M/S. ULTRATECH CEMENT LTD. & ANR. v. STATE OF RAJASTHAN & ORS.
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Headnote — Supreme Court Reports (editorial summary, not part of the judgment)
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75% subsidy under 2003 Scheme was a matter of policy – The policy of extending 75% subsidy to cement industry was withdrawn by the Government by deleting sub-clauses C (vi) and (vii) of clause 7 of the 2003 Scheme – As the policy of extending 75% subsidy was not in existence at the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. G Maxims: ‘Contemporanea exposition est optima et fortissimo in lege’ – Meaning of.
A 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 D (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 E 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 F 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 G 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 H (vii). [Para 19.1][458-B-G]
Reporter's headnote (continued) and case details
392 [2020]REPORTS SUPREME COURT 7 S.C.R. 392 [2020] 7 S.C.R.
A (Civil Appeal No. 2773 of 2020) Industrial Development: Capital Investment Subsidy – Under Rajasthan Investment C 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 G – 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 H 392
M/S. ULTRATECH CEMENT LTD. & ANR. v. STATE OF 393 RAJASTHAN & ORS.
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M/S. ULTRATECH CEMENT LTD. & ANR. v. STATE OF 395 RAJASTHAN & ORS.
1.2 It is not correct to say that BIDI had granted 75% A 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) B 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. C 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 E 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 H
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A 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] B 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 C 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 D 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 E 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]
F 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- G 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 H
M/S. ULTRATECH CEMENT LTD. & ANR. v. STATE OF 397 RAJASTHAN & ORS.
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] E 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 H
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A 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. B 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 E 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 F 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 G 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 H
M/S. ULTRATECH CEMENT LTD. & ANR. v. STATE OF 399 RAJASTHAN & ORS.
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- C 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 H
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A 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. D 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]
M/S. ULTRATECH CEMENT LTD. & ANR. v. STATE OF 401 RAJASTHAN & ORS.
Malabar Industrial Co. Ltd. v. Commissioner of Income A 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 B 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 C 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] D 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 H
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A 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. B 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 C 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 D 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 G 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 H
M/S. ULTRATECH CEMENT LTD. & ANR. v. STATE OF 403 RAJASTHAN & ORS.
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. C [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% D 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] E 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 F
[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 G [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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A 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 B [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 C 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 D Mishra, Ms. Harsha Vinoy, Irshad Ahmad, Advs. for the Respondents.
Judgment
The Judgment of the Court was delivered by DINESH MAHESHWARI, J. PRELIMINARY AND BRIEF OUTLINE
11. Leave granted.
22. 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’. H 3 The company’s name was changed to M/s Ultratech Cement Limited w.e.f. 01.08.2010.
M/S. ULTRATECH CEMENT LTD. & ANR. v. STATE OF 405 RAJASTHAN & ORS. [DINESH MAHESHWARI, J.]
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.
33. 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’. G 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. H
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A 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 B 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 C 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. D
44. 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 E 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 F
55. 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/ G 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 H the copy of Scheme as amended upto 05.08.2010.
M/S. ULTRATECH CEMENT LTD. & ANR. v. STATE OF 407 RAJASTHAN & ORS. [DINESH MAHESHWARI, J.]
5.1. As per the Preamble, the Scheme was introduced by the A 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:- B “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- F 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. G
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. H
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A (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; B 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: C (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 D (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 E 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 F 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, G 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
M/S. ULTRATECH CEMENT LTD. & ANR. v. STATE OF 409 RAJASTHAN & ORS. [DINESH MAHESHWARI, J.]
