TaxTMI 
TaxTMI 
2004 (9) TMI 381
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....e corrected. The disputes in these appeals relate to the interpretation of the scheme and the effect of the corrigendum. 2.. The scheme was part of the New 4th Industrial Policy of the State. The policy stated that the object of the scheme was to make Rajasthan "a most favoured destination for industries" and to encourage the setting up of industries in the State. The policy describes the nature of the exemptions which were sought to be granted to the different kinds of industries with exemption/deferment incentives for 11 years in respect of some industries and 14 years for others. A greater incentive was granted to industries being set up in the five industrial growth centres in the State. The incentives available during the first year were to be gradually tapered off to a particular percentage of the fixed capital investment at different rates in respect of some industries. However, in respect of cement industries the percentage of exemption proposed was at a flat rate of 25 per cent for 11 years. According to the policy the scheme would also give benefits for the first time to sick units. The sick units were classified into two categories as follows: "(1) Those units w....
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....ndents in these appeals, viz., M/s. J.K. Udyog and J.K. Synthetics Ltd., were writ petitioners before the High Court of Rajasthan and are companies which manufacture cement in different units within the State of Rajasthan. The respondent-companies in these appeals are undisputedly "sick". 6.. The description of the type of units, extent of the percentage of exemption from tax liability, the maximum exemption permissible under the scheme and the maximum time-limit for availing the exemption under the scheme have been set out in annexure "B" to the scheme. 7. We set out below the material portion of annexure "B" to the exemption scheme. S.No. Type of units Extent of the percentage of exemption from total tax liability Maximum exemption in terms of percentage of eligible fixed capital investment (FCI) Maximum time-limit for availing exemption from tax 1 2 3 4 5 1. New units other than the units mentioned at S. No. 2 and 3 and units going in for expansion or diversification 1st year 100% 2nd year 90% 3rd year 80% 4th year 70% 5th year 60% 6th year 50% 7th year 50% 8th year 40% 9th year 40% 10th year 30% 11th year 30% 100%....
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....his clear. 10. According to the appellants, on the other hand, this was never the intention of the State Government which had wanted to treat sick industrial units of a particular kind on par with new industrial units of that kind in the matter of grant of exemption. But we are anticipating the dispute which is considered in detail subsequently. Returning to the scheme; the procedure for obtaining exemption under the scheme has been provided in clause 4, the relevant extract of which reads as under: "Sanction of benefits under the exemption scheme and issue of eligibility certificate: (a) In order to avail the benefit under this Scheme, the applicant industrial unit shall have to obtain sanction from the State Level Screening Committee or District Level Screening Committee, as the case may be. The Screening Committees shall act as quasi-judicial authorities whose decisions shall be final subject to other provisions provided for in this scheme. (b) to (d)........... (e) The appropriate Screening Committee shall, after having examined the application of an industrial unit and after having gathered or collected such other information, docu....
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....nder this clause of the scheme was therefore: (1) making of an application by the industrial unit; (2) the certification of the application as complete and the provisional availability of the benefits [clause 4(h)]; (3) The examination of the application by the Screening Committee after collecting information/enquiry, etc. [clause 4(e)]; (4) The sanction or rejection of the application by the Screening Committee [clause 4(e)]; (5) In case of sanction, the communication of the sanction to the assessing authority [clause 4(f)]; (6) The issuance of eligibility certificate by the assessing authority within seven days [clause 4(f)]; (7) The availability of exemption from payment of tax during the currency of the eligibility certificate until the exemption was either exhausted or unless the certificates were amended, suspended or revoked [clause 4(i)]. 12.. The respondent-companies applied for exemption under the scheme claiming benefits at par with units under Srl. No. 1. As far as M/s. J.K. Synthetics Ltd., is concerned, the Director of Industries certified that the application was complete. The certificate issued under section 4(h) on February 20, 1999, made it....
