TaxTMI 
TaxTMI 
2020 (7) TMI 513
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....blic limited company registered under the Companies Act, 1956 and engaged in the business of manufacturing and marketing of cement and allied products. It may be noted that previously, the Appellant was carrying on its business in the name of M/s. Grasim Industries Limited^3, a company of the Aditya Birla Group, which was engaged in manufacturing staple fiber, cement, textiles, sponge iron, aluminum etc. The company originally had two cement plants, one situated in Chittorgarh District and another in Jodhpur District in the State of Rajasthan. The Appellant No. 2 is said to be the Senior General Manager of the said Kotputli Unit of the Appellant No. 1. The matter in issue in the present case essentially relates to the extent to which the Appellant No. 1 company was entitled, under RIPS-2003, to avail the Capital Investment Subsidy^4 in relation to its Kotputli Unit.^5 2.2. The Respondent No. 1 herein is the State of Rajasthan and Respondent Nos. 2 to 5 are its officers related with respective departments whereas Respondent No. 6 is the State Level Screening Committee, who was the prescribed authority for determining eligibility for subsidy under the Scheme in question.^6 2.3.....
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....what has been noticed hereinabove and for what has been contended on behalf of the parties before us, the major questions involved in this matter, including those relating to the effect of the decision of BIDI as also the MoU entered into between the parties, revolve around the terms and stipulations of the Rajasthan Investment Promotion Scheme-2003. Hence, at the outset, it shall be apposite to take note of the relevant Clauses of this Scheme having bearing on the case. Rajasthan Investment Promotion Scheme-2003: Relevant Clauses and their amendments/revisions up to 05.08.2010 5. Rajasthan Investment Promotion Scheme-2003, with which we are concerned in this case, had been a non-statutory Scheme announced by the Government of Rajasthan through its Finance Department Order dated 28.07.2003^10. It is apparent from the material placed before us that this Scheme had undergone umpteen number of amendments/revisions from time to time. We may refer to the relevant Clauses as also their important amendments/revisions as infra.^11 5.1. As per the Preamble, the Scheme was introduced by the State Government with a view to 'provide investors an attractive opportunity to invest in....
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....nvestment Subsidy (Interest component) and/or Capital Investment Subsidy (Wage component) only if it commences first commercial production/operation during the operative period of the Scheme; (v) there has been no default in repayment of dues against term loan of the concerned financial institution(s) and/or Bank(s); and (vi) the applications as required under this Scheme are presented with full particulars and supporting documents, as required, before the appropriate authority within 90 days of commencement of commercial production/operation of the project in respect of which the Capital Investment Subsidy (Wage component)/Capital Investment Subsidy (Interest component) is sought. Such commercial production/operation should however commence during the operative period of the Scheme, i.e., on or before March 31st 2011. 5.3. The provisions relating to the prescribed authority for granting benefits under the Scheme and the prescribed authority to recommend grant of customized incentive package, as contained in Clauses 6 and 6A had been as follows^14: 6. AUTHORITY TO GRANT BENEFITS UNDER THE SCHEME: The prescribed authority for determining the el....
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....02.12.2005) and their deletion (with effect from 28.04.2006) form the bone of contention in this case. We may take note of the entire Clause 7 with its Sub-clauses (i) to (v) as amended/revised from time to time while also pointing out the dates of relevant amendments/revisions, which have bearing on the present case as follows^15: 7. Capital Investment Subsidy: (i) (a) In case of new investments made, the sum total of Capital Investment Subsidy (Interest component) and Capital Investment Subsidy (wage component) would be subject to a maximum limit of fifty percent of the tax payable and deposited under the Rajasthan Sales Tax Act, 1994, the Central Sales Tax Act, 1956 and Rajasthan Value Added Tax Act, 2003. (b) "In case of investment made in Modernization/Expansion, the amount of Capital Investment Subsidy shall be subject to maximum of fifty percent of the amount of the Central Sales Tax and VAT payable or deposited by the unit on its additional capacity, so created over and above the installed capacity before Expansion/Modernization. illustration: Installed capacity of unit 'A' before expansion/Modernization was 100 tons and after exp....
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....ansion/Modernizing the unit shall be eligible for Capital Investment Subsidy under the scheme from the date of payment of tax deposited on their additional production after Expansion/Modernization and for diversification, the amount in excess of the Central Sales Tax and VAT deposited by the unit over and above the highest tax payable or deposited whichever is higher, in any of the three immediately preceding years. Provided that for the first cement plant, having minimum capacity of 3 million tons per annum and minimum investment of Rs. 1000 crores, to be established in Jaisalmer district, the Capital Investment Subsidy shall be available to the investor for 12 years from the date of first repayment of interest in case of Capital Investment Subsidy (Interest component) and first payment of wage/employment in case of Capital Investment Subsidy (wage component) if the 25% of its manpower is local. Provided that for the new investments in the units being established in Special Economic Zones located entirely in backward and rural areas (as may be specified by the State Government by an order), the period of seven years shall stand raised to ten years. Provi....
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.... on 02.12.2005 and were deleted on 28.04.2006; but these Sub-clauses (vi) and (vii) of Clause 7 form the core of issues involved in this matter and hence, for ready reference, are extracted as under: (vi) Notwithstanding anything contained in sub Clauses (i) to (v) above, in case of new cement unit having investment exceeding Rs. 400 crores and with a minimum regular employment of 200 persons, the amount of subsidy shall be subject to a maximum limit of 75% of the tax payable or deposited under Rajasthan Sales Tax, 1994 or Value Added Tax Act (as and when introduced in the State) and Central Sales Tax Act, 1956 for a period of 7 years from the date of the commencement of production, subject to the following conditions, namely- 1. The investor shall submit an option to the Member Secretary, SLSC to avail benefit under this scheme within 180 days of this amendment; 2. The unit shall start commercial production within 5 years of filing of application for option; and 3. The sum total of 75% subsidy shall be calculated in the following manner: (a) Subsidy of 45% of the Rajasthan Sales Tax or Value Added Tax and Central Sales Tax shall be allo....
