid in law and justified on facts.

15.1. The learned senior counsel would submit that the companyhad applied to BIDI for a customized package of incentives for theproposed cement plant at Kotputli; and this application was disposed ofby BIDI on 01.04.2006, where it was directed that the recently announcedpackage be granted to the company and also the RIPS-2003 benefits.While pointing out that this package, providing for 75% Sales Tax subsidyto newly established or substantially expanded cement undertaking, wasintroduced on 02.12.2005 with insertion of sub-clauses (vi) and (vii) toClause 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 togrant subsidy to the extent of 75%, of the tax payable and deposited, toany industrial undertaking with an investment of over Rs. 400 croresunder the proviso to Clauses 7(i)(a) and 7(i)(b) of the Scheme; and sucha decision of BIDI in relation to the appellant company had rightly beenimplemented by SLSC.

15.1.1. The learned counsel would also submit that subsidy underClauses 7(vi) and 7(vii) consisted of 45% upfront subsidy, which waspayable straightaway without being dependant on the wages and interestamounts spent by the undertaking; and the balance 30% subsidy consistedof wage and interest subsidy but, in contrast, the subsidy granted to theappellant did not include any upfront subsidy; rather it only consisted of75% wage and interest subsidy and hence, it remains beyond the cavilthat the subsidy so granted to the appellant had been under the provisoto Clauses 7(i)(a) and 7(i)(b) of RIPS-2003, particularly when it did notinclude any upfront subsidy and only consisted of 75% wage and interestsubsidy. According to the learned counsel, the Minutes of SLSC meetingdated 17.03.2011 make it crystal clear that the decision to grant 75%subsidy was the decision of BIDI and not that of SLSC.

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A15.2. The learned senior counsel has also invoked the principlesof Contemporanea Expositio with the submissions that in all theexchanges at the relevant time, it was plainly and clearly understood bythe authorities concerned that the appellant company was entitled tosubsidy to the extent of 75% in the true interpretation of the provisionsBof 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 thelater stage. The learned counsel has argued, while placing reliance onthe decision of this Court in Spentex Industries Ltd v. C.C.E.: (2016)1SCC 780, that SLSC’s understanding of the record and the factualposition deserves to be accepted by the Court on the doctrine ofCContemporanea Expositio.

15.2.1. The learned senior counsel has further submitted thatthough it was expressly admitted in the Show Cause Notice dated10.07.2017 that BIDI did take a decision on 01.04.2006, but it was allegedthat BIDI did not expressly grant 75% subsidy; and the same view isDreflected in the revisional order, which has been approved by the HighCourt. However, according to the learned counsel, this view would renderthe words ‘recently announced cement package’ in BIDI’s decisiondated 01.04.2006 completely meaningless; and this view is also contraryto the contemporaneous understanding of the SLSC, as set out in theEMinutes of its meeting dated 17.03.2011. The learned counsel wouldmaintain that the words of BIDI, giving ‘recently announced cementpackage’ to the company, could only mean granting of 75% subsidy,though it was not under or in terms of Clauses 7(vi) or 7(vii) but, wasrelatable 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 theFappellant made its entire investment of over Rs.1,600 crores on its Kotputliplant only after the decision of BIDI dated 01.04.2006 and after enteringinto the MoU dated 30.11.2007 in Resurgent Rajasthan Summit underwhich, the respondent State Government gave a commitment to extendall concessions and benefits which were available under RIPS-2003.GThe learned counsel would argue that the decision of BIDI dated01.04.2006 and commitment of the State Government dated 30.112007clearly attracted the doctrine of promissory estoppel against therespondents but the High Court has rejected this contention only on theground that promissory estoppel is of no avail against a statute, which isa patent error on part of the High Court because RIPS-2003 has been aH

totally non-statutory Scheme. According to the learned counsel, theappellant is entitled to succeed on the ground of promissory estoppelalone; and the respondents cannot deny the entitlement of appellant toavail subsidy to the extent of 75% of the Sales Tax/VAT payable anddeposited, as rightly allowed and rightfully availed.

15.4. It has further been submitted by the learned senior counselthat BIDI was a high-powered body presided over by the Chief Ministerand its decision could not have been revised under Clause 13 of RIPS-2003. According to the learned counsel, only the decision of SLSC couldbe revised under Clause 13 of RIPS-2003 but, in the present case, SLSConly implemented BIDI’s decision dated 01.04.2006 and did not takeany decision on its own to grant subsidy and hence, SLSC’s directionsdated 17.03.2011 were not open to revision under Clause 13. The learnedsenior counsel would submit that the certificates in question had rightlybeen issued by the SLSC acting in terms of the decision of BIDI, whichremains binding on the respondents and, therefore, the respondents arenot entitled to suggest any different interpretation after the subsidy inquestion had already been availed of.

15.5. In regard to the scope of such powers of revision, thelearned senior counsel has referred to the decision of this Court in thecase of Malabar Industries Co. Ltd. v. Commissioner of IncomeTax, Kerala State.: (2002) 2 SCC 718 and has submitted that Clause13 of RIPS-2003, which confers power on the State Government torevise 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 theadjudication order constitutes one of the possible views, then no revisionwould lie. According to the learned counsel, the view taken by SLSC, asset out in its Minutes of the meeting dated 17.03.2011, had certainlybeen a possible view and, therefore, in any event, no proceedings forrevision under Clause 13 of RIPS-2003 were maintainable against thisdecision of SLSC.

15.6. The learned senior counsel has also argued, while relyingon various decisions, including that of this Court in Birla Jute &Industries Ltd. v. State of M.P.: 119 STC 14 (S.C.) and that ofRajasthan High Court in Commissioner, Commercial Taxes,Rajasthan, Jaipur and Anr. v. Rajasthan Taxation Tribunal andOrs.: 38 Tax Up-date 131, that when the incentives granted to theassessee had been fully availed of and the incentive period had already A

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Abeen completed, the incentives cannot thereafter be revoked or recalledwith retrospective effect.

