M/S. ULTRATECH CEMENT LTD. & ANR. versus STATE OF RAJASTHAN & ORS.
[2020] 7 S.C.R. 392, Supreme Court of India, 2020
Outcome: Case Partly allowed (Granted)
Segment: Body
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M/S. ULTRATECH CEMENT LTD. & ANR.
v.
STATE OF RAJASTHAN & ORS.
(Civil Appeal No. 2773 of 2020)
JULY 17, 2020
[A. M. KHANWILKAR AND DINESH MAHESHWARI, JJ.]
Industrial Development:
Capital Investment Subsidy – Under Rajasthan Investment
Promotion Scheme 2003 – Clauses 7(i)(a), 7(i)(b), 7(vi) and 7(vii),
10 and 13 – Request by the appellant-Company for customized
package of incentives for setting up a cement plant – Pre-BIDI (Pre
Board of Infrastructure Development and Investment Institution)
meeting, after considering the request recommended that the cement
package and the Scheme of 2003 was applicable to the Company –
BIDI also resolved that recently announced cement package and
the 2003 Scheme would be applicable to the Company – The
Company addressed letter dated 26.4.2006 to Commissioner of
Industries seeking registration in terms of sub-clause (vii) of clause
7 of the 2003 Scheme – Before any decision could be taken on the
letter, State Government deleted sub-clauses (vi) and (vii) from
Clause 7 by Notification dated 28.4.2006 – Company’s
representation seeking withdrawal of Notification dated 28.4.2006
– State replied that the Company would be eligible for concessions
as per the 2003 Scheme – Company also entered into MOU with
the State – After establishment of the cement plant and starting
production therein, Company sought Entitlement Certificate under
the 2003 Scheme – State Level Screening Committee (SLSC)
allowed
Capital Investment Subsidy to the Company to the extent of 75% of
deposited VAT and Entitlement Certificate was issued – Company
availed the benefit of 75% subsidy in terms of Entitlement Certificate
– After Finance Department of the State raised doubts about the
decision in respect of grant of subsidy upto 75% to the Company,
SLSC re-examined the matter and suggested appropriate action
under Clause 13 of the 2003 Scheme – In Revision proceedings
under Clause 13, the competent Authority decided that SLSC had
erroneously issued Entitlement Certificates and the Company was
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not entitled to the subsidy beyond 50% of the tax payable and
deposited – Pursuant thereto revised Entitlement Certificates were
issued allowing subsidy upto 50% – The Company was directed to
refund the amount of excess availed subsidy together with interest
@ 18% – Writ petition challenging the orders was dismissed by
High Court – Appeal to Supreme Court – Held: Extending of any
incentive in the form of exemption, rebate, concession or subsidy is
the matter of policy of Government – A Government is entitled to
frame a particular policy and to alter the same – Whether the cement
industry was to be granted 75% subsidy under 2003 Scheme was a
matter of policy – The policy of extending 75% subsidy to cement
industry was withdrawn by the Government by deleting sub-clauses
(vi) and (vii) of clause 7 of the 2003 Scheme – As the policy of
extending 75% subsidy was not in existence at the time when the
application of the Company was considered, no benefit could have
been claimed under non-existent policy – Company is entitled to
subsidy only to the extent of 50% and hence liable to refund the
excess 25% – Since the disbursement of 75% subsidy to the Company
was on the basis of erroneous decision and was not relatable to
breach of any of the conditions of the Scheme on the part of the
Company, the Revenue is not entitled to demand interest on the excess
amount @ 18% p.a. – However, as the Company had obtained undue
advantage by availing 25% extra subsidy and had
undertaken to
refund extra subsidy with interest @ 12% p.a. Company is liable to
refund excess amount with interest @ 12% p.a.
Doctrines/ Principles
Doctrine of Contemporanea Expotio – is a guide to the
interpretation of Statute or a document by referring the exposition
that the same had received from competent Authority at relevant
point of time – Held, not applicable in present case.
Principle of Promissory Estoppel – Applicability of – Held
not applicable in the facts of the present case.
Maxims:
‘Contemporanea exposition est optima et fortissimo in lege’ –
Meaning of.
M/S. ULTRATECH CEMENT LTD. & ANR. v. STATE OF
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Partly allowing the appeal, the Court
HELD: 1.1. The application earlier made by the Company
was considered in the Pre-BIDI (Board of Infrastructure
Development and Investment Institution) meeting dated
28.03.2006 and the recommendations therein had only been to
the effect that the cement package recently announced and RIPS-
2003 (Rajasthan Investment Promotion Scheme, 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, sub-
clauses (vi) and (vii) of Clause 7 of RIPS-2003 were in existence
and, in fact, the phrase “recently announced cement package”
precisely referred to the said provisions of sub-clauses (vi) and
(vii), which had been inserted to Clause 7 of RIPS-2003 on
02.12.2005. Moreover, even when BIDI stated that ‘recently
announced cement package’ would be applicable to the Company,
it was coupled with the requirement of applicability of the Scheme,
i.e., RIPS-2003. After the aforesaid decision of BIDI dated
01.04.2006, the Company, in its letter dated 26.04.2006 to the
Commissioner of Industries, sought registration in terms of sub-
clause (vii) of Clause 7 of RIPS-2003 for a new
cement plant/
captive power plant. 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 (State
Level Screening Committee) 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). [Para 19.1][458-B-G]
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1.2 It is not correct to say that BIDI had granted 75%
subsidy under proviso to Clauses 7(i)(a) and 7(i)(b) of RIPS-2003.
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-
2003 is again evident on the face of the record on a bare look at
the contents of its application dated 26.04.2006. 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 of the said notification
dated 02.12.2005. The SLSC, while taking up the said application,
on its own, connected the prayer of the appellant to the decision
of BIDI and, for that matter, read as if BIDI’s decision had been
to grant subsidy to the extent of 75% in terms of the said proviso
to Clauses 7(i)(a) and 7(i)(b) of RIPS-2003. There is no rationale
or logic that SLSC, in its meeting dated 17.03.2011, imported
the said proviso to Clauses 7(i)(a) and 7(i)(b) of RIPS-2003 into
the decision of BIDI dated 01.04.2006 and then, applied 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
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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. [Paras 20 and 20.2][459-C-F]
[460-C-G]
1.3 The competent authority, to sanction subsidy under
RIPS-2003, had only been SLSC in terms of Clause 6 thereof.
Even if BIDI had been a high-powered body, its resolutions or
even directives could have only been read in conformity with the
provisions applicable to any particular proposition; and the fact
that one of the Secretary had been a member of both BIDI and
SLSC, the resolution of BIDI could not have been imported into
the decision making process of SLSC beyond what was
permissible under the Scheme. [Para 19.2][458-H][459-A-C]
1.4 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. There is no such
decision by the Committee referred to in Clause 6-A and any
recommendation for customised incentive package in relation to
the appellant. The decision of BIDI dated 01.04.2006 also does
not refer to nor is relatable
with any customised package meant
for the appellant Company. [Para 21][460-G-H][461-A-B]
1.5 In an overall conspectus of the record and various
amendments/revisions of RIPS-2003, it appears that though at
one stage (i.e., on 02.12.2005), the State Government thought it
proper to announce an entirely different treatment to cement units
by extending 75% subsidy to them with a different methodology
and hence, inserted sub-clauses (vi) and (vii) to Clause 7 of RIPS-
2003 but, it did not continue with that 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
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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. [Para 22][461-B-E]
1.6 Thus, 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%. 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 there is no infirmity when the High Court has held that the
appellant Company was only entitled to subsidy to the extent of
50% of the tax payable and deposited and not to the extent of
75%. [Paras 20.1 and 23][460-B][461-E-G]
J.K. Cotton Spinning & Weaving Mills Co. Ltd. v. State
of U.P. [1961] 3 SCR 185 – referred to.
2. There is 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. 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, the benefit of
any such ambiguity could not have been extended to the appellant
Company. The benefit thereof would have only gone in favour of
revenue for the simple reason that under the provisions in
question, the State had agreed, by way of incentive, to part with a
portion of its revenue. Such provisions, whether in the statute or
in the non-statutory document, by their very nature, are subject
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to strict interpretation so far as their applicability is concerned.
[Paras 24.1 and 24.2][462-C-F]
Commissioner of Customs (Import), Mumbai v. Dilip
Kumar & Co. and Ors. (2018) 9 SCC 1 : [2018] 7 SCR
1191 – followed.
Ramnath & Co. v. Commissioner of Income Tax 2020
(8) SCALE 585  – relied on.
3.1 The doctrine of Contemporanea Expositio is embodied
in the maxim ‘Contemporanea exposition est optima et fortissimo
in lege’ which means that the best way to construe a document is
to read it as it would have read when made. In essence, the
doctrine of Contemporanea Expositio is applied as a guide to the
interpretation of a statute or even document by referring to the
exposition that the same had received from competent authority
at the relevant point of time. This doctrine is also relatable to the
doctrine of stare decisis whereunder, an exposition standing for a
long length of time, is considered to be a law settled and is applied
as such. As regards the contemporaneous construction placed
by the administrative or executive officers charged with executing
statute, the Courts lean in favour of attaching considerable weight
to the same but, it cannot be laid down that understanding of a
particular administrative or executing authority is always fait
accompli and has to be applied 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. [Paras 25, 25.1
and 25.3][464-B-C][465-F][466-A-C]
Spentex Industries Ltd v. C.C.E. (2016) 1 SCC 780 :
[2015] 11 SCR 487 – held inapplicable.
Desh Bandhu Gupta v. Delhi Stock Exchange
Association Ltd. AIR 1979 SC 1049 : [1979] 3 SCR
373 – referred to.