grant of customized incentive package, as contained in Clauses 6 and A 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 B this Scheme shall be the following Screening Committees, whose decisions, subject to other provisions of the Scheme, shall be final: S.N. Investment Prescribed Authority Status amount
1. Investment above State Level Screening Committee (SLSC) Rs. 10.00 crores consisting of the following: a) Pr. Secretary , Industries Chairman C b) Secretary , Finance (Rev.) or his M ember representative not below the rank of Deputy Secretary c) Commissioner, Co mmercial Taxes or his M ember representative not below the rank of Additional commissioner. d) CM D, RFC or his Representative, not M ember below the rank of ED e) M D, RIICO or his Representative, not M ember D below the rank of ED f) Commissioner, Industries member- Secretary
2. Investment up to District Level Screening Committee (DLSC) Rs. 10.00 cores consisting of the following: a) District Collector Chairman b) Concerned Branch M anager of RFC in the M ember District c) Concerned Senior Regional M anager/ M ember E Regional M anager of RIICO in the District. M ember d) Deputy/ Asstt. Commissioner, Commercial Taxes/ Commercial Taxes Officer (CTO) M ember- e) General Manager DIC Secretary
“6A. Authority to recommend grant of customized incentive F 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. G
14 Clause 6B, dealing with incentives for quality and standards upgradation, is also not relevant in the present case. H
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A S.N. Investment Prescribed officers Status amount 1 2 3 4 More than 500 Principal Secretary, Finance or his Member
1. crores representative not below the rank of Secretary
2. Principal Secretary, Industries/ Member B Secretary Industries.
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 C 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 D 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 E 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 F (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.
M/S. ULTRATECH CEMENT LTD. & ANR. v. STATE OF 411 RAJASTHAN & ORS. [DINESH MAHESHWARI, J.]
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 C & 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. D
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. E 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. F (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 G 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. H
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A 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 B 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 E 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 F 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 G 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 H This proviso inserted by FD order dated 30.09.2008.
M/S. ULTRATECH CEMENT LTD. & ANR. v. STATE OF 413 RAJASTHAN & ORS. [DINESH MAHESHWARI, J.]
Captive Power Plant: The existing unit under expansion/ A 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 B 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 C 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 G 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).” H
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A 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 :- B “(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 C 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 F 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 G 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. H
M/S. ULTRATECH CEMENT LTD. & ANR. v. STATE OF 415 RAJASTHAN & ORS. [DINESH MAHESHWARI, J.]
(vii) Notwithstanding anything contained in sub clause(i) to (v) A 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) B 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 C 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 D
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 E (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 F 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. G
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 H
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A 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. D
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,
E 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 F SLSC, and
66. 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 G 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
M/S. ULTRATECH CEMENT LTD. & ANR. v. STATE OF 417 RAJASTHAN & ORS. [DINESH MAHESHWARI, J.]
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: C
*** *** *** (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. G 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. H
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A (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, B 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 C 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. D (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 E 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 F 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 G 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 H
M/S. ULTRATECH CEMENT LTD. & ANR. v. STATE OF 419 RAJASTHAN & ORS. [DINESH MAHESHWARI, J.]
authority of the Commercial Taxes Department, under this A 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.” B 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/ C 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. D 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: E 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 F 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 G 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 H
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A 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 B 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 (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. D 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: G 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
M/S. ULTRATECH CEMENT LTD. & ANR. v. STATE OF 421 RAJASTHAN & ORS. [DINESH MAHESHWARI, J.]
the Government of Rajasthan in the Finance Department whose A 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. B 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. C
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. F 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. G 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 H
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A the BOARD OF INFRASTRUCTURE DEVELOPMENT AND INVESTMENT INSTITUTION (BIDI) to the following members:-
1. Chief Minister - Chairman
2. Industry Minister - Vice-Chairman
B 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 C 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. D
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.
E 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.
77. To consider and dispose off, inter-departmental issues pertaining to investment proposals.
88. To give any other directions which the Board considers to encourage investment.”
G 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 H existence after 07.06.2009 for having been disbanded.
M/S. ULTRATECH CEMENT LTD. & ANR. v. STATE OF 423 RAJASTHAN & ORS. [DINESH MAHESHWARI, J.]
Relevant factual and background aspects A
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 B 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 C 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 F 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: G
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 H
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A investment of more than Rs. 1000 crores. Details of the concessions/incentives sought by the Company are as follows:- Sl. Company’s request Existing Policy Financial implications No. given by the company
1. Interest subsidy @ RIPS 2003, p rovides that in the If the Company’s 7.75% per annum for a case of new cement units having request is accepted, period of 15 years on the investment exceeding Rs. 400 total financial total investment. crore with a minimum regular implication will be Rs. B Wage subsidy @ 25% employment to 200 persons, 1102.50 crores over a per annum for a period interest subsidy and p eriod of 15 years of 15 years. wage/emp loyment subsidy will be whereas the financial subject to a maximum limit of implication as per RIPS 75% of the tax payable and 2003 will be Rs. 448 deposited under RST/CST/VAT. crores over a period of Out of this 75% subsidy, 45% 7 years. subsidy shall be allowed upfront on the basis of actual tax liability In correspondence with C and balance subsidy to the extent of 30% shall be allowed in the the company, they had indicated that the form of interest subsidy and company is self wage/emp loyment subsidy of sufficient and no which interest subsidy shall be appraisal by a financial limited to 5% of the documented institution was rate of interest. envisaged the concession on interest These subsidies are admissible for subsidy has been asked a period of 7 years. on total investment.