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....9, and was sanctioned on December 30, 1999. However the quantum of benefit was granted in terms of the corrigendum from the date of issuance of the corrigendum. The eligibility certificate was issued to M/s. J.K. Udyog on February 29, 2000 also restricting the benefits under the scheme on the basis of the corrigendum. 17.. Since the respondent had been availing of the higher rates of exemption against Srl. No. 1, consequent upon the decision of the Screening Committee granting the benefits under the corrigendum, provisional assessment orders and notices were issued to both the respondent-companies by the sales tax authorities over the differential sales tax. 18.. M/s. J.K. Synthetics Ltd. and J.K. Udyog Ltd., filed separate writ petitions before the High Court of Rajasthan challenging the corrigendum dated September 30, 1999; in the alternative a prayer was made to hold that the corrigendum had no application to the respondent-companies; for quashing the decisions of the Screening Committee in so far as the respondent-companies were given the benefit of the exemption scheme on the basis of the corrigendum and for quashing the provisional assessment orders and notices. 1....
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....ation of their applications under clause 4(h) and were substantive and that these rights could not be affected adversely unless the subsequent notification clearly manifested an intention to do so. It was held that the corrigendum did not contain any such explicit provision nor could any inference be drawn that accrued rights were to be affected. It was held that even if this proposition was unacceptable the amendment was arbitrary and violative of article 14 being discriminatory vis-a- vis other sick industries. It was further held that the amendment could not discriminate against sick cement plants which had not availed of benefits of tax exemption earlier, so that such sick industries were treated in a manner worse than sick cement industries which had availed of exemptions from sales tax earlier. The division Bench accordingly held that the respondent-companies were entitled to avail of the benefits under the scheme as originally notified in the manner provided in column 3 of serial No. 1 of annexure "B" read with serial No. 4(a) and that such rights were not affected by the corrigendum published on January 7, 2000. However, the corrigendum notification itself was not quashed a....
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.... State Government to issue the corrigendum with retrospective effect. It is submitted that the scheme was issued not only under section 15 of the RST Act but also under section 8(5) of the CST Act. The exercise of the power was thus, to use counsel's language, "inseverable". It is argued that as there is no power under section 8(5) of the CST Act to withdraw an exemption with retrospective effect the entire exercise of issuing the corrigendum must fail. In addition, it is submitted that even section 15 of the Act did not allow the State Government to withdraw an exemption with retrospective effect. It is stated that under clause 4(h) read with clause 5(g) on the date on which the respondent-companies' application was certified as being complete, rights accrued to the industrial units which could not be withdrawn and it was not necessary to rely upon the principle of promissory estoppel for the purpose of claiming continued exemption. It is submitted that the subsequent notification was not a corrigendum but an amendment of the scheme and could not be construed as amounting to withdrawal of the rights conferred under the scheme as originally published. It is submitted that sick unit....
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....neficiaries of such concession are not required to pay the tax or duty they are otherwise liable to pay under such statute. The recipient of a concession has no legally enforceable right against the Government to grant a concession except to enjoy the benefits of the concession during the period of its grant. This right to enjoy is a defeasible one in the sense that it may be taken away in exercise of the very power under which the exemption was granted. [See Shri Bakul Oil Industries v. State of Gujarat See [1987] 64 STC 204 (SC). (1987) 1 SCC 31, Kasinka Trading v. Union of India (1995) 1 SCC 274, Shrijee Sales Corporation v. Union of India (1997) 3 SCC 398]. 26.. In this case the scheme being notified under the power in the State Government to grant exemptions both under section 15 of the RST and section 8(5) of the CST in the public interest, the State Government was competent to modify or revoke the grant for the same reason. Thus what is granted can be withdrawn unless the Government is precluded from doing so on the ground of promissory estoppel, which principle is itself subject to considerations of equity and public interest. [See Sales Tax Officer v. Shree Durga Oil Mi....