15.7. The learned senior counsel has also questioned the levy ofinterest with the submissions that the grant of 25% subsidy has beenrevoked not because of any default committed by the appellant but onlyBbecause of a sudden change of opinion by the respondents after abouteight years. In this fact situation, according to the learned counsel, Clause10 of RIPS-2003, authorising levy of interest, has no application at all.With reference to the decisions in India Carbon Ltd. & Ors. v. State ofAssam.: (1997) 6 SCC 479, Maruti Wire Industries Pvt. Ltd. v.Sales Tax Officer.: (2001) 3 SCC 735 and J.K. Synthetics Ltd. v.CC.T.O.: (1994) 4 SCC 276, the learned counsel has contended that aprovision for charge of interest has to be construed strictly like thecharging provision for levy of a tax; and unless the conditions of theprovision for levy of interest are strictly fulfilled, no interest can becharged. The conditions being not fulfilled, the learned counsel wouldDurge, interest cannot be charged in the present case.

The Respondents

16. The learned Additional Advocate General, appearing for therespondents, has vehemently countered the submissions made on behalfof the appellants while maintaining that the appellant company wasEentitled to subsidy only to the extent of 50% of Sales Tax/VAT payableand deposited; and the appellant is bound to refund the excess subsidy tothe tune of 25% that had been wrongfully obtained under the erroneousdecisions of SLSC.

16.1. In an equally detailed reference to the chronicle of facts,Fthe learned AAG has submitted that the special cement packageannounced on 02.12.2005 came to be incorporated in RIPS-2003 byinsertion of sub-clauses (vi) and (vii) to Clause 7; and this was the positionobtainable on 01.04.2006 when BIDI took the decision on the prayermade by the company; and hence, the decision of BIDI dated 01.04.2006Gto grant subsidy could only have been with respect to the said sub-clauses(vi) and (vii) of Clause 7 because the specific provision always overridesthe general one, as explained in J.K. Cotton Spinning & Weaving MillsCo. Ltd. v. State of U.P. : (1961) 3 SCR 185. Thus, according to thelearned AAG, the appellants herein could have sought, if at all, the reliefflowing from the said sub-clauses (vi) and (vii) of Clause 7 but, thoseH

sub-clauses were consciously deleted by the State Government on28.04.2006; and being aware of this position, the appellants haveabandoned 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 theproviso to Clauses 7(i)(a) and 7(i)(b) of RIPS-2003, the learned AAGhas contended that the general powers under the said proviso could nothave been exercised by BIDI on 01.04.2006, because on that date, thesaid sub-clauses (vi) and (vii) of Clause 7 were in existence and theyco-related with cement units alone. The learned AAG would submit thatthe appellant company is a cement unit and the contemporaneouscorrespondence amply demonstrates that even the appellants construedat the relevant point of time that the subsidy was given under the saidsub-clauses (vi) and (vii) of Clause 7 of RIPS-2003; and only in order tocircumvent the deletion of the said sub-clauses (vi) and (vii), the appellantsstarted to claim subsidy under proviso to Clause 7(i)(a) and 7(i)(b) ofRIPS-2003. According to the learned AAG, the claim so made by theappellant had only been an afterthought and cannot be countenanced,for it would result in conferring a benefit that had ceased to exist post28.04.2006. With repeat reference to the Minutes of BIDI meeting dated01.04.2006, the learned AAG has submitted that not a single documentexisted at the relevant point of time, i.e., around 01.04.2006, which couldeven remotely suggest that the subsidy was granted in terms of provisoto Clauses 7(i)(a) and 7(i)(b) of RIPS-2003.

16.2. While countering other parts of submissions, the learnedAAG has submitted that the doctrine of Contemporaneous Expositioapplies to ancient statutes and has no application to the present case.The learned AAG would further submit that even if this doctrine is heldapplicable to current statutes, it would only apply if one particular viewhas been taken by the executive and there is ambiguity in the constructionof the clauses in question but, in the present case, there is no ambiguitywith regard to construction of the Scheme. The learned AAG would yetfurther argue that this doctrine would not apply when an administrativebody had granted exemption on an erroneous view of the matter becausethe competent administrative body is entitled to revoke such a decisionafter being apprised of the correct facts.

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A16.3. The learned AAG has further submitted that the MoUsigned on 30.11.2007 clearly stated about grant of the incentives underRIPS-2003 as available from time to time and, for the said sub-clauses(vi) and (vii) of Clause 7 having been withdrawn, the understandingcould not have gone beyond allowing 50% subsidy, as available underthe Scheme on that date. Thus, according to the learned AAG, even theBprinciples of promissory estopple are not applicable to the present caseinasmuch 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 meetingdated 01.04.2006.

16.4. The learned AAG would lay emphasis on submissions thatCthe State Government has rightly exercised the power of revision to setaside the order of SLSC, which had erroneously granted 75% subsidy,even though the related provisions in the Scheme stood withdrawn on28.04.2006; and that the grant of subsidy by SLSC will not create anyissue of estoppel because it was a wrongful grant and the same wasDcorrected in exercise of revisional powers reserved under the Scheme.

16.4.1. It has also been argued that the revisional authority hasclearly exercised the power under Clause 13 of RIPS-2003 within theperiod of five years prescribed therein from the last date of availing thebenefit. According to the learned AAG, the last date of availing the benefitEby the appellant company being in the month of February 2017, therevisional order passed on 12.03.2018 remains well within the stipulatedperiod under Clause 13(b) of RIPS-2003.

16.5. Levy of interest has also been justified on behalf of therespondents with reference to the terms and conditions of RIPS-2003Fand with the submissions that the appellant company is bound to refundthe amount wrongfully received while also compensating the Governmentin terms of interest stipulated in the Scheme or at least as agreed to inthe undertaking submitted to the Government.

16.5.1. It has been argued by the learned AAG that the subsidywas in the form of a contract between the State Government and theGappellant company and hence, the appellant is bound by the undertakingthat if any excess benefit is availed, the same shall be returned with12% per annum interest. The learned AAG has submitted that even onthe principles embodied in Section 72 of the Indian Contract Act, anybenefit received by mistake must be returned with interest so as to avoidHunjust enrichment.

