TaxTMI 
TaxTMI 
TaxTMI 
2020 (7) TMI 513
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....s 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 Limited3, 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 Subsidy4 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. By the aforesaid order of revision dated 12.03.2018, the ....
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.... 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 28.07.200310. 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 the State of Rajasthan'. As per its revised Clause 2, the Scheme was....
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.... 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 follows14: 6. AUTHORITY TO GRANT BENEFITS UNDER THE SCHEME: The prescribed authority for determining the eligibility, except for exemption from stamp duty and/or conversion charges, under this Scheme shall be the following Screening Committees, whose decisions, subject to other provisi....
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....sent case as follows15: 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 expansion it becomes 150 tons but the unit 'A' produce 140 tons. Tax paid on (140 tons-100 tons) = 40 tons shall qualify for calculation of Capital Investment Subsidy. For diversification the amount of Capital Investment subsidy shall be subject to a maximum of fifty percent of the amount of Central Sales Tax and VAT payable or d....
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....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. Provided further that the investment made or committed before 22.05.2008 or under MOU signed during Resurgent Rajasthan Summit for both new cement unit or under expansion, having capacity more than 200 tons per day, shall be eligible for Capital Investment Subsidy under this Clause on the condition that such unit shall start commercial production by 31.03.2011.17 Captive Power Plant: The existing unit ....
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....o 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 allowed upfront on the basis of actual tax liability; and (b) The remaining subsidy to the extent of 30% of Rajasthan Sales Tax or Value Added Tax and Central Sales Tax liability shall be allowed in form of interest subsidy, wage/employment subsidy out of which interest subsidy shall be limited to 5% of the documented rate of interest and the amount actually paid as interest shall not include penal interest, and wage/employment subsidy. A unit not claiming any interest su....
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....ernment 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. 2. Where the option was submitted before 28.04.2006 and benefits were granted by SLSC after 27.04.2006. 3. Where the option was submitted before 28.04.2006 and benefits had not been granted by SLSC, 4. Where the option was submitted after 27.04.2006 but within 180 days of 02.12.2005 and the benefits had not been granted by SLSC, 5. Where the option was submitted after 27.04.2006 but within 180 days of 02.12.2005 and the case has not been considered by SLSC, and 6. Where the option was submitted after 27.04.2006 but within 180 days of 02.12.....
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....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 decision of the Screening Committee. (vi) The units declared eligible for availing Capital Investment Subsidy under the Scheme, shall submit an application to the Assistant Commissioner/Commercial Taxes Officer for claiming the Capital Investment Subsidy who shall provide the Capital Investment Subsidy as per the order of the Government issued in this regard. (vii) The payment of Capital Investment Subsidy (Interest component) shall be made only for the period for which the unit deposits State and/or Central sales tax and/or and makes regular repayment of loan and interest due to the financial institution(s). Capital Investment Subsidy shall be disallowed for the period ....
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....dy 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 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 be subject to the conditions, procedures, instructions, clarifications, or amendments issued from time to time under the Scheme. (c) If any subsidy under any other scheme of Government of India or Government of Rajasthan is received by the unit in respect of interest payment, or as a wage/employment subsidy then the total Capital Investment Subsidy payable under the scheme shall be reduced to the extent of subsidy so received. Provided, that if a unit is availing interest sub....
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.... 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's Order No. F.6(51)AR/Gr.3/96 dated 26th January, 1999, the Governor is pleased to re-structure the BOARD OF INFRASTRUCTURE DEVELOPMENT AND INVESTMENT INSTITUTION (BIDI) to the following members: 1. Chief Minister - Chairman 2. Industry Minister - Vice-Chairman 3. Planner Minister - Member 4. Energy Minister - Member 5. UDH Minister - Member 6. Chief Secretary - Member-Secretary *** *** *** 1. To consider and review schemes and provide directions for accelerating investment in to the State. 2. To consider these matters relating to investment, which have not been disposed off by the concerned Departments/Corporation/Authorities within the time Schedule prescribed by the State Government. 3. To make amendments in investment policies and procedure to accelerate economic development of the State. 4. To....
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....ue 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 duly considered in 11th Pre-BIDI meeting held on 28.03.2006. 7.2.1. The relevant agenda proposal of the said 11th Pre-BIDI meeting19 fairly gives insight into the nature of request made by the company, the views of the Finance Department as also Industries Minister and the recommendations of Pre-BIDI. Therefore, the same is reproduced in extenso as under: Request of the Company: The Company has requested for a customized package of incentives on the ground that this a Mega Project with an investment of more than Rs. 1000 crores. Details of the concessions/incentives sought by the Company are as follows: Sl. No. Company's request Existing Policy Financial implications given by the company 1. Interest subsidy @ 7.75% per annum for a period of 15 years on the total investment. Wage subsidy @ 25% per annum for a period of 15 years. RIPS 2003, provides that in the case of new cement units having investment exceeding Rs. 400 crore with a minimum reg....
