Strict construction of fiscal incentive schemes limits subsidy to the express scheme terms and permits recovery of excess grant.

A fiscal incentive scheme must be construed strictly, so a subsidy benefit cannot exceed what the scheme expressly permits. The Court held that the Board's direction did not amount to a valid grant of 75% capital investment subsidy, and the appellant was entitled only to 50%. It further held that the State could revise a Screening Committee order that was erroneous and prejudicial to revenue within the scheme's prescribed period, and recover the excess subsidy. For interest, the Court found that 18% was not justified because the excess arose from administrative error rather than proved breach; interest was payable at 12% under the undertaking.

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Issues: (i) Whether the appellant was entitled under the Rajasthan Investment Promotion Scheme-2003 to capital investment subsidy at 75% or only at 50%; (ii) whether the State Government could validly revise the Screening Committee's grant of 75% subsidy and recover the excess amount; (iii) whether interest on the excess subsidy was recoverable at 18% or at a lesser rate.

Issue (i): Whether the appellant was entitled under the Rajasthan Investment Promotion Scheme-2003 to capital investment subsidy at 75% or only at 50%.

Analysis: The incentive scheme was a non-statutory fiscal scheme whose subsidy provisions had to be construed strictly. The decision of the Board of Infrastructure Development and Investment Promotion directed only that the recently announced cement package and the scheme would apply to the appellant; it did not specifically grant 75% subsidy under the proviso to Clause 7(i)(a) or 7(i)(b), nor did it amount to a customized package under Clause 6A. The special 75% cement provisions inserted on 02.12.2005 were deleted on 28.04.2006 before any valid grant under them was made. The Screening Committee's later understanding that the Board had approved 75% subsidy was therefore based on a misreading of the record.

Conclusion: The appellant was entitled only to subsidy to the extent of 50% of the tax payable and deposited, not 75%.

Issue (ii): Whether the State Government could validly revise the Screening Committee's grant of 75% subsidy and recover the excess amount.

Analysis: Clause 13 empowered the State Government in the Finance Department to revise any order of a Screening Committee that was erroneous and prejudicial to the State revenue, within five years after the benefits were fully availed. The Screening Committee's grant of 75% subsidy was outside the Scheme and prejudicial to revenue, and the later revision was issued within the prescribed time. The doctrines of contemporanea expositio and promissory estoppel did not protect a benefit granted contrary to the Scheme, and no binding representation existed to confer a higher subsidy than the Scheme permitted.

Conclusion: The revision was valid and the excess subsidy was recoverable.

Issue (iii): Whether interest on the excess subsidy was recoverable at 18% or at a lesser rate.

Analysis: Clause 10 contemplated interest at 18% where breach of Scheme conditions occurred, but the excess grant here arose from an erroneous administrative decision, not from any proved breach by the appellant. The undertaking furnished by the appellant in Form 2 bound it to refund excess benefits with interest at 12% per annum. In these circumstances, recovery at 18% was not justified, though interest remained payable to prevent retention of undue monetary advantage.

Conclusion: Interest was recoverable at 12% per annum, not 18% per annum.

Final Conclusion: The subsidy entitlement was confined to 50%, the revised recovery of excess subsidy was sustained, and only the rate of interest was modified downward to 12% per annum.

Ratio Decidendi: A fiscal incentive scheme must be strictly construed, and a benefit granted contrary to the express scheme conditions or on a misreading of the governing decision can be revised as erroneous and prejudicial to revenue; estoppel cannot sustain an unauthorized subsidy, and interest recovery depends on the governing contractual or scheme basis.

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