Points for determination

17. For what has been noticed hereinabove, the basic point arisingfor determination in this case is the extent to which the appellant companywas entitled to Sales Tax/VAT subsidy under RIPS-2003 i.e., as towhether the company was entitled to the subsidy to the extent of 75% oftax payable and deposited or was entitled only to 50%? For effectualdetermination of this basic and principal point, we need to examine thepurport and effect of the decision of BIDI dated 01.04.2006. The otherequally relevant points arising for determination are: as to whether theview taken by SLSC in its initial decisions to grant 75% subsidy to theappellant on the basis of the decision of BIDI had been a possible viewof the matter; as to whether the doctrine of Contemporanea Expositioapplies to this case and inures to the benefit of appellant; as to whetherthe respondent cannot recall 25% subsidy on the principles of promissoryestopple; as to whether the State Government was entitled to exercisethe powers of revision under Clause 13 of RIPS-2003 and has rightlyexercised such powers; and what is the effect of the fact that 75%subsidy had already been availed by the appellant before the decision inthat regard was sought to be questioned and re-opened by the respondents.Lastly, if the decision of State Government to recall 25% component ofavailed subsidy is upheld, the point still requiring consideration would beas to whether the State is justified in seeking to recover interest @ 18%per annum?

18. We have given anxious consideration to the points so arisingin 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 ofsubmissions on behalf of the appellant is that granting of subsidy to theextent of 75% was permissible under the proviso to Clauses 7(i)(a) and7(i)(b) of RIPS-2003 and the BIDI could have and indeed granted suchsanction in its favour. According to the appellant, the decision to grant75% subsidy was taken by BIDI on 01.04.2006 while SLSC onlyimplemented the same. It has also been suggested that the companyapplied for a customised package of incentives and the decision of BIDIought to be equally viewed in the light of the provision authorising grant B

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Aof customised package. In our view, these submissions suffer from severalshortcomings, where a fine but well-defined line of separation betweenthe resolution/decision of BIDI dated 01.04.2006 and the decision ofSLSC dated 17.3.2011, is ignored.

19.1. As noticed, the application earlier made by the companyBwas considered in the Pre-BIDI meeting dated 28.03.2006 and therecommendations therein had only been to the effect that the cementpackage recently announced and RIPS-2003 should be applicable to thecompany. The decision of BIDI in its meeting dated 01.04.2006 hadalso been specifically in line of the Pre-BIDI recommendations where itwas directed that ‘the recently announced cement package and RIPS-C2003 will be applicable on the company’. At the given stage of Pre-BIDI recommendations dated 28.03.2006 and the decision of BIDI dated01.04.2006, the aforesaid sub-clauses (vi) and (vii) of Clause 7 of RIPS-2003 were in existence and, in fact, the phrase “recently announcedcement package” precisely referred to the said provisions of sub-clausesD(vi) and (vii), which had been inserted to Clause 7 of RIPS-2003 on02.12.2005. Moreover, even when BIDI stated that ‘recently announcedcement package’ would be applicable to the company, it was coupledwith the requirement of applicability of the Scheme, i.e., RIPS-2003.After the aforesaid decision of BIDI dated 01.04.2006, the company, inits letter dated 26.04.2006 to the Commissioner of Industries, soughtEregistration in terms of sub-clause (vii) of Clause 7 of RIPS-2003 for anew cement plant/captive power plant, intended to be established atKotputli. However, there had been significant developments/revisions inrelation to RIPS-2003 after the said decision of BIDI dated 01.04.2006and the application of the company dated 26.04.2006, where the said Fsub-clauses (vi) and (vii) of Clause 7 were specifically deleted from theScheme on 28.04.2006. Noticeably, no decision had been taken by SLSCto 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 bythe 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 BIDIGdated 01.04.2006 whose initial part, i.e., ‘recently announced cementpackage’ became redundant with the aforesaid amendment of Clause7 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 thecompetent authority, to sanction subsidy under RIPS-2003, had only beenH

SLSC in terms of Clause 6 thereof. Though it has been strenuouslyargued by the learned senior counsel for the appellant that BIDI was ahigh-powered body with the Chief Minister being its Chairperson and ithas also been asserted that the Secretary Finance had equally been aMember of BIDI as also SLSC, but, we are afraid, these submissions donot advance the cause of the appellant in any manner. Even if BIDI hadbeen a high-powered body, its resolutions or even directives could haveonly been read in conformity with the provisions applicable to anyparticular proposition; and the fact that one of the Secretary had been amember of both BIDI and SLSC, the resolution of BIDI could not havebeen imported into the decision making process of SLSC beyond whatwas 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 remainsunacceptable for a variety of reasons. It is apparent on the face of therecord that neither in Pre-BIDI’s recommendation dated 28.03.2006 norin the final decision of BIDI dated 01.04.2006, there had at all been anyproposition for invocation and application of the said proviso to Clauses7(i)(a) and 7(i)(b) of RIPS-2003. The application made on behalf of thecompany had precisely been with reference to the contents of the saidsub-clauses (vi) and (vii) of Clause 7 seeking 75% subsidy, 45% beingallowable upfront and remaining 30% in the form of interest and wage/employment subsidy, with cap of interest subsidy to the extent of 5% ofthe documented rate of interest. There had never been any proposalbefore BIDI in the case of the appellant company to invoke the saidproviso to Clauses 7(i)(a) and 7(i)(b) of RIPS-2003 so as to increase themaximum limit of subsidy to 75%. Proceeding ahead of the decision ofBIDI dated 01.04.2006, the fact that the company was consciouslyseeking the benefit under sub-clause (vii) of Clause 7 of RIPS-2003 isagain evident on the face of the record on a bare look at the contents ofits application dated 26.04.2006. No decision on this application wastaken; and within two days of making of this application, the StateGovernment amended RIPS-2003 and deleted the aforesaid sub-clauses(vi) and (vii) of Clause 7. The company made a desperate attempt topersuade the State Government to withdraw such amendment of deletionof sub-clauses (vi) and (vii) of Clause 7 of the Scheme and to grantbenefit of those deleted provisions by way of its representation dated26.05.2006 but, the communication thereafter sent on 17.06.2006 to thecompany by BIP was again to the effect that the ‘company would be AB

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Aeligible for the concessions as contained in RIPS-2003’. Even in theMoU dated 30.11.2007, what the State Government undertook was toextend support in the form of providing incentives as permissible underRIPS-2003 together with additional support as per the prevalent policy.

