TaxTMI 
TaxTMI 
2019 (4) TMI 1139
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....inance Department, Government of Rajasthan, Jaipur with the prayer that revised entitlement certificate dated 02.04.2018 granted pursuant to the decision of the State Level Screening Committee (for short 'the SLSC') dated 28.03.2018 be quashed and set aside and consequential order dated 04.04.2018 demanding amount of Rs. 15,96,37,794/- with interest in the sum of Rs. 17,18,33,816/- be quashed and set aside. The petitioners have also challenged constitutional validity of Clause 13 of the Rajasthan Invest Promotion Scheme-2013 (for short 'the RIPS-2003') with the prayer that the same be declared arbitrary, unconstitutional, illegal, bad in law and null and void, being violative of Articles 14, 19(1)(g) and 265 of the Constitution of India. The petitioner is a public limited company incorporated and registered under Companies Act, 1956 and is engaged in the business of manufacturing and marketing of cement and allied products. Clause 13 of the RIPS-2003 empowers the State Government in its Finance Department to suo motu or otherwise revise an order passed by any Screening Committee wherever it is found to be erroneous and prejudicial to the interest of the State revenue, after afford....
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....esurgent Rajasthan Partnership Summit in which the petitioner-company undertook to set up a new cement plant at Kotputli with a capacity of 4 million tons per annum. Clause 7(iii) of the RIPS-2003 was amended on 30.09.2008 to protect investments made under MOU signed during Resurgent Rajasthan Summit, provided commercial production was started by 31.03.2011. The Kotputli project fulfills all the requirements of this amendment. Substantial investment was made after and in view of the MOU and the assurance given thereby read with the earlier decision of the BIDI dated 01.04.2006. The SLSC in its meeting dated 17.03.2011 granted 75% sales tax subsidy to the petitioner's Kotputli plant. The SLSC specifically stated that it was acting in pursuance of the decision of the BIDI approving grant of 75% subsidy under Clause 7(i)(a) and (b) of the RIPS-2003. Entitlement certificate dated 29.04.2011 issued to the petitioner clearly shows that the grant of subsidy was under Clause 7(i)(a) and 7(i)(b) and not under Clause 7(vi) and 7(vii) of the RIPS-2003 because there was no upfront subsidy of 45% and the wage and interest subsidy aggregated to 75% and not to 30%. The petitioner-company already ....
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....titionercompany, which is patently untenable. Reliance in support of this argument has been placed on judgment of the Supreme Court in Commissioner of Customs, Mumbai Vs. Toyo Engineering India Ltd., (2006) 7 SCC 592 and judgment of Delhi High Court in Commissioner of Income Tax, Delhi Vs. Contimeters Electrical Pvt. Ltd., (2009) 317 ITR 249 (Delhi). It is further argued that it is well settled legal position that a tax incentive granted to and fully availed of by the assessee cannot be withdrawn subsequently with retrospective effect so as to demand back the benefit already availed of. In the present case, 75% subsidy was fully availed of by the petitioner by February, 2017, long before issuance of the show cause notice. Reliance in support of this argument has been placed upon the judgments in Birla Jute & Industries Ltd. Vs. State of M.P., 119 STC 14 (S.C.); CCT Vs. Rajasthan Tax Tribunal (Raj.), 38 Tax U-Date 131; CST Vs. Elopic Paper Converter, 104 STC 2 (S.C.) and; C.T.O. Vs. Shiv Agrevo (Rajasthan Tax Board). Learned Senior Counsel further argued that recognising the abovementioned settled legal position, the revisional order itself states that it did not propose to take awa....
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.... the assessing officer. These decisions state that every loss of revenue as a consequence of an order of the subordinate authority cannot be treated as prejudicial to the interest of the revenue. It has also been held that where two views are possible and the subordinate authority has taken one view, with which the revisional authority does not agree, it cannot be treated as an erroneous order prejudicial to the interest of the revenue, unless the view taken by the subordinate authority is unsustainable in law. In the present case, the decision taken by the SLSC was based on the decision of the BIDI and their view is certainly a possible view, which was in fact adhered to for more than seven years. Learned Senior Counsel argued that Clause 9B(viii) of the RIPS-2003 lays down that where subsidy has been granted by mistake, it can be rectified by the jurisdictional assessing officer as per the provisions of Section 33 of the Rajasthan Value Added Tax Act, 2003, which lays down a period of limitation of four years. In the present case, the revisional order has not been passed by the assessing officer and further it was passed well after the expiry of the period of four years. Learned....
