M/s. Ultratech Cement Ltd. & Anr. vs State of Rajasthan & Ors.

7 of the 2003 Scheme – Before any decision could be taken on the letter, State Government deleted sub-clauses (vi) and (vii) from Clause 7 by Notification dated 28.4.2006 – Company’s representation seeking withdrawal of Notification dated 28.4.2006 – State replied that the Company would be eligible for concessions as per the 2003 Scheme – Company also entered into MOU with the State – After establishment of the cement plant and starting production therein, Company sought Entitlement Certificate under the 2003 Scheme – State Level Screening Committee (SLSC) allowed Capital Investment Subsidy to the Company to the extent of 75% of deposited VAT and Entitlement Certificate was issued – Company availed the benefit of 75% subsidy in terms of Entitlement Certificate – After Finance Department of the State raised doubts about the decision in respect of grant of subsidy upto 75% to the Company, SLSC re-examined the matter and suggested appropriate action under Clause 13 of the 2003 Scheme – In Revision proceedings under Clause 13, the competent Authority decided that SLSC had erroneously issued Entitlement Certificates and the Company was not entitled to the subsidy beyond 50% of the tax payable and deposited – Pursuant thereto revised Entitlement Certificates were issued allowing subsidy upto 50% – The Company was directed to refund the amount of excess availed subsidy together with interest @ 18% – Writ petition challenging the orders was dismissed by High Court – Appeal to Supreme Court – Held: Extending of any incentive in the form of exemption, rebate, concession or subsidy is the matter of policy of Government – A Government is entitled to frame a particular policy and to alter the same – Whether the cement industry was to be granted 75% subsidy under 2003 Scheme was a matter of policy – The policy of extending 75% subsidy to cement industry was withdrawn by the Government by deleting sub-clauses

(vi) and (vii) of clause 7 of the 2003 Scheme – As the policy of extending 75% subsidy was not in existence at the time when the application of the Company was considered, no benefit could have been claimed under non-existent policy – Company is entitled to subsidy only to the extent of 50% and hence liable to refund the excess 25% – Since the disbursement of 75% subsidy to the Company was on the basis of erroneous decision and was not relatable to breach of any of the conditions of the Scheme on the part of the Company, the Revenue is not entitled to demand interest on the excess amount @ 18% p.a. – However, as the Company had obtained undue advantage by availing 25% extra subsidy and had undertaken to refund extra subsidy with interest @ 12% p.a. Company is liable to refund excess amount with interest @ 12% p.a.

Doctrines/ Principles

Doctrine of Contemporanea Expotio – is a guide to the interpretation of Statute or a document by referring the exposition that the same had received from competent Authority at relevant point of time – Held, not applicable in present case. Principle of Promissory Estoppel – Applicability of – Held not applicable in the facts of the present case.

Maxims:

‘Contemporanea exposition est optima et fortissimo in lege’ – Meaning of.

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 RIPS2003 (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 PreBIDI 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, subclauses (vi) and (vii) of Clause 7 of RIPS-2003 were in existence and, in fact, the phrase “recently announced cement package” precisely referred to the said provisions of sub-clauses (vi) and (vii), which had been inserted to Clause 7 of RIPS-2003 on 02.12.2005. Moreover, even when BIDI stated that ‘recently announced cement package’ would be applicable to the Company, it was coupled with the requirement of applicability of the Scheme, i.e., RIPS-2003. After the aforesaid decision of BIDI dated 01.04.2006, the Company, in its letter dated 26.04.2006 to the Commissioner of Industries, sought registration in terms of subclause (vii) of Clause 7 of RIPS-2003 for a new cement plant/captive power plant. However, there had been significant developments/revisions in relation to RIPS-2003 after the said decision of BIDI dated 01.04.2006 and the application of the Company dated 26.04.2006, where the said sub-clauses (vi) and

(vii) of Clause 7 were specifically deleted from the Scheme on 28.04.2006. Noticeably, no decision had been taken by SLSC (State Level Screening Committee) to grant subsidy to the Company in terms of the then existing sub-clauses (vi) and (vii) of Clause 7 until 28.04.2006. The application later made by the Company on 21.02.2010 and the decision thereupon taken by SLSC on 17.03.2011 do not and cannot co-relate with the decision of BIDI dated 01.04.2006 whose initial part, i.e., ‘recently announced cement package’ became redundant with the aforesaid amendment of Clause 7 of RIPS-2003 and deletion of its sub-clauses (vi) and (vii). [Para 19.1][458-B-G]

