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TMI Blog2019 (4) TMI 1139X X X X Extracts X X X X X X X X Extracts X X X X ..... ars prescribed under Section 33 of the Rajasthan Value Added Tax Act, 2003. This provision cannot therefore create any impediment for the State to invoke Clause 13 of the RIPS-2003. Clause 7 of the RIPS-2003 is the relevant provision relating to Capital Investment Subsidy with which we are concerned in the present matter. Clause 7(i)(a) of the RIPS-2003 provides that in case of new investments made, the sum total of Capital 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. Clause 7(i) (b) of the RIPS-2003 inter alia provides that in case of investment made in the Modernization/Expansion, the amount of Capital Investment Subsidy shall be subject to a 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. Undeniably, the cement package was inserted into the RIPS-2003 as sub-clauses (vi) a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - - - Dated:- 11-1-2019 - Mr. Justice Mohammad Rafiq And Mr. Justice Goverdhan Bardhar For the Petitioner(s) : Mr. S. Ganesh, Sr. Counsel assisted by Shri Ujjwal Rana, Shri M.L. Patodi, Shri Anant Kasliwal, Shri Vaibhav Kasliwal. For the Mr. Rajendra Prasad, AAG assisted by Shri Karan Tibrewal and Shri Madhusudan Shiromani Sharma for State., Mr. R.B. Mathur with Mr. Nikhil Simlote, Ms. Tanvi Sahai, Shri Prateek Kedavat, Shri Hitesh Mishra, Shri Prabhansh Sharma and Shri Ankit Popli for Commercial Taxes Department. JUDGMENT PER HON BLE MR. JUSTICE MOHAMMAD RAFIQ M/s. Ultratech Cement Limited and its Senior General Manager have filed this writ petition challenging the order dated 12.03.2018 passed by the Additional Chief Secretary, Finance Department, Government of Rajasthan, Jaipur with the prayer that revised entitlement certificate dated 02.04.2018 granted pursuant to the decision of the State Level Screening Committee (for short the SLSC ) dated 28.03.2018 be quashed and set aside and consequential order dated 04.04.2018 demanding amount of ₹ 15,96,37,794/- with interest in the sum of ₹ 17,18,33,816/- be quashed and set aside. The petitio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny upfront subsidy. The RIPS was amended on 02.12.2005 to introduce a new package of sales tax subsidy at 75% for new cement units with a total investment of more than ₹ 400 crores under Clause 7(vi) of the RIPS-2003. The subsidy could be granted only by the SLSC and not by the BIDI and 75% subsidy included 45% upfront subsidy and the wage/interest subsidy was only 30% and not 75% as per Clause 7(i)(b) of the RIPS-2003. The BIDI in its meeting held on 01.04.2006 held that the recently announced cement package in RIPS 2003 will be applicable to the petitioner-company. It was thus crystal clear that the BIDI had granted to the petitioner 75% sales tax subsidy, which was the recently announced cement package. The petitioners entered into an MOU with the respondent-State during Resurgent Rajasthan Partnership Summit in which the petitioner-company undertook to set up a new cement plant at Kotputli with a capacity of 4 million tons per annum. Clause 7(iii) of the RIPS-2003 was amended on 30.09.2008 to protect investments made under MOU signed during Resurgent Rajasthan Summit, provided commercial production was started by 31.03.2011. The Kotputli project fulfills all the requireme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the BIDI dated 01.04.2006 was best understood by the SLSC having regard to its constitution. SLSC s understanding of the RIPS and of BIDI s decision thereunder is squarely covered by the doctrine of Contemporanea Expositio. Reliance in this connection has been placed upon the judgment of the Supreme Court in Desh Bandhu Gupta Co. Others Vs. Delhi Stock Exchange Association Ltd., AIR 1979 SC 1049 and Spentex Industries Ltd. Vs. Commissioner of Central Excise Another, (2016) 1 SCC 780 . Learned Senior Counsel argued that the revisional order could not in law be based on any ground or material which was not set out in the show cause notice. In the present case, the only ground set out in the show cause notice was that the BIDI did not pass any order granting 75% subsidy to the petitionercompany, which is patently untenable. Reliance in support of this argument has been placed on judgment of the Supreme Court in Commissioner of Customs, Mumbai Vs. Toyo Engineering India Ltd., (2006) 7 SCC 592 and judgment of Delhi High Court in Commissioner of Income