2020 (7) TMI 513 - SC - VAT and Sales Tax

Doctrine of Contemporanea Expositio - Availment of Capital Investment Subsidy - issuance of new Entitlement Certificate for subsidy - Capital Investment Subsidy to the Appellant to the extent of 75% of deposited VAT. - whether the company was entitled to the subsidy to the extent of 75% of tax payable and deposited or was entitled only to 50%? Entitlement of the Appellant to Capital Investment Subsidy - HELD THAT - It appears that though at one stage (i.e., on 02.12.2005), the State Government thought it proper to announce an entirely different treatment to cement units by extending 75% subsidy to them with a different methodology and hence, inserted Sub-clauses (vi) and (vii) to Clause 7 of RIPS-2003 but, it did not continue with that policy and deleted the said sub-clauses on 28.04.2006. It remains trite that extending of any incentive in the form of exemption, rebate, concession or subsidy is a matter of the policy of the Government and for that matter, fiscal policy. Ordinarily, such framing of the policy remains within the domain of the Government; and the Government is entitled to frame a particular policy and to alter the same, as deemed fit and proper. As to whether the cement industry was to be granted 75% subsidy under RIPS-2003 or not was definitely a matter of the policy of the Government; and when such a policy was not in existence at the time of consideration of the application of the Appellant, no benefit could have been claimed under a non-existent policy. The Additional Chief Secretary has rightly held that SLSC's decision dated 17.03.2011 and its repeat decision dated 24.11.2011 had been erroneous on the very fundamentals where it was assumed as if BIDI had already sanctioned 75% subsidy to the company. The High Court has also independently examined the entire matter in requisite details and we are unable to find any infirmity when the High Court has held that the Appellant company was only entitled to subsidy to the extent of 50% of the tax payable and deposited and not to the extent of 75%. SLSC's decision of granting 75% subsidy to the Appellant - HELD THAT - The possibility of so called other view (the wrong one) could arise only if SLSC is held entitled to simply turn itself away from the applicable provisions of the Scheme while ignoring the fact that Sub-clauses (vi) and (vii) of Clause 7 had already been deleted; and is simultaneously conferred with dubious discretion to interpret the decision of BIDI in whatever manner it would chose to. Obviously, such arbitrary authority or unfettered discretion is not available to any decision taking body; and could least be countenanced for a responsible body of the Government, like SLSC, who deals with public exchequer. Having examined the record in its totality, we have not an iota of doubt that the initial decision of SLSC had not only been erroneous but had been highly perverse, reaching the level of absurdity. The view of SLSC cannot be regarded as a possible view of the matter from any standpoint or any angle - the contention on the part of the Appellant about existence of any ambiguity in the matter and extending the benefit of ambiguity to itself could only be, and is, rejected. Doctrine of Contemporanea Expositio - HELD THAT - The doctrine of Contemporanea Expositio cannot be invoked in the case of present nature would also be clear by visualising the result, if at all this doctrine is applied. It is not far to seek that if at all this doctrine is applied, the consequence would be that howsoever erroneous a decision by the executive or administrative authority may be, once it emanates from the understanding of some of the officers or authorities, the same would acquire immunity from scrutiny for all time to come. Such has never been the intent of the doctrine of Contemporanea Expositio nor could such a result be countenanced. Whether principles of Promissory Estoppel apply? - HELD THAT - 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 estoppel cannot be invoked for their enforcement - Even otherwise, when the decision of SLSC, or any decision of any authority for that matter, was subject to revision by the Government in terms of Clause 13 of the Scheme, it cannot be suggested that the said power of revision cannot be invoked. In other words, the principles of promissory estoppel cannot operate against such revisional power of the Government. Hence, this part of the contentions also deserves to be, and is, rejected. Exercise of powers of revision by the State Government under Clause 13 - HELD THAT - The initial decision of SLSC was entirely erroneous and cannot be said to be a possible view of the matter. Coupled with that, the said decision was directly prejudicial to the interest of revenue where the State exchequer was to part with extra 25% of the tax amount received or receivable from the Appellant. As noticed, the learned ACS, while passing the order dated 12.03.2008 in exercise of such power of revision under Clause 13 of the Scheme, has meticulously examined the entire material and has recorded each and every finding with due regard to the dealings of the parties and the provisions of Scheme as applicable. The exercise of power of revision as per Clause 13 of the Scheme remains unexceptionable in the present case. Effect of availing 75% subsidy for 7 years - HELD THAT - 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. Thus, BIDI, in its decision dated 01.04.2006 never directed for grant of 75% subsidy to the Appellant company in terms of proviso to Clauses 7(i)(a) and 7(i)(b) of RIPS-2003 nor allowed any customised package to the company. The position of record is crystal clear that BIDI's decision dated 01.04.2006 had only been for allowing 'recently announced cement package' to the company and that was also coupled with the requirement of applicability of RIPS-2003. The initial part of this decision of BIDI dated 01.04.2006 and the company's prayer dated 26.04.2006 for registration in terms of Sub-clause (vii) of Clause 7 of RIPS-2003 became redundant on 28.04.2006 with the amendment of Clause 7 of RIPS-2003 and deletion of Sub-clauses (vi) and (vii) thereof because no decision had been taken by SLSC to grant subsidy to the company in terms of the said Sub-clauses (vi) and (vii) of Clause 7 by that date i.e., 28.04.2006 - It is also clear that the doctrine of Contemporanea Expositio neither applies to this case nor inures to the benefit of Appellant. The principles of promissory estoppel are equally inapplicable and the State Government has rightly exercised the powers of revision under Clause 13 of RIPS-2003 to interfere with the erroneous decisions of SLSC whereby the Appellant was allowed 25% extra subsidy and which was, obviously, prejudicial to the interest of revenue; and mere availing of the benefits by the Appellant under the erroneous decisions of SLSC is of no effect, particularly when the State Government has exercised the powers of revision within the time stipulated in Clause 13 of RIPS-2003. Levy of Interest - HELD THAT - When availing of subsidy to the tune of 75% (and thereby availing 25% in excess) is not referable to any misrepresentation by the Appellants and there is no allegation of breach of any of the conditions of RIPS-2003 by the Appellants while availing such benefit, the Respondent cannot be held entitled to demand interest at the rate stipulated in Clause 10 of RIPS-2003. However, and at the same time, when the Appellant company had obtained undue advantage in monetary terms by availing 25% extra subsidy; and had given undertaking to refund any excessive benefit with interest at the rate of 12% per annum, in our view, the Appellant company remains liable to refund the excess amount together with interest at the rate agreed upon, i.e., 12% per annum. The impugned order of the High Court dated 11.01.2019, upholding the order dated 12.03.2018 passed by the Additional Chief Secretary, Finance Department, Government of Rajasthan, Jaipur is affirmed but with the modification that the Respondents shall be entitled to recover interest at the rate of 12% per annum from the date of availing of excessive subsidy (25%) by the Appellants until payment/recovery - appeal allowed in part.