Principles of Statutory Interpretation by Justice G.P.
Singh 14th Edition, pp. 375-376 – referred to.
3.2 On the facts and in the circumstances of the present
case, invocation of the doctrine of Contemporanea Expositio on
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behalf the appellant remains entirely inapt. 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. [Paras 25.4 and 25.5.][466-F-H]
4.1 The High Court observed that the doctrine of
promissory estoppel cannot be invoked against a statute. 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 intake of the amount of Sales Tax/VAT; and such an
intake is indeed governed by the statute. This apart, it cannot be
deduced that a conscious decision was ever taken at any stage or
at any level that the appellant was to be extended any differential
and advantageous treatment by SLSC and was to be allowed 75%
subsidy in place of the ordinarily allowable 50%. BIDI never
issued any direction to SLSC to grant 75% subsidy to the
appellant. It merely directed that “the recently announced cement
package and RIPS-2003 shall be applicable on the Company.”
Obviously, the case of the appellant was required to be
dealt with
by SLSC only in accordance with the applicable provisions
contained in RIPS-2003. The provisions under which the appellant
could 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
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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, any such
representation was made by the State Government which led the
Company to alter its position. Besides the above, when the
decisions of SLSC dated 17.03.2011 and 24.04.2011 turn out to
be unauthorised and not in accord with the applicable provisions
of the Scheme, the principles of promissory estopple cannot be
invoked for their enforcement. [Paras 26, 26.1 and 26.2]
[467-A-H]
Dr. Ashok Kumar Maheshwari v. State of U.P. & Anr.
(1998) 2 SCC 502 : [1998] 1 SCR 147 – relied on.
4.2 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.
[Para 26.3][468-D-E]
5. The exercise of power of revision as per Clause 13 of
the Scheme remains unexceptionable in the present case.
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. The Authority,
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. [Para 27.2][470-E-F]
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Malabar Industrial Co. Ltd. v. Commissioner of Income
Tax, Kerala State (2000) 2 SCC 718 : [2000] 1 SCR
744 – held inapplicable.
6.1 It cannot be accepted that the subsidy cannot be
revoked or withdrawn with retrospective effect and after having
been fully availed of. Sub-clause (b) of Clause 13 of the Scheme
specifically provides for a period of five years from the date by
which benefits under the Scheme are availed of. Sub-clause (b) of
Clause 13 of the Scheme specifically provides for a period of five
years from the date by which benefits under the Scheme are
availed of, to be the period within which the power of revision
could be exercised by the State Government. Admittedly, in the
present case, the appellant Company had availed the benefits
until the month of February 2017 and the order of revision was
passed on 12.03.2018, well within the period of five years
stipulated in the Scheme. [Para 28][470-G-H][471-A-B]
6.2 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. 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 obtained by the appellant, beyond its
entitlement, had only been based on an erroneous and
unauthorised decision of SLSC.  In any case, RIPS-2003 being a
matter of concession in the form of subsidy, securing an advantage
by the appellant at the cost of public exchequer could not have
been allowed and, for the Scheme itself having reserved the
powers in the State Government to revise the erroneous and
prejudicial order within a period of five years from the date of
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fully availing of the benefits, such powers have rightly been
invoked and exercised by the State Government. [Para 29]
[471-C--F]
Birla Jute & Industries Ltd. v. State of M.P. 119 STC 14
(S.C.) - distinguished.
Commissioner, Commercial Taxes, Rajasthan, Jaipur and
Anr. v. Rajasthan Taxation Tribunal and Ors. 38 Tax
Up-date 131 – referred to.
7.1 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. Entitlement of the appellant to 50% subsidy has
not been questioned. Disbursement of such 75% subsidy to the
appellant was only on the basis of the erroneous decisions taken
and Entitlement Certificates dated 29.04.2011 and 24.11.2011
issued by SLSC. Even when the said decisions of SLSC are found
erroneous and invalid; and the appellant Company 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
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12.03.2018 and then, the Re-revised Entitlement Certificate was
issued only on 02.04.2018. [Paras 33 and 33.1][473-E-H]
[474-A-C]
7.2 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 the rate of 12% per annum. Both the
parties had proceeded with reference to the said undertaking
furnished on behalf of the appellant and the same is required to
be treated as a binding term of contract between them.
[Para 33.2][474-C-D]
7.3 Therefore, the respondent cannot be held entitled to
demand interest at the rate stipulated in Clause 10 of RIPS-2003.
However, and at the same time, when the appellant Company
had obtained undue advantage in monetary terms by availing 25%
extra subsidy; and had given undertaking to refund any excessive
benefit with interest at the rate of 12% per annum, the appellant
Company remains liable to refund the excess amount together
with interest at the rate agreed upon, i.e., 12% per annum.
[Para 33.3][474-E-F]
India Carbon Ltd. & Ors. v. State of Assam (1997) 6
SCC 479 : [1997] 3 Suppl. SCR 1; Maruti Wire
Industries Pvt. Ltd. v. Sales Tax Officer (2001) 3 SCC
735 : [2001] 2 SCR 829; J.K. Synthetics Ltd. v. C.T.O
(1994) 4 SCC 276 : [1994] 3 SCR 964 – referred to.
Case Law Reference
[2000] 1 SCR 744
held inapplicable
Para 13.11
38 Tax Up-date 131
referred to
Para 15.6
[2001] 2 SCR 829
referred to
Para 15.7
[1994] 3 SCR 964
referred to
Para 15.7
[1961] 3 SCR 185
referred to
Para 16.1
[2018] 7 SCR 1191
followed
Para 24.2
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2020 (8) SCALE 585
relied on
Para 24.2
[1979] 3 SCR 373
referred to
Para 25.1
[2015] 11 SCR 487
held inapplicable
Para 25.4
[1998] 1 SCR 147
relied on
Para 26.2
[1997] 3 Suppl. SCR 1
referred to
Para 33.4
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2773
of 2020.
From the Judgment and Order dated 11.01.2019 of the  High Court
of  Judicature for Rajasthan at Jaipur Bench, Jaipur in D.B. Civil Writ
Petition No. 9090 of 2018.
S. Ganesh, Sr. Adv., U.A. Rana, M.L. Patodi, Himanshu Mehta
(for M/S. Gagrat And Co.), Advs. for the Appellants.
Dr. Manish Singhvi, Sr. Adv., Satyendra Kumar, Ms. Shailja Nanda
Mishra, Ms. Harsha Vinoy, Irshad Ahmad, Advs. for the Respondents.
The Judgment of the Court was delivered by
DINESH MAHESHWARI, J.
PRELIMINARY AND BRIEF OUTLINE
1. Leave granted.
2. This appeal is directed against the judgment and order dated
11.01.2019 passed in D.B. Civil Writ Petition No. 9090 of 2018, whereby
the High Court of Judicature for Rajasthan, Bench at Jaipur, dismissed
the writ petition filed by the appellants while upholding the order of revision
dated 12.03.2018 as passed by the Additional Chief Secretary, Finance,
Government of Rajasthan, Jaipur1 in revision proceedings under Clause
13 of the Rajasthan Investment Promotion Scheme-20032.
2.1. The appellant No.1, M/s Ultratech Cement Limited (Unit-
Kotputli Cement Works), is a public 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 Limited3, a company of the Aditya Birla Group,
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.
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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 ACS
held that the Kotputli Unit of the company was entitled to Capital
Investment Subsidy only to the extent of 50% of the payable and deposited
Sales Tax/VAT 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 Committee7. The SLSC was directed
to issue a new Entitlement Certificate for subsidy to the limit of 50% of
total tax to the said Kotputli Unit of the company; and the company was
directed to refund the amount of subsidy
availed in excess of 50% of the
payable and deposited tax together with interest at the rate of 18% per
annum.
3. Put in a nutshell, case of the appellant is that the subsidy in
question, to the extent of 75% of tax payable and deposited, was availed
by it under the Rajasthan Investment Promotion Scheme-2003 only in
terms of and pursuant to: (a) the decision taken by the high-powered
Board of Infrastructure Development and Investment Institution8 on
01.04.2006; (b) the Memorandum of Understanding9 entered with the
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.
M/S. ULTRATECH CEMENT LTD. & ANR. v. STATE OF
RAJASTHAN & ORS. [DINESH MAHESHWARI, J.]
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State Government on 30.11.2007; and (c) the Entitlement Certificates
issued by SLSC on 29.04.2011 and 24.11.2011. Therefore, according to
the appellant, there was no occasion for the ACS to invoke Clause 13 of
the Scheme; and the appellant can neither be forced to repay the amount
of subsidy already availed of nor could any interest be charged. Per
contra, stand of the respondents is that the decision of BIDI dated
01.04.2006 is of no good for the appellant because the package referred
therein was withdrawn and the corresponding provisions in the Scheme
were deleted on 28.04.2006; and the benefits under the deleted provisions
could have been granted only until the date of their deletion, i.e.,
28.04.2006. Thus, according to the respondents, understanding of the
State Government with the company had only been to extend the benefit
of incentive in terms of subsidy to the extent permissible under the Scheme
and not beyond. The respondents would assert that the aforesaid
Entitlement Certificates were erroneously issued by SLSC and the matter
being related to public exchequer, the appellant is not entitled to claim
any relief contrary to the applicable provisions/stipulations.
4. The factual aspects of the matter are not of much controversy
but, for 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 28.07.200310. 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
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 been placed on record as
Annexure P-1 and another copy of this Scheme, as amended upto 25.01.2010, has been
placed for perusal in compilation by the respondents. The extractions herein are from
the copy of Scheme as amended upto 05.08.2010.
