Tax payable under a VAT-linked subsidy scheme means net tax after input-tax credit, not gross output tax.

Where a fiscal subsidy under the Rajasthan Investment Promotion Policy, 2003 is linked to "tax payable" under a VAT regime, the expression is construed as net tax payable after input-tax credit, not gross output tax. The VAT framework under the Rajasthan Value Added Tax Act, 2003 treats liability on value addition and allows set-off of input tax, and the policy language referring to tax payable and deposited supports that reading. The Finance Department's clarification limiting subsidy by reference to net tax payable was therefore consistent with the policy and valid.

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Issues: Whether the expression "tax payable" in clause 7(i)(a) of the Rajasthan Investment Promotion Policy, 2003 for computation of subsidy means gross output tax or net tax payable after deducting input-tax credit.

Analysis: The policy linked the subsidy ceiling to tax payable and deposited under the relevant sales tax laws. Under the Rajasthan Value Added Tax Act, 2003, the scheme of VAT is to levy tax on value addition and permit set-off of input tax, thereby avoiding cascading tax burden. Section 17 of the Act treats the dealer's tax liability as net tax payable after adjustment of input tax, and the policy language of tax payable and deposited supports that construction. The clarification issued by the Finance Department was therefore consistent with the policy and the VAT framework, and the subsidy being a concession could validly be limited on that basis.

Conclusion: "Tax payable" in the policy means net tax payable after input-tax credit, not gross output tax, and the clarification was valid.

Final Conclusion: The clarification limiting subsidy with reference to net tax payable was upheld, and the writ petitions were dismissed.

Ratio Decidendi: Where a subsidy under a fiscal incentive scheme is linked to tax payable under a VAT regime, the expression must be construed in accordance with the VAT mechanism of net tax after input-tax set-off unless the scheme expressly provides otherwise.

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