Tax, Delhi Vs. Contimeters Electrical Pvt. Ltd., (2009) 317 ITR 249 (Delhi) . It is further argued that it is wel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubsequent point of time. It is argued that petitioner s right to 75% subsidy is also based on the RIPS amendment dated 30.09.2008 read with the MOU dated 30.11.2007, which fact has been completely disregarded by the revisional authority. Mr. S. Ganesh, learned Senior Counsel argued that wording of Clause 13 of the RIPS-2003 is identical to that of Section 263 of the Income Tax Act, 1961 which has been interpreted in detail by the Supreme Court in Malabar Industrial Co. Ltd. Vs. Commissioner of Income Tax, Kerala State, (2000) 2 SCC 718 and Commissioner of Income Tax, (Central) Ludhiana Vs. Max India Limited (2007) 15 SCC 401 wherein the Supreme Court has held that the phrase prejudicial to the interest of the revenue under Section 263 has to be read in conjunction with the expression erroneous order passed by the assessing officer. These decisions state that every loss of revenue as a consequence of an order of the subordinate authority cannot be treated as prejudicial to the interest of the revenue. It has also been held that where two views are possible and the subordinate authority has taken one view, with which the revisional authority does not agree, it cannot be t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... placed by the respondents on the judgment of Co-ordinate Bench of this Court at Principal Seat at Jodhpur in State of Rajasthan Others Vs. Shree Cement Limited Others (D.B. Special Appeal (Writ) No. 1719/2011 and other connected matters decided on 06.12.2016) , Mr. S. Ganesh, leaned Senior Counsel argued that the aforesaid case stands entirely on a different footing as compared to the present case because in that case, there was no decision whatsoever for grant of any subsidy by the BIDI and there was only a decision by SLSC which specifically granted subsidy only under Clause 7(vi) and 7(vii) of the RIPS-2003 which was withdrawn on 28.04.2006. Reliance placed by the respondents on the judgment of the Supreme Court in Commissioner of Customs (Import), Mumbai Vs. Dilip Kumar Company Others, (2018) 9 SCC 1 is wholly misconceived as this judgment only lays down that an exemption notification has to be construed strictly and only if there is any ambiguity therein, the benefit thereof has to go to the revenue. This principle does not have any applicability whatsoever to the present case where there is no ambiguity in respect of any exemption notification. Mr. Rajen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vocate General submitted that even in the MOU dated 30.11.2007 Government committed nothing more than project incentives permissible to the project under the RIPS-2003 as amended from time to time. The amendment dated 30.09.2008 thus had no bearing upon the outer limit of subsidy permissible under the Scheme. It is argued that the decision of the BIDI was in the context of application for customised package which is nothing more than declaring the eligibility of company under the provisions of the RIPS-2003. Neither any specific application under the RIPS-2003 was pending nor any application for raising the limit of subsidy under Clause 7(i)(a) was under consideration before the BIDI nor the company ever applied to the BIDI even after 28.04.2006 for raising the limit to 75% till the BIDI remained in existence i.e. up to 07.06.2009. It is important to note that irrespective of disbanding of the BIDI, the provisions of Clause 7(i)(a) of the RIPS-2003, its proviso and the provisions of Clause 5 relating to eligibility and Clause 6 of the RIPS-2003 with regard to authority to grant benefits and Clause 9 with regard to claim of capital investment subsidy have not been amended, so as to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the context as mentioned above. Thus, no issue with regard to constructing an ambiguous statute or document arises in this case. The BIDI never explained subsequently its understanding about decision dated 01.04.2006, nor the government ever explained its understanding about the said decision at any point of time to mean grant of enhanced subsidy of 75% under Clause 7(i)(a) of the RIPS-2003. However, the SLSC misunderstood the decision as there was no material before it to reach to this conclusion. The construction of decision of the BIDI has no bearing because the scheme itself does not give its understanding