1.2 It is not correct to say that BIDI had granted 75% subsidy under proviso to Clauses 7(i)(a) and 7(i)(b) of RIPS-2003. It is apparent on the face of the record that neither in Pre-BIDI’s recommendation dated 28.03.2006 nor in the final decision of BIDI dated 01.04.2006, there had at all been any proposition for invocation and application of the said proviso to Clauses 7(i)(a) and 7(i)(b) of RIPS-2003. The application made on behalf of the Company had precisely been with reference to the contents of the said sub-clauses (vi) and (vii) of Clause 7 seeking 75% subsidy, 45% being allowable upfront and remaining 30% in the form of interest and wage/employment subsidy, with cap of interest subsidy to the extent of 5% of the documented rate of interest. There had never been any proposal before BIDI in the case of the appellant Company to invoke the said proviso to Clauses 7(i)(a) and 7(i)(b) of RIPS-2003 so as to increase the maximum limit of subsidy to 75%. Proceeding ahead of the decision of BIDI dated 01.04.2006, the fact that the Company was consciously seeking the benefit under sub-clause (vii) of Clause 7 of RIPS2003 is again evident on the face of the record on a bare look at the contents of its application dated 26.04.2006. Invocation of proviso to Clauses 7(i)(a) and 7(i)(b) of RIPS-2003 seems to have only been a creation of SLSC in its meeting dated 17.03.2011 while dealing with the application made by the appellant on 21.02.2010. Significantly, even in the said application, what the appellant claimed had only been the concession in terms of subclause (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 01.04.2006 and that too with its misconstruction; by reading into it such powers, which had neither been invoked nor exercised by BIDI. The decision of SLSC dated 17.03.2011 and its repeat decision dated 24.11.2011, turn out to be wholly perverse and could only be disapproved. [Paras 20 and 20.2][459-C-F] [460-C-G]

1.3 The competent authority, to sanction subsidy under RIPS-2003, had only been SLSC in terms of Clause 6 thereof. Even if BIDI had been a high-powered body, its resolutions or even directives could have only been read in conformity with the provisions applicable to any particular proposition; and the fact that one of the Secretary had been a member of both BIDI and SLSC, the resolution of BIDI could not have been imported into the decision making process of SLSC beyond what was permissible under the Scheme. [Para 19.2][458-H][459-A-C]

1.4 Grant of customised incentive package for any particular Company or establishment was governed by Clause 6-A of RIPS2003 that had an entirely different prescribed authority in the form of a Committee, who was supposed to examine individual cases and could have made recommendation for sanction of the customised incentive package through BIDI. There is no such decision by the Committee referred to in Clause 6-A and any recommendation for customised incentive package in relation to the appellant. The decision of BIDI dated 01.04.2006 also does not refer to nor is relatable with any customised package meant for the appellant Company. [Para 21][460-G-H][461-A-B]

1.5 In an overall conspectus of the record and various amendments/revisions of RIPS-2003, it appears that though at one stage (i.e., on 02.12.2005), the State Government thought it proper to announce an entirely different treatment to cement units by extending 75% subsidy to them with a different methodology and hence, inserted sub-clauses (vi) and (vii) to Clause 7 of RIPS2003 but, it did not continue with that policy and deleted the said sub-clauses on 28.04.2006. It remains trite that extending of any incentive in the form of exemption, rebate, concession or subsidy is a matter of the policy of the Government and for that matter, fiscal policy. Ordinarily, such framing of the policy remains within the domain of the Government; and the Government is entitled to frame a particular policy and to alter the same, as deemed fit and proper. As to whether the cement industry was to be granted 75% subsidy under RIPS-2003 or not was definitely a matter of the policy of the Government; and when such a policy was not in existence at the time of consideration of the application of the appellant, no benefit could have been claimed under a nonexistent policy. [Para 22][461-B-E]

1.6 Thus, it cannot be deduced, by any stretch of imagination, that a conscious decision was ever taken by BIDI at any stage that the appellant Company would be extended any differential and advantageous treatment by allowing 75% subsidy in place of the ordinarily allowable 50%. The Additional Chief Secretary has rightly held that SLSC’s decision dated 17.03.2011 and its repeat decision dated 24.11.2011 had been erroneous on the very fundamentals where it was assumed as if BIDI had already sanctioned 75% subsidy to the Company. The High Court has also independently examined the entire matter in requisite details and there is no infirmity when the High Court has held that the appellant Company was only entitled to subsidy to the extent of 50% of the tax payable and deposited and not to the extent of 75%. [Paras 20.1 and 23][460-B][461-E-G]

J.K. Cotton Spinning & Weaving Mills Co. Ltd. v. State of U.P. [1961] 3 SCR 185 – referred to.