Summary

Issues Involved:
1. Entitlement to Capital Investment Subsidy under RIPS-2003.
2. Validity of the decision of SLSC granting 75% subsidy.
3. Applicability of the doctrine of Contemporanea Expositio.
4. Applicability of the principles of Promissory Estoppel.
5. Exercise of powers of revision by the State Government under Clause 13 of RIPS-2003.
6. Effect of availing 75% subsidy for 7 years.
7. Levy of interest on the excess subsidy availed.

Issue-wise Analysis:

1. Entitlement to Capital Investment Subsidy under RIPS-2003:
The Appellant company, engaged in manufacturing and marketing of cement, claimed entitlement to a 75% Capital Investment Subsidy under the Rajasthan Investment Promotion Scheme-2003 (RIPS-2003). The controversy centered on whether the company was entitled to this extent of subsidy for its Kotputli Unit.

2. Validity of the decision of SLSC granting 75% subsidy:
The State Level Screening Committee (SLSC) had initially granted the Appellant a 75% subsidy based on the decision of the Board of Infrastructure Development and Investment Promotion (BIDI) dated 01.04.2006. However, the Supreme Court found that BIDI's decision did not specifically grant a 75% subsidy under the proviso to Clauses 7(i)(a) and 7(i)(b) of RIPS-2003. Instead, BIDI's decision referred to the "recently announced cement package," which was later deleted on 28.04.2006. The SLSC's decision was deemed erroneous and unauthorized, as it misinterpreted BIDI's decision and exceeded its authority.

3. Applicability of the doctrine of Contemporanea Expositio:
The doctrine of Contemporanea Expositio, which interprets a document based on contemporary understanding, was invoked by the Appellant. However, the Supreme Court held that this doctrine was inapplicable as the SLSC's interpretation was clearly erroneous. The doctrine cannot be used to uphold an incorrect administrative interpretation.

4. Applicability of the principles of Promissory Estoppel:
The Appellant argued that the State was bound by the principles of promissory estoppel, given the representations made by BIDI and the MoU dated 30.11.2007. The Supreme Court rejected this argument, noting that no clear representation was made to grant a 75% subsidy. Additionally, promissory estoppel cannot be invoked against statutory provisions or when the representation was not clear and unequivocal.

5. Exercise of powers of revision by the State Government under Clause 13 of RIPS-2003:
The State Government exercised its powers under Clause 13 of RIPS-2003 to revise the erroneous decision of SLSC. The Supreme Court upheld this exercise of power, noting that the decision of SLSC was both erroneous and prejudicial to the interest of the State revenue. The revision was conducted within the stipulated period of five years from the date of fully availing the benefits, making it valid.

6. Effect of availing 75% subsidy for 7 years:
The Appellant had availed the 75% subsidy from February 2010 to February 2017. The Supreme Court held that the mere fact of having availed the subsidy did not preclude the State from revising the decision within the stipulated period. The erroneous advantage obtained by the Appellant had to be corrected to protect public revenue.

7. Levy of interest on the excess subsidy availed:
The Supreme Court modified the order regarding the levy of interest. While the State was entitled to recover the excess subsidy, the interest rate was reduced from 18% to 12% per annum, as per the undertaking given by the Appellant in Form 2. The Appellant was directed to refund the excess subsidy with interest at this rate from the date of availing the excess subsidy until recovery.

Conclusion:
The Supreme Court affirmed the High Court's decision and the revision order dated 12.03.2018, holding that the Appellant was entitled to a 50% subsidy, not 75%. The SLSC's decisions granting 75% subsidy were erroneous and unauthorized. The State Government's exercise of revision powers was valid, and the Appellant was required to refund the excess subsidy with interest at 12% per annum.