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....t 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/exemptions are granted, the 18 other companies which are operating within the State will face competitive price disadvantage. It would also be contrary to the declared policy of providing level playing field for all. Further, department has added that in the VAT regime, the concessions may not be possible in any case. Therefore, limiting benefit to RIPS in future reinforced (sic). Views of the Industry Minister If RIPS-2003 would have been good enough, investment would have flown. Moreover, expansion and setting up has to be differentiated. An expansion process costs around 250 to 400 crores. Now, new plants with 2 MT capacity single kiln is one factor, which is putting Korea, China, ahead of all other players. The matter must be taken to BIDI for discussions and decision. Pre-BIDI recommendation The Pre-BIDI recommended that the Cement Package as announced recently and RIPS-2003 should be applicable to the company. Proposed decision BIDI may take a view. 7.3. The said proposal was considered under Agenda item No. 13 i....
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....an, stating the steps taken by the company after submitting the option for availing benefit under the Notification dated 02.12.2005; and the setback likely to be caused to the investment plans of the company upon withdrawal of 45% upfront subsidy. While pointing out that the company had, in fact, represented to the Government for customized package of incentives, it was prayed in this representation that the Notification dated 28.04.2006 may be withdrawn. The relevant contents of this representation dated 26.05.2006 read as under: This has reference to above-mentioned notification, vide which Sub-clause (vi) and (vii) of Clause 7 of the Rajasthan Investment Promotion Policy 2003 have been deleted. Clause 7 was added to the aforesaid policy vide notification No. F.4(18)FD/Tax Div/2001 dt. 02nd December 2005. After the above notification dated 28th April 2006, the benefit of 45% upfront subsidy of the actual tax liability in VAT and CST will not be allowed. We would like to mention that based on 2nd December 2005 Notification number F.4(18)FD/Tax/Div/2001 our company has decided to set up 2 cement plants of 3.5 million tons per annum capacity each at Grasim Cement-Kotputli, Dis....
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....State Government in the form of letter No. BIP/IP/DGM(NS)/61 dated 17.06.2006 of the Bureau of Investment Promotion, Rajasthan20, stating that 'company would be eligible for concessions as contained in RIPS-2003'. 7.7. On the other hand, during the summit named 'Resurgent Rajasthan', the company entered into an MoU with the State Government on 30.11.2007, proposing to set up new Cement Plants at Kotputli and Nawalgarh as also to expand the existing plant at Shambhupura with the projection of generating direct employment of 1000 persons and significant multiplier impact on local economy and consequent indirect employment. As against this proposal, the State undertook to extend support in the form of providing incentives as permissible under RIPS-2003 together with additional support as per the prevalent policy apart from facilitating the approvals etc., by offering a 'single window service'. This MoU was to remain valid for the initial period of five years and upon considering the progress made, its term was extendable for such period as mutually agreed upon. 7.8. It had been the case of the Appellant that pursuant to BIDI's decision dated 01.04.2006 an....
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....Rs. 400 crores and have given the employment to 254 persons up to 31.12.2009 i.e. more than 200 persons, hence fulfill all the conditions of the notification dated 02.12.2005 i.e. as per Sub-clause (vi) of Clause 7 of the RIPS-2003. Considering the above facts, kindly grant the Entitlement Certificate and the benefits may also be allowed in terms of the notification dated 2nd December, 2005. In case you require any further information, please intimate so that the same may be furnished. 7.9.2. The application was submitted in Form 2 referable to Clause 9(B)(i) of the Scheme and therein, a request was made to 'grant 5% of the interest subsidy, and 25% of the employment/wage subsidy 45% Up-Front subsidy' under the Scheme. The said Form 2 also carried declaration and undertaking of the Vice-President of company in the following terms: I hereby declare that I have fully understood the provisions of the Rajasthan Investment Promotion Scheme, 2003 and agree to comply with the same. In case of availing excess benefits or non compliance with the provisions of this Scheme, I undertake to repay whole of the amount actually availed under the Scheme and shall also be liable to pay ....
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....(25 percent employment component) from 5/2/2010 the date of starting of commercial production for 7 years. Committee has also taken decision that on the basis of approval from the BIDI Rule 7(i)(a) & (b) basis Capital Investment subsidy (Interest Component) of total payable and 75% of the deposited VAT will be the limit. Committee has also taken the decision that the eligibility for rebate in electricity for 50% will be from commercial production date 5/2/2010 for 7 years. 7.10.1. On the basis of, and pursuant to, the decision aforesaid, the Member-Secretary, SLSC proceeded to issue the necessary Entitlement Certificate to the Appellant on 29.04.2011. 7.11. Thereafter, the matter relating to the Appellant company was re-examined in the SLSC meeting dated 17.10.2011, particularly with reference to the quantum of investment and borrowings; and the decision finally taken by SLSC reads, in its translated version, as follows24: The committee under the plan has after the completion & on the basis of desirable eligibility terms by the unit & guidelines of finance department dated 11-7-2011 & in the series of guidelines of the committee dated 17-3-2011, the decision taken by the commit....