2. There is not an iota of doubt that the initial decision of SLSC had not only been erroneous but had been highly perverse, reaching the level of absurdity. The view of SLSC cannot be regarded as a possible view of the matter from any standpoint or any angle. Apart from the above, even if it be assumed for the sake of argument that there was any ambiguity in the applicable provisions of RIPS-2003 or the decision of BIDI, the benefit of any such ambiguity could not have been extended to the appellant Company. The benefit thereof would have only gone in favour of revenue for the simple reason that under the provisions in question, the State had agreed, by way of incentive, to part with a portion of its revenue. Such provisions, whether in the statute or in the non-statutory document, by their very nature, are subject to strict interpretation so far as their applicability is concerned. [Paras 24.1 and 24.2][462-C-F]

Commissioner of Customs (Import), Mumbai v. Dilip Kumar & Co. and Ors. (2018) 9 SCC 1 : [2018] 7 SCR 1191 – followed.

Ramnath & Co. v. Commissioner of Income Tax 2020

(8) SCALE 585 – relied on.

3.1 The doctrine of Contemporanea Expositio is embodied in the maxim ‘Contemporanea exposition est optima et fortissimo in lege’ which means that the best way to construe a document is to read it as it would have read when made. In essence, the doctrine of Contemporanea Expositio is applied as a guide to the interpretation of a statute or even document by referring to the exposition that the same had received from competent authority at the relevant point of time. This doctrine is also relatable to the doctrine of stare decisis whereunder, an exposition standing for a long length of time, is considered to be a law settled and is applied as such. As regards the contemporaneous construction placed by the administrative or executive officers charged with executing statute, the Courts lean in favour of attaching considerable weight to the same but, it cannot be laid down that understanding of a particular administrative or executing authority is always fait accompli and has to be applied even if erroneous. The true principle is just to the contrary: that is, if a construction placed by the contemporary authority is found to be clearly wrong or erroneous, the same deserves to be disregarded. [Paras 25, 25.1 and 25.3][464-B-C][465-F][466-A-C]

Spentex Industries Ltd v. C.C.E. (2016) 1 SCC 780 : [2015] 11 SCR 487 – held inapplicable.

Desh Bandhu Gupta v. Delhi Stock Exchange

Association Ltd. AIR 1979 SC 1049 : [1979] 3 SCR

373 – referred to.

Principles of Statutory Interpretation by Justice G.P. Singh 14th Edition, pp. 375-376 – referred to.

3.2 On the facts and in the circumstances of the present case, invocation of the doctrine of Contemporanea Expositio on 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. RIPS2003 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 RIPS2003’. Even in the MoU dated 30.11.2007, what the State undertook was only to provide incentives as permissible under RIPS-2003 together with additional support as per the prevalent policy. So far availing 75% subsidy under proviso to Clauses 7(i)(a) and 7(i)(b) is concerned, the appellant was required to make an application to SLSC for that purpose whereupon SLSC could have referred it to BIDI but, neither any such application was made by the appellant nor any such matter was ever placed before BIDI until it remained in existence i.e., 07.06.2009. In an overall view of the matter, it is difficult to find that at any stage, any such representation was made by the State Government which led the Company to alter its position. Besides the above, when the decisions of SLSC dated 17.03.2011 and 24.04.2011 turn out to be unauthorised and not in accord with the applicable provisions of the Scheme, the principles of promissory estopple cannot be invoked for their enforcement. [Paras 26, 26.1 and 26.2] [467-A-H]

Dr. Ashok Kumar Maheshwari v. State of U.P. & Anr. (1998) 2 SCC 502 : [1998] 1 SCR 147 – relied on.

4.2 Even otherwise, when the decision of SLSC, or any decision of any authority for that matter, was subject to revision by the Government in terms of Clause 13 of the Scheme, it cannot be suggested that the said power of revision cannot be invoked. In other words, the principles of promissory estoppel cannot operate against such revisional power of the Government. [Para 26.3][468-D-E]

5. The exercise of power of revision as per Clause 13 of the Scheme remains unexceptionable in the present case. The initial decision of SLSC was entirely erroneous and cannot be said to be a possible view of the matter. Coupled with that, the said decision was directly prejudicial to the interest of revenue where the State exchequer was to part with extra 25% of the tax amount received or receivable from the appellant. The Authority, while passing the order dated 12.03.2008 in exercise of such power of revision under Clause 13 of the Scheme, has meticulously examined the entire material and has recorded each and every finding with due regard to the dealings of the parties and the provisions of Scheme as applicable. [Para 27.2][470-E-F] Malabar Industrial Co. Ltd. v. Commissioner of Income Tax, Kerala State (2000) 2 SCC 718 : [2000] 1 SCR

744 – held inapplicable.