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....onceived as this judgment only lays down that an exemption notification has to be construed strictly and only if there is any ambiguity therein, the benefit thereof has to go to the revenue. This principle does not have any applicability whatsoever to the present case where there is no ambiguity in respect of any exemption notification. Mr. Rajendra Prasad, learned Additional Advocate General appearing on behalf of the respondent-State opposed the writ petition and argued that the matter has been listed before the Division Bench only because of challenge to Clause 13 of the RIPS-2003 and if the challenge to the aforesaid Clause fails, the writ petition with respect to other prayers is liable to be listed before the Single Bench. It is argued that the RIPS-2003 is a policy in the nature of offer to the entrepreneurs inviting them to invest in the State of Rajasthan. The petitioners having accepted the said policy with open eyes never objected to any of its clauses and availed the benefits under it fully except objection to the deletion of sub-clause (vi) to Clause 7 of the RIPS-2003. According to the policy, a person desirous to get benefits under it has to apply as per clause 9(....
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....rtant to note that irrespective of disbanding of the BIDI, the provisions of Clause 7(i)(a) of the RIPS-2003, its proviso and the provisions of Clause 5 relating to eligibility and Clause 6 of the RIPS-2003 with regard to authority to grant benefits and Clause 9 with regard to claim of capital investment subsidy have not been amended, so as to authorise the SLSC to raise the limit of subsidy up to 75%. The petitioners admittedly for the first time applied to SLSC under Clause 7 of the RIPS-2003 on 12.02.2010 and that too making a request for grant under deleted sub-clause (vii) making wholly untenable submissions with regard to the amendment dated 30.09.2008, MOU and notification dated 02.12.2005. The SLSC however, accepted the application of the petitioners under proviso to Clause 7(i)(a) by incorrectly relying upon the decision of BIDI dated 01.04.2006 as raising of limit under Clause 7(i)(a) to 75%. The entitlement certificate was accordingly issued and the benefit was availed upto 75% by the petitioner. The petitioners accepted the benefits under the RIPS-2003 with all its conditions and clauses and never raised any objection to Clause 13 of the RIPS- 2003 either in the Court ....
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....t always be decisive on the question of construction which is what the judgments cited by the petitioners also state so. Other contention raised on behalf of the petitioners that the impugned revisional order has gone beyond the show cause notice is also wholly misconceived. It is submitted that the notice clearly stated that in the decision of the BIDI, there is no reference of enhancement of the limit of subsidy to 75% under proviso to Clause 7(i)(a) and (b) of the RIPS-2003 and that is the only reason for which the impugned order has been passed. Learned Additional Advocate General argued that in some of the matters cited relating to earlier schemes, provisions of revision were there, but in those matters also it was not indicated that the benefit by revision can be withdrawn after being availed and apart from that, those orders have no value as binding precedents. The Division Bench of this Court at Principal Seat at Jodhpur in State of Rajasthan & Others Vs. Shree Cement Limited & Others (supra), considered these very issues and turned down such objections being raised by the petitioners in the present writ petition. It is argued that the submissions made on behalf of the pet....
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....per the scheme of the RIPS-2003. The State of Rajathan subsequently vide notification dated 02.12.2005 amended the RIPS-2003 by inserting sub-clauses (vi) and (vii) to Clause 7 whereby benefits were extended to cement plants. Aforesaid two sub-clauses were deleted soon thereafter vide notification dated 28.04.2006 and further clarification was issued on 22.05.2008 rescinding the privileges granted to the cement plants. The petitioners however on 26.04.2006 submitted an application for availing benefits of the said cement package. Thereafter, vide communication dated 04.02.2010, the petitioners again made a similar request for grant of benefits under the cement package with the specific reference to notification dated 02.12.2005 and requested for issuance of entitlement certificate on the premise that it has already started commercial production on 20.01.2010. Till this stage, the petitioners never made any assertion as to any conscious decision by the BIDI under proviso to Clause 7 of the RIPS-2003. It was rather continuously pressing for cement package. Had the BIDI taken any specific decision in the matter, it would have certainly indicated as to what extent the petitioner-comp....
