2016 (12) TMI 1770 - HC - VAT and Sales Tax

Grant of subsidy for promotion of industrial sick units - Rajasthan Investment Promotional Scheme - principle of promissory estoppel and legitimate expectation - HELD THAT - In the scheme RIPS 2003 introduced by the State of Rajasthan vide notification dated 28.7.2003 the said scheme was amended vide notification dated 2.12.2005 whereby sub-clauses (vi) and (vii) were inserted in clause 7 of the RIPS, 2003, but subsequently, the said provision was deleted just after five months vide notification dated 28.4.2006, but SLSC granted entitlement certificate to the petitioner-respondent Shree Cement Company Ltd. granting subsidy upto 75% for both the units situated in Pali and Bhiwadi. In the SLSC all the higher authorities of the government were present and after due application of mind issued eligibility certificate in favour of the petitioner-respondent Shree Cement Company Ltd. even after deletion of amendment vide orders dated 29.7.2006 and 27.6.2007. It is worthwhile to observe that in the writ petition although notification dated 28.4.2006 was challenged, but the said prayer was not pressed by the respondent company. The learned Single Judge has committed an error while holding that petitioner-respondent Shree Cement Company Ltd. has vested right by virtue of principle of promissory estoppel and legitimate expectation to get subsidy upto 75% on the basis of entitlement certificate issued by the SLSC because the State Government is framing scheme from time to time to grant certain benefits and concession in the form of subsidy to the industrial development, but here in this case, upon perusal of entire record, it is obvious that till deletion of provision vide notification dated 28.4.2006, none of the eligibility conditions were fulfilled by the respondent Company but ignoring those facts, the SLSC issued entitlement certificate on 29.6.2006 and 28.7.2007 much after the deletion of the provision by way of notification dated 28.4.2006. Specific provision has been incorporated under clause 13 of the RIPS, 2003 to check the action and orders of SLSC while exercising revisional power, therefore, it cannot be said that any error was committed by the Principal Secretary, Finance of State Government to quash the orders passed by the SLSC, therefore, the judgment impugned in this appeal is not sustainable in law. Appeal allowed.

Summary

Issues Involved:
1. Principle of Promissory Estoppel
2. Legitimate Expectation
3. Vested Right
4. Doctrine of Contemporanea Expositio
5. Revisional Jurisdiction

Issue-wise Analysis:

A. Principle of Promissory Estoppel:
The court examined whether the principle of promissory estoppel was rightly applied by the learned Single Judge to quash the order dated 31.3.2009. The principle of promissory estoppel is a rule of evidence incorporated in Section 115 of the Indian Evidence Act, 1872. It requires that a clear and unequivocal promise intended to create legal relations and acted upon by the promisee binds the promisor. The court found that the deletion of clause 7(vi) and (vii) of RIPS, 2003, which was not challenged by the respondent company, negated the application of promissory estoppel. The Principal Secretary, Finance was justified in quashing the entitlement certificates issued by the SLSC after the deletion of the provision. Therefore, the learned Single Judge's finding on promissory estoppel was contrary to law and public interest.

B. Legitimate Expectation:
The court considered whether the respondent company was entitled to relief based on legitimate expectation. Legitimate expectation is not a legal right but an expectation of a benefit or remedy that may flow from a promise or established practice. The court found that the SLSC issued entitlement certificates after the deletion of the relevant provisions, and the respondent company did not press for quashing the deletion notification. The decision to delete the provisions was based on public interest due to the reduction of VAT on cement from 28% to 12.5%. Thus, the ground of legitimate expectation was not applicable, and the learned Single Judge's finding was erroneous.

C. Vested Right:
The court examined whether any vested right existed after the deletion of clause 7(vi) and (vii) of RIPS, 2003. A vested right is a property interest that cannot be impaired without the owner's consent. The court found that the entitlement certificates were issued after the deletion of the provisions, and no documentary evidence supported the respondent company's claim of assurance for 75% subsidy. The SLSC's decision to grant entitlement certificates was contrary to the existing provisions. Therefore, the ground of vested right was not sustainable, and the learned Single Judge's finding was quashed.

D. Doctrine of Contemporanea Expositio:
The court considered whether the doctrine of contemporanea expositio applied in this case. This doctrine is a guide for interpreting documents or statutes based on the conduct of the parties at the time of and after execution. The court found that the SLSC's interpretation of the provisions was contrary to the deletion notification and the intention of the legislature. The entitlement certificates were issued without considering the valid reasons for the deletion. Therefore, the doctrine of contemporanea expositio did not apply, and the learned Single Judge's finding was incorrect.

E. Revisional Jurisdiction:
The court examined whether the order passed by the Principal Secretary, Finance exercising revisional jurisdiction could be interfered with in the writ of certiorari filed by the respondent company. The court found that the Principal Secretary, Finance had the jurisdiction to entertain the revision petition under clause 13 of RIPS, 2003, which provided for revision by the State Government. The SLSC's entitlement certificates were issued contrary to the deletion notification, and the Principal Secretary's order was well-reasoned and in public interest. Therefore, the learned Single Judge's interference with the revisional order was not justified.

Conclusion:
The court allowed the special appeal filed by the State of Rajasthan, quashed the order of the learned Single Judge dated 11.10.2011, and restored the judgment of the Principal Secretary, Finance dated 31.3.2009. Consequently, the special appeal filed by the appellant Shree Cement Company Ltd. was dismissed.