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....ll be as per the provisions of this Scheme. 5.4.2. A few material aspects concerning the amendments/revisions of Clause 7 of the Scheme had been that by way of Notification bearing No. F.12(20) FD/Tax/2005 dated 22.05.2008, the Government of Rajasthan proceeded to issue clarification to resolve the ambiguity relating to admissibility of subsidy with regard to cement industry in the wake of aforesaid amendment dated 28.04.2006, deleting Sub-clauses (vi) and (vii) of Clause 7. In the said Notification dated 22.05.2008, the State Government clarified, in specific terms and by way of illustrations, that none of the benefits under the deleted Sub-clauses (vi) and (vii) of Clause 7 of RIPS-2003 would be available on and after 28.04.2006 as follows: State Government hereby clarifies that the benefits under the deleted provision cannot be granted on and after 28.04.2006, that is to reiterate that none of the types enumerated at Sl. No. 1 to 6 below, quality for benefits under deleted Sub-clause (vi) and (vii) of Clause 7 of RIPS-2003 on or after 28.04.2006. 1. Where the option was submitted before 28.04.2006 and benefits were also granted by SLSC before 28.04.2006. ....
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....ot been completed within 15 days such cases shall separately be placed before the committee with reasons. Note: the District Level Screening Committee or the State Level Screening Committee, as the case may be, on being satisfied may condone the delay not exceeding 180 days in filing of the application from the prescribed date of application. (iii) The Screening Committee shall dispose of the application within fifteen days of its presentation by the Member Secretary. If the Committee approves the case, the Member Secretary shall issue Entitlement Certificate in the prescribed format, within three days of such decision and convey the decision to all concerned Departments, financial institutions, Banks, Assistant Commissioner/Commercial Taxes Officer of the Circle where the dealer is registered under the RST/CST/VAT provisions, for necessary compliance. (iv) In case the Committee rejects the application, the same shall be communicated to the applicant within a week of the date of such decision. (v) The Assistant Commissioner/Commercial Taxes Officer of the area where the eligible unit is registered shall be the Nodal Officer to give effect to the ....
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....he Scheme as and when needed in public interest. These Clauses 10 to 14 may also be reproduced as under: 10. TERMS & CONDITIONS: The Capital Investment Subsidy (Interest component) and/or Capital Investment Subsidy (Wage component) sanctioned and paid under the Scheme and the exemption of luxury tax, electricity duty, mandi tax, entertainment tax, stamp duty, conversion charges and other benefits availed under the Scheme shall be subject to the following conditions. Breach of any of these conditions shall make the Capital Investment Subsidy/exemption amount liable to be recovered as Tax or arrears of land revenue/alongwith interest @ 18% per annum from the date from which the Capital Investment Subsidy was provided. (a) The unit availing Capital Investment Subsidy (Interest component) and/or Capital Investment Subsidy (Wage component) and availing exemption of luxury tax, electricity duty, mandi tax, entertainment tax, stamp duty, conversion charges and other benefits under the Scheme shall comply with all statutory laws and Regulations. Non-compliance may result in cancellation/withdrawal of the benefits under the Scheme. (b) The unit availing C....
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....t 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. 14. REVIEW OR MODIFICATION OF SCHEME: The State Government in the Finance Department reserves the right to review or modify the Scheme as and when needed in public interest. BIDI: Composition and Mandate 6. Having taken note of salient features as also the relevant provisions of the Scheme i.e., RIPS-2003 and their amendments, we may also take note of a few facts relating to BIDI, whose decision carries a material bearing on the questions involved in this case. 6.1. The restructuring of BIDI and its mandate was specified by the State Government in its Administrative Reforms (Gr.3) Department by the order dated 15.01.2005 in the following terms: In superannuation of department....
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....nd allied products; previously, the Appellant was carrying on its business in the name of M/s. Grasim Industries Limited and acquired the present name from 01.08.2010. The company originally had two cement plants, one situated in Chittorgarh District and another in Jodhpur District in the State of Rajasthan. 7.2. It appears from the material placed on record that the company (then carrying the name M/s. Grasim Industries Limited), proposed to put up a cement plant with installed capacity of 3 MTPA^18 at Kotputli, District Jaipur in the State of Rajasthan and pursuant to a decision taken in BIDI meeting dated 10.01.2002, the mining lease for an area measuring 5.02 sq. kms. was transferred to the company at the cost of Rs. 46.50 lakhs with the condition that the company shall put up the cement plant within a period of three years. However, this task of putting up the cement plant at Kotputli could not be accomplished within the expected time, perhaps due to various pending litigations. Be that as it may, after the aforesaid Sub-clauses (vi) and (vii) were added to Clause 7 of the Scheme w.e.f. 02.12.2005, the company made a request for grant of incentives; and this request was dul....