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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 to come into operation w.e.f. 01.07.2003 and
was to remain in force up to 31.03.201112. The applicability of the Scheme,
in its amended form, had been specified as follows:-
“3. APPLICABILITY OF THE SCHEME
The Scheme shall be applicable to all new investments and
investments made by existing units and enterprises for
Modernization/Expansion/Diversification, including the units/
enterprise, covered under policy for promotion of Agro-processing
and Agri-business, 2010 subject to the condition that such units
shall commence commercial production/operations owing to such
investment during the operative period of the Scheme.”
5.2. Some of the expressions and phrases used in the text of the
Scheme had been defined in Clause 4 thereof. Then, the eligibility for
availing Capital Investment Subsidy had been provided in Clause 5 of
the Scheme as follows13:-
“5. ELIGIBILITY:
The benefits Capital Investment subsidy as per Clause 7 and
exemptions as per Clause 8 under the Scheme shall be available
to all units, other than those covered in the list of ineligible units,
subject to the fulfilment of the following conditions:
(i)
the term loan sanctioned by the State/Central financial
institution(s)/International Financial Institution/Corporation
and/or
Scheduled Commercial Bank(s) including co-
operative Bank(s), has been sanctioned and utilized during
the operative period of the Scheme;
Provided that this condition shall not apply for the benefits
pertaining to purchase/use of land.
12 As per amendment dated 06.08.2008
13 Clause 5A, dealing with eligibility in case of Sick Industrial Units and Clause 5B,
dealing with eligibility in case of Biotechnology Units, are not relevant in the present
case.
M/S. ULTRATECH CEMENT LTD. & ANR. v. STATE OF
RAJASTHAN & ORS. [DINESH MAHESHWARI, J.]
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(ii)
the unit shall have a minimum borrowing for investment
of Rs. 10 lacs or having an investment of at least Rs. 10
lacs in land and /or building calculated on the basis of
DLC/RIICO rate for land, and Rs. 3228/- per sq. metre
(Rs. 300/- per sq. ft.) for building, during the operative
period;
provided that the above limit of Rs. 10 lacs shall be Rs. 5
lacs in case of Small Scale Industries.
(iii) to claim Capital Investment Subsidy (Wage component)
the unit shall provide:
(a) direct employment to at least ten persons in case of
a new unit; and
(b) twenty five percent additional direct employment
subject to a minimum of ten persons in case of
diversification, modernization or expansion.
(iv) the unit shall be eligible for Capital Investment 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
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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 provisions of the Scheme, shall be final:
S.N.
Investment 
amount 
Prescribed Authority 
Status 
1.
Investment above 
Rs. 10.00 crores 
State Level Screening Committee (SLSC) 
consisting of the following: 
a) Pr. Secretary, Industries 
Chairman
b) 
Secretary, 
Finance 
(Rev.) 
or 
his 
representative not below the rank of Deputy 
Secretary 
Member
c) Commissioner, Commercial Taxes or his 
representative 
not 
below 
the 
rank 
of 
Additional commissioner. 
Member
d) CMD, RFC or his Representative, not 
below the rank of ED 
Member
e) MD, RIICO or his Representative, not 
below the rank of ED 
Member
f) Commissioner, Industries
member-
Secretary 
2.
Investment up to 
Rs. 10.00 cores 
District Level Screening Committee (DLSC) 
consisting of the following: 
a) District Collector
Chairman
b) Concerned Branch Manager of RFC in the 
District 
Member
c) Concerned Senior
Regional Manager/ 
Regional Manager of RIICO in the District. 
Member
d) Deputy/ Asstt. Commissioner, Commercial 
Taxes/ Commercial Taxes Officer (CTO) 
Member
e) General Manager DIC 
Member-
Secretary 
“6A.  Authority to recommend grant
of customized incentive
package:
Notwithstanding anything contained under any clause/(s) of the
scheme, the following committee shall examine individual cases
of investment and may recommend for sanction of the Customized
Incentive Package through BIP or BIDI.
14 Clause 6B, dealing with incentives for quality and standards upgradation, is also not
relevant in the present case.
M/S. ULTRATECH CEMENT LTD. & ANR. v. STATE OF
RAJASTHAN & ORS. [DINESH MAHESHWARI, J.]
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S.N.
Investment 
amount 
Prescribed officers 
Status 
1
2
3
4
1. 
More than 500 
crores 
Principal Secretary, Finance or his 
representative not below the rank of 
Secretary 
Member
2.
Principal Secretary, Industries/ 
Secretary Industries.  
Member 
3.
Commissioner, Commercial Taxes.
Member 
4.
Commissioner (Investment & NRI)
Convenor”
5.4. The extent and limit of Capital Investment Subsidy under the
Rajasthan Investment Promotion Scheme-2003 was specified in Clause
7 of this Scheme, which had undergone a vast number of amendments/
revisions over the course of time. In fact, the amendments/revisions of
this Clause with insertion of sub-clauses (vi) and (vii) (with effect from
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 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
15 Sub-clause (va), providing for additional direct employment based subsidy, inserted
by FD order dated 05.08.2010, is omitted for being not relevant in the present case.
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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 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 the maximum limit of fifty percent
prescribed under clause 7(i)(a) and clause 7(i)(b) may be
raised by the BIDI (Board of Infrastructure Development
& Investment Promotion, Government or Rajasthan) to
sixty percent in such cases where the investment exceed
Rs. 100 crores but are less than or equal to Rs. 200 cores;
and this maximum limit may be raised further to seventy
five percent in cases where the investments exceed
Rs. 200 crores16.
and provided further that the maximum limit of 50%
prescribed under clause 7 (i) a and clause 7 (i) b shall be
raised up to 75% for the Biotechnology Unit established in
terms of the Biotechnology Policy, 2004.
provided also that for the new investment in textile
sector, the maximum limit of 50% prescribed under clause
7(i)(b) shall stand raised to, sixty percent in such cases
where such investment exceeds Rs. 50 crores but is less
than or equal to Rs. 100 crores and to seventy five percent
in cases where such investment exceeds Rs. 100 crores.
(ii) Subject to clause (i) Capital Investment Subsidy (Interest
component) shall be 5% (percentage points). An additional
Capital Investment Subsidy (Interest component) of one
percent shall be available to Schedule Caste/Schedule Tribe
entrepreneurs. In case the documented rate of interest is
less than 5% or less than 6% in case of SC/ST
entrepreneurs, the entitlement of the Capital Investment
Subsidy (Interest component) will be limited to the
16 This proviso amended by FD order dated 22.10.2003.
M/S. ULTRATECH CEMENT LTD. & ANR. v. STATE OF
RAJASTHAN & ORS. [DINESH MAHESHWARI, J.]
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documented rate of interest and the amount actually paid
as interest but shall not include penal interest.
(iii) The Capital Investment Subsidy shall be available to the
investors for seven years from the date of first repayment
of interest in case of Capital Investment Subsidy (Interest
component) and first payment of wages/employment in
case of Capital Investment Subsidy (wage component).
In case of Expansion/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.
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
17 This proviso inserted by FD order dated 30.09.2008.
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Captive Power Plant: The existing unit under expansion/
modernization, investing in captive power plant shall qualify
for Capital Investment Subsidy under this clause.
(iv) Where a unit has claimed and/or is availing benefit of the
Capital Investment Subsidy (Interest component) the
Capital Investment Subsidy (Wage component), shall be
available to the extent of twenty five percent of wages/
salary paid by the investors to workers for whom the
employee and employers are both contributing in the
approved provident funds. However, in case of the unit is
not claiming or availing Capital Investment Subsidy
(Interest component), the amount of Capital Investment
Subsidy (Wage component) shall be thirty percent of the
wages/salary paid to the workers for whom the employee
and the employer are both contributing in the approved
provident funds,
provided however that notwithstanding anything contained
in this clause, Capital Investment Subsidy (Wage
component) in the case of diversification/expansion of
modernization shall be available only with respect to
additional numbers of such workers engaged for whom
the employee and the employer are both contributing in
the approved provident funds,
and provided further that such additional number of
workers in the case of diversification, modernisation or
expansion is at least twenty five percent of the existing
direct employment subject to a minimum of ten additional
persons as already provided under Clause 5(iii)(a)(b)
of
this Scheme.
(v) For Capital Investment Subsidy (Interest component) the
interest actually being paid on the additional capital
borrowed shall be the only basis for computation of Capital
Investment Subsidy. In case of Capital Investment Subsidy
(Wage component) the wages/salary paid for the additional
employment generated shall be the basis for the
computation of Capital Investment Subsidy (Wage
component).”
M/S. ULTRATECH CEMENT LTD. & ANR. v. STATE OF
RAJASTHAN & ORS. [DINESH MAHESHWARI, J.]
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5.4.1. As observed, sub-clauses (vi) and (vii) were inserted to the
aforesaid Clause 7 of the Scheme 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 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 subsidy can claim wage/
employment subsidy to the extent of 30%, subject to
other conditions under this amendment.
4. The claim of subsidy shall be as per the provisions of this
Scheme.
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(vii) Notwithstanding anything contained in sub clause(i) to (v)
above, in case of investments for expansion of existing cement
unit having investment exceeding Rs.200 crores and with a
minimum regular employment of 100 persons, the amount of
subsidy shall be subject to a maximum limit of 75% of the
additional tax( calculated by taking the average of last 3 years)
payable or deposited under Rajasthan Sales Tax Act, 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 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 the
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 subsidy can claim wage/ employment subsidy
to the extent of 30% subject to other conditions under
this amendment.
4. The claim of subsidy shall 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
M/S. ULTRATECH CEMENT LTD. & ANR. v. STATE OF
RAJASTHAN & ORS. [DINESH MAHESHWARI, J.]
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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.
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 02.12.2005 and the unit has still not applied for the
benefits.”