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.... relating to the propositions of the Appellant company as also the decisions taken by the authorities concerned at different stages depicts only one part of the spectrum of this case. For comprehension of the overall scenario, several other equally significant aspects also need to be taken note of. 8.1. As noticed, one of the significant aspects had been that after 07.06.2009, BIDI ceased to exist for having been disbanded by the State Government with constitution of another body in the name of Rajasthan Investment Promotion Board w.e.f. 08.06.2009. 8.2. Another remarkable aspect had been that upon receipt of the Minutes of SLSC meeting dated 17.03.2011, the Finance Department of the State Government sent a letter dated 17.11.2011 to the Member-Secretary, SLSC raising doubts on the correctness of the decision of SLSC with reference to the decision of BIDI, particularly when it was not clear as to when did BIDI issue the order for increasing maximum limit of subsidy from 50% to 75% in the cases pertaining to the units the Appellant. The contents of this letter dated 17.11.2011 have been reproduced in extenso in the impugned order of ACS dated 12.03.2018 and the relevant passage th....
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....s and investment of Rs. 400 Crore. Later the said provision was deleted and Clause 7(1)(b) of the Scheme remained as it is according to which upon recommendation of BIDI the unit invested more than Rs. 100 Crore but below Rs. 200.00 Crore could have granted subsidy up to 60% of the payable/deposit tax/VAT and more than 200 Crore Rupees it could have increased up to 75% of the payable/deposit tax/VAT. Perhaps benefit to the unit was given on the basis of decision taken in the BIDI meeting dated 1.1.2006 (sic) under the aforesaid clause. Besides, no other record is available in this office. Hence in this regard it is requested to the Finance Department to examine the matter at its own and take decision. 8.4. After having received the aforesaid reply dated 17.02.2017, the Finance Department of the State Government expressed its reservations on the decision taken by SLSC in the purported reference to the directions of BIDI and sent its communication dated 03.04.2017 to the Industries Department, expecting appropriate action in the matter while observing, inter alia, as under: In this regard from the information and documents received from Finance Department it is appeared that in re....
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....ligible for the benefit. Likewise it has been observed from the meeting of BIDI dated 01-04-2006 its agenda item No. 13 that discussions were made only for the Kotputli plant & the matter for Shambhupura district Chittorgarh plant has not been placed before BIDI for discussion. The meeting dated 1-4-2006 of the BIDI on detailed action in agenda No. 13 the following has been mentioned- BIDI directed that the recently announced cement package and RIPS-2003 will be applicable on the company. Any changes post VAT regime will also be available to other units. Possibly, BIP in its letter dated 17-6-2006 has written on BIDI decisions for its as it is implementation. This is also mentioned that the said package is for cement units, this has been withdrawn & this is not applicable for these units. Prima facie, it has been clear that the matter of Shambhupura (District-Chittorgarh) was not put up before BIDI. Whereas the matter of Kotputli (District-Jaipur) plant, the consent for enhancement of investment subsidy limit of 75% of the deposited tax limit is not clear. Attention is invited of the committee on the following legal provisions regarding expected action by the Finance Depart....
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....thdrawn. It was also submitted that the earlier decision by SLSC had been a bonafide and reasonable decision, being that of permissible interpretation; and if more than one interpretation was possible, the interpretation in favour of the Assessee ought to be accepted. The Appellant also submitted that it had made a huge investment to the tune of Rs. 1661.88 crores on the basis of Notification dated 02.12.2005 and invoked the principles of promissory estoppel. It was also contended that SLSC had no locus standi to refer the matter for revision by the State Government. On behalf of the Department, reply to the objections of the Appellant were filed contending, inter alia, that the matter of Appellant's unit was not approved by BIDI and the benefit availed were much beyond the permissible limit under RIPS-2003. It was also contended that the power of the State Government under Clause 13 was wide enough to revise any order granting undue benefits which was erroneous and prejudicial to the interest of revenue. The Appellant filed a detailed rejoinder with the submissions, inter alia, that the subsidy was granted not Under Sub-clauses (vi) and (vii) of Clause 7 of RIPS-2003 but that ....
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....Clause 7(i)(a) of Rajasthan Investment promotion Scheme, 2003 (RIPS-2003) but State Level Screening Committee (SLSC) has taken decision to increase it up to 75% of payable and deposited tax. As such, the company has received amount from the State treasury in excess of capital investment subsidy payable under Rajasthan Investment Promotion Scheme, 2003 (RIPS-2003). iv) As stated above Decision taken under Agenda No. 13 of Meeting dated 17.3.2011 of State Level Screening Committee (SLSC) and in furtherance thereto reference of capital investment subsidy of 75% of total payable tax under Agenda No. 18 of in next meeting dated 17.10.2011 of State Level Screening Committee (SLSC) is erroneous and prejudicial to the interest of the State Revenue therefore amendment in decision dated 17.3.2011 of the State Level Screening Committee (SLSC) under Clause 13 of the rajasthan Investment Promotion Scheme, 2003 (RIPS-2003) in revision proceeding by the Finance Department is needed and lawful. v) On proposal of revising of decision dated 17.3.2011 of State Level Screening Committee (SLSC) adequate opportunity of hearing as per provision has been given to the beneficiary industrial unit. Preli....