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....a period 15 years No such policy exists The total financial implication over a period of 15 years will be Rs. 290.70 crores. 4. 100% exemption of Electricity duty for a period of 15 years As per RIPS-2003, 50% exemption from Electricity duty is available for seven years. Furthermore, for new investment exceeding Rs. 400 crores, 100% exemption from Electricity duty is admissible on self generated energy in respect of investment in Captive power plant. If power is purchased from Grid (DISCOMs), the total financial implication over a period of 15 years will be Rs. 30.90 crores. 5. Subsidies will be subject to a maximum the total investment in the project i.e. Rs. 1200 crores. No such policy exists. In that case, the company is asking the total benefit up to the extent of Rs. 1200 crores. Views of the Finance Department The value of the enhanced incentives/exemptions will be approximately Rs. 1130 crores which would be almost equal to the cost of the plant being set up by the company (at a cost of Rs. 1200 crores). Finance Department is of the view that incentives/exemptions beyond RIPS-2003 should not be given. If further incentives/exem....
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....ptive Power Plant. Details are as under: Proposed total cost : Rs. 1,100 crore Total Capacity : 3.5 million ton/annum Minimum Employment : 250 Expected Date of Completion : March 2008 We request you to register the above in Rajasthan Investment Promotion Policy 2003 Scheme of sub Clause (vii) of Clause 7 vide Notification No. F.12(20)FD/Tax/05-Pt dated 2/12/2005. We also request that in case any special package of incentives is approved for any other similar cement plant, then the same may be granted to our aforesaid plant also. 7.5. However, before any decision was taken on the aforementioned application dated 26.04.2006, the State Government proceeded to delete the aforesaid Sub-clauses (vi) and (vii) of Clause 7 of RIPS-2003 by way of its amendment Notification No. F.12(63)FD/Tax/05 dated 28.04.2006. 7.6. The company felt distressed with the aforesaid amendment dated 28.04.2006 and deletion of Sub-clauses (vi) and (vii) of Clause 7 of the Scheme and hence, on 26.05.2006, its Group Executive President made a representation to the Chief Minister of Rajasthan, stating the steps taken by the company after....
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....ich will make our proposed plants unviable. In fact we had represented to the Government of Rajasthan for customized package of incentives as provided under the Rajasthan Investment Policy 2003 for investment of Rs. 1,000 crores and above. Both the above proposed plants are expected to contribute over Rs. 225 crores each to the exchequer & substantial part of which will be shared by the State Government. In the present high growth environment of Indian economy, cement industry being one of the prominent infrastructure industry is providing support to other industries & such retrogatory steps may affect the growth of the cement industry & ultimately overall growth of the Indian economy. We sincerely request your goodself to reconsider & withdraw the above notification dated 28th April 2006 which will also be in the natural justice as we have planned investments based on the notification dated 02nd December 2005. We hope that our request shall be considered favourably enabling us to take further steps for implementation of the proposed plants in a time bound manner. 7.6.1. It appears that the request so made by the company evoked only a pithily ....
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....n 26.04.2006 pursuant to the notification dated 02.12.2005^22. The aforesaid decision of BIDI dated 01.04.2006, the letter of BIP dated 17.06.2006, and the amendment dated 30.09.2008 of Sub-clause (iii) of Clause 7 of the Scheme were also referred and then, the applicant submitted as under: 6. ....In accordance with above amendment the Applicant Company is eligible for subsidy as investments have already been made of significant amount of Rs. 1,184.47 crores upto 30th April, 2008 (before 22.05.2008) and also signed the MOU during Resurgent Rajasthan Summit on dated 30th November, 2007 for setting up the 40 Lac MT/annum cement plants at Mohanpura, Tehsil Kotputli, Distt. Jaipur and the copy of the Memorandum of Understanding is enclosed herewith as Annexure-6. We are also enclosing herewith the certificate of Chartered Accountants certifying the investment of Rs. 1,184.47 crores up to 30th April, 2008 in Grasim Cement-Kotputli as Annexure-7. 7. That we have already filed the option under the notification dated 02.12.2005, within 180 days and also commenced the commercial production on 20.01.2020 i.e. within five years from the date of filing the option, investments....
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.... loan borrowing schemes, thereafter units are eligible Under Rule 5(i) of the plan for seeking term loan from financial institutions & local body. And earlier in many cases the State Level Screening Committee have on the basis of Capital Investment (Interest component) allowed eligibility. Therefore, in this case the unit is covered under the definition of term loan for seeking term loan from ECB & Buyers Credit then unit should be given the benefit of eligibility of interest subsidy. On the basis of advise of the representative of finance department Secretary, Finance committee has take the decision that unit is for the time being allowed for the starting from the first date of commercial production, first VAT challan deposit date 5/2/2010 for 7 years capital investment subsidy (interest component) eligibility & loan received from HDFC bank of 250 crore & axis bank 200 crores means total 450/crore etc may be granted eligibility for term loan and already received ECB credit & Buyers matters & in consideration of earlier matters, matter may be referred to finance department. The eligibility certificate may be amended as per the decision of the Finance Department decision. C....
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.... (ii) Wage & Emp. Component @ 5% from 05.02.2010 (Interest Comp. eligibility available on Rs. 450 crs. Term loan and 216.25 crs. ECB Credit Total 666.25 crs. only) @ 25% from 05.02.2010 Note: 1. In case of new units, the maximum amount of interest and wage/employment subsidy shall not exceed 75% of the State Sales Tax/VAT and the Central Sales Tax paid by the applicant dealer. 2. This certificate is liable to amendment/suspension/revocation, if obtained on misrepresentation or concealment of facts or by fraud or on breach of any of the terms and conditions, mentioned in the relevant notification. 3. This certificate shall be valid for a period of seven years from 05.02.2010. 4. This certificate may be revoked by the issuing authority in case the applicant violates any of the conditions of the Scheme or the certificate. 5. This Revised Entitlement Certificate is being issued superseding earlier Entitlement Certificate issued being No. 02/190 on 29.04.2011. (bold as in original) 7.13. It is not a matter of much dispute that the Appellant fully availed the benefit of 75% subs....
