Fiscal exemption as a revocable concession: prospective scheme clarification valid, with no vested right to higher tax benefits.

A fiscal exemption under an industrial incentive scheme was treated as a concession, not a vested right, so the State could validly clarify and modify the scheme prospectively through a corrigendum issued to remove ambiguity and align the text with the policy. Sick cement units could not claim the higher benefits reserved for a different class of units, and certification of an application as complete did not freeze the rate, period or quantum of exemption absent promissory estoppel. The State was also entitled to recover differential sales tax for the period governed by the modified scheme, subject to limited protection for benefits already enjoyed up to the specified date and waiver of interest or penalty on timely payment of the principal differential amount.

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Issues: (i) Whether sick cement units were entitled, under the original exemption scheme, to the higher benefits available to new units under serial No. 1 of annexure B, and whether the subsequent corrigendum validly clarified the scheme; (ii) whether the respondents acquired a vested or indefeasible right to continue enjoying the higher exemption rates from the date their applications were certified as complete under clause 4(h); (iii) whether the State could recover differential sales tax for the period after the corrigendum and during the pendency of the litigation.

Issue (i): Whether sick cement units were entitled, under the original exemption scheme, to the higher benefits available to new units under serial No. 1 of annexure B, and whether the subsequent corrigendum validly clarified the scheme.

Analysis: The scheme was framed under section 15 of the Rajasthan Sales Tax Act, 1994 and sub-section (5) of section 8 of the Central Sales Tax Act, 1956 pursuant to the State's industrial policy. The scheme separately classified industries under serial Nos. 1, 2 and 3, with serial No. 3 specifically covering all categories of cement plants and granting them a uniform exemption. Read with clause 2(k)(ii), the scheme indicated that a sick industrial unit could, at the highest, be treated at par with the relevant class of new unit and not claim a more advantageous position than the industrial class to which it belonged. The later notification merely removed an ambiguity in annexure B and aligned the text with the policy and substantive scheme.

Conclusion: The corrigendum was valid and operated to clarify and modify the scheme prospectively, and the respondents were not entitled to claim the higher benefits of serial No. 1 contrary to the corrected scheme.

Issue (ii): Whether the respondents acquired a vested or indefeasible right to continue enjoying the higher exemption rates from the date their applications were certified as complete under clause 4(h).

Analysis: Exemption under a fiscal scheme is a concession and not an indefeasible right. The scheme itself made the grant of benefits subject to scrutiny and sanction by the Screening Committee, and clause 9 reserved the State's power to review or modify the scheme in public interest. In the absence of promissory estoppel, the respondents could not assert a vested right to an unalterable rate, period or quantum of exemption merely because their applications had been certified as complete. In the case of the company that had not yet received sanction, no enforceable right had crystallised at all.

Conclusion: No vested or indefeasible right arose in favour of the respondents to continue the earlier exemption structure.

Issue (iii): Whether the State could recover differential sales tax for the period after the corrigendum and during the pendency of the litigation.

Analysis: The mere absence of a stay of the High Court judgment did not confer a permanent entitlement when the appellate challenge remained pending and was ultimately allowed. The primary liability to pay sales tax rested on the seller, and the inability to pass the burden on to purchasers did not defeat the State's right to recover tax lawfully due. Equitable relief was not warranted on the facts, though the Court protected amounts already enjoyed up to the date it specified and denied interest or penalty on the differential amounts for the sub judice period if the principal was paid within the stipulated time.

Conclusion: The State was entitled to recover the differential sales tax in accordance with the modified scheme, subject to the limited protection granted for amounts already enjoyed up to 7 January 2000 and the waiver of interest or penalty on timely payment of the principal differential amount.

Final Conclusion: The appeals succeeded, the High Court's decision was set aside, and the respondents were held entitled only to the benefits available under the scheme as modified by the corrigendum from 7 January 2000 onward, with limited protection for prior benefits already availed.

Ratio Decidendi: A fiscal exemption is a revocable concession, and unless protected by promissory estoppel, the State may modify or clarify the exemption prospectively in public interest even after applications have been certified complete; no vested right arises to insist on a particular rate, period or quantum of exemption contrary to the scheme as validly modified.

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