5.4.3. The aforementioned clarification was followed by the
amendment bearing No. F.12(20)FD/Tax/2005-Pt dated 30.09.2008
whereby, the Government of Rajasthan inserted proviso to sub-clause
(iii) of Clause 7 of RIPS 2003 to the effect that the investment made or
committed before 22.05.2008 or under the MOU, for both a new cement
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unit or under expansion, having capacity of more than 200 tons per day,
shall be eligible for subsidy on the condition that the commercial production
shall commence by 31.03.2011. Similar proviso was also inserted to
Clause 8 of the Scheme.
5.5. Clause 8 of the Scheme related to various exemptions for the
eligible beneficiary, in addition to the subsidies. Then, the procedure for
claim of incentives under the Scheme was specified in Clause 9 and its
sub-clause (B) may be usefully taken note of as under:-
“9. PROCEDURES:
(A) CLAIM OF EXEMPTIONS OF STAMP DUTY AND
CONVERSION CHARGES:
***
***
***
(B) CLAIM OF CAPITAL INVESTMENT SUBSIDY:
(i)
A unit entitled to claim Capital Investment Subsidy under
this Scheme should submit duly completed application in
prescribed Form, to the Member Secretary of the
appropriate Screening Committee (SLSC/DLSC). Such
application shall be accompanied with the following
documents, as may be applicable,-
(a) Loan sanction letter issued by the term lending
institution(s)/bank(s);
(b) Proof of investment in case of self finance and
(c) Approved Provident Fund deposit receipt.
(ii)
The Member Secretary shall complete the formalities for
placing the completed application before the appropriate
Screening Committees within fifteen days from the receipt
of the application. Where an application has not 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.
M/S. ULTRATECH CEMENT LTD. & ANR. v. STATE OF
RAJASTHAN & ORS. [DINESH MAHESHWARI, J.]
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(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 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 the unit defaults in depositing sales tax or
defaults in regular repayment of loan or interest. It shall be
restored on the recommendation of the Assistant
Commissioner/ Commercial Taxes Officer from the
Commercial Taxes Department and the concerned Financial
Institution in case such unit clears all its over dues, and
starts making regular repayment of sales tax and the term
loan/interest.
(viii) “Rectification of mistake”, With a view to rectify mistake
apparent on the record, subsidy sanctioned by the assessing
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authority of the Commercial Taxes Department, under this
scheme may rectify suo moto or otherwise any order passed
by him as per the provision of section 33 of the Rajasthan
Value Added Tax Act-2003.
(ix)
The periodicity for computation of subsidy under the scheme
will be on quarterly basis.”
5.6. The State Government extended the incentives under this
Scheme subject to the terms and conditions stipulated in Clause 10
thereof.  This Clause also carries its own bearing on the questions involved
in this matter including the question of interest sought to be claimed by
the respondents. Clause 11 specified the authorities for implementation/
interpretation of the Scheme; and Clause 12 provided for review and
appeal by the authorities concerned as also by the aggrieved party. Clause
13 of this Scheme, which has been invoked for passing the impugned
order dated 12.03.2018, provided for revision by the State Government
in its Finance Department, suo motu or otherwise, where any order was
found to be erroneous and prejudicial to the interest of the State revenue.
Lastly, Clause 14 provided for the general power of the State Government
to review or modify the 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
M/S. ULTRATECH CEMENT LTD. & ANR. v. STATE OF
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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 subsidy benefit
under Technology Upgradation Fund (TUF) scheme of
Government of India, for textile sector, then it would be
eligible to avail the benefit up to 2.5% of Capital Investment
Subsidy (Interest component) under this scheme in addition
to the interest subsidy availed under the TUF Scheme.”
This benefit would be available with prospective effect from
the date of issue of this order.
Note: Interest @ 5 percent per annum would be payable to
investor in case the payment of Capital Investment Subsidy
is delayed for a period of more than 30 days once the Capital
Investment Subsidy release order is issued.
11. 
AUTHORITY 
FOR 
IMPLEMENTATION/
INTERPRETATION:
All the related departments shall implement the scheme.
The Industries Department shall act as the nodal coordinating,
monitoring and implementing department. Any matter pertaining
to interpretation of any Clause of the Scheme shall be referred to
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the Government of Rajasthan in the Finance Department whose
decision shall be final in such a matter.
12. REVIEWS AND APPEAL:
The State Level Screening Committee and District Level
Screening Committee described under clause 6 and clause 6C of
this Scheme, shall also be empowered to review their decision.
The State Level Screening Committee shall hear and decide
appeals against the orders of District Level Screening Committee.
Provided that the aggrieved party has filed review application or
the appeal within the period of 60 days from the date of
communication of the decision of the committee.
13. REVISION BY THE STATE GOVERNMENT:
(a)
The State Government in Finance Department may suo motu
or otherwise revise an order passed by any Screening
Committee wherever it is found to be erroneous and
prejudicial to the interest of the State revenue, after affording
an opportunity of being heard to the beneficiary industrial
unit.
(b)
No order under the sub-clause (a) shall be passed by the
State Government after the expiry of a period five years
after the date by which the benefits under this scheme are
fully availed of.
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’s Order No. F.6(51)AR/Gr.3/
96 dated 26th January, 1999, the Governor is pleased to re-structure
M/S. ULTRATECH CEMENT LTD. & ANR. v. STATE OF
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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 decide policy matters bearing direct/ indirect impact on
investment promotion.
5. To give projects pertaining to investment involving Rs. 25.00
Crores and above.
6. To approve a customized package of incentives where the Board
feels that the investment would catalyze employment and/ or
further investments into the State.
7. To consider and dispose off, inter-departmental issues pertaining
to investment proposals.
8. To give any other directions which the Board considers to
encourage investment.”
6.2. One of the significant and relevant aspect emerging from the
material placed on record is that in supersession of the aforesaid order
dated 15.01.2005 of reconstitution of BIDI, the State Government, in its
Administrative Reforms Department, by way of order No.F.6(51)AR/
Gr.3/96 dated 08.06.2009, constituted another body in the name of
Rajasthan Investment Promotion Board. Hence, BIDI was not in
existence after 07.06.2009 for having been disbanded.
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Relevant factual and background aspects
7. Keeping the aforesaid provisions and features of Rajasthan
Investment Promotion Scheme-2003 as also BIDI in view, we may now
take note of the relevant factual and background aspects of this case in
their feasible chronology.
7.1. As noticed at the outset, the appellant M/s Ultratech Cement
Limited (Unit-Kotputli Cement Works), is a public limited company
engaged in the business of manufacturing and marketing of cement and
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 MTPA18 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 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
18 ‘MTPA’ stands for metric ton per annum
19 At pp. 175-178 of the paper-book
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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 regular 
employment 
to 
200 
persons, 
interest 
subsidy 
and 
wage/employment subsidy will be 
subject to a maximum limit of 
75% of the tax payable and 
deposited under RST/CST/VAT.  
Out of this 75% subsidy, 45% 
subsidy shall be allowed upfront 
on the basis of actual tax liability 
and balance subsidy to the extent 
of 30% shall be allowed in the 
form of interest subsidy and 
wage/employment 
subsidy 
of 
which interest subsidy shall be 
limited to 5% of the documented 
rate of interest. 
These subsidies are admissible for 
a period of 7 years. 
If 
the 
Company’s 
request 
is 
accepted, 
total 
financial 
implication will be Rs. 
1102.50 crores over a 
period of 15 years 
whereas the financial 
implication as per RIPS 
2003 will be Rs. 448 
crores over a period of 
7 years. 
In correspondence with 
the company, they had 
indicated 
that 
the 
company 
is 
self 
sufficient 
and 
no 
appraisal by a financial 
institution 
was 
envisaged 
the
concession on interest 
subsidy has been asked 
on total investment. 
2.
Waiver of Entry Tax for 
a period 15 years 
No such policy exists.
However, BIDI has granted 50% 
exemption from entry tax of raw 
materials, processing 
materials, 
consumables 
and 
packaging 
material in the case of RAS 
Cement Limited vide notification 
No. F.4(10)FD/Tax Div/02-197 
dated 21st Feb, 2003. 
Total 
financial 
implication on plant & 
machinery would be 
Rs. 10 crores. 
3.
Waiver of Royalty on 
lime stone for 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/
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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 Koria, 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
in the 21st Meeting of BIDI held on 01.04.2006 under the
chairmanship of the then Chief Minister and it was resolved that
‘the recently announced cement package and RIPS 2003 will
be applicable on the company’; and that ‘any changes post
VAT regime will also be available to other units’. The relevant
contents of the minutes of the said 21st Meeting of BIDI dated
01.04.2006 read as under:
“Agenda No. 13
Grasim Industries Limited
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.”
7.4. Thereafter, the company addressed a letter dated 26.04.2006
to the Commissioner of Industries, seeking registration in terms
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of sub-clause (vii) of Clause 7 of RIPS-2003 (as inserted by way
of amendment dated 02.12.2005) for a new cement plant/captive
power plant, intended to be established at Kotputli. The relevant
contents of this letter dated 26.04.2006 could also be usefully
extracted as under:-
“This is in reference to the Notification No. F 4(18)FD/Tax-Div/
2001 amended on 2.12.05. Kindly note that our group has intention
to set up a new plant for manufacturing of 3.5 million tons/annum
cement plant at Kotputli along with a 2 X 23 MW Captive 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 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
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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 , District Jaipur &
Aditya Cement – Shambhupura Dist. Chittorgarh involving total
investment of above Rs. 2200/- crores.