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....e Industrial Policy which resulted in the exemption scheme expressly provided that the rate of benefits which were to be given to sick industrial units which had not availed of any such benefits in the past would be at par with a new unit. But does this mean that the words "new unit" in the policy referred to industries under Srl. No. 1? We think not. New units of different kinds of industries had been separately classified both under the policy and under Srl. Nos. 1, 2 and 3 of annexure "B" to the scheme. Each of the three categories at Srl. Nos. 1, 2 and 3 have been granted different rates of exemption. Serial No. 1 relates to new industries not covered by Srl. Nos. 2 and 3. It is therefore, the residuary category and any new industry covered by Srl. Nos. 2 and 3 would not be covered by Srl. No. 1. Serial No. 2 speaks of particular industries such as knitwears, gems and jewellery, textile, electronics, telecommunications, computer software, footwear and leather goods, glass and ceramics. This category of industries has been sub-classified under the heads of (a) "new units" and (b) "very prestigious units". A "very prestigious unit " is not defined in the scheme itself but is r....
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..... Doubtless the interpretation put by the respondent-companies and accepted by the High Court on the entries against Srl. No. 4 as it originally stood in annexure "B", is a possible interpretation, but in our opinion annexure "B" was equally susceptible of the interpretation put forward by the appellants before us particularly in the context of the Industrial Policy. 31.. It was to clarify this ambiguity that the subsequent notification was issued by the State Government to correct or amend annexure "B" to the extent that it could be interpreted in a manner not in keeping with the published industrial policy of the State and the substantive provisions of the scheme. 32.. For these reasons also the corrigendum cannot be said to be violative of article 14. On the contrary, if the corrigendum were not to be given effect to, the entire scheme would operate irrationally by making an invidious distinction between sick cement units as we have already said. The irrationality is also apparent vis-a-vis industries referable to Srl. No. 2. Under the scheme, the highest rate of exemption and greatest benefits is granted to new units under Srl. No. 2. If the respondents' interpretation of....
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....te under clause 4(h). But it is again unnecessary to decide the ambit of the Screening Committee's power, as the appellants have not argued that the benefits of the higher rate of exemption already availed of by the respondent- companies with effect from the date of certification under clause 4(h) up to January 7, 2000, should be taken away from them. 35.. This brings us to the last argument of the respondent- companies, viz., that they should not be made liable for the sales tax on the basis of the corrigendum for the period they had availed of the exemptions after the decision of the High Court. The submission proceeded on the basis that the High Court had quashed the corrigendum notification. As we have noted earlier the division Bench had not quashed the corrigendum notification but had contented itself with construing it. The mere fact that this Court has not granted a stay of operation of the decision of the High Court would not give the respondent-companies any right to the fruits of that decision if the decision is ultimately reversed by this Court. Besides the respondent- companies should have been aware that with the admission of the appeal from the High Court's....
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....r three notifications which had been quashed. The fourth notification was challenged directly before this Court by means of a writ petition under article 32. This time the Bench which entertained the writ petition disagreed with the view expressed earlier by this Court in respect of Shri Digvijay Cement Co. See [1997] 106 STC 11 (SC). (1997) 5 SCC 406 and referred the matter to a larger Bench. The Constitution Bench overruled the decision in Shri Digvijay Cement See [2000] 117 STC 395 (SC). (2000) 1 SCC 765. The question then was whether the local manufactures would be entitled to the benefit of the decision of the Constitution Bench despite the fact that the notifications under which they had availed of a lower rate of tax had been decided against them in Shri Digvijay Cement See [2000] 117 STC 395 (SC). (2000) 1 SCC 765. This Court held in favour of the local manufacturers. The circumstance that the notifications were subsequently held to be valid by a larger Bench operated to protect them from liabilities which had arisen by virtue of the earlier erroneous decision. 39.. In State of Rajasthan v. Mahaveer Oil Industries See [1999] 115 STC 29 (SC). (1999) 4 SCC 357, this Court ....