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....s amount from the company. iv) Under provisions of Rajasthan Investment Promotion Scheme, 2003 (RIPS-2003) interest @ 18% on available excess benefits is chargeable. The company has given Undertaking in Form-2 for repayment of availing excess benefits with 18% hence on availing excess benefits interest @ 18% is chargeable which may be recovered from the company. v) The company is ordered that to refund the benefits of capital investment subsidy availed in excess from 50% of payable and deposited tax under erroneous order of State Level screening committee (SLSC) together with 18% interest to the to the State Government. 12. Pursuant to the aforesaid order of ACS dated 12.03.2018, a meeting of SLSC was held on 28.03.2018 wherein, it was decided that the entitlement certificate issued in favour of the Appellant on 24.11.2011 be cancelled and in its place, a revised entitlement certificate be issued allowing Capital Investment Subsidy to the extent of 50% in place of 75% of deposited Sales Tax/Value Added Tax/Goods and Services Tax. Accordingly, Re-revised Entitlement Certificate dated 02.04.2018 was issued to the effect that 'the maximum amount of interest and wage/employmen....
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....ly within a period of four years, as prescribed by Section 33 of the Rajasthan Value Added Tax Act, 2003 while pointing out that the said provision was intended to be applied by the Assessing Officer of the Commercial Taxes Department and was of no impediment for the action under Clause 13 of RIPS-2003. 13.2. Thereafter, the High Court minutely analysed Clause 7 of RIPS-2003 while also taking note of its various amendments/revisions, as described hereinbefore. The High Court also referred to the dealings of parties including the application made by the company directly to BIDI; the minutes of Pre-BIDI meeting dated 28.03.2006; the minutes of BIDI meeting dated 01.04.2006; the other application made by the company on 26.04.2006; and the representation made by the company on 26.05.2006. Having thus examined the relevant material on record, the High Court observed that though the company prayed for the benefits under newly inserted Sub-clause (vii) of Clause 7 by way of the application dated 26.04.2006 but, both Sub-clauses (vi) and (vii) of Clause 7 were deleted by the Government on 28.04.2006. The High Court also observed that the company was fully conscious of the fact that it wou....
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.... observed as follows: .....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 considered the matter in its meeting dated 17.10.2011 for revision of the entitlement certificate. Consequently, the entitlement certificate issued on 29.04.2011 was revised on 24.11.2011. The Petitioners accordingly availed the subsidy. However, the SLSC in its meeting dated 22.05.2017 considered the issue on the letter received from the department, which found that the....
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.... equity which are not applicable in this case. Clause 13 of the RIPS-2003 clearly indicates that the benefit wrongly given can be withdrawn after its being fully availed and the Petitioners availed the benefits with open eyes and full knowledge. Such was not the position in the judgments cited on behalf of the Petitioners. (emphasis in bold supplied) 13.7. The High Court further examined the amendment dated 30.09.2008 and found the same to be of no avail to the Appellant; and pointed out the root cause of error in the decision of SLSC dated 17.03.2011 where it had proceeded beyond the ambit of its power and authority in the following words: As regards the contention that amendment made in Clause 7(iii) of RIPS-2003 vide notification dated 30.09.2008 protected investments made under MOU signed during Resurgent Rajasthan Summit, provided commercial production started by 31.03.2011 also does not improve the case of the Petitioners. Even though Clause 7(iii) had protected MOUs signed during Resurgent Rajasthan Summit but this amendment does not in any manner confer any additional power on the SLSC to grant more subsidy than what it otherwise wielded. On the date of aforesaid amend....
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.... for availing benefit thereunder on 26.04.2006. Another provision under which the Petitioner-company could have availed tax incentive of 75% was proviso to Clause 7(i)(a) and 7(i)(b) in which case the Petitioner-company was required to make an application to SLSC whereupon the SLSC could have referred it to the BIDI. The BIDI remained in existence till 07.06.2009 and till that time, no such reference was made by the SLSC to it. There is therefore hardly any justification to contend that any representation was held out to the Petitioner-company by the BIDI or the SLSC. (emphasis in bold supplied) 13.9. The High Court also referred to the Constitution Bench decision in the case of Commissioner of Customs (Import), Mumbai v. Dilip Kumar & Co. and Ors. (2018) 9 SCC 1 to point out that where there is ambiguity in an exemption notification or exemption clause, the benefit of such ambiguity cannot be extended to the Assessee; and the question whether Assessee falls within the exemption clause, has to be strictly construed. The High Court referred to the nature of benefit obtained by the Appellant and reiterated the fact that case of the Appellant had not even been considered by BIDI. T....