any finality, rather it negates it by insertion of Clause 13 of the RIPS-2003. The understanding of the SLSC cannot be binding upon the Government. The interpretation given by an authority can be invoked in a given situation, but it will not always be decisive on the question of construction which is what the judgments cited by the petitioners also state so. Other contention raised on behalf of the petitioners that the impugned revisional order has gone beyond the show cause notice is also wholly misconceived. It is submitted that the notice clearly stated that in the decis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l appearing on behalf of the respondents-Commercial Taxes Department also opposed the writ petition and argued that the petitioners applied for benefit of customisd package to the BIDI. In response to the application of the petitioners, the BIDI in its 21st meeting held on 01.04.2006 directed that the petitioner-company would be entitled for cement package in the light of notification dated 02.12.2005. It was pursuant to this cement package that sub-clauses (vi) and (vii) were added in Clause 7 of the RIPS-2003. Being aware of this fact, the petitioner-company got itself registered with the SLSC vide letter dated 26.04.2006 specifically making a request for granting the benefits according to the cement package. The Bureau of Investment Promotion Rajasthan vide letter dated 17.06.2006 informed the petitioners that they will be eligible for the benefits only as per the scheme of the RIPS-2003. The State of Rajathan subsequently vide notification dated 02.12.2005 amended the RIPS-2003 by inserting sub-clauses (vi) and (vii) to Clause 7 whereby benefits were extended to cement plants. Aforesaid two sub-clauses were deleted soon thereafter vide notification dated 28.04.2006 and furth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e validity of Clause 13 of the RIPS-2003. Once the petitioners decided to contest the matter before the Additional Chief Secretary, they are estopped from challenging Clause 13 at this stage. It is argued that Clause 13 has been considered by Division Bench of this Court at Principal Seat at Jodhpur in State of Rajasthan Others Vs. Shree Cement Limited Others (supra). Mr. R.B. Mathur, learned counsel argued that it is settled principle of law that while interpreting exemption notification, the court has to adopt principle of strict interpretation and any ambiguity shall be decided in favour of the revenue. Once an exemption is granted it eats out of the public exchequer and no person shall be allowed to take undue advantage of the benefits granted to him/her. Learned counsel in support of this argument relied upon recent judgment of the Supreme Court in Commissioner of Customs (Import), Mumbai Vs. Dilip Kumar Company Others, (2018) 9 SCC 1 wherein it has been held that the exemption notification should be interpreted strictly. Relying on the judgment of the Supreme Court in State of Rajasthan Vs. J.K. Udaipur Udyog, (2004) 7 SCC 673 , learned counsel argued ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . This provision cannot therefore create any impediment for the State to invoke Clause 13 of the RIPS-2003. Clause 7 of the RIPS-2003 is the relevant provision relating to Capital Investment Subsidy with which we are concerned in the present matter. Clause 7(i)(a) of the RIPS-2003 provides that in case of new investments made, the sum total of Capital 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. Clause 7(i) (b) of the RIPS-2003 inter alia provides that in case of investment made in the Modernization/Expansion, the amount of Capital Investment Subsidy shall be subject to a 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. The first proviso to the aforesaid Clause 7 inter alia stipulates that the maximum limit of fifty percent prescribed under clause 7(i)(a) and clause 7(i)(b) m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 3 MTPA with invest of ₹ 300 crores and employment of 500 persons. The Pre-BIDI meeting was held on 28.03.2006 in which the application of the petitioners was considered. The Pre-BIDI proposed as under: 14. Grasim Industries The pre-BIDI recommended that the cement package as announced recently should be applicable to the company. Meeting of the BIDI presided over by the Chief Minister on 01.04.2006, considered the recommendation of the Pre-BIDI and resolved at Agenda Item No. 13 as under: Agenda No. 13 Grasim Industries Limited