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....sioner of Customs (Import), Mumbai Vs. Dilip Kumar & Company & Others, (2018) 9 SCC 1 wherein it has been held that the exemption notification should be interpreted strictly. Relying on the judgment of the Supreme Court in State of Rajasthan Vs. J.K. Udaipur Udyog, (2004) 7 SCC 673, learned counsel argued that even in the cases where the assessee is not found entitled under the exemption schemes, the Apex Court directed them to make payment irrespective of the fact that they were not collected from the consumer. Relying on the judgment of Division Bench of this Court in State of Rajasthan & Others Vs. Shree Cement Limited & Others (supra), learned counsel argued that therein all the issues like promissory estoppels, legitimate exepctation, contemporanea exposito and validity of Clause 13 of the RIPS-2003 were examined and the arguments similar to the one being raised by the petitioners in the present case have been rejected. It is argued that any special benefit given to the petitioners contrary to any decision of the BIDI will amount to discrimination with same class of industries. We have given our anxious consideration to rival submissions and carefully perused the material on ....
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.... or deposited by the unit on its additional capacity, so created over and above the installed capacity before Expansion/Modernization. The first proviso to the aforesaid Clause 7 inter alia stipulates that the maximum limit of fifty percent prescribed under clause 7(i)(a) and clause 7(i)(b) may be raised by the BIDI to sixty percent in such cases where the investments exceed Rs. 100 crores but are less than or equal to Rs. 200 crores; and this maximum limit may be raised further to seventy five percent in cases where the investments exceed Rs. 200 crores. It is this proviso which could be invoked in the present case as it empowered the BIDI to increase the limit of subsidy of 50% to 75% in cases where the investments exceed Rs. 200 crores. The RIPS-2003 was amended vide notification dated 02.12.2005 whereby sub-clause (vi) and (vii) were inserted in Clause 7 of the RIPS-2003. Sub-clause (vi) provided for new cement units, which enhanced maximum limit of 75% instead of 50% and further would be available on submitting option within 180 days of the amendment to SLSC and commencement of commercial production within 5 years of filing the application for option. The total period of sub....
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....ii) were deleted by the Government vide notification dated 28.04.2006. The petitioner-company was fully conscious of this fact that it shall not receive the tax subsidy under deleted sub-clause (vii) supra, which is evident from the representation which it made to the respondents on 26.05.2006 stating that the withdrawal of 45% upfront subsidy of actual tax liability is a major setback to the company's investment plan and it was requested that the aforesaid newly inserted clauses vide notification dated 28.04.2006 be reconsidered and withdrawn. But then, the Bureau of Investment Promotion specifically informed the petitioner-company vide communication dated 17.06.2006 with regard to its request for customised package that "the company will be eligible for the concessions as contained in RIPS-2003". Even in the MOU entered into between the Government and the petitioner-company on 30.11.2007, all that stated was that the State will extend to the Project incentives permissible to the Project under the RIPS as amended from time to time. The Government issued a categorical clarification on 22.05.2008 that on deletion of sub-clauses (vi) and (vii) of Clause 7 of the RIPS-2003 w.e.f. 28.....
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.... provisos in sub-clause (iii) of Clause 7 of the RIPS- 2003 provided that the investment made or committed before 22.05.2008 or under MOU signed during Resurgent Rajasthan Summit for both new cement unit or unit under expansion, having capacity of more than 200 tons per day, shall be eligible for subsidy under this clause on the condition that such unit shall start commercial production by 31.03.2011. The petitioners however submitted an application on 04.02.2010 for issuance of entitlement certificate and benefits under the notification dated 02.12.2005 whereas the amendments made under that notification were already deleted on 28.04.2006. It was at that stage that the SLSC considered this application of the petitioners in its meeting dated 17.03.2011 and directed for granting the subsidy to it upto the limit of 75% under proviso to Clause 7(i)(a) and (b) in view of the approval allegedly granted by the BIDI. A careful examination of the minutes of 21st meeting of the BIDI held on 01.04.2006 does not reveal any such decision on the part of the BIDI. The BIDI simply directed that recently announced cement package in RIPS-2003 shall be applicable on the company. The SLSC further co....
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....ar authority has by no means a controlling effect upon the courts and if occasion arises, has to be disregarded for cogent and perspective reason and in a clear case of error, the court would without hesitation refuse to follow such construction. As regards the decisions relied on behalf of the petitioners on the aspect that tax incentives cannot be withdrawn retrospectively, it is submitted that the impugned order clearly draws a distinction between tax exemption notifications and the notification with regard to subsidy of this nature. Cited judgments arose out of the matters where the beneficiary having not collected tax by virtue of acceptance of exemption by the Government could not be saddled with liability retrospectively. In the present case, the situation is entirely different in that the petitioners availed undue advantage at the time when it established the plant, which is being sought to be recovered after its full establishment in business. It is not a case where the petitioners did not recover taxes and did not deposit due to exemption. The cited judgments are therefore not applicable and are only the expression of the doctrine of impossibility and are based on reasons....