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....revenue" in the sense this phrase has been used in Clause 13 of the RIPS-2003. Although in a different way, allowing the Petitioners to retain 25% differential amount would tantamount to loss of Revenue and gain of the Petitioner-company at the cost of State exchequer which is after all public money. The Petitioner-company was entitled 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. (emphasis in bold supplied) 13.12. As regards the challenge to Clause 13 of RIPS-2003, the High Court observed that the Appellant was very much aware of the provisions envisaged therein at the time of filing its application and it was not the case of the Appellant that the Government did not have the authority to provide such a Clause in the Scheme or frame the policy in question nor was it demonstrated that Clause 13 violated any fundamental right or otherwise. 13.13. As regards validity of the action taken under Clause 13 of RIPS-2003, the High Court ob....
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....-2003 and these sub-clauses were deleted on 28.04.2006, the learned Senior Counsel has argued that BIDI had the authority to grant subsidy to the extent of 75%, of the tax payable and deposited, to any industrial undertaking with an investment of over Rs. 400 crores under the proviso to Clauses 7(i)(a) and 7(i)(b) of the Scheme; and such a decision of BIDI in relation to the Appellant company had rightly been implemented by SLSC. 15.1.1. The learned Counsel would also submit that subsidy under Clauses 7(vi) and 7(vii) consisted of 45% upfront subsidy, which was payable straightaway without being dependant on the wages and interest amounts spent by the undertaking; and the balance 30% subsidy consisted of wage and interest subsidy but, in contrast, the subsidy granted to the Appellant did not include any upfront subsidy; rather it only consisted of 75% wage and interest subsidy and hence, it remains beyond the cavil that the subsidy so granted to the Appellant had been under the proviso to Clauses 7(i)(a) and 7(i)(b) of RIPS-2003, particularly when it did not include any upfront subsidy and only consisted of 75% wage and interest subsidy. According to the learned Counsel, the Minut....
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....dated 01.04.2006 and commitment of the State Government dated 30.11.2007 clearly attracted the doctrine of promissory estoppel against the Respondents but the High Court has rejected this contention only on the ground that promissory estoppel is of no avail against a statute, which is a patent error on part of the High Court because RIPS-2003 has been a totally non-statutory Scheme. According to the learned Counsel, the Appellant is entitled to succeed on the ground of promissory estoppel alone; and the Respondents cannot deny the entitlement of Appellant to avail subsidy to the extent of 75% of the Sales Tax/VAT payable and deposited, as rightly allowed and rightfully availed. 15.4. It has further been submitted by the learned Senior Counsel that BIDI was a high-powered body presided over by the Chief Minister and its decision could not have been revised under Clause 13 of RIPS-2003. According to the learned Counsel, only the decision of SLSC could be revised under Clause 13 of RIPS-2003 but, in the present case, SLSC only implemented BIDI's decision dated 01.04.2006 and did not take any decision on its own to grant subsidy and hence, SLSC's directions dated 17.03.2011 we....
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.... v. C.T.O. (1994) 4 SCC 276, the learned Counsel has contended that a provision for charge of interest has to be construed strictly like the charging provision for levy of a tax; and unless the conditions of the provision for levy of interest are strictly fulfilled, no interest can be charged. The conditions being not fulfilled, the learned Counsel would urge, interest cannot be charged in the present case. The Respondents 16. The learned Additional Advocate General, appearing for the Respondents, has vehemently countered the submissions made on behalf of the Appellants while maintaining that the Appellant company was entitled to subsidy only to the extent of 50% of Sales Tax/VAT payable and deposited; and the Appellant is bound to refund the excess subsidy to the tune of 25% that had been wrongfully obtained under the erroneous decisions of SLSC. 16.1. In an equally detailed reference to the chronicle of facts, the learned AAG has submitted that the special cement package announced on 02.12.2005 came to be incorporated in RIPS-2003 by insertion of Sub-clauses (vi) and (vii) to Clause 7; and this was the position obtainable on 01.04.2006 when BIDI took the decision on the prayer....
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.... AAG would further submit that even if this doctrine is held applicable to current statutes, it would only apply if one particular view has been taken by the executive and there is ambiguity in the construction of the clauses in question but, in the present case, there is no ambiguity with regard to construction of the Scheme. The learned AAG would yet further argue that this doctrine would not apply when an administrative body had granted exemption on an erroneous view of the matter because the competent administrative body is entitled to revoke such a decision after being apprised of the correct facts. 16.3. The learned AAG has further submitted that the MoU signed on 30.11.2007 clearly stated about grant of the incentives under RIPS-2003 as available from time to time and, for the said Sub-clauses (vi) and (vii) of Clause 7 having been withdrawn, the understanding could not have gone beyond allowing 50% subsidy, as available under the Scheme on that date. Thus, according to the learned AAG, even the principles of promissory estoppel are not applicable to the present case inasmuch as 75% subsidy under the proviso to Clauses 7(i)(a) and 7(i)(b) was neither stipulated in the MoU n....