20.1. In our view, whether each of the aforesaid backgroundBaspects is seen in isolation or whether all these aspects are put together,it cannot be deduced, by any stretch of imagination, that a consciousdecision was ever taken by BIDI at any stage that the appellant companywould be extended any differential and advantageous treatment byallowing 75% subsidy in place of the ordinarily allowable 50%.

C20.2. 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 dated17.03.2011 while dealing with the application made by the appellant on21.02.2010. Significantly, even in the said application, what the appellantclaimed had only been the concession in terms of sub-clause (vi) ofClause 7 of RIPS-2003. The claim precisely was that the benefits mayDbe 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 ofthe appellant to the decision of BIDI and, for that matter, read as ifBIDI’s decision had been to grant subsidy to the extent of 75% in termsof the said proviso to Clauses 7(i)(a) and 7(i)(b) of RIPS-2003. We areEunable to find any rationale and any logic that SLSC, in its meeting dated17.03.2011, imported the said proviso to Clauses 7(i)(a) and 7(i)(b) ofRIPS-2003 into the decision of BIDI dated 01.04.2006 and then, appliedsuch incorrect reading of BIDI’s order in its decision making process soas to grant 75% subsidy. The SLSC, who had the power to grant subsidyupto 50% could not have granted beyond this limit by unwarrantedFapplication of the decision of BIDI dated 01.04.2006 and that too withits misconstruction; by reading into it such powers, which had neitherbeen invoked nor exercised by BIDI. The decision of SLSC dated17.03.2011 and its repeat decision dated 24.11.2011, turn out to be whollyperverse and could only be disapproved.G

21. Taking up the question if the decision of BIDI is relatable tothe grant of a customised package, the answer would be in the negativewithout requiring much discussion because such grant of customisedincentive package for any particular company or establishment wasgoverned by Clause 6-A of RIPS-2003 that had an entirely differentHprescribed authority in the form of a Committee, who was supposed to examine individual cases and could have made recommendation forsanction of the customised incentive package through BIDI. In the entirelength of dealings in this matter, we are unable to find any such decisionby the Committee referred to in Clause 6-A and any recommendationfor customised incentive package in relation to the appellant. The decisionof BIDI dated 01.04.2006 also does not refer to nor is relatable with anycustomised 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., on02.12.2005), the State Government thought it proper to announce anentirely different treatment to cement units by extending 75% subsidy tothem with a different methodology and hence, inserted sub-clauses (vi)and (vii) to Clause 7 of RIPS-2003 but, it did not continue with thatpolicy and deleted the said sub-clauses on 28.04.2006. It remains tritethat extending of any incentive in the form of exemption, rebate,concession or subsidy is a matter of the policy of the Government andfor that matter, fiscal policy. Ordinarily, such framing of the policy remainswithin the domain of the Government; and the Government is entitled toframe 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 underRIPS-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 considerationof the application of the appellant, no benefit could have been claimedunder a non-existent policy.

23. In the given set of facts and circumstances, in our view, theAdditional Chief Secretary has rightly held that SLSC’s decision dated17.03.2011 and its repeat decision dated 24.11.2011 had been erroneouson the very fundamentals where it was assumed as if BIDI had alreadysanctioned 75% subsidy to the company. The High Court has alsoindependently examined the entire matter in requisite details and we areunable to find any infirmity when the High Court has held that the appellantcompany was only entitled to subsidy to the extent of 50% of the taxpayable 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 twoviews were possible and the SLSC in its earlier decision had taken one AB

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Aof the views, then the same could not have been interfered with, has itsown shortcomings.

24.1. In the first place, the possibility of so called other view (thewrong one) could arise only if SLSC is held entitled to simply turn itselfaway from the applicable provisions of the Scheme while ignoring theBfact that sub-clauses (vi) and (vii) of Clause 7 had already been deleted;and is simultaneously conferred with dubious discretion to interpret thedecision of BIDI in whatever manner it would chose to. Obviously, sucharbitrary authority or unfettered discretion is not available to any decisiontaking body; and could least be countenanced for a responsible body ofthe Government, like SLSC, who deals with public exchequer. HavingCexamined the record in its totality, we have not an iota of doubt that theinitial decision of SLSC had not only been erroneous but had been highlyperverse, reaching the level of absurdity. The view of SLSC cannot beregarded as a possible view of the matter from any standpoint or anyangle.D

24.2. Apart from the above, even if it be assumed for the sake ofargument that there was any ambiguity in the applicable provisions ofRIPS-2003 or the decision of BIDI, we are clearly of the view that thebenefit of any such ambiguity could not have been extended to theappellant company. If at all there had been any ambiguity, the benefitEthereof would have only gone in favour of revenue for the simple reasonthat under the provisions in question, the State had agreed, by way ofincentive, to part with a portion of its revenue. Such provisions, whetherin the statute or in the non-statutory document, by their very nature, aresubject to strict interpretation so far as their applicability is concerned.The principles of law in this regard are well settled with the ConstitutionFBench decision of this Court in the case of Dilip Kumar & Co. (supra).

Recently, in the case of Ramnath & Co. v. Commissioner of IncomeTax: Civil Appeal Nos.2506-2509 of 2020 decided on 05.06.2020,while dealing with an incentive provision contained in Section 80-O ofthe Income Tax Act, 1961[30], this Court has taken note of the principlesGlaid down in Dilip Kumar & Co. and has held, inter alia, as under :- “17.3. In view of above and with reference to several otherdecisions, in Dilip Kumar & Co., the Constitution Bench summedup the principles as follows:- H30 Hereinafter referred to as ‘the Act of 1961’

“66. To sum up, we answer the reference holding as under:

66.1. Exemption notification should be interpretedstrictly; the burden of proving applicability would be on theassessee to show that his case comes within the parametersof the exemption clause or exemption notification.

