1 IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JODHPUR : O R D E R : S.B. Civil Writ Petition No.7568/2008. (Shree Rajasthan Syntex Ltd. Vs. State of Rajasthan & Others) DATE OF ORDER : October 13th, 2008 P R E S E N T HON’BLE MR. JUSTICE GOPAL KRISHAN VYAS ____________________________________ Mr. Sanjeev Johari for the petitioner. BY THE COURT : In this writ petition, the main prayer of the petitioner is that it may be held that the petitioner’s claim of exemption of 50% electricity duty in view of entitlement certificates dated 23.08.2005 and 26.08.2005 respectively, stands crystallized throughout for the period of 7 years and is not hit by the so called illegal clarification dated 23.08.2006 (Annex.-5) and the illegal retrospective amendment dated 21.08.2007 (Annex.-6) adversely. 2 The petitioner has further prayed that the excess charged 50% electricity duty over and above the 50% exemption in the monthly bills from June 2008 onwards may be held to be illegal, unjust and void; and, amendment notification dated 21.08.2007 and the so called clarification dated 23.08.2006 may be quashed. According to the facts of the case, for the purpose of providing attractive opportunity to the investors in the State to invest for modernization/expansion/diversification, a scheme was floated by the State Government known as the Rajasthan Investment Promotion Scheme 2003 (hereinafter called “the Scheme”) in which besides the new investments, investments made by the existing units and enterprises for modernization/expansion/diversification, subject to the condition that such units shall commence commercial productions/operations owing to such investment during the operative period of the Scheme, have been made eligible for the benefit under the Scheme. The claim of the petitioner is that it has availed 50% exemption for the entire electricity duty in respect of expansion for which it started commercial production on 09.05.2005 and entitlement certificates under the Scheme for benefits of exemption of Electricity Duty were granted on 23.08.2005 in respect of expansion of cotton division 3 and 26.08.2005 in respect of modernization of syntex division with effect from 09.05.2005 by the State Level Screening Committee. Now, amendment has been issued vide notification dated 21.08.2007 which has been made effective from 23.08.2006, however, the said amendment is illegal because the amendment cannot be made effective retrospectively and could not have taken away the crystallized rights of the petitioner industry. Further, it could not have been issued just to hide the illegality already committed by the State Government while issuing clarification Annex.-5 dated 23.08.2006. As per the petitioner, it has already undergone complete exercise of expansion in the year 2005 and it was done being persuaded by the State Government’s Scheme of industrial promotion vide Policy of 2003 i.e., the Scheme herein mentioned. The petitioner company was granted the entitlement certificates in the year 2005 itself and, on that basis, exemption was granted and the petitioner started availing the benefit of 50% exemption on electricity duty on the power generated and used by its captive power plant. Thus, as per the petitioner, the benefit of exemption was made available to the petitioner since 2005, therefore, the said right cannot be snatched away by 4 subsequent amendment in the year 2007 while making the same effective retrospectively with effect from 23.08.2006. The main grievance of the petitioner is that although as per the Scheme entitlement certificates were issued for grant of 50% exemption on electricity duty on whole of the consumption and, now, by way of issuing Annex.-5 and Annex.-6 the said right which is already accrued to the petitioner and already availed of has been taken away. Now, by issuing clarification dated 23.08.2006 it is interpreted that exemption on electricity duty is only available on the additional electricity duty after carrying out such expansion/modernization/diversification, therefore, illegally it was further tried to clarify that on such basis of the provision relating to the subsidy the exemption in electricity duty under Clause 8 of the Scheme should also be allowed only on the additional electricity duty payable by the unit over and above the highest electricity duty payable/deposited (whichever is higher) in any of the three immediately preceding financial years. The said clarification was illegally made applicable with effect from 23.08.2006 because no retrospective effect can be made applicable by the Government which directly affects accrued rights of the beneficiaries. 5 Learned counsel for the petitioner invited my attention towards the judgment in the case of MRF Ltd., Kottayam Vs. Asstt. Commissioner (Assessment) Sales Tax & Others, reported in (2006) 8 SCC 702. It is submitted by the learned counsel that in view of the said judgment the State Government is stopped from acting arbitrarily on the ground of the doctrine of promissory estoppels because having granted the right under the notified Scheme, then, that right cannot be snatch away by way of making an amendment retroactive and is stopped to do so on the ground of theory of legitimate expectation. The State action should not be violative of the settled proposition of law and, therefore, on both the grounds impugned clarification and notification are arbitrary and illegal. Learned counsel for the petitioner vehemently argued that the welfare State is under obligation to act in fair manner while issuing clarification notification whereby the State Government has snatched the right to avail exemption on the 50% electricity duty on the whole of the consumed energy. I have carefully considered the submission of the learned counsel for the petitioner. I have also considered the judgment cited by the learned counsel for the 6 petitioner in the case of MRF Ltd., Kottayam Vs. Asstt. Commissioner (Assessment) Sales Tax & Others (supra). The purpose of floating the Scheme is inherent in the intention explicitly mentioned in the Rajasthan Investment Promotion Policy 2003. It is stated that with a view to provide investors an attractive opportunity to invest in the State of Rajasthan the benefit of subsidies as per Clause 7 and exemption as per Clause 8 of the Scheme shall be available to all units, other than those covered in the list of ineligible units, subject to fulfillment of certain conditions upon investments made for expansion/modernization/ diversification. In terms of the aforesaid Scheme, entitlement certificates were issued to the petitioner company after scrutiny by the SLSC; however, upon the reference made by the Department of Industries, clarificatory notification dated 23.08.2006 was issued whereby it is clarified that when a unit carries out expansion/modernization/diversification and, as a result, if the electricity duty payable by the unit increases, the benefit of exemption from the electricity duty would be available only on the additional electricity duty which becomes payable by the unit after carrying out such expansion/modernization/diversification. I am in full agreement with the clarificatory interpretation set out in 7 the clarification dated 23.08.2006 because the intention of the Scheme was altogether different and it was to promote expansion/modernization/diversification of the existing units. Therefore, it is obvious that under the Scheme any unit can claim 50% exemption not on the entire electricity duty payable by it; but, the intention of the framers of the Scheme is to grant exemption upon the additional electricity duty which becomes payable by the unit after carrying out such expansion/modernization/diversification. Therefore, the clarification issued by the Finance Department dated 23.08.2006 cannot be termed as arbitrary and illegal or unconstitutional. Likewise, After issuance of the aforementioned clarification, amendment has been made in Clause 8 of the Scheme to incorporate the same in the Scheme and the same has been given effect from the date of clarification i.e., 23.08.2006 in which there is no illegality or perversity. The principle of estoppel, in my opinion, cannot operate against the statute because the State has the power to clarify the intention of the Scheme which is not questionable if it is in consonance with law. In my opinion, the State could legitimately make amendment in the Scheme to incorporate the proviso made through clarification dated 23.08.2006. Therefore, it cannot be 8 said that amendment has been made retrospectively. More so, the said amendment has been made effective with effect from the date of clarification. Therefore, the argument of learned counsel for the petitioner with regard to retrospective applicability of the amendment does not have any substance. In this view of the matter, while issuing Annex.-5 and Annex.-6 no illegality has been committed by the State Government and by the said clarification only it is made clear as to the extent of entitlement that is available to the industrial unit under the Scheme and, accordingly, the amendment has been made applicable from the date of clarification. Hence, the petitioner cannot claim any right beyond the said amendment which is under challenge. As a result of the aforesaid, this writ petition fails and the same is hereby dismissed. There shall however be no order as to costs. (Gopal Krishan Vyas) J. Ojha, a.