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..... The other equally relevant points arising for determination are: as to whether the view taken by SLSC in its initial decisions to grant 75% subsidy to the Appellant on the basis of the decision of BIDI had been a possible view of the matter; as to whether the doctrine of Contemporanea Expositio applies to this case and inures to the benefit of Appellant; as to whether the Respondent cannot recall 25% subsidy on the principles of promissory estoppel; as to whether the State Government was entitled to exercise the powers of revision under Clause 13 of RIPS-2003 and has rightly exercised such powers; and what is the effect of the fact that 75% subsidy had already been availed by the Appellant before the decision in that regard was sought to be questioned and re-opened by the Respondents. Lastly, if the decision of State Government to recall 25% component of availed subsidy is upheld, the point still requiring consideration would be as to whether the State is justified in seeking to recover interest @ 18% per annum? 18. We have given anxious consideration to the points so arising in this case with reference to the rival submissions and the law applicable; and have scanned through th....
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....However, there had been significant developments/revisions in relation to RIPS-2003 after the said decision of BIDI dated 01.04.2006 and the application of the company dated 26.04.2006, where the said Sub-clauses (vi) and (vii) of Clause 7 were specifically deleted from the Scheme on 28.04.2006. Noticeably, no decision had been taken by SLSC to grant subsidy to the company in terms of the then existing Sub-clauses (vi) and (vii) of Clause 7 until 28.04.2006. The application later made by the company on 21.02.2010 and the decision thereupon taken by SLSC on 17.03.2011 do not and cannot co-relate with the decision of BIDI dated 01.04.2006 whose initial part, i.e., 'recently announced cement package' became redundant with the aforesaid amendment of Clause 7 of RIPS-2003 and deletion of its Sub-clauses (vi) and (vii). 19.2. Apart from the above, it is also significant to notice that the competent authority, to sanction subsidy under RIPS-2003, had only been SLSC in terms of Clause 6 thereof. Though it has been strenuously argued by the learned Senior Counsel for the Appellant that BIDI was a high-powered body with the Chief Minister being its Chairperson and it has also been a....
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.... company by BIP was again to the effect that the 'company would be eligible for the concessions as contained in RIPS-2003'. Even in the MoU dated 30.11.2007, what the State Government undertook was to extend support in the form of providing incentives as permissible under RIPS-2003 together with additional support as per the prevalent policy. 20.1. In our view, whether each of the aforesaid background aspects is seen in isolation or whether all these aspects are put together, it cannot be deduced, by any stretch of imagination, that a conscious decision was ever taken by BIDI at any stage that the Appellant company would be extended any differential and advantageous treatment by allowing 75% subsidy in place of the ordinarily allowable 50%. 20.2. Invocation of proviso to Clauses 7(i)(a) and 7(i)(b) of RIPS-2003 seems to have only been a creation of SLSC in its meeting dated 17.03.2011 while dealing with the application made by the Appellant on 21.02.2010. Significantly, even in the said application, what the Appellant claimed had only been the concession in terms of Sub-clause (vi) of Clause 7 of RIPS-2003. The claim precisely was that the benefits may be allowed in terms....
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....at policy and deleted the said sub-clauses on 28.04.2006. It remains trite that extending of any incentive in the form of exemption, rebate, concession or subsidy is a matter of the policy of the Government and for that matter, fiscal policy. Ordinarily, such framing of the policy remains within the domain of the Government; and the Government is entitled to frame a particular policy and to alter the same, as deemed fit and proper. As to whether the cement industry was to be granted 75% subsidy under RIPS-2003 or not was definitely a matter of the policy of the Government; and when such a policy was not in existence at the time of consideration of the application of the Appellant, no benefit could have been claimed under a non-existent policy. 23. In the given set of facts and circumstances, in our view, the Additional Chief Secretary has rightly held that SLSC's decision dated 17.03.2011 and its repeat decision dated 24.11.2011 had been erroneous on the very fundamentals where it was assumed as if BIDI had already sanctioned 75% subsidy to the company. The High Court has also independently examined the entire matter in requisite details and we are unable to find any infirmity....