66.2. When there is ambiguity in exemption notificationwhich is subject to strict interpretation, the benefit ofsuch ambiguity cannot be claimed by the subject/assessee and it must be interpreted in favour of theRevenue. 66.3. The ratio in Sun Export case is not correctand all the decisions which took similar view as in SunExport case stand overruled.”

17.4. Obviously, the generalised, rather sweeping, proposition statedin the case of Sun Export Corporation (supra) as also in othercases that in the matters of taxation, when two views are possible,the one favourable to assessee has to be preferred, standsspecifically disapproved by the Constitution Bench in Dilip Kumar& Co. (supra). It has been laid down by the Constitution Bench inno uncertain terms that exemption notification has to be interpretedstrictly; the burden of proving its applicability is on the assessee;and in case of any ambiguity, the benefit thereof cannot be claimedby the subject/assessee, rather it would be interpreted in favourof the revenue.

19. Without expanding unnecessarily on variegated provisionsdealing with different incentives, suffice would be to notice thatthe proposition that incentive provisions must receive “liberalinterpretation” or to say, leaning in favour of grant of relief tothe assessee is not an approach countenanced by this Court. Thelaw declared by the Constitution Bench in relation to exemptionnotification, proprio vigore, would apply to the interpretation andapplication of any akin proposition in the taxing statutes forexemption, deduction, rebate et al., which all are essentially theform of tax incentives given by the Government to incite orencourage or support any particular activity……”

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24.3. In view of the above, contention on the part of the appellantabout existence of any ambiguity in the matter and extending the benefitof ambiguity to itself could only be, and is, rejected.

Doctrine of Contemporanea Expositio: if applicable?

25. The learned senior counsel for the appellant has endeavouredBto persuade us that SLSC’s understanding of the record and factualposition deserves to be accepted on the doctrine of ContemporaneaExpositio. In our view, neither this doctrine could be invoked in thepresent case nor the principles related therewith could be applied.

25.1. The referred doctrine is embodied in the maximC‘Contemporanea exposition est optima et fortissimo in lege’ whichmeans that the best way to construe a document is to read it as it wouldhave read when made. The doctrine has been tersely explained by thisCourt in the case of Desh Bandhu Gupta v. Delhi Stock ExchangeAssociation Ltd.: AIR 1979 SC 1049 in the following terms (at p.D1054) :

“… The principle of contemporanea exposition (interpreting astatute or any other document by reference to the exposition ithas received from contemporary authority) can be invoked thoughthe same will not always be decisive of the question of construction.E(Maxwell 12th Edn. p. 268). In Crawford on Statutory Construction(1940 Edn.) in para 219 (at pp. 393-395) it has been stated thatadministrative construction (i.e. contemporaneous constructionplaced by administrative or executive officers charged withexecuting a statute) generally should be clearly wrong before it isoverturned; such a construction, commonly referred to as practicalFconstruction, although not controlling, is nevertheless entitled toconsiderable weight; it is highly persuasive. In Baleshwar Bagartiv. Bhagirathi Dass I.L.R. 35 Cal. 713 the principle, which wasreiterated in Mathura Mohan Sana v. Ram Kumar Saha I.L.R. 43Cal. 790 has been stated by Mukerjee J. thus:

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GIt is a well-settled principle of construction that courts inconstruing a statute will give much weight to the interpretationput upon it, at the time of its enactment and since, by thosewhose duty it has been to construe, execute and apply it. I donot suggest for a moment that such interpretation has by anymeans a controlling effect upon the Courts; such interpretationHmay, if occasion arises, have to be disregarded for cogent and persuasive reasons, and in a clear case of error, a Court wouldwithout hesitation refuse to follow such construction.”

25.2. Some of the basic features of this doctrine ofContemporanea Expositio and its applicability as also non-applicability,as explained with reference to the decided cases in the Principles ofStatutory Interpretation by Justice G.P. Singh[31], could also be usefullyextracted as under:- “Usage or practice developed under a statute is indicative of themeaning ascribed to its words by contemporary opinion and incase of an ancient statute is an admissible external aid to itsconstruction.[32] Referring to Magna Carta, Lord Coke said: “Thisand the like were the forms of ancient Acts and graunts, and theancient Act and graunts must be construed and taken as the lawwas holden at that time when they were made”.[33] ..… The doctrineof stare decisis may also be applied when the law is settled in aState for over 100 years by considered view of the High Court ofthat State.[34]

…..Even if the persons who dealt with the Act understoodit in a particular manner, that does not prevent the court in givingto the Act its true construction.[35]...The Supreme Court has refusedto apply the principle of Contemporanea Expositio to theTelegraph Act, 1885[36] and the Evidence Act, 1872.[37] Further, aninterpretation to a statute received from contemporary authorityis not binding upon the Courts and may have to be disregarded ifsuch 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 theinterpretation of a statute or even document by referring to the expositionthat the same had received from competent authority at the relevant 31 14th Edition, pp.375-376

32 Optimus legume interpres est consuetudo; Contemporanea exposition est Optima etfortissimo 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

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

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Apoint of time. This doctrine is also relatable to the doctrine of staredecisis whereunder, an exposition standing for a long length of time, isconsidered to be a law settled and is applied as such. As regards thecontemporaneous construction placed by the administrative or executiveofficers charged with executing statute, the Courts lean in favour ofattaching considerable weight to the same but, it cannot be laid downBthat understanding of a particular administrative or executing authorityis always fait accompli and has to be applied even if erroneous. Thetrue principle is just to the contrary: that is, if a construction placed bythe contemporary authority is found to be clearly wrong or erroneous,the same deserves to be disregarded.C