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....er RIPS-2003 all the relevant facts remained available in the file of Finance Department, therefore with regard to the order issued by the BIDI for increasing maximum limit of capital investment subsidy from 50% to 75% in these matters the requisite factual comments may be forwarded to the Finance Department at the earliest possible. 8.3. It appears that the aforesaid communication and its reminders from the Finance Department to the Industries Department remained unanswered for a long length of time.26 Ultimately, a reply dated 09.02.2017 was forwarded by the Member-Secretary, SLSC, which too was carrying certain typographical errors and hence, another reply was sent by the said Member-Secretary on 17.02.2017, seeking to furnish 'factual comments in respect of grant of capital investment subsidy upto 75%' to the Appellant in the Meeting dated 17.03.2011. Therein, the said Member-Secretary stated, inter alia, that "perhaps" the benefit was given on the basis of decision taken by BIDI. This communication dated 17.02.2017 has also been reproduced in the impugned order dated 12.03.2018 and the relevant passage thereof may be reproduced for ready reference as under27: ....
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....tputli Cement Works) Brief Notes (Note-A and Note-B) are being enclosed which concludes that in Agenda Notes placed being SLSC being shown approval of 75% capital investment subsidy to these matters by the BIDI the SLSC has taken defective decision. In these matters decision of SLSC is defective and contrary to the revenue interest therefore it is necessary to again place the matters along with all facts and documents before SLSC. By the even number Letter dated 17.11.2011 of the Finance Department on seeking information of the order pertaining to extending subsidy limit up to 75% by BIDI your office has replied after lapse of more than 5 years. Need of fixing responsibility for such delay is also appeared. (sic) Take action accordingly and up date to the Finance Department. 9. In the above-noted background, the SLSC proceeded to re-examine the matter in its 20th meeting held on 22.05.2017. In the Minutes of this meeting dated 22.05.2017, the SLSC underscored the very same doubts as raised by the Finance Department on the purport and effect of the decision of BIDI and suggested for appropriate action under Clause 13 of RIPS-2003. The relevant part of this resol....
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.... Finance Department has not been exhausted. Therefore, it has been decided that in this matter Under Rule 13 recommendation may be sent to Finance Department and for fixing the responsibility action may be taken on file. In the last, thanks given to President & the meeting is closed. Revision proceeding under Clause 13 of RIPS-2003: impugned order dated 12.03.2018 10. Following the aforesaid recommendation of SLSC, a notice bearing No. P12 (55) Fin/tax/2017-Part-I dated 10.07.2017 was issued to the Appellant by the State Government informing about the proposed action of the Finance Department under Clause 13 of RIPS-2003, because the decision taken by SLSC on 17.03.2011 was found to be erroneous and against the interest of revenue. The Appellant was called upon to enter into defence with relevant documents and evidences. 10.1. Having received the aforesaid notice dated 10.07.2017 from the State Government, the Appellant made an application under the Right to Information Act to obtain a copy of agenda note regarding item No. 13 in the minutes of meeting dated 01.04.2006 of BIDI and minutes of Pre-BIDI meeting dated 28.03.2006. After obtaining necessary documents, t....
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....rroneous because while considering the matter the Committee presumed that increasing of capital investment subsidy of deposited tax from 50% limit to 75% limit as per first proviso to Clause 7(i)(a) and 7(i)(b) of the Rajasthan Investment Promotion Scheme, 2003 (RIPS-2003) has been approved by the Board of Infrastructure Development and Investment Promotion (BIDI) in its meeting dated 01.04.20016 (sic) whereas no such order was passed by the Board of Infrastructure Development and Investment Promotion (BIDI) for increasing available capital investment subsidy from 50% limit to 75% of payable and deposited tax in view of provision of Clause 7(i)(a) and 7(i)(b) of Rajasthan Investment Promotion Scheme 2003 (RIPS-2003). ii) In furtherance to the decision taken under Agenda No. 13 of Meeting dated 17.3.2011 of State Level Screening Committee (SLSC) under Agenda No. 18 of in next meeting dated 17.10.2011 of State Level Screening Committee (SLSC) reference of capital investment subsidy up to 75% of total payable tax is also erroneous. iii) Decision taken under Agenda No. 13 of Meeting dated 17.3.2011 of State Level Screening Committee (SLSC) and in furtherance thereto r....
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.... committee (SLSC) this order is issued in this revision proceeding that- i) Kotputli Cement Works Unit of the Company would be able to get capital investment subsidy as per provision of Clause 7(i)(a) of Rajasthan Investment Promotion Scheme, 2003 (RIPS-2003) to the extent of 50% of payable and deposited tax because no order has been passed by Board of Infrastructure Development and Investment Promotion (BIDI) for increasing capital investment subsidy as per provision of Clause 7(i)(a) and 7(i)(b) of Rajasthan Investment Promotion Scheme, 2003 (RIPS-2003) from 50% to 75% of the payable and deposited tax. ii) The Entitlement Certificate dated 29.04.2011 issued in furtherance to State Level Screening Committee (SLSC) Meeting dated 17.03.2011 and also Revised Entitlement Certificate dated 24.11.2011 issued in furtherance to Meeting dated 17.10.2011 of State Level Screening Committee (SLSC) are hereby cancelled and it is ordered to State Level Screening Committee (SLSC) to issue new Entitlement Certificate for investment subsidy up to 50% limit of total tax to Kotputli Cement Works Unit of the Company. iii) Disbursement officers of the Capital Investment Subs....
