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TMI Blog2004 (9) TMI 381X X X X Extracts X X X X X X X X Extracts X X X X ..... Senior Advocate, and Aruneshwar Gupta, Additional Advocate-General of Rajasthan (Amarjit Singh Bedi, Advocate, with them) for the appellants. S. Ganesh, Senior Advocate (U.A. Rana, M.L. Patodi, Arvind Kumar and Sadeep Kharel, Advocates, with him) for the respondents. -------------------------------------------------- ORDER The judgment of the Court was delivered by Mrs. RUMA PAL, J. -A scheme was framed by the first appellant granting exemption to industrial units from payment of sales tax on intra-State and inter-State sale of goods and by-products manufactured within the State of Rajasthan. By a subsequent notification the extent of the percentage of exemption available to sick industries was sought to be corrected. The disputes in these appeals relate to the interpretation of the scheme and the effect of the corrigendum. 2.. The scheme was part of the New 4th Industrial Policy of the State. The policy stated that the object of the scheme was to make Rajasthan "a most favoured destination for industries" and to encourage the setting up of industries in the State. The policy describes the nature of the exemptions which were sought to be granted to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nit, the benefit permissible for a new unit shall be available to it only on the production in excess of 80 per cent of the installed capacity of the existing unit. (ii) "new industrial unit" shall also include a sick unit: (a) which has not availed of any benefits of exemption from tax or deferment of tax; (b) which has been appraised by financial institution and appropriate rehabilitation plan has been formulated; and (c) which has been purchased by a new management other than by way of collusive transfer and such management has made additional fixed capital investment not less than 25 per cent of the depreciated value of the assets of such unit. 5.. The respondents in these appeals, viz., M/s. J.K. Udyog and J.K. Synthetics Ltd., were writ petitioners before the High Court of Rajasthan and are companies which manufacture cement in different units within the State of Rajasthan. The respondent-companies in these appeals are undisputedly "sick". 6.. The description of the type of units, extent of the percentage of exemption from tax liability, the maximum exemption permissible under the scheme and the maximum time-limit for availing the exemption under the sch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eed Rs. 150.00 lacs. Eleven years 8. It is apparent from this annexure that for the purposes of deferring the rate of exemption the industries were classified into three categories under Srl. Nos. 1, 2 and 3 according to the kind of industry. Cement plants/units have been separately placed in Srl. No. 3. 9. According to the respondent-companies, however, sick units were treated as a special category, and irrespective of the nature of the industry, were covered by Srl. 4. It is the respondent's case that as far as their cement units were concerned they were not covered by Srl. No. 3 but by Srl. No. 4(a) and thus, according to them, they were entitled to the higher benefits accorded to new units under Srl. No. 1. According to them the words under column 3 against Srl. No. 4 made this clear. 10. According to the appellants, on the other hand, this was never the intention of the State Government which had wanted to treat sick industrial units of a particular kind on par with new industrial units of that kind in the matter of grant of exemption. But we are anticipating the dispute which is considered in detail subsequently. Returning to the scheme; the pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ible exemption from tax in accordance with the provisions of this scheme is not exhausted, or till such certificate is not amended, suspended or revoked. (h) The benefits under this scheme shall be available from the date of the application filed by the applicant unit completed in all respects, as certified by the Member Secretary of the appropriate Screening Committee. (i) During the currency of the eligibility certificate, the unit concerned shall be exempted from payment of tax on the intra-State sales/inter-State sales of the goods and by-products manufactured by it within the State including the waste items derived therefrom and the packing material used therewith." 11.. The order in which the steps envisaged for grant of benefits under this clause of the scheme was therefore: (1) making of an application by the industrial unit; (2) the certification of the application as complete and the provisional availability of the benefits [clause 4(h)]; (3) The examination of the application by the Screening Committee after collecting information/enquiry, etc. [clause 4(e)]; (4) The sanction or rejection of the application by the Screening Committee [clause 4(e)]; (5) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k, although the company itself had been declared sick, it should await the rehabilitation programme duly approved by the BIFR providing the benefit of sales tax incentives scheme to all such units. While deferring the case till the approval of the rehabilitation programme by BIFR, the Screening Committee said that the unit could avail of the benefit under the scheme to the extent permissible under the corrigendum. Neither any sanction under clause 4(e) and consequently no eligibility certificate under clause 4(f) have been issued to M/s. J.K. Synthetics Ltd., under the scheme till today. 16.. As far as M/s. Udaipur Udyog Ltd. is concerned, its application under the scheme was certified as complete under clause 4(h) on July 26, 1999, and was sanctioned on December 30, 1999. However the quantum of benefit was granted in terms of the corrigendum from the date of issuance of the corrigendum. The eligibility certificate was issued to M/s. J.K. Udyog on February 29, 2000 also restricting the benefits under the scheme on the basis of the corrigendum. 17.. Since the respondent had been availing of the higher rates of exemption against Srl. No. 1, consequent upon the decision of the S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orrigendum notification was in fact an amendment of the scheme and, therefore, this would operate only prospectively, i.e., from January 7, 2000. The plea of the respondent-companies that the State Government was bound by the principles of promissory estoppel from modifying or amending the scheme was negated by the division Bench. The respondent- companies have not sought to challenge this conclusion before us. The division Bench however held that the rights of the respondent- companies of enjoying the benefit under the original scheme including the maximum amount of exemption, the maximum period of exemption, and the percentage of exemption were available to the respondent- companies with effect from the date of certification of their applications under clause 4(h) and were substantive and that these rights could not be affected adversely unless the subsequent notification clearly manifested an intention to do so. It was held that the corrigendum did not contain any such explicit provision nor could any inference be drawn that accrued rights were to be affected. It was held that even if this proposition was unacceptable the amendment was arbitrary and violative of article 14 being ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny promissory estoppel on the part of the State Government, the Government could withdraw or modify the concession given at least from the date of the publication of the corrigendum notification. As far as the High Court's findings on the issue of discrimination is concerned, it is submitted that in fact there were no other cement units in the State in comparison with which it could be said that the respondents- companies were being unfairly treated. The language of Srl. No. 3 in annexure "B" was also relied upon to contend that the corrigendum was not discriminatory and merely treated sick cement units and new cement units equally. 