The withdrawal of 45% upfront subsidy would have major set
back to company’s investment plan in Rajasthan. The cement
plants are capital intensive plants and most of the states are offering
subsidy/incentives in one form or the other form and in previous
cases Government of Rajasthan has announced specific schemes
for specific companies i.e. incentives even up to 75% exemption
of Tax up to 11 years by issuing separate notifications on case to
case basis.
We have already submitted option to avail the benefit under
notification dated 2nd December 2005 as provided in Para 7 (vi)
(1) of the afforsaid
scheme and our intention is to commence
commercial production in both these plants by March 2008 i.e.
within 5 years of filing of the option as provided in the scheme.
We have taken the effective seps like placement of orders for
major items of plant & machineries on  the basis of incentives/
subsidy offered vide notification dated 2nd December 2005.
We are distressed to know about the withdrawals of incentives
provided to cement industry within 5-6 months of notification, which
will make our proposed plants unviable. In fact we had represented
to the Government of Rajasthan for customized package of
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incentives as provided under the Rajasthan Investment Policy 2003
for investment of Rs 1000 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 tight response from the 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.
20 Hereinafter referred as ‘BIP’
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7.8. It had been the case of the appellant that pursuant to BIDI’s
decision dated 01.04.2006 and the MoU dated 30.11.2007, the company
made investment to the tune of Rs.1661.88 crores on its Kotputli Unit;
provided employment to 254 persons as on 31.12.2009; and availed the
loan facility amounting to Rs.798.82 crores from various financial
institutions and banks. Thus, according to the appellant, all the required
conditions stipulated under RIPS-2003 stood fulfilled.
7.9. With reference to the aforementioned facts and with the
assertion that commercial production in the said Kotputli Unit commenced
on 20.01.2010, the company made an application, on or about 21.02.2010,
to the Member Secretary SLSC for grant of Entitlement Certificate under
RIPS-200321. Several aspects related with the contents of this application
and its accompanying form, affidavit and annexures do form the areas
of conflict and divergence of the parties and, therefore, appropriate it
could be to take note of their relevant features too.
7.9.1. In the aforesaid application, the company, after stating that
it had commenced commercial production on 20.01.2010 and had made
investment of a sum of Rs.1661.88 crores, also referred to the fact that
it had filed the option on 26.04.2006 pursuant to the notification dated
02.12.200522. 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.1184.47 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
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.
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also enclosing herewith the certificate of Chartered Accountants
certifying the investment of Rs.1184.47 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 were made of Rs.1661.88
crores i.e. more than 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 interest at the rate of 12% per
annum on such amount.”
7.10. The matter relating to the aforesaid application was
considered by SLSC in its 29th meeting held on 17.03.2011. As noticed,
by that time, the name of company had changed to that of the present
appellant. In the said meeting dated 17.03.2011, the SLSC proceeded to
take the decision of allowing Capital Investment Subsidy to the appellant
to the extent of 75% of deposited VAT. This decision was taken by
SLSC purportedly on the basis of the approval of BIDI. The relevant
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part of the Minutes of SLSC meeting dated 17.03.2011, in their translated
version23 read as under:-
“13….Committee after observing & examining the submitted
documents by the unit & available provision in the plan & earlier
decision taken by the finance department, this decision has been
taken that unit has appended signatures on MoU in Rajasthan
Resurgent Summit. Therefore, as per the orders of finance
department dated 30/9/2008 unit is free from negativeness.
Committee has also observed that although finance department
has not given any consent for the amendment regarding available
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.
Committee has also taken decision that unit may be allowed for
Capital Investment (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
23 pp.160-161 of the paper-book
M/S. ULTRATECH CEMENT LTD. & ANR. v. STATE OF
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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 committee,
accordingly the committee, & information received from the unit
ECB credit of 216.25 crore has also been added under Capital
Investment Plan, total 666.25 crore rupees from 5-2-2010 on the
basis of new unit the capital investment subsidy (5 percent interest
component & 25 percent vet component) eligibility for 7 years
period from 5-2-2010 taking the decision, amended eligibility
certificate will be issued for the unit. The total pay ability for the
unit under capital investment subsidy, the total limit of 75 percent
of the vat deposit, the decision taken in the meeting dated
17-3-2011 as per the
series of decision will be payable by the
unit.”
7.12. Pursuant to the aforesaid decision of SLSC dated
17.10.2011, the Office of the Commissioner Industries, Rajasthan issued
a revised Entitlement Certificate to the appellant company on 24.11.2011,
superseding the earlier Certificate dated 29.04.2011 and certifying the
entitlement of the appellant to Capital Investment Subsidy in the following
terms:-
“8.
Capital Investment subsidy:
(i)
Interest Component
(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 
24 pp.165-166 of the paper-book
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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% subsidy in terms of the Entitlement Certificate
dated 24.11.2011 from the month of February 2010 and until the month
of February 2017.
8. The foregoing narration of facts 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
M/S. ULTRATECH CEMENT LTD. & ANR. v. STATE OF
RAJASTHAN & ORS. [DINESH MAHESHWARI, J.]
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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 therefrom could be usefully extracted as
under25:-
“In both the matters of M/s. UltraTech Cement grant of benefit
up to 75% limit of VAT has been referred while as per proviso to
clause 7(1)(a) and (b) of the Scheme 50% maximum limit can be
extended only by Board of Infrastructure Development and
Investment Promotion. (BIDI)
BIDI was reconstituted by the Administrative Reforms
Department by its Order No. F.6 (51) / AR / Gr.3 / 96 dated
15.1.2005. In supersession of the said Order dated 15.1.2005 the
Administrative Reforms Department by its Order No. F.6 (51)
AR / Gr.3 / 96 dated 8.6.2009 constituted Rajasthan Investment
Promotion Board (RIPB). As such after 7.6.2009 BIDI has not
been in existence.  In these cases Applications under RIPS-2003
has been filed on 23.2.2010 and 19.6.2009 respectively and it is
not clear from the available information that when BIDI issued
order for increasing maximum limit from 50% to 75% of capital
investment subsidy in these cases.
In regard to promotion sanctioned under 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
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
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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:-
“Notably, in clause 7(vi) of the Scheme provision was for cement
units to give capital investment subsidy up to 75% of payability/
deposition of VAT subject to providing employment to minimum
200 persons 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 respect of
proposed against the then Additional Director, Industries, who was working at the
relevant time as the Functional Officer under RIPS-2003.  It has been pointed out that
the inquiry could not proceed further for the said officer having retired and inquiry
having gone time barred under the Rajasthan Civil Services (Pension) Rules, 1996.
27 pp.470-472 of paper-book
M/S. ULTRATECH CEMENT LTD. & ANR. v. STATE OF
RAJASTHAN & ORS. [DINESH MAHESHWARI, J.]
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M/s. UltraTech Shambhupura District Chittorgarh (Unit Aditya
Cement Works-II) matter of grant of 75% subsidy as per proviso
of clause 7(i)(a) and (b) of RIPS 2003 was not placed before
BIDI therefore no approval by the BIDI was found to be done. In
21st Meeting of BIDI dated 1.4.2006 under Agenda Item No. 13
matter of Kotputli Cement plant of Grasim Industries was placed
before BIDI in regard to which BIDI passed following orders:-
“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 on other units”
As such it is clear that no approval was made by BIDI for
grant of subsidy 75% as per proviso to clause 7(i)(a) and (b) of
RIPS 2003 in the matter of M/s. Utratech Cement Limited (Unit
– Kotputli Cement Works).
In respect of M/s. UltraTech Shambhupura District
Chittorgarh (Unit Aditya Cement Works-II) and M/s. Utratech
Cement Limited (Unit – Kotputli 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
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13 of RIPS-2003. The relevant part of this resolution of SLSC dated
22.05.2017 could also be usefully extracted as under28:-
“This is not clear from the action detail letter dated 17- 5-2006 of
BIP that what should be meaning in which it was said that according
RIPS-2003 provision these units are eligible 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 Department–
(i)
According to rule 12 of the plan provision if the State level
screening committee a letter has been received within 60 days
of its decision, then the committee will review its decision.
(ii) (ii) Under rule 13 there is a provision that on the basis of
Finance Department suo motto or information received from
any other source may review the decision of the screening
committee. If the decision is against the interest of Govt.
Although before the changing the decision, the beneficiaries
units will be given opportunity for hearing. For this purpose
the time limit after 5 years of the complete benefits.
28 pp. 170-171 of paper-book
M/S. ULTRATECH CEMENT LTD. & ANR. v. STATE OF
RAJASTHAN & ORS. [DINESH MAHESHWARI, J.]
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The eligibility certificate was issued on 29-4-2011 in favour of
unit. The time limit was 6 months which has already been
exhausted. But the given benefit time period was for 7 years,
possibly, still it is continuing. Therefore, under rule 13, the time
limit for action by 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, the appellant submitted its objections and reply to the show
cause notice, inter alia, to the effect that it had availed the benefit
under RIPS-2003 with effect from 05.10.2010 on the basis of the
Entitlement Certificate granted to it and the period of seven years having
been completed, the availed benefit cannot be withdrawn. 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
estopple. It was also contended that SLSC had no locus standi to refer
the matter for revision by the State Government. On behalf of the
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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 had been on the basis of the
MoU entered into with the State Government and under the proviso to
Clause 7(i)(a) of RIPS-2003.
11. The learned Additional Chief Secretary examined the entire
record and took note of all the objections of the appellants and then, in
his elaborate order dated 12.03.2018, held that the SLSC had erroneously
issued the aforesaid Entitlement Certificates dated 29.04.2006 and
24.11.2011; and that the appellant was not entitled to the subsidy beyond
50% of the tax payable and deposited. The relevant observations and
findings in the impugned order dated 12.03.2018 read as under :-
“27. In light of conclusion derive on the aforesaid each point under
consideration as stated above overall conclusion is drawn as under:-
i)
The decision taken under Agenda No. 13 of Meeting dated
17.03.2011 of State Level Screening Committee (SLSC) is
erroneous
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
M/S. ULTRATECH CEMENT LTD. & ANR. v. STATE OF
RAJASTHAN & ORS. [DINESH MAHESHWARI, J.]