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....2509 of 2020 decided on 05.06.2020, while dealing with an incentive provision contained in Section 80-O of the Income Tax Act, 196130, this Court has taken note of the principles laid down in Dilip Kumar & Co. and has held, inter alia, as under: 17.3. In view of above and with reference to several other decisions, in Dilip Kumar & Co., the Constitution Bench summed up the principles as follows: 66. To sum up, we answer the reference holding as under: 66.1. Exemption notification should be interpreted strictly; the burden of proving applicability would be on the Assessee to show that his case comes within the parameters of the exemption Clause or exemption notification. 66.2. When there is ambiguity in exemption notification which is subject to strict interpretation, the benefit of such ambiguity cannot be claimed by the subject/Assessee and it must be interpreted in favour of the Revenue. 66.3. The ratio in Sun Export case is not correct and all the decisions which took similar view as in Sun Export case stand overruled. (emphasis in bold supplied) 17.4. Obviously, the generalised, rather sweeping, proposition stated in the case of Sun Export Corporation (supra) as al....
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....tion it has received from contemporary authority) can be invoked though the same will not always be decisive of the question of construction. (Maxwell 12th Edn. p. 268). In Crawford on Statutory Construction (1940 Edn.) in para 219 (at pp. 393-395) it has been stated that administrative construction (i.e. contemporaneous construction placed by administrative or executive officers charged with executing a statute) generally should be clearly wrong before it is overturned; such a construction, commonly referred to as practical construction, although not controlling, is nevertheless entitled to considerable weight; it is highly persuasive. In Baleshwar Bagarti v. Bhagirathi Dass I.L.R. 35 Cal. 713 the principle, which was reiterated in Mathura Mohan Sana v. Ram Kumar Saha I.L.R. 43 Cal. 790 has been stated by Mukerjee J. thus: It is a well-settled principle of construction that courts in construing a statute will give much weight to the interpretation put upon it, at the time of its enactment and since, by those whose duty it has been to construe, execute and apply it. I do not suggest for a moment that such interpretation has by any means a controlling effect upon the Courts; such ....
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....plied even if erroneous. The true principle is just to the contrary: that is, if a construction placed by the contemporary authority is found to be clearly wrong or erroneous, the same deserves to be disregarded. 25.4. In the case of Spentex Industries (supra), the question was as to whether the manufacturer/exporter was entitled to rebate of excise duty paid both on the inputs and on the manufactured product, when the excise duty was paid on the manufactured product and also on the input, which had gone into manufacturing and the manufactured product was exported. It was in the context of the aforesaid question that this Court, in the process of interpretation of the relevant Central Excise Rules, 2002 and the notification thereunder, referred to Contemporanea Expositio in regard to the notifications issued by the Government in giving effect to the Rule in question; and it was observed that when the Centre, who had framed the Rules as also issued notifications, had been of the opinion that rebate was to be allowed on both forms of excise duty, the Government was bound thereby. This decision does not even remotely apply to the case at hand and the erroneous decisions of SLSC are n....
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....d have availed tax subsidy upto 75% i.e., the said Sub-clauses (vi) and (vii) of Clause 7, were deleted on 28.04.2006, only two days after the company submitted the application dated 26.04.2006 for availing benefit thereunder. The repeat request of the company to withdraw such deletion and to allow benefit under the said deleted sub-clauses, under its representation dated 26.05.2006, did not meet with any success and the only response of the Government through BIP was to the effect that the 'company would be eligible for concessions as contained in RIPS-2003'. Even in the MoU dated 30.11.2007, what the State undertook was only to provide incentives as permissible under RIPS-2003 together with additional support as per the prevalent policy. So far availing 75% subsidy under proviso to Clauses 7(i)(a) and 7(i)(b) is concerned, the Appellant was required to make an application to SLSC for that purpose whereupon SLSC could have referred it to BIDI but, neither any such application was made by the Appellant nor any such matter was ever placed before BIDI until it remained in existence i.e., 07.06.2009. In an overall view of the matter, it is difficult to find that at any stage, ....
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....the interests of the Revenue' whereas in Clause 13 of RIPS-2003, such power could be exercised by the State Government in Finance Department in relation to an order passed by any screening committee 'wherever it is found to be erroneous and prejudicial to the interest of the State Revenue' 27.1.1. For the construction of the aforesaid statutory provision, this Court observed in Malabar Industrial Co. (supra) that the phrase 'prejudicial to the interest of the Revenue' has to be read in conjunction with the expression 'erroneous' for the order passed by the Assessing Officer. In fact, such a process of interpretation is not even required in the present case because the two aspects, i.e., 'erroneous' and 'prejudicial to the interest of Revenue' have already been stated with the conjunction "and" in Clause 13 of the Scheme. 27.1.2. It is also noteworthy that even in the case of Malabar Industrial Co. (supra), this Court, ultimately, upheld the exercise of jurisdiction by the Commissioner Under Section 263(1) of the Act of 1961, particularly when it was found that there was no material to support the view taken; and the Assessing Officer ha....