23.. Counsel for the respondent-companies has submitted that there was no power in the State Government to issue the corrigendum with retrospective effect. It is submitted that the scheme was issued not only under section 15 of the RST Act but also under section 8(5) of the CST Act. The exercise of the power was thus, to use counsel's language, "inseverable". It is argued that as there is no power under section 8(5) of the CST Act to withdraw an exemption with retrospective effect the entire exercise of issuing the corrigendum must fail. In addition, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isions cited with regard to the principles for deciding whether a statutory provision has retrospective effect, is unnecessary. The question is whether the subsequent notification could operate as far as the respondent-companies are concerned with effect from January 7, 2000. The answer to this question would depend upon the nature of the rights of the respondent-companies under the scheme. 25.. An exemption is by definition a freedom from an obligation which the exemptee is otherwise liable to discharge. It is a privilege granting an advantage not available to others. An exemption granted under a statutory provision in a fiscal statute has been held to be a concession granted by the State Government so that the beneficiaries of such concession are not required to pay the tax or duty they are otherwise liable to pay under such statute. The recipient of a concession has no legally enforceable right against the Government to grant a concession except to enjoy the benefits of the concession during the period of its grant. This right to enjoy is a defeasible one in the sense that it may be taken away in exercise of the very power under which the exemption was granted. [See Shri Bakul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d as a modification and would apply only to subsequent applicants is unacceptable. There is no ambiguity in the language of the subsequent notification. On the contrary the use of the word corrigendum itself indicates the intention was to correct and to rectify what the State Government thought had been erroneously done. 29.. Coming now to the question of public interest. The 4th New Industrial Policy pursuant to which the scheme had been framed by the State Government was indisputably in the public interest. Therefore, if the intention of the State Government was to effectuate the policy by issuing the subsequent notification it cannot be said that the State Government was not acting in the public interest. The Industrial Policy which resulted in the exemption scheme expressly provided that the rate of benefits which were to be given to sick industrial units which had not availed of any such benefits in the past would be at par with a new unit. But does this mean that the words "new unit" in the policy referred to industries under Srl. No. 1? We think not. New units of different kinds of industries had been separately classified both under the policy and under Srl. Nos. 1, 2 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nit can claim under the scheme, is to be treated at par with new industries. 30.. The thrust of the industrial policy was to give an incentive to new entrepreneurs. It is true that there are separate provisions for "sick industries" but given the main object of the policy to make Rajasthan a "most favoured destination for industries", it could not have been the intention of the State Government to give a lower benefit to new industries and to give higher benefits to sick industrial units already established in the State. However, when the scheme was first notified although the body of the scheme effectuated the objective, the entry under column 3 against Srl. No. 4 in annexure "B" did not clearly reflect this. Doubtless the interpretation put by the respondent-companies and accepted by the High Court on the entries against Srl. No. 4 as it originally stood in annexure "B", is a possible interpretation, but in our opinion annexure "B" was equally susceptible of the interpretation put forward by the appellants before us particularly in the context of the Industrial Policy. 31.. It was to clarify this ambiguity that the subsequent notification was issued by the State Government to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with effect from the date of the sub- sequent notification. That is also what the appellants contend, namely, that Srl. No. 4(a) expressly put sick cement units on par with new cement units under Srl. No. 3. 34.. The respondent-companies are, therefore, required to avail of the benefits under the scheme on the basis of the corrigendum with effect from January 7, 2000. Learned counsel for the respondent-companies may be right in his contention that if a sanction is granted and an eligibility certificate issued on the basis of the sanction, then having regard to the provisions of clause 4(h) the period of exemption under the sanction ought to cover the date of the certification of the application as complete under clause 4(h). But it is again unnecessary to decide the ambit of the Screening Committee's power, as the appellants have not argued that the benefits of the higher rate of exemption already availed of by the respondent- companies with effect from the date of certification under clause 4(h) up to January 7, 2000, should be taken away from them. 35.. This brings us to the last argument of the respondent- companies, viz., that they should not be made liable for the sales ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd. v. State of Rajasthan* (2000) 1 SCC 765, relief was granted having regard to the peculiar history of the case. By three notifications covering 1990 to 1994 issued by the State of Rajasthan the rate of tax payable by local dealers in respect of inter-State sales had been reduced. The notifications were challenged by cement manufacturers from outside the State. The High Court rejected the challenge. When the non-local cement manufacturers came to this Court, this Court held that the notifications were void and quashed them. [Shri Digvijay Cement Co. v. State of Rajasthan (1997) 5 SCC 406]. A fourth notification was subsequently issued by the State of Rajasthan similar to the earlier three notifications which had been quashed. The fourth notification was challenged directly before this Court by means of a writ petition under article 32. This time the Bench which entertained the writ petition disagreed with the view expressed earlier by this Court in respect of Shri Digvijay Cement Co. See [1997] 106 STC 11 (SC). (1997) 5 SCC 406 and referred the matter to a larger Bench. The Constitution Bench overruled the decision in Shri Digvijay Cement See [2000] 117 STC 395 (SC). (2000) 1 S ..... X X X X Extracts X X X X X X X X Extracts X X X X
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