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(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 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 prejudicial to the interest of the State revenue
because for investment made in the unit capital investment
subsidy was available up to 50% of payable and deposited
tax only as per 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. Preliminary objections, Objections and
Arguments advanced by the Beneficiary Industrial Unit has
been discussed in detail.
vi) The decision dated 17.3.2011 of State Level Screening
Committee (SLSC) is revising within limitation prescribed in
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clause 13(b) of Rajasthan Investment Promotion Scheme,
2003 (RIPS-2003).
11.1. In view of the above, the learned Additional Chief Secretary
issued directions to the appellant as also to SLSC in the following terms:-
28. Hence, in this revision proceeding proposal is accepted in
context of points referred to Finance Department for revising
under clause 13 of Rajasthan Investment Promotion Scheme, 2003
(RIPS-2003) the decision taken by the State Level Screening
Committee (SLSC) in its meeting dated 17.03.2011 as decided in
meeting dated 22.05.2017 by the State Level Screening 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 Subsidy
(Assessing Authority) is directed to calculate payable capital
investment subsidy as per New Entitlement Certificate to be issued
by the State Level Screening Committee (SLSC) in reference to
this revision order and in case the company in the context of this
unit has already received excess benefit then payable capital
investment subsidy under this revision Order then to recover the
said excess amount from the company.
M/S. ULTRATECH CEMENT LTD. & ANR. v. STATE OF
RAJASTHAN & ORS. [DINESH MAHESHWARI, J.]
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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/
employment subsidy shall not exceed 50% of the State Sales tax/
VAT and the Central Sales Tax paid by the applicant dealer.’
12.1. In sequel to the above, an order dated 04.04.2018 was issued
by the ACS wherein, the total tax and excess subsidy availed by the
company were calculated
for the period from 05.02.2010 to 31.12.2016
and whereby, the appellant was directed to refund the amount of excess
availed subsidy together with interest in the following terms:-
“Hence you are directed to deposit excess availed capital
investment subsidy amount Rs. 15,96,37,794/- together with interest
Rs. 17,18,33,816/- payable thereon totaling to Rs. 33,14,71,610/-
till 3.5.2008 through E-Grass under Budget Head (VAT-OTHER
MISC PAYMENTS) in the State treasury and submit evidence
thereof 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
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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 dismissed
the writ petition by the impugned order dated 11.01.2019. Having regard
to the subject-matter and the questions involved, we may also take note
of the reasons that prevailed with the High Court in rejecting the case of
the appellant.
13.1. The High Court in the first place rejected the contention of
appellant that if there was any mistake in granting subsidy, that could
have been rectified with reference to Clause 9(B)(vii) only 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
M/S. ULTRATECH CEMENT LTD. & ANR. v. STATE OF
RAJASTHAN & ORS. [DINESH MAHESHWARI, J.]
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deleted by the Government on 28.04.2006. The High Court also observed
that the company was fully conscious of the fact that it would not receive
the tax subsidy under deleted sub-clause (vii) of Clause 7, which was
also borne out from the representation made by it on 26.05.2006, stating
that the withdrawal of 45% upfront subsidy of actual tax liability was a
major setback to the company’s investment plan; and making a request
that the newly inserted clauses under Notification dated 28.04.2006 be
reconsidered. The High Court also observed that BIP in its communication
dated 17.06.2006, with regard to the request for customized package,
merely stated that ‘the company will be eligible for concessions as
contained in RIPS-2003’; and even in the MoU dated 30.11.2007, ‘all
that stated was that the State will extend to the project incentives
permissible to the project 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 application29 made by the company for issuance of entitlement
certificate and for benefits under the amendment dated 02.12.2005 and
pointed out the fundamental flaw therein that the amendment dated
02.12.2005 had already been deleted on 28.04.2006. The High Court
also took note of the decision of SLSC dated 17.03.2011 and pointed out
the basic error therein that the decision of BIDI dated 01.04.2006 was
29 This application bears the date 04.02.2010 but was filed on 21.02.2010, vide paragraph
7.9.1 and footnote 21 hereinbefore.
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utterly misconstrued. The High Court further took note of the corrective
decision taken by SLSC on 22.05.2017 and 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 BIDI never
approved raising of the subsidy upto 75% and accordingly
recommended to the Government for proceeding under Clause
13 of the RIPS-2003.”
(emphasis in bold
supplied)
13.5. The invocation of the doctrine of Contemporanea Expositio
on behalf of the appellant for the submission that SLSC, consisting mostly
of the officers from the Finance Department of the State, was in the
best position to construe the decision of BIDI was also negated by the
High Court in the following words:-
“The argument that the SLSC which consisted of the officers
mostly from the Finance Department of the State by virtue of
doctrine of Contemporanea Expositio was in the best position to
consider decision of the BIDI is noted to be rejected 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
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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 liability
retrospectively. In the present case, the situation is entirely different
in that the petitioners availed undue advantage at the time when it
established the plant, which is being sought to be recovered after
its full establishment in business. It is not a case where the
petitioners did not recover taxes and did not deposit due
to exemption. The cited judgments are therefore not applicable
and are only the expression of the doctrine of impossibility and
are based on
reasons of 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:-
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“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
amendment, the SLSC was competent to grant subsidy to the
extent of 50% and no more than that. The SLSC, however, wrongly
accepted the application of the petitioner-company under the
proviso to Clause 7(i)(a) by incorrectly relying upon the decision
of the BIDI dated 01.04.2006 in raising the limit of subsidy upto
75%. The SLSC at the maximum could have granted the
tax subsidy to the extent of 50% and could have, till the
BIDI was in existence, referred the case of the petitioner-
company for extending the limit of tax subsidy from 50%
to 75%. Since the BIDI was disbanded on 07.06.2009,
therefore, it was not in existence when the SLSC took up
the case of the petitioner for consideration in its meeting
held on 17.03.2011. Thus obviously, it could not have
granted tax subsidy beyond 50%.”
(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 estopple and rejected the same with two-fold
observations: one that there could be no estopple 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
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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-2003, that would mean that the provisions contained
in RIPS-2003 would have to be adhered to and the case of the
petitioner-company would be dealt with in accordance therewith.
The two provisions under which the petitioner-company could have
availed tax subsidy upto 75% were the sub-clauses namely Sub-
clause (vi) and (vii) of Clause 7 inserted vide notification dated
02.12.2005 but both these sub-clauses were deleted vide
notification dated 28.04.2006, merely two days after the petitioner-
company submitted option 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. The High Court said,-
“…In the present matter, case of the petitioners has not even
been considered by the BIDI which merely relegated it to SLSC,
as such the provisions of the RIPS-2003 are to be strictly adhered
to. Unlike the exemption schemes where the assessee is not
collecting the taxes from the customer/purchaser, here in the
present case of subsidy, the tax is collected from the customers/
purchasers and after depositing the same with the department,
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the amount to the extent of 50% or 75%, as per the entitlement
certificate, is refunded to the assessee.”
13.10.The High Court also reiterated the basic flaw in the approach
of SLSC where it had 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 by itself direct for grant of
75% tax subsidy but merely directed that “the recently announced
cement
package and the RIPS-2003 shall be applicable on the
company”, the SLSC could have extended only such tax subsidy
which it was competent to do. The SLSC by erroneously
misconstruing the aforesaid decision of the BIDI extended the
benefit of sub- clause (vii) whereas the said clause stood deleted
only two days after the option was exercised by the petitioner-
company. Order of the SLSC was therefore certainly
“prejudicial to interest of the 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
M/S. ULTRATECH CEMENT LTD. & ANR. v. STATE OF
RAJASTHAN & ORS. [DINESH MAHESHWARI, J.]
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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 observed that in the case at hand, the appellant
started availing the benefit of 75% subsidy from the month of February
2010 and availed the same until the month of February 2017; and as the
show cause notice was sent within six months from February 2017, it
was well within the limitation period of five years, as provided under
Clause 13. The High Court held and concluded as follows:-
“…Admittedly, in the present case, the petitioners started availing
benefits of the subsidy from February, 2010 and fully availed the
benefits of subsidy to the extent of 75% up to February, 2017.
Show cause notice for revising the order under Clause 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.
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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.
15.1. The learned senior counsel would submit that the company
had applied to BIDI for a customized package of incentives for the
proposed cement plant at Kotputli; and this application was disposed of
by BIDI on 01.04.2006, where it was directed that the recently announced
package be granted to the company and also the RIPS-2003 benefits.
While pointing out that this package, providing for 75% Sales Tax subsidy
to newly established or substantially expanded cement undertaking, was
introduced on 02.12.2005 with insertion of sub-clauses (vi) and (vii) to
Clause 7 of RIPS-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 Minutes of SLSC meeting
dated 17.03.2011 make it crystal clear that the decision to grant 75%
subsidy was the decision of BIDI and not that of SLSC.
M/S. ULTRATECH CEMENT LTD. & ANR. v. STATE OF
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15.2. The learned senior counsel has also invoked the principles
of Contemporanea Expositio with the submissions that in all the
exchanges at the relevant time, it was plainly and clearly understood by
the authorities concerned that the appellant company was entitled to
subsidy to the extent of 75% in the true interpretation of the provisions
of the Scheme and on their correct application to the facts of the case;
and, therefore, the respondents are not entitled to 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)
1SCC 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 terms of Clauses 7(vi) or 7(vii) but, was
relatable to the proviso to Clauses 7(i)(a) and 7(i)(b) of RIPS-2003.