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....before the undersigned. Please note that undertaking in Form No. 2 for payment of 18% interest in case of availing excess benefits has already been given by the company. It is also informed that in case the aforesaid amount of Rs. 33,14,71,610/- is not deposited till 31.05.2018 under the provisions of the Rajasthan Investment Promotion Scheme 2003 then the said amount shall be recovered from the company as land revenue dues. The writ petition before the High Court: impugned order dated 11.01.2019 13. Aggrieved by the order dated 12.03.2018 as passed by the ACS in revision proceedings under Clause 13 of RIPS-2003; issuance of the Re-revised Entitlement Certificate; and the order dated 04.04.2018 of the ACS demanding the excess subsidy amounting to Rs. 15,96,37,794/- together with interest amount of Rs. 17,18,33,816/-, the Appellant preferred the writ petition, being W.P. No. 9090 of 2018, before the High Court of Judicature for Rajasthan, Bench at Jaipur, challenging Clause 13 of RIPS-2003 as being arbitrary and unconstitutional as also seeking the relief of quashing the orders dated 12.03.2018, 02.04.2018 and 28.03.2018 amongst other prayers. The High Court has dismi....
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.... under the RIPS-2003 as amended from time to time'. 13.3. The High Court further took note of the aforementioned clarification dated 22.05.2008 whereby the State Government made it clear that 'on deletion of Sub-clauses (vi) and (vii) of Clause 7 of the RIPS-2003 w.e.f. 28.04.2006, none of the types enumerated at Serial No. 1 to 6 in the clarification will qualify for benefits under the deleted sub-clauses'. The High Court also referred to the amendment dated 30.09.2008, whereby another proviso was added after Sub-clause (iii) of Clause 7 to the effect 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 Clause 7 on the condition that the unit shall start commercial production by 31.03.2011. 13.4. Having thus traversed through the whole gamut of Clause 7 of RIPS-2003 with its amendments/revisions as also the background aspects relating to the propositions of the company, the High Court took note of the application^29 made by the company for issuance of entitlement certificate a....
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.... firstly because there is no ambiguity whatsoever in the decision of the BIDI and secondly, such decision has to be read in context of the facts. The BIDI never explained its understanding subsequently on 01.04.2006. The SLSC thus misunderstood the decision of the BIDI. The RIPS-2003 also does not provide any clarification for such a decision. In the cited judgments on this aspect, it has been indicated that such interpretation by a particular 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.... (emphasis in bold supplied) 13.6. Another line of submissions on behalf of the Appellant that tax incentives cannot be withdrawn retrospectively was also rejected by the High Court with reference to the nature of benefits availed by the Appellant. The High Court, inter alia, observed as follows: .....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 liabili....
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....ting held on 17.03.2011. Thus obviously, it could not have granted tax subsidy beyond 50%. (emphasis in bold supplied) 13.8. Proceeding further, the High Court dealt with the submission made on behalf of the Appellant that the Respondents were bound by the principles of promissory estoppel and rejected the same with two-fold observations: one that there could be no estoppel against the statute; and secondly, that there was no such representation held out to the Appellant by BIDI or SLSC as alleged. The High Court observed and held as under: The argument that impugned revisional 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 grant 75% tax subsidy to the Petitioner-company. It merely directed that "the recently announced cement package and RIPS-2003 shall be applicable on the company." When the BIDI had itself not taken the decision and directed for extending the recently announced cement package as per RIPS-20....
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....misconstrued the decision of BIDI and observed that the view taken by SLSC in extending unwarranted benefit to the Appellant under the non-existing Sub-clauses (vi) and (vii) of Clause 7 of RIPS-2003 was not at all a possible view of the matter; and that the Appellant 'fully understood this situation', which was evident from its representation made on 26.05.2006. 13.11. Yet further, the High Court examined the contention on behalf of the Appellant 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 and also referred to the cited decision in the case of Malabar Industrial Co. Ltd. v. Commissioner of Income Tax, Kerala State (2000) 2 SCC 718 while pointing out that the phrase "prejudicial to the interest of revenue" is of wide import and not confined to loss of tax alone. After extracting relevant passages from the cited decision, the High Court applied the principles to the case at hand as follows: Applying the ratio of the aforesaid judgment on the facts of the present case, it has to be accepted that due to erroneous reading of the order of the BIDI, which did not b....
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....lause 13 of the RIPS-2003 was issued to the Petitioner-company by the Government on 10.07.2017, which was well within the period of five years, given in Clause 13(b) of the RIPS-2003. In fact, the show cause notice was issued/received within six months from February, 2017, up to which time, subsidy was fully availed by the Petitioner-company. Therefore, the argument that exercise of power of revision within five years after the expiry of seven years during which benefit was availed by the Petitioner-company, makes the said provision as unreasonable, arbitrary, oppressive and violative of fundamental rights of the Petitioners, has no merit. 14. The order so passed by the High Court dismissing the writ petition and the action of the Respondents recalling 25% part of the subsidy have been questioned in this appeal. Rival Contentions The Appellants 15. Assailing the orders passed by the High Court as also the Additional Chief Secretary, learned Senior Counsel for the Appellants has painstakingly taken us through the facts of the case and has made elaborate submissions that grant of 75% subsidy to the Appellant company had been valid in law and justified on facts....