25.4. In the case of Spentex Industries (supra), the questionwas as to whether the manufacturer/exporter was entitled to rebate ofexcise duty paid both on the inputs and on the manufactured product,when the excise duty was paid on the manufactured product and also onthe input, which had gone into manufacturing and the manufacturedDproduct was exported. It was in the context of the aforesaid questionthat this Court, in the process of interpretation of the relevant CentralExcise Rules, 2002 and the notification thereunder, referred toContemporanea Expositio in regard to the notifications issued by theGovernment in giving effect to the Rule in question; and it was observedthat when the Centre, who had framed the Rules as also issuedEnotifications, had been of the opinion that rebate was to be allowed onboth forms of excise duty, the Government was bound thereby. Thisdecision does not even remotely apply to the case at hand and theerroneous decisions of SLSC are not fait accompli merely becauseSLSC chose to put a wrong construction on the decision of BIDI. On Fthe facts and in the circumstances of the present case, invocation of thedoctrine of Contemporanea Expositio on behalf the appellant remainsentirely inapt and the contentions in that regard could only be rejected.

25.5. That the doctrine of Contemporanea Expositio cannot beinvoked in the case of present nature would also be clear by visualisingGthe result, if at all this doctrine is applied. It is not far to seek that if at allthis doctrine is applied, the consequence would be that howsoevererroneous a decision by the executive or administrative authority maybe, once it emanates from the understanding of some of the officers orauthorities, the same would acquire immunity from scrutiny for all timeto come. Such has never been the intent of the doctrine ofHContemporanea Expositio nor could such a result be countenanced.

Whether principles of Promissory Estoppel apply?

26. Another line of submissions on behalf of the appellant basedon the principles of promissory estoppel remains equally baseless. Ofcourse, while rejecting such a contention, the High Court observed thatthis doctrine cannot be invoked against a statute but, at the same time,the High Court also categorically found that in fact, no representationwas 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 butthat hardly makes a difference looking to the nature of purport of thisScheme whereby the State was ultimately to extend the benefit byreducing its intake of the amount of Sales Tax/VAT; and such an intakeis indeed governed by the statute. This apart, as noticed hereinbefore, itcannot be deduced that a conscious decision was ever taken at anystage or at any level that the appellant was to be extended any differentialand advantageous treatment by SLSC and was to be allowed 75% subsidyin place of the ordinarily allowable 50%. BIDI never issued any directionto SLSC to grant 75% subsidy to the appellant. It merely directed that“the recently announced cement package and RIPS-2003 shall beapplicable on the company.” Obviously, the case of the appellant wasrequired to be dealt with by SLSC only in accordance with the applicableprovisions contained in RIPS-2003. The provisions under which theappellant 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 twodays after the company submitted the application dated 26.04.2006 foravailing benefit thereunder. The repeat request of the company towithdraw such deletion and to allow benefit under the said deleted sub-clauses, under its representation dated 26.05.2006, did not meet withany success and the only response of the Government through BIP wasto the effect that the ‘company would be eligible for concessions ascontained in RIPS-2003’. Even in the MoU dated 30.11.2007, whatthe State undertook was only to provide incentives as permissible underRIPS-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 SLSCfor that purpose whereupon SLSC could have referred it to BIDI but,neither any such application was made by the appellant nor any suchmatter 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 atany stage, any such representation was made by the State Governmentwhich led the company to alter its position.

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A26.2. Besides the above, when the decisions of SLSC dated17.03.2011 and 24.04.2011 turn out to be unauthorised and not in accordwith the applicable provisions of the Scheme, the principles of promissoryestopple cannot be invoked for their enforcement. In this regard, referenceto the following passage from the decision of this Court in the case ofDr. Ashok Kumar Maheshwari v. State of U.P. & Anr.: (1998) 2BSCC 502 would suffice :- “22. Whether a promissory estoppel, which is based on a “promise”contrary to law can be invoked has already been considered bythis Court in Kasinka Trading v. Union of India : (1995) 1 SCC274 as also in Shabi Construction Co. v. City & IndustrialDevelopment Corpn.: (1995) 4 SCC 301 wherein it is laid downthat the rule of “promissory estoppel” cannot be invokedfor the enforcement of a “promise” or a “declaration” whichis contrary to law or outside the authority or power of theGovernment or the person making that promise.”

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(emphasis in bold supplied)

26.3. Even otherwise, when the decision of SLSC, or any decisionof any authority for that matter, was subject to revision by the Governmentin terms of Clause 13 of the Scheme, it cannot be suggested that the saidpower of revision cannot be invoked. In other words, the principles ofpromissory estoppel cannot operate against such revisional power of theGovernment. Hence, this part of the contentions also deserves to be,and is, rejected.

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Exercise of powers of revision by the State Governmentunder Clause 13F

27. For the self-same reasons aforesaid, the contentions urged onbehalf of the appellant against the exercise of power of revision underClause 13 of RIPS-2003 with reference to the decision of this Court inthe case of Malabar Industrial Co. (supra) turn out to be totally devoidof substance.

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27.1. In Malabar Industrial Co. (supra), this Court construedSection 263 of the Act of 1961 wherein too, the basis for exercise ofpower of revision by the Principal Commissioner or Commissioner isakin to Clause 13 of RIPS-2003 but with a little difference. Under Section263 of the Act of 1961, the Commissioner concerned could exercise theHpower of revision, if he considers that the order passed by the Assessing Officer is ‘erroneous insofar as it is prejudicial to the interests ofthe Revenue’ whereas in Clause 13 of RIPS-2003, such power could beexercised by the State Government in Finance Department in relation toan order passed by any screening committee ‘wherever it is found tobe 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 conjunctionwith the expression ‘erroneous’ for the order passed by the AssessingOfficer. In fact, such a process of interpretation is not even required inthe present case because the two aspects, i.e., ‘erroneous’ and‘prejudicial to the interest of Revenue’ have already been stated withthe conjunction “and” in Clause 13 of the Scheme.