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...., they operate only against the case of the Appellant. 27.2. In the present case, as observed hereinbefore, the initial decision of SLSC was entirely erroneous and cannot be said to be a possible view of the matter. Coupled with that, the said decision was directly prejudicial to the interest of revenue where the State exchequer was to part with extra 25% of the tax amount received or receivable from the Appellant. As noticed, the learned ACS, while passing the order dated 12.03.2008 in exercise of such power of revision under Clause 13 of the Scheme, has meticulously examined the entire material and has recorded each and every finding with due regard to the dealings of the parties and the provisions of Scheme as applicable. The exercise of power of revision as per Clause 13 of the Scheme remains unexceptionable in the present case. Effect of availing 75% subsidy for 7 years 28. It has also been submitted on behalf of the Appellants that the subsidy cannot be revoked or withdrawn with retrospective effect and after having been fully availed of. Such a contention does not carry any substance for the simple reason that Sub-clause (b) of Clause 13 of the Scheme specifically provide....
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....(a) and 7(i)(b) of RIPS-2003 nor allowed any customised package to the company. The position of record is crystal clear that BIDI's decision dated 01.04.2006 had only been for allowing 'recently announced cement package'38 to the company and that was also coupled with the requirement of applicability of RIPS-2003. The initial part of this decision of BIDI dated 01.04.2006 and the company's prayer dated 26.04.2006 for registration in terms of Sub-clause (vii) of Clause 7 of RIPS-2003 became redundant on 28.04.2006 with the amendment of Clause 7 of RIPS-2003 and deletion of Sub-clauses (vi) and (vii) thereof because no decision had been taken by SLSC to grant subsidy to the company in terms of the said Sub-clauses (vi) and (vii) of Clause 7 by that date i.e., 28.04.2006. Further, the view taken by SLSC in its initial decisions, to grant 75% subsidy to the Appellant on the basis of the decision of BIDI, while reading as if BIDI had taken such decision under proviso to Clauses 7(i)(a) and 7(i)(b) of RIPS-2003, had been entirely perverse and unauthorised; and had not been a possible view of the matter. There had not been any ambiguity in the decision of BIDI; and if at a....
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....ing for charging of interest has no application to the present case because grant of 25% subsidy has been revoked not because of any default committed by the Appellants but only because of a change of opinion by the Respondents after about eight years. The Respondents, on the other hand, assert that if benefits have been received under a mistake, the same must be returned with interest so as to avoid unjust enrichment. 33. It remains undeniable that Clause 10 of RIPS-2003, providing Terms and Conditions attached to the benefits availed under the Scheme, envisaged that the 'breach' of any of the condition would 'make the Capital Investment Subsidy/exemption amount liable to be recovered as Tax or arrears of land revenue along with interest @ 18% per annum from the date from which the Capital Investment Subsidy was provided'. It is not the case of the Respondents that the Appellant had committed breach of any of the conditions enumerated in Clause 10 of the Scheme and that the excessive amount of subsidy (25%) was being recovered because of any such breach. As noticed, entitlement of the Appellant to 50% subsidy has not been questioned; and the only question had been....
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....r view, the Appellant company remains liable to refund the excess amount together with interest at the rate agreed upon, i.e., 12% per annum. 33.4. In the given set of facts and circumstances of this case, reliance on the decisions of this Court in India Carbon Ltd., J.K. Synthetics Ltd. and Maruti Wire Industries Pvt. Ltd. (supra), dealing the scheme of particular taxing statutes for charging of interest, does not make out a case of total waiver of interest because the fact remains that the Appellant company had indeed availed excessive 25% subsidy under the non-statutory scheme and unequivocal undertaking was stated on its behalf to refund the excess amount together with interest @ 12% per annum. 33.5. It is also noticed that as per the submissions of the Appellants, by way of recovery proceedings adopted by the State after the decision of High Court, entire of the principal amount of excess subsidy, i.e., Rs. 15,96,37,794/- has already been recovered. In the totality of circumstances and relevant features of this case, in our view, interest of justice shall be served if the Respondents are allowed interest at the rate of 12% per annum from the date of availing of excessive (25....
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....75-178 of the paper-book 20 Hereinafter referred as 'BIP' 21 A copy of this application is placed on record as Annexure P-11 that bears the date 04.02.2010 but its contents and annexures carry the later dates too, like VAT deposit dated 05.02.2010 and Chartered Accountant's certificate dated 16.02.2010. It appears from the receipt endorsement that the application was submitted on 21.02.2010 and hence, we have taken this to be the date of application. 22 Whereby the aforesaid Sub-clauses (vi) and (vii) were added to Clause 7 of RIPS-2003. 23 pp. 160-161 of the paper-book 24 pp. 165-166 of the paper-book 25 pp. 462-464 of paper-book. 26 During the course of submissions, the facts have also been placed before us that the Industries Department did not send reply to the aforesaid letter dated 17.11.2011 despite repeated reminders dated 18.05.2012, 20.05.2013, 17.06.2013, 29.07.2013 and 12.09.2013. In regard to these aspects of wanton avoidance and in regard to the sanction made in favour of the Appellant, a departmental inquiry for major penalty was also proposed against the then Additional Director, Industries, who was working at the relevant time as the Funct....