D 2. Waiver of Entry Tax for No such policy exists. Total financial a period 15 years implication on p lant & However, BIDI has granted 50% machinery would be exemption from entry tax of raw Rs. 10 crores. 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.
E 3. Waiver of Royalty on No such policy exists The total financial lime stone for a period implication over a 15 years p eriod of 15 years will be Rs. 290.70 crores.
4. 100% exemption of As per RIPS-2003, 50% If power is purchased Electricity duty for a exemption from Electricity duty is from Grid (DISCOM s), period of 15 years available for seven y ears. the total financial implication over a Furthermore, for new investment p eriod of 15 years will F exceeding Rs. 400 crores, 100% exemption from Electricity duty is be Rs. 30.90 crores.
admissible on self generated energy in respect of investment in Captive power plant.
5. Subsidies will be subject No such policy exists. In that case, the to a maximum the total company is asking the investment in the project total benefit up to the i.e. Rs. 1200 crores. extent of Rs. 1200 crores. G 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. H 1200 crores). Finance Department is of the view that incentives/
M/S. ULTRATECH CEMENT LTD. & ANR. v. STATE OF 425 RAJASTHAN & ORS. [DINESH MAHESHWARI, J.]
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 D 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. E 7.3. The said proposal was considered under Agenda item No. 13 in the 21 st 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 F 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 G 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 H
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A 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:- B “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 : C Proposed total cost : Rs. 1,100 crore Total Capacity : 3.5 million ton/annum Minimum Employment : 250 Expected Date of Completion : March 2008 D 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 E 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/ F 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 G 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 H
M/S. ULTRATECH CEMENT LTD. & ANR. v. STATE OF 427 RAJASTHAN & ORS. [DINESH MAHESHWARI, J.]
may be withdrawn. The relevant contents of this representation dated A 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 B 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 C 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. D 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 E 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) F (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. G 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 H
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A 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. B 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. C 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 D 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 E 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 F 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 G 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 H Hereinafter referred as ‘BIP’
M/S. ULTRATECH CEMENT LTD. & ANR. v. STATE OF 429 RAJASTHAN & ORS. [DINESH MAHESHWARI, J.]
7.8. It had been the case of the appellant that pursuant to BIDI’s A 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 F 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 G 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-
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A 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 B 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. C Considering the above facts, kindly grant the Entitlement Certificate and the benefits may also be allowed in terms of the notification dated 2 nd December, 2005. In case you require any further information, please intimate so that the same may be furnished.” D 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:- E “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 F 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 G 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
M/S. ULTRATECH CEMENT LTD. & ANR. v. STATE OF 431 RAJASTHAN & ORS. [DINESH MAHESHWARI, J.]
part of the Minutes of SLSC meeting dated 17.03.2011, in their translated A 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 B 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 C 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 H
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A 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. B 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:- C “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 D 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 E 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 F 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 In vestment subsidy:
G (i) Interest Component @ 5% from 05.02.2010 (Interest Comp. eligibility ava ilable on Rs.450 crs. Term loan and 216.25 crs. ECB Credit Total 666.25 crs. only) @ 25% from 05.02.2010 (ii) Wage & Emp. Component
H 24 pp.165-166 of the paper-book
M/S. ULTRATECH CEMENT LTD. & ANR. v. STATE OF 433 RAJASTHAN & ORS. [DINESH MAHESHWARI, J.]
Note: A
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, B 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. C
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 D 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 E 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 F 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 G 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 H
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A 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 B 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 C 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) D 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/ C 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 G
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 H
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A 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 B 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” C 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 D 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 E 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 F 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.” G
99. 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 H
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13 of RIPS-2003. The relevant part of this resolution of SLSC dated A 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 B 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 – C 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 H
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