27.1.2. It is also noteworthy that even in the case of MalabarIndustrial Co. (supra), this Court, ultimately, upheld the exercise ofjurisdiction by the Commissioner under Section 263(1) of the Act of1961, particularly when it was found that there was no material to supportthe view taken; and the Assessing Officer had failed to make the requisiteenquiry, rather the questioned order was found to have been passed bythe 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” hasto be read in conjunction with an erroneous order passed by theAssessing Officer. Every loss of revenue as a consequence of anorder of the Assessing Officer cannot be treated as prejudicial tothe interests of the Revenue, for example, when an Income TaxOfficer adopted one of the courses permissible in law and it hasresulted in loss of revenue; or where two views are possible andthe Income Tax Officer has taken one view with which theCommissioner does not agree, it cannot be treated as an erroneousorder prejudicial to the interests of the Revenue unless the viewtaken by the Income Tax Officer is unsustainable in law. It hasbeen held by this Court that where a sum not earned by a personis assessed as income in his hands on his so offering, the orderpassed by the Assessing Officer accepting the same as such willbe erroneous and prejudicial to the interests of the Revenue. (SeeRampyari Devi Saraogi v. CIT: (1868) 67 ITR 84 (SC) and inTara Devi Aggarwal v. CIT: (1973) 88 ITR 323.)

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SUPREME COURT REPORTS

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A11. In the instant case, the Commissioner noted that the IncomeTax Officer passed the order of nil assessment without applicationof mind. Indeed, the High Court recorded the finding that theIncome Tax Officer failed to apply his mind to the case in allperspective and the order passed by him was erroneous. It appearsthat the resolution passed by the Board of the appellant CompanyBwas not placed before the Assessing Officer. Thus, there was nomaterial to support the claim of the appellant that the said amountrepresented compensation for loss of agricultural income. Heaccepted the entry in the statement of the account filed by theappellant in the absence of any supporting material and withoutCmaking any inquiry. On these facts the conclusion that the orderof the Income Tax Officer was erroneous is irresistible. We are,therefore, of the opinion that the High Court has rightly held thatthe exercise of the jurisdiction by the Commissioner under Section263(1) was justified.”

D27.1.3. The observations and conclusions aforesaid, do not advancethe cause of the appellant; and if at all of any application, they operateonly against the case of the appellant.

27.2. In the present case, as observed hereinbefore, the initialdecision of SLSC was entirely erroneous and cannot be said to be aEpossible view of the matter. Coupled with that, the said decision wasdirectly prejudicial to the interest of revenue where the State exchequerwas to part with extra 25% of the tax amount received or receivablefrom the appellant. As noticed, the learned ACS, while passing the orderdated 12.03.2008 in exercise of such power of revision under Clause 13of the Scheme, has meticulously examined the entire material and hasFrecorded each and every finding with due regard to the dealings of theparties and the provisions of Scheme as applicable. The exercise ofpower of revision as per Clause 13 of the Scheme remainsunexceptionable in the present case.

Effect of availing 75% subsidy for 7 years G

28. It has also been submitted on behalf of the appellants that thesubsidy cannot be revoked or withdrawn with retrospective effect andafter having been fully availed of. Such a contention does not carry anysubstance for the simple reason that sub-clause (b) of Clause 13 of theScheme specifically provides for a period of five years from the date by H

which benefits under the Scheme are availed of, to be the period withinwhich the power of revision could be exercised by the State Government.Admittedly, in the present case, the appellant company had availed thebenefits until the month of February 2017 and the order of revision waspassed on 12.03.2018, well within the period of five years stipulated inthe Scheme. In this view of the matter, reference to the decisions likethat of this Court in the case of Birla Jute & Industries Ltd. (supra)remains entirely misplaced. The observations in the referred decisionsare not relatable to the specific stipulation of the Scheme in question andneed no further dilation.

29. It is also noteworthy that the fundamental questions on thecorrectness of the decision of SLSC dated 17.03.2011 were indeed raisedby the Finance Department of the Government by its letter dated17.11.2011. As noticed, the Industries Department chose not to respondto the said communication and reminders of the Finance Department foran abnormal length of time and sent a reply only in the month of February2017. By that time, the appellant had practically availed the entireadvantage under the questioned decision of the SLSC. Thereafter, theSLSC re-examined the matter only on 22.05.2017 and left it for theFinance Department to take proceedings under Clause 13 of RIPS-2013.In the given set of facts and circumstances, the suggestion that alreadyavailed benefit cannot be withdrawn turn out to be hollow and baselessbecause 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 ofsubsidy, securing an advantage by the appellant at the cost of publicexchequer could not have been allowed and, for the Scheme itself havingreserved the powers in the State Government to revise the erroneousand prejudicial order within a period of five years from the date of fullyavailing of the benefits, such powers have rightly been invoked andexercised 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% subsidyto 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 dated01.04.2006 had only been for allowing ‘recently announced cement AB

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Apackage’[38] to the company and that was also coupled with therequirement of applicability of RIPS-2003. The initial part of this decisionof BIDI dated 01.04.2006 and the company’s prayer dated 26.04.2006for registration in terms of sub-clause (vii) of Clause 7 of RIPS-2003became redundant on 28.04.2006 with the amendment of Clause 7 ofRIPS-2003 and deletion of sub-clauses (vi) and (vii) thereof because noBdecision had been taken by SLSC to grant subsidy to the company interms 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, togrant 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 ClausesC7(i)(a) and 7(i)(b) of RIPS-2003, had been entirely perverse andunauthorised; and had not been a possible view of the matter. There hadnot been any ambiguity in the decision of BIDI; and if at all there wasany doubt or ambiguity, the benefit thereof could not have gone to theappellant. The appellant company was entitled to subsidy under RIPS-2003 only to the extent of 50% of tax payable and deposited and notD75% as allowed by SLSC.

30.1. It is also clear that the doctrine of Contemporanea Expositioneither applies to this case nor inures to the benefit of appellant. Theprinciples of promissory estopple are equally inapplicable and the StateGovernment has rightly exercised the powers of revision under ClauseE13 of RIPS-2003 to interfere with the erroneous decisions of SLSCwhereby the appellant was allowed 25% extra subsidy and which was,obviously, prejudicial to the interest of revenue; and mere availing of thebenefits by the appellant under the erroneous decisions of SLSC is of noeffect, particularly when the State Government has exercised the powersFof revision within the time stipulated in Clause 13 of RIPS-2003.