15.3. It has also been submitted by the learned counsel that the
appellant made its entire investment of over Rs.1,600 crores on its Kotputli
plant only after the decision of BIDI dated 01.04.2006 and after entering
into the MoU dated 30.11.2007 in Resurgent Rajasthan Summit under
which, the respondent State Government gave a commitment to extend
all concessions and benefits which were available under RIPS-2003.
The learned counsel would argue that the decision of BIDI dated
01.04.2006 and commitment of the State Government dated 30.112007
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
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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 were not open to revision under Clause 13. The learned
senior counsel would submit that the certificates in question had rightly
been issued by the SLSC acting in terms of the decision of BIDI, which
remains binding on the respondents and, therefore, the respondents are
not entitled to suggest any different interpretation after the subsidy in
question had already been availed of.
15.5. In regard to the scope of such powers of revision, the
learned senior counsel has referred to the decision of this Court in the
case of Malabar Industries Co. Ltd. v. Commissioner of Income
Tax, Kerala State.: (2002) 2 SCC 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
M/S. ULTRATECH CEMENT LTD. & ANR. v. STATE OF
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been completed, the incentives cannot thereafter be revoked or recalled
with retrospective effect.
15.7. The learned senior counsel has also questioned the levy of
interest with the submissions that the grant of 25% subsidy has been
revoked not because of any default committed by the appellant but only
because of a sudden change of opinion by the respondents after about
eight years. In this fact situation, according to the learned counsel, Clause
10 of RIPS-2003, authorising levy of interest, has no application at all.
With reference to the decisions in India Carbon Ltd. & Ors. v. State of
Assam.: (1997) 6 SCC 479, Maruti Wire Industries Pvt. Ltd. v.
Sales Tax Officer.: (2001) 3 SCC 735 and J.K. Synthetics Ltd. 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
made by the company; and hence, the decision of BIDI dated 01.04.2006
to grant subsidy could only have been with respect to the said sub-clauses
(vi) and (vii) of Clause 7 because the specific provision always overrides
the general one, as explained in J.K. Cotton Spinning & Weaving Mills
Co. Ltd. v. State of U.P. : (1961) 3 SCR 185. Thus, according  to the
learned AAG, the appellants herein could have sought, if at all, the relief
flowing from the said sub-clauses (vi) and (vii) of Clause 7 but, those
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sub-clauses were consciously deleted by the State Government on
28.04.2006; and being aware 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 result in conferring a benefit that had ceased to exist post
28.04.2006. With repeat reference to the Minutes of BIDI meeting dated
01.04.2006, the learned AAG has submitted that not a single
document
existed at the relevant point of time, i.e., around 01.04.2006, which could
even remotely suggest that the subsidy was granted in terms of proviso
to Clauses 7(i)(a) and 7(i)(b) of RIPS-2003.
16.2. While countering other parts of submissions, the learned
AAG has submitted that the doctrine of Contemporaneous Expositio
applies to ancient statutes and has no application to the present case.
The learned 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.
M/S. ULTRATECH CEMENT LTD. & ANR. v. STATE OF
RAJASTHAN & ORS. [DINESH MAHESHWARI, J.]
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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 estopple 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 nor was granted in the BIDI meeting
dated 01.04.2006.
16.4. The learned AAG would lay emphasis on submissions that
the State Government has rightly exercised the power of revision to set
aside the order of SLSC, which had erroneously granted 75% subsidy,
even though the related provisions in the Scheme stood withdrawn on
28.04.2006; and that the grant of subsidy by SLSC will not create any
issue of estoppel because it was a wrongful grant and the same was
corrected in exercise of revisional powers reserved under the Scheme.
16.4.1. It has also been argued that the revisional authority 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 Contract Act, any
benefit received by mistake must be returned with interest so as to avoid
unjust enrichment.
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Points for determination
17. For what has been noticed hereinabove, the basic point arising
for determination in this case is the extent to which the appellant company
was entitled to Sales Tax/VAT subsidy under RIPS-2003 i.e., as to
whether the company was entitled to the subsidy to the extent of 75% of
tax payable and deposited or was entitled only to 50%? For effectual
determination of this basic and principal point, we need to examine the
purport and effect of the decision of BIDI dated 01.04.2006. 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
estopple; 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 the entire record.
Entitlement of the Appellant to Capital Investment Subsidy
: The extent thereof : effect of the decision of BIDI
19. For what has been noticed hereinabove, the main plank of
submissions on behalf of the appellant is that granting of subsidy to the
extent of 75% was permissible under the proviso to Clauses 7(i)(a) and
7(i)(b) of RIPS-2003 and the BIDI could have and indeed granted such
sanction in its favour.  According to the appellant, the decision to grant
75% subsidy was taken by BIDI on 01.04.2006 while SLSC only
implemented the same. It has also 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
M/S. ULTRATECH CEMENT LTD. & ANR. v. STATE OF
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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” precisely referred to the said provisions of sub-clauses
(vi) and (vii), which had been inserted to Clause 7 of RIPS-2003 on
02.12.2005. Moreover, even when BIDI stated that ‘recently announced
cement package’ would be applicable to the company, it was coupled
with the requirement of applicability of the Scheme, i.e., RIPS-2003.
After the aforesaid decision of BIDI dated 01.04.2006, the company, in
its letter dated 26.04.2006
to the Commissioner of Industries, sought
registration in terms of sub-clause (vii) of Clause 7 of RIPS-2003 for a
new cement plant/captive power plant, intended to be established at
Kotputli. 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
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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 asserted that the Secretary Finance had equally been a
Member of BIDI as also SLSC, but, we are afraid, these submissions do
not advance the cause of the appellant in any manner. Even if BIDI had
been a high-powered body, its resolutions or even directives could have
only been read in conformity with the provisions applicable to any
particular proposition; and the fact that one of the Secretary had been a
member of both BIDI and SLSC, the resolution of BIDI could not have
been imported into the decision making process of SLSC beyond what
was permissible under the 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-2003 is
again evident on the face of the record on a bare look at the contents of
its application dated 26.04.2006. No decision on this application was
taken; and within two days of making of this application, the State
Government amended RIPS-2003 and deleted the aforesaid sub-clauses
(vi) and (vii) of Clause 7. The company made a desperate attempt to
persuade the State Government to withdraw such amendment of deletion
of sub-clauses (vi) and (vii) of Clause 7 of the Scheme and to grant
benefit of those deleted provisions by way of its representation dated
26.05.2006 but, the communication thereafter sent on 17.06.2006 to the
company by BIP was again to the effect that the ‘company would be
M/S. ULTRATECH CEMENT LTD. & ANR. v. STATE OF
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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 of the said notification dated 02.12.2005. The SLSC,
while taking up the said application, on its own, connected the prayer of
the appellant to the decision of BIDI and, for that matter, read as if
BIDI’s decision had been to grant subsidy to the extent of 75% in terms
of the said proviso to Clauses 7(i)(a) and
7(i)(b) of RIPS-2003. We are
unable to find any rationale and any logic that SLSC, in its meeting dated
17.03.2011, imported the said proviso to Clauses 7(i)(a) and 7(i)(b) of
RIPS-2003 into the decision of BIDI dated 01.04.2006 and then, applied
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
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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 and any recommendation
for customised incentive package in relation to the appellant. The decision
of BIDI dated 01.04.2006 also does not refer to nor is relatable with any
customised package meant for the appellant company.
22. In an overall conspectus of the record and various amendments/
revisions of RIPS-2003, it appears that though at one stage (i.e., on
02.12.2005), the State Government thought it proper to announce an
entirely different treatment to cement units by extending 75% subsidy to
them with a different methodology and hence, inserted sub-clauses (vi)
and (vii) to Clause 7 of RIPS-2003 but, it did not continue with that
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 when the High Court has held that the appellant
company was only entitled to subsidy to the extent of 50% of the tax
payable and deposited and not to the extent of 75%.
SLSC’s decision of granting 75% subsidy to the appellant:
whether a possible view of the matter
24. The suggestion on behalf of the appellant company, that if two
views were possible and the SLSC in its earlier decision had taken one
M/S. ULTRATECH CEMENT LTD. & ANR. v. STATE OF
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of the views, then the same could not have been interfered with, has its
own shortcomings.
24.1. In the first place, the possibility of so called 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 there had been any ambiguity, the benefit
thereof would have only gone in favour of revenue for the
simple reason
that under the provisions in question, the State had agreed, by way of
incentive, to part with a portion of its revenue. Such provisions, whether
in the statute or in the non-statutory document, by their very nature, are
subject to strict interpretation so far as their applicability is concerned.
The principles of law in this regard are well settled with the Constitution
Bench decision of this Court in the case of Dilip Kumar & Co. (supra).
Recently, in the case of Ramnath & Co. v. Commissioner of Income
Tax: Civil Appeal Nos.2506-2509 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:-
30 Hereinafter referred to as ‘the Act of 1961’
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“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 also in other
cases that in  the matters of taxation, when two views are possible,
the one favourable to  assessee has to be preferred, stands
specifically disapproved by the Constitution Bench in Dilip Kumar
& Co. (supra). It has been laid down by the Constitution Bench in
no uncertain terms that exemption notification has to be interpreted
strictly; the burden of proving its applicability is on the  assessee;
and in case of any ambiguity, the benefit thereof cannot be claimed
by the subject/assessee, 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……”
M/S. ULTRATECH CEMENT LTD. & ANR. v. STATE OF
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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 deserves to be accepted on the doctrine of Contemporanea
Expositio. In our view, neither this doctrine could be invoked in the
present case nor the principles related therewith could be applied.