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....alter their stand at the later stage. The learned Counsel has argued, while placing reliance on the decision of this Court in Spentex Industries Ltd. v. C.C.E. (2016) 1 SCC 780, that SLSC's understanding of the record and the factual position deserves to be accepted by the Court on the doctrine of Contemporanea Expositio. 15.2.1. The learned Senior Counsel has further submitted that though it was expressly admitted in the Show Cause Notice dated 10.07.2017 that BIDI did take a decision on 01.04.2006, but it was alleged that BIDI did not expressly grant 75% subsidy; and the same view is reflected in the revisional order, which has been approved by the High Court. However, according to the learned Counsel, this view would render the words 'recently announced cement package' in BIDI's decision dated 01.04.2006 completely meaningless; and this view is also contrary to the contemporaneous understanding of the SLSC, as set out in the Minutes of its meeting dated 17.03.2011. The learned Counsel would maintain that the words of BIDI, giving 'recently announced cement package' to the company, could only mean granting of 75% subsidy, though it was not under or in t....
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....C 718 and has submitted that Clause 13 of RIPS-2003, which confers power on the State Government to revise SLSC's orders, is identical to Section 263 of the Income Tax Act, 1961, which has been interpreted by this Court in the manner that if the adjudication order constitutes one of the possible views, then no revision would lie. According to the learned Counsel, the view taken by SLSC, as set out in its Minutes of the meeting dated 17.03.2011, had certainly been a possible view and, therefore, in any event, no proceedings for revision under Clause 13 of RIPS-2003 were maintainable against this decision of SLSC. 15.6. The learned Senior Counsel has also argued, while relying on various decisions, including that of this Court in Birla Jute & Industries Ltd. v. State of M.P. 119 STC 14 (S.C.) and that of Rajasthan High Court in Commissioner, Commercial Taxes, Rajasthan, Jaipur and Anr. v. Rajasthan Taxation Tribunal and Ors. 38 Tax Up-date 131, that when the incentives granted to the Assessee had been fully availed of and the incentive period had already been completed, the incentives cannot thereafter be revoked or recalled with retrospective effect. 15.7. The learned Seni....
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.... of this position, the Appellants have abandoned their plea of claiming relief under those Sub-clauses (vi) and (vii) and have started relying on the proviso to Clauses 7(i)(a) and 7(i)(b) of the Scheme. 16.1.1. While refuting the claim of the Appellant, as based on the proviso to Clauses 7(i)(a) and 7(i)(b) of RIPS-2003, the learned AAG has contended that the general powers under the said proviso could not have been exercised by BIDI on 01.04.2006, because on that date, the said Sub-clauses (vi) and (vii) of Clause 7 were in existence and they co-related with cement units alone. The learned AAG would submit that the Appellant company is a cement unit and the contemporaneous correspondence amply demonstrates that even the Appellants construed at the relevant point of time that the subsidy was given under the said Sub-clauses (vi) and (vii) of Clause 7 of RIPS-2003; and only in order to circumvent the deletion of the said Sub-clauses (vi) and (vii), the Appellants started to claim subsidy under proviso to Clause 7(i)(a) and 7(i)(b) of RIPS-2003. According to the learned AAG, the claim so made by the Appellant had only been an afterthought and cannot be countenanced, for it would ....
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....ority has clearly exercised the power under Clause 13 of RIPS-2003 within the period of five years prescribed therein from the last date of availing the benefit. According to the learned AAG, the last date of availing the benefit by the Appellant company being in the month of February 2017, the revisional order passed on 12.03.2018 remains well within the stipulated period under Clause 13(b) of RIPS-2003. 16.5. Levy of interest has also been justified on behalf of the Respondents with reference to the terms and conditions of RIPS-2003 and with the submissions that the Appellant company is bound to refund the amount wrongfully received while also compensating the Government in terms of interest stipulated in the Scheme or at least as agreed to in the undertaking submitted to the Government. 16.5.1. It has been argued by the learned AAG that the subsidy was in the form of a contract between the State Government and the Appellant company and hence, the Appellant is bound by the undertaking that if any excess benefit is availed, the same shall be returned with 12% per annum interest. The learned AAG has submitted that even on the principles embodied in Section 72 of the Indian Co....
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....been suggested that the company applied for a customised package of incentives and the decision of BIDI ought to be equally viewed in the light of the provision authorising grant of customised package. In our view, these submissions suffer from several shortcomings, where a fine but well-defined line of separation between the resolution/decision of BIDI dated 01.04.2006 and the decision of SLSC dated 17.3.2011, is ignored. 19.1. As noticed, the application earlier made by the company was considered in the Pre-BIDI meeting dated 28.03.2006 and the recommendations therein had only been to the effect that the cement package recently announced and RIPS-2003 should be applicable to the company. The decision of BIDI in its meeting dated 01.04.2006 had also been specifically in line of the Pre-BIDI recommendations where it was directed that 'the recently announced cement package and RIPS-2003 will be applicable on the company'. At the given stage of Pre-BIDI recommendations dated 28.03.2006 and the decision of BIDI dated 01.04.2006, the aforesaid Sub-clauses (vi) and (vii) of Clause 7 of RIPS-2003 were in existence and, in fact, the phrase "recently announced cement package" pr....
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....Scheme. 20. The other limb of submissions that BIDI had granted 75% subsidy under proviso to Clauses 7(i)(a) and 7(i)(b) of RIPS-2003 remains unacceptable for a variety of reasons. It is apparent on the face of the record that neither in Pre-BIDI's recommendation dated 28.03.2006 nor in the final decision of BIDI dated 01.04.2006, there had at all been any proposition for invocation and application of the said proviso to Clauses 7(i)(a) and 7(i)(b) of RIPS-2003. The application made on behalf of the company had precisely been with reference to the contents of the said Sub-clauses (vi) and (vii) of Clause 7 seeking 75% subsidy, 45% being allowable upfront and remaining 30% in the form of interest and wage/employment subsidy, with cap of interest subsidy to the extent of 5% of the documented rate of interest. There had never been any proposal before BIDI in the case of the Appellant company to invoke the said proviso to Clauses 7(i)(a) and 7(i)(b) of RIPS-2003 so as to increase the maximum limit of subsidy to 75%. Proceeding ahead of the decision of BIDI dated 01.04.2006, the fact that the company was consciously seeking the benefit Under Sub-clause (vii) of Clause 7 of RIPS-2....