31. In view of the above, we have no hesitation in affirming theorder of the High Court dated 11.01.2019 and in turn, approving theorder of revision dated 12.03.2018 insofar the Additional Chief Secretaryheld that the Kotputli Cement Works Unit of the appellant company wasGentitled to Capital Investment Subsidy only to the extent of 50% of thepayable and deposited tax and not to the extent of 75%, as availed by itpursuant to the Entitlement Certificates dated 29.04.2011 and 24.11.2011erroneously issued by the State Level Screening Committee. The SLSC

38 As noticed repeatedly, the said expression ‘recently announced cement package’ isonly referable to sub-clauses (vi) and (vii) of Clause 7 of RIPS-2003.H

was rightly directed to issue the new Entitlement Certificate for subsidyto the limit of 50% of total tax to the said Kotputli Unit of the appellantcompany; and the company was rightly directed to refund the amount ofsubsidy availed in excess of 50% of payable and deposited tax.

31.1. However, in the impugned order dated 12.03.2018, theappellant was also directed to make such refund together with interestat the rate of 18% per annum. As observed hereinbefore, even if thedecision of State Government to recall 25% availed subsidy is upheld,the point still requiring consideration would be as to whether the State isjustified 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 soughtto be recovered, it has been contended on behalf of the appellants thatClause 10 of RIPS-2003 providing for charging of interest has noapplication to the present case because grant of 25% subsidy has beenrevoked not because of any default committed by the appellants but onlybecause of a change of opinion by the respondents after about eightyears. The respondents, on the other hand, assert that if benefits havebeen received under a mistake, the same must be returned with interestso as to avoid unjust enrichment.

33. It remains undeniable that Clause 10 of RIPS-2003, providingTerms and Conditions attached to the benefits availed under the Scheme,envisaged that the ‘breach’ of any of the condition would ‘make theCapital Investment Subsidy/ exemption amount liable to be recoveredas Tax or arrears of land revenue along with interest @ 18% perannum from the date from which the Capital Investment Subsidywas provided’. It is not the case of the respondents that the appellanthad committed breach of any of the conditions enumerated in Clause 10of the Scheme and that the excessive amount of subsidy (25%) wasbeing recovered because of any such breach. As noticed, entitlement ofthe appellant to 50% subsidy has not been questioned; and the onlyquestion had been as to whether the appellant company could have availed75% subsidy? However, disbursement of such 75% subsidy to theappellant was only on the basis of the erroneous decisions taken andEntitlement Certificates dated 29.04.2011 and 24.11.2011 issued by SLSC.

33.1. Even when the said decisions of SLSC are found erroneousand invalid; and the appellant company is found entitled to subsidy only A

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Ato the extent of 50%, it cannot be said that the excess 25% is relatable tobreach of any of the conditions of the Scheme on the part of the appellantnor the appellant could be said to have availed the excessive amount ofsubsidy by way of any misrepresentation. The basic fault had been onthe part of SLSC in taking erroneous decisions and in issuing unauthorisedEntitlement Certificates dated 29.04.2011 and 24.11.2011. The respondentBState took an abnormally long time in realising the mistake on the part ofits functionaries and took corrective measures only after the entire benefithad already been availed of inasmuch as the proceedings for recall wereinitiated only in the month of July 2017 which led to the impugned orderdated 12.03.2018 and then, the Re-revised Entitlement Certificate wasCissued only on 02.04.2018.

33.2. Apart from the above, it is also noticed that even when theScheme envisaged interest at the rate of 18% per annum, in Form 2 filedby the appellants, undertaking was stated to repay the amount of subsidy,in case of availing excessive benefits or non-compliance with theDprovisions of the Scheme, with interest at the rate of 12% per annum[39].Both the parties had proceeded with reference to the said undertakingfurnished on behalf of the appellant and the same is required to be treatedas a binding term of contract between them.

33.3. Hence, when availing of subsidy to the tune of 75% (andEthereby availing 25% in excess) is not referable to any misrepresentationby the appellants and there is no allegation of breach of any of theconditions of RIPS-2003 by the appellants while availing such benefit,the respondent cannot be held entitled to demand interest at the ratestipulated in Clause 10 of RIPS-2003. However, and at the same time,when the appellant company had obtained undue advantage in monetaryFterms by availing 25% extra subsidy; and had given undertaking to refundany excessive benefit with interest at the rate of 12% per annum, in ourview, the appellant company remains liable to refund the excess amounttogether 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,Greliance on the decisions of this Court in India Carbon Ltd., J.K.Synthetics Ltd. and Maruti Wire Industries Pvt. Ltd. (supra), dealingthe scheme of particular taxing statutes for charging of interest, doesnot make out a case of total waiver of interest because the fact remainsthat the appellant company had indeed availed excessive 25% subsidyH39 Vide the declaration extracted in paragraph 7.9.2.

under the non-statutory scheme and unequivocal undertaking was statedon 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 decisionof High Court, entire of the principal amount of excess subsidy, i.e.,Rs.15,96,37,794/- has already been recovered. In the totality ofcircumstances and relevant features of this case, in our view, interest ofjustice shall be served if the respondents are allowed interest at the rateof 12% per annum from the date of availing of excessive (25%) subsidyby the appellants and until recovery/payment.

CONCLUSION

34. Accordingly, this appeal is partly allowed to the extent and inthe manner indicated above. The impugned order of the High Courtdated 11.01.2019, upholding the order dated 12.03.2018 passed by theAdditional Chief Secretary, Finance Department, Government ofRajasthan, Jaipur is affirmed but with the modification that the respondentsshall be entitled to recover interest at the rate of 12% per annum fromthe date of availing of excessive subsidy (25%) by the appellants untilpayment/recovery. In the circumstances of the case, the parties are leftto bear their own costs.

Kalpana K. Tripathy

Appeal partly allowed.

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