6.1 It cannot be accepted that the subsidy cannot be revoked or withdrawn with retrospective effect and after having been fully availed of. Sub-clause (b) of Clause 13 of the Scheme specifically provides for a period of five years from the date by which benefits under the Scheme are availed of. Sub-clause (b) of Clause 13 of the Scheme specifically provides for a period of five years from the date by which benefits under the Scheme are availed of, to be the period within which the power of revision could be exercised by the State Government. Admittedly, in the present case, the appellant Company had availed the benefits until the month of February 2017 and the order of revision was passed on 12.03.2018, well within the period of five years stipulated in the Scheme. [Para 28][470-G-H][471-A-B]

6.2 The fundamental questions on the correctness of the decision of SLSC dated 17.03.2011 were indeed raised by the Finance Department of the Government by its letter dated 17.11.2011. The Industries Department chose not to respond to the said communication and reminders of the Finance Department for an abnormal length of time and sent a reply only in the month of February 2017. By that time, the appellant had practically availed the entire advantage under the questioned decision of the SLSC. Thereafter, the SLSC re-examined the matter only on 22.05.2017 and left it for the Finance Department to take proceedings under Clause 13 of RIPS-2013. In the given set of facts and circumstances, the suggestion that already availed benefit cannot be withdrawn turn out to be hollow and baseless because whatever was obtained by the appellant, beyond its entitlement, had only been based on an erroneous and unauthorised decision of SLSC. In any case, RIPS-2003 being a matter of concession in the form of subsidy, securing an advantage by the appellant at the cost of public exchequer could not have been allowed and, for the Scheme itself having reserved the powers in the State Government to revise the erroneous and prejudicial order within a period of five years from the date of fully availing of the benefits, such powers have rightly been invoked and exercised by the State Government. [Para 29] [471-C--F]

Birla Jute & Industries Ltd. v. State of M.P. 119 STC 14 (S.C.) - distinguished.

Commissioner, Commercial Taxes, Rajasthan, Jaipur and Anr. v. Rajasthan Taxation Tribunal and Ors. 38 Tax Up-date 131 – referred to.

7.1 Clause 10 of RIPS-2003, providing Terms and Conditions attached to the benefits availed under the Scheme, envisaged that the ‘breach’ of any of the condition would ‘make the Capital Investment Subsidy/ exemption amount liable to be recovered as Tax or arrears of land revenue along with interest @ 18% per annum from the date from which the Capital Investment Subsidy was provided’. It is not the case of the respondents that the appellant had committed breach of any of the conditions enumerated in Clause 10 of the Scheme and that the excessive amount of subsidy (25%) was being recovered because of any such breach. Entitlement of the appellant to 50% subsidy has not been questioned. Disbursement of such 75% subsidy to the appellant was only on the basis of the erroneous decisions taken and Entitlement Certificates dated 29.04.2011 and 24.11.2011 issued by SLSC. Even when the said decisions of SLSC are found erroneous and invalid; and the appellant Company is found entitled to subsidy only to the extent of 50%, it cannot be said that the excess 25% is relatable to breach of any of the conditions of the Scheme on the part of the appellant nor the appellant could be said to have availed the excessive amount of subsidy by way of any misrepresentation. The basic fault had been on the part of SLSC in taking erroneous decisions and in issuing unauthorised Entitlement Certificates dated 29.04.2011 and 24.11.2011. The respondent State took an abnormally long time in realising the mistake on the part of its functionaries and took corrective measures only after the entire benefit had already been availed of inasmuch as the proceedings for recall were initiated only in the month of July 2017 which led to the impugned order dated 12.03.2018 and then, the Re-revised Entitlement Certificate was issued only on 02.04.2018. [Paras 33 and 33.1][473-E-H] [474-A-C]

7.2 Even when the Scheme envisaged interest at the rate of 18% per annum, in Form 2 filed by the appellants, undertaking was stated to repay the amount of subsidy, in case of availing excessive benefits or non-compliance with the provisions of the Scheme, with interest at the rate of 12% per annum. Both the parties had proceeded with reference to the said undertaking furnished on behalf of the appellant and the same is required to be treated as a binding term of contract between them. [Para 33.2][474-C-D]

7.3 Therefore, the respondent cannot be held entitled to demand interest at the rate stipulated in Clause 10 of RIPS-2003. However, and at the same time, when the appellant Company had obtained undue advantage in monetary terms by availing 25% extra subsidy; and had given undertaking to refund any excessive benefit with interest at the rate of 12% per annum, the appellant Company remains liable to refund the excess amount together with interest at the rate agreed upon, i.e., 12% per annum. [Para 33.3][474-E-F]

India Carbon Ltd. & Ors. v. State of Assam (1997) 6 SCC 479 : [1997] 3 Suppl. SCR 1; Maruti Wire

Industries Pvt. Ltd. v. Sales Tax Officer (2001) 3 SCC

735 : [2001] 2 SCR 829; J.K. Synthetics Ltd. v. C.T.O (1994) 4 SCC 276 : [1994] 3 SCR 964 – referred to.