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....d such incorrect reading of BIDI's order in its decision making process so as to grant 75% subsidy. The SLSC, who had the power to grant subsidy upto 50% could not have granted beyond this limit by unwarranted application of the decision of BIDI dated 01.04.2006 and that too with its misconstruction; by reading into it such powers, which had neither been invoked nor exercised by BIDI. The decision of SLSC dated 17.03.2011 and its repeat decision dated 24.11.2011, turn out to be wholly perverse and could only be disapproved. 21. Taking up the question if the decision of BIDI is relatable to the grant of a customised package, the answer would be in the negative without requiring much discussion because such grant of customised incentive package for any particular company or establishment was governed by Clause 6-A of RIPS-2003 that had an entirely different prescribed authority in the form of a Committee, who was supposed to examine individual cases and could have made recommendation for sanction of the customised incentive package through BIDI. In the entire length of dealings in this matter, we are unable to find any such decision by the Committee referred to in Clause 6-A a....
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....alled other view (the wrong one) could arise only if SLSC is held entitled to simply turn itself away from the applicable provisions of the Scheme while ignoring the fact that Sub-clauses (vi) and (vii) of Clause 7 had already been deleted; and is simultaneously conferred with dubious discretion to interpret the decision of BIDI in whatever manner it would chose to. Obviously, such arbitrary authority or unfettered discretion is not available to any decision taking body; and could least be countenanced for a responsible body of the Government, like SLSC, who deals with public exchequer. Having examined the record in its totality, we have not an iota of doubt that the initial decision of SLSC had not only been erroneous but had been highly perverse, reaching the level of absurdity. The view of SLSC cannot be regarded as a possible view of the matter from any standpoint or any angle. 24.2. Apart from the above, even if it be assumed for the sake of argument that there was any ambiguity in the applicable provisions of RIPS-2003 or the decision of BIDI, we are clearly of the view that the benefit of any such ambiguity could not have been extended to the Appellant company. If at all ....
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....ee, rather it would be interpreted in favour of the revenue. *** *** *** 19. Without expanding unnecessarily on variegated provisions dealing with different incentives, suffice would be to notice that the proposition that incentive provisions must receive "liberal interpretation" or to say, leaning in favour of grant of relief to the Assessee is not an approach countenanced by this Court. The law declared by the Constitution Bench in relation to exemption notification, proprio vigore, would apply to the interpretation and application of any akin proposition in the taxing statutes for exemption, deduction, rebate et al., which all are essentially the form of tax incentives given by the Government to incite or encourage or support any particular activity...... 24.3. In view of the above, contention on the part of the Appellant about existence of any ambiguity in the matter and extending the benefit of ambiguity to itself could only be, and is, rejected. Doctrine of Contemporanea Expositio: if applicable? 25. The learned Senior Counsel for the Appellant has endeavoured to persuade us that SLSC's understanding of the record and factual position dese....
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....efully extracted as under: Usage or practice developed under a statute is indicative of the meaning ascribed to its words by contemporary opinion and in case of an ancient statute is an admissible external aid to its construction.^32 Referring to Magna Carta, Lord Coke said: "This and the like were the forms of ancient Acts and graunts, and the ancient Act and graunts must be construed and taken as the law was holden at that time when they were made".^33..... The doctrine of stare decisis may also be applied when the law is settled in a State for over 100 years by considered view of the High Court of that State.^34 .....Even if the persons who dealt with the Act understood it in a particular manner, that does not prevent the court in giving to the Act its true construction.^35...The Supreme Court has refused to apply the principle of Contemporanea Expositio to the Telegraph Act, 1885^36 and the Evidence Act, 1872.^37 Further, an interpretation to a statute received from contemporary authority is not binding upon the Courts and may have to be disregarded if such interpretation is clearly wrong.... 25.3. Suffice it to observe for the present purpose that in....
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.... by visualising the result, if at all this doctrine is applied. It is not far to seek that if at all this doctrine is applied, the consequence would be that howsoever erroneous a decision by the executive or administrative authority may be, once it emanates from the understanding of some of the officers or authorities, the same would acquire immunity from scrutiny for all time to come. Such has never been the intent of the doctrine of Contemporanea Expositio nor could such a result be countenanced. Whether principles of Promissory Estoppel apply? 26. Another line of submissions on behalf of the Appellant based on the principles of promissory estoppel remains equally baseless. Of course, while rejecting such a contention, the High Court observed that this doctrine cannot be invoked against a statute but, at the same time, the High Court also categorically found that in fact, no representation was held out to the Appellant by BIDI or SLSC as sought to be alleged. 26.1. RIPS-2003 had admittedly been a non-statutory scheme but that hardly makes a difference looking to the nature of purport of this Scheme whereby the State was ultimately to extend the benefit by reducing its in....