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....y than what it otherwise wielded. On the date of aforesaid amendment, the SLSC was competent to grant subsidy to the extent of 50% and no more than that. The SLSC, however, wrongly accepted the application of the petitioner-company under the proviso to Clause 7(i)(a) by incorrectly relying upon the decision of the BIDI dated 01.04.2006 in raising the limit of subsidy upto 75%. The SLSC at the maximum could have granted the tax subsidy to the extent of 50% and could have, till the BIDI 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 up the case of the petitioner for consideration in its meeting held on 17.03.2011. Thus obviously, it could not have granted tax subsidy beyond 50%. The argument that impugned revisonal order constituted breach of the promise held out to the petitioner-company which was binding on the respondents by doctrine of promissory estoppel and equitable estoppel cannot be countenanced for the simple reason that there could be no estoppel against the statute. The BIDI did not direct the SLSC to gra....
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....tion whether assessee falls in the notification or in the exemption clause, has to be strictly construed and when once the ambiguity or doubt is resolved by interpreting the applicability of exemption clause strictly, the Court may construe the notification by giving full play bestowing wider and liberal construction, held the Supreme Court. In the present matter, case of the petitioners has not even been considered by the BIDI which merely relegated it to SLSC, as such the provisions of the RIPS-2003 are to be strictly adhered to. Unlike the exemption schemes where the assessee is not collecting the taxes from the customer/purchaser, here in the present case of subsidy, the tax is collected from the customers/purchasers and after depositing the same with the department, the amount to the extent of 50% or 75%, as per the entitlement certificate, is refunded to the assessee. Contention that every loss of revenue as a consequence of an order of the subordinate authority cannot be treated as prejudicial to the interest of the revenue cannot be countenanced for the simple reason that in the present case the decision taken by the SLSC was based on incorrect reading/understanding of dec....
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....t is of wide import and is not confined to loss of tax. The High Court of Calcutta in Dawjee Dadabhoy & Co. v. S.P. Jain (1957) 31 ITR 872 (Cal), the High Court of Karnataka in CIT v. T. Narayana Pai (1975) 98 ITR 422 (Kant), the High Court of Bombay in CIT v. Gabriel India Ltd (1993) 203 ITR 108 (Bom), and the High Court of Gujarat in CIT v. Minalben S. Parikh (1995) 215 ITR 81 (Guj) treated loss of tax as prejudicial to the interests of the Revenue. 9. Mr Abraham relied on the judgment of the Division Bench of the High Court of Madras in Venkatakrishna Rice Co. v. CIT (1987) 163 ITR 129 (Mad) interpreting "prejudicial to the interests of the Revenue". The High Court held: "In this context, (it must) be regarded as involving a conception of acts or orders which are subversive of the administration of revenue. There must be some grievous error in the order passed by the Income Tax Officer, which might set a bad trend or pattern for similar assessments, which on a broad reckoning, the Commissioner might think to be prejudicial to the interests of Revenue Administration". In our view this interpretation is too narrow to merit acceptance. The scheme of the Act is to levy and col....
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....led to grant of 50% tax subsidy only as on the date on which the SLSC met to consider its case and resolved to grant subsidy of 75%, it was not competent for that. Money from coffers of the State has been undersevely paid to the petitioner-company even though it was not entitled to receive the same. Adverting now to the challenge to the validity of Clause 13 of the RIPS-2003, we deem it appropriate to reproduce this clause which reads as under: "13. REVISION BY THE STATE GOVERNMENT: (a) The State Government in Finance Department may suo motu or otherwise revise an order passed by any Screening Committee wherever it is found to be erroneous and prejudicial to the interest of the State revenue, after affording an opportunity of being heard to the beneficiary industrial unit. (b) No order under the sub-clause (a) shall be passed by the State Government after the expiry of a period five years after the date by which the benefits under this scheme are fully availed of." The petitioner-company was very much aware about Clause 13 of the RIPS-2003 while submitting the application and availing the benefits. Therefore, the petitioner-company will be deemed to have waived all objectio....