25.1. The referred doctrine is embodied in the maxim
‘Contemporanea exposition est optima et fortissimo in lege’ which
means that the best way to construe a document is to read it as it would
have read when made. The doctrine has been tersely explained by this
Court in the case of Desh Bandhu Gupta v. Delhi Stock Exchange
Association Ltd.: AIR 1979 SC 1049 in the following terms (at p.
1054) :
“… The principle of contemporanea exposition (interpreting a
statute or any other document by reference to the exposition 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 interpretation
may, if occasion arises, have to be disregarded for cogent and
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persuasive reasons, and in a clear case of error, a Court would
without hesitation refuse to follow such construction.”
25.2. Some of the basic features of this doctrine of
Contemporanea Expositio and its applicability as also non-applicability,
as explained with reference to the decided cases in the Principles of
Statutory Interpretation by Justice G.P. Singh31, could also be usefully
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, 188536 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 essence,
the doctrine of Contemporanea Expositio is applied as a guide to the
interpretation of a statute or even document by referring to the exposition
that the same had received from competent authority at the relevant
31 14th Edition, pp.375-376
32 Optimus legume interpres est consuetudo; Contemporanea exposition est Optima et
fortissimo in lege
33 Senior Electric Inspector v. Laxminarayan Chopra, AIR 1962 SC 159, p. 162 : 1962
(3) SCR 146
34 Ram Adhar Singh v. Bansi, (1987) 2 SCC 482, p. 485 : AIR 1987 SC 987
35 Punjab Traders v. State of Punjab, AIR 1990 SC 2300, p. 2304 : 1991 (1) SCC 86
36 Senior Electric Inspector v. Laxminarayan Chopra, AIR 1962 SC 159, pp. 162, 163
: 1962 (3) SCR 146.
37 Raja Ram Jaiswal v. State of Bihar, AIR 1964 SC 828, p. 836: 1964 (2) SCR 752
M/S. ULTRATECH CEMENT LTD. & ANR. v. STATE OF
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point of time. This doctrine is also relatable to the doctrine of stare
decisis whereunder, an exposition standing for a long length of time, is
considered to be a law settled and is applied as such. As regards the
contemporaneous construction placed by the administrative or executive
officers charged with executing statute, the Courts lean in favour of
attaching considerable weight to the same but, it cannot be laid down
that understanding of a particular administrative or executing authority
is always fait accompli and has to be applied 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 not fait accompli merely because
SLSC chose to put a wrong construction on the decision of BIDI. On
the facts and in the circumstances of the present case, invocation of the
doctrine of Contemporanea Expositio on behalf the appellant remains
entirely inapt and the contentions in that regard could only be rejected.
25.5. That the doctrine of Contemporanea Expositio cannot be
invoked in the case of present nature would also be clear 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.
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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 intake of the amount of Sales Tax/VAT; and such an intake
is indeed governed by the statute. This apart, as noticed hereinbefore, it
cannot be deduced that a conscious decision was ever taken at any
stage or at any level that the appellant was to be extended any differential
and advantageous treatment by SLSC and was to be allowed 75% subsidy
in place of the ordinarily allowable 50%. BIDI never issued any direction
to SLSC to grant 75% subsidy to the appellant. It merely directed that
“the recently announced cement package and RIPS-2003 shall be
applicable on the company.” Obviously, the case of the appellant was
required to be dealt with by SLSC only in accordance with the applicable
provisions contained in RIPS-2003. The provisions under which the
appellant could 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, any such representation was made by the State Government
which led the company to alter its position.
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26.2. Besides the above, when the decisions of SLSC dated
17.03.2011 and 24.04.2011 turn out to be unauthorised and not in accord
with the applicable provisions of the Scheme, the principles of promissory
estopple cannot be invoked for their enforcement. In this regard, reference
to the following passage from the decision of this Court in the case of
Dr. Ashok Kumar Maheshwari v. State of U.P. & 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 Corpn.: (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 Government
under Clause 13
27. For the self-same reasons aforesaid, the contentions urged on
behalf of the appellant against the exercise of power of revision under
Clause 13 of RIPS-2003 with reference to the decision of this Court in
the case of Malabar Industrial Co. (supra) turn out to be totally devoid
of substance.
27.1. In Malabar Industrial Co. (supra), this Court construed
Section 263 of the Act of 1961 wherein too, the basis for exercise of
power of revision by the Principal Commissioner or Commissioner is
akin to Clause 13 of RIPS-2003 but with a little difference. Under Section
263 of the Act of 1961, the Commissioner concerned could exercise the
power of revision, if he considers that the order passed by the Assessing
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Officer is ‘erroneous insofar as it is prejudicial to 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 had failed to make the requisite
enquiry, rather the questioned order was found to have been passed by
the Assessing Officer without application of mind. This Court, inter alia,
observed and held as under :-
“10. The phrase “prejudicial to the interests of the Revenue” has
to be read in conjunction with an erroneous order passed by the
Assessing Officer. Every loss of revenue as a consequence 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.)
M/S. ULTRATECH CEMENT LTD. & ANR. v. STATE OF
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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. It appears
that the resolution passed by the Board of the appellant Company
was not placed before the Assessing Officer. Thus, there was no
material to support the claim of the appellant that the said amount
represented compensation for loss of agricultural income. He
accepted the entry in the statement of the account filed by the
appellant in the absence of any supporting material and without
making any inquiry. On these facts the conclusion that the order
of the Income Tax Officer was erroneous is irresistible. We are,
therefore, of the opinion that the High Court has rightly held that
the exercise of the jurisdiction by the Commissioner under Section
263(1) was justified.”
27.1.3. The observations and conclusions aforesaid, do not advance
the cause of the appellant; and if at all of any application, 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 provides for a period of five years from the date by
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which benefits under the Scheme are availed of, to be the period within
which the power of revision could be exercised by the State Government.
Admittedly, in the present case, the appellant company had availed the
benefits until the month of February 2017 and the order of revision was
passed on 12.03.2018, well within the period 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 obtained by the appellant, beyond its entitlement,
had only been based on an erroneous and unauthorised decision of SLSC.
In any case, RIPS-2003 being a matter of concession in the form of
subsidy, securing an advantage by the appellant at the cost of public
exchequer could not have been allowed and, for the Scheme itself having
reserved the powers in the State Government to revise the erroneous
and prejudicial order within a period of five years from the date of fully
availing of the benefits, such powers have rightly been invoked and
exercised by the State Government.
Summation on major points for determination
30. The discussion foregoing leads to the clear answers that BIDI,
in its decision dated 01.04.2006 never directed for grant of 75% subsidy
to the appellant company in terms of proviso to Clauses 7(i)(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
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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 all there was
any doubt or ambiguity, the benefit thereof could not have gone to the
appellant. The appellant company was entitled to subsidy under RIPS-
2003 only to the extent of 50% of tax payable and deposited and not
75% as allowed by SLSC.
30.1. It is also clear that the doctrine of Contemporanea Expositio
neither applies to this case nor inures to the benefit of appellant. The
principles of promissory estopple 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
38 As noticed repeatedly, the said expression ‘recently announced cement package’ is
only referable to sub-clauses (vi) and (vii) of Clause 7 of RIPS-2003.
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was rightly directed to issue the new Entitlement Certificate for subsidy
to the limit of 50% of total tax to the said Kotputli Unit of the appellant
company; and the company was rightly directed to refund the amount of
subsidy availed in excess of 50% of payable and deposited tax.
31.1. However, in the impugned order dated 12.03.2018, the
appellant was also directed to make such refund together with interest
at the rate of 18% per annum. As observed hereinbefore, even if the
decision of State Government to recall 25% availed subsidy is upheld,
the point still requiring consideration would be as to whether the State is
justified in seeking to recover interest at this rate of 18% per annum?
Levy of Interest
32. Coming to the question of levy of interest on the amount sought
to be recovered, it has been contended on behalf of the appellants that
Clause 10 of RIPS-2003 providing 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 as to whether the appellant company could have availed
75% subsidy? However, disbursement of such 75% subsidy to the
appellant was only on the basis of the erroneous decisions taken and
Entitlement Certificates dated 29.04.2011 and 24.11.2011 issued by SLSC.
33.1. Even when the said decisions of SLSC are found erroneous
and invalid; and the appellant company is found entitled to subsidy only
M/S. ULTRATECH CEMENT LTD. & ANR. v. STATE OF
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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 the rate of 12% per annum39.
Both the parties had proceeded with reference to the said undertaking
furnished on behalf of the appellant and the same is required to be treated
as a binding term of contract between them.
33.3. Hence, when availing of subsidy to the tune of 75% (and
thereby availing 25% in excess) is not referable to any misrepresentation
by the appellants and there is no allegation of breach of any of the
conditions of RIPS-2003 by the appellants while availing such benefit,
the respondent cannot be held entitled to demand interest at the rate
stipulated in Clause 10 of RIPS-2003. However, and at the same time,
when the appellant company had obtained undue advantage in monetary
terms by availing 25% extra subsidy; and had given undertaking to refund
any excessive benefit with interest at the rate of 12% per annum, in our
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
39 Vide the declaration extracted in paragraph 7.9.2.
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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%) subsidy
by the appellants and until recovery/payment.
CONCLUSION
34. Accordingly, this appeal is partly allowed to the extent and in
the manner indicated above. The impugned order of the High Court
dated 11.01.2019, upholding the order dated 12.03.2018 passed by the
Additional Chief Secretary, Finance Department, Government of
Rajasthan, 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.
Kalpana K. Tripathy
Appeal partly allowed.
M/S. ULTRATECH CEMENT LTD. & ANR. v. STATE OF
RAJASTHAN & ORS. [DINESH MAHESHWARI, J.]