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.... of this Court in the case of Dr. Ashok Kumar Maheshwari v. State of U.P. and Anr. (1998) 2 SCC 502 would suffice: 22. Whether a promissory estoppel, which is based on a "promise" contrary to law can be invoked has already been considered by this Court in Kasinka Trading v. Union of India (1995) 1 SCC 274 as also in Shabi Construction Co. v. City & Industrial Development Corporation (1995) 4 SCC 301 wherein it is laid down that the rule of "promissory estoppel" cannot be invoked for the enforcement of a "promise" or a "declaration" which is contrary to law or outside the authority or power of the Government or the person making that promise. (emphasis in bold supplied) 26.3. Even otherwise, when the decision of SLSC, or any decision of any authority for that matter, was subject to revision by the Government in terms of Clause 13 of the Scheme, it cannot be suggested that the said power of revision cannot be invoked. In other words, the principles of promissory estoppel cannot operate against such revisional power of the Government. Hence, this part of the contentions also deserves to be, and is, rejected. Exercise of powers of revision by the State Governmen....
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....of an order of the Assessing Officer cannot be treated as prejudicial to the interests of the Revenue, for example, when an Income Tax Officer adopted one of the courses permissible in law and it has resulted in loss of revenue; or where two views are possible and the Income Tax Officer has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the interests of the Revenue unless the view taken by the Income Tax Officer is unsustainable in law. It has been held by this Court that where a sum not earned by a person is assessed as income in his hands on his so offering, the order passed by the Assessing Officer accepting the same as such will be erroneous and prejudicial to the interests of the Revenue. (See Rampyari Devi Saraogi v. CIT (1868) 67 ITR 84 (SC) and in Tara Devi Aggarwal v. CIT (1973) 88 ITR 323.) 11. In the instant case, the Commissioner noted that the Income Tax Officer passed the order of nil assessment without application of mind. Indeed, the High Court recorded the finding that the Income Tax Officer failed to apply his mind to the case in all perspective and the order passed by him was erroneous....
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....of five years stipulated in the Scheme. In this view of the matter, reference to the decisions like that of this Court in the case of Birla Jute & Industries Ltd. (supra) remains entirely misplaced. The observations in the referred decisions are not relatable to the specific stipulation of the Scheme in question and need no further dilation. 29. It is also noteworthy that the fundamental questions on the correctness of the decision of SLSC dated 17.03.2011 were indeed raised by the Finance Department of the Government by its letter dated 17.11.2011. As noticed, the Industries Department chose not to respond to the said communication and reminders of the Finance Department for an abnormal length of time and sent a reply only in the month of February 2017. By that time, the Appellant had practically availed the entire advantage under the questioned decision of the SLSC. Thereafter, the SLSC re-examined the matter only on 22.05.2017 and left it for the Finance Department to take proceedings under Clause 13 of RIPS-2013. In the given set of facts and circumstances, the suggestion that already availed benefit cannot be withdrawn turn out to be hollow and baseless because whatever was....
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....f Appellant. The principles of promissory estoppel are equally inapplicable and the State Government has rightly exercised the powers of revision under Clause 13 of RIPS-2003 to interfere with the erroneous decisions of SLSC whereby the Appellant was allowed 25% extra subsidy and which was, obviously, prejudicial to the interest of revenue; and mere availing of the benefits by the Appellant under the erroneous decisions of SLSC is of no effect, particularly when the State Government has exercised the powers of revision within the time stipulated in Clause 13 of RIPS-2003. 31. In view of the above, we have no hesitation in affirming the order of the High Court dated 11.01.2019 and in turn, approving the order of revision dated 12.03.2018 insofar the Additional Chief Secretary held that the Kotputli Cement Works Unit of the Appellant company was entitled to Capital Investment Subsidy only to the extent of 50% of the payable and deposited tax and not to the extent of 75%, as availed by it pursuant to the Entitlement Certificates dated 29.04.2011 and 24.11.2011 erroneously issued by the State Level Screening Committee. The SLSC was rightly directed to issue the new Entitlement Certi....
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....mpany is found entitled to subsidy only to the extent of 50%, it cannot be said that the excess 25% is relatable to breach of any of the conditions of the Scheme on the part of the Appellant nor the Appellant could be said to have availed the excessive amount of subsidy by way of any misrepresentation. The basic fault had been on the part of SLSC in taking erroneous decisions and in issuing unauthorised Entitlement Certificates dated 29.04.2011 and 24.11.2011. The Respondent State took an abnormally long time in realising the mistake on the part of its functionaries and took corrective measures only after the entire benefit had already been availed of inasmuch as the proceedings for recall were initiated only in the month of July 2017 which led to the impugned order dated 12.03.2018 and then, the Re-revised Entitlement Certificate was issued only on 02.04.2018. 33.2. Apart from the above, it is also noticed that even when the Scheme envisaged interest at the rate of 18% per annum, in Form 2 filed by the Appellants, undertaking was stated to repay the amount of subsidy, in case of availing excessive benefits or non-compliance with the provisions of the Scheme, with interest at th....
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.... Jaipur is affirmed but with the modification that the Respondents shall be entitled to recover interest at the rate of 12% per annum from the date of availing of excessive subsidy (25%) by the Appellants until payment/recovery. In the circumstances of the case, the parties are left to bear their own costs. FOOTNOTE 1 'ACS' for short 2 Hereinafter also referred to as 'RIPS-2003' or simply 'the Scheme'. 3 The company's name was changed to M/s. Ultratech Cement Limited w.e.f. 01.08.2010. 4 Hereinafter also referred to as 'the subsidy'. 5 For continuity of discussion, we shall refer only to the Appellant No. 1 as 'the Appellant' or 'the company'. 6 For continuity of discussion, we shall refer to the Respondents collectively and shall refer to the particular Respondent only when necessary in the context. 7 'SLSC' for short. 8 "BIDI" for short. 9 "MoU" for short. 10'Finance Department' has appeared in short form 'FD' in some of the expressions. 11 A copy of this Scheme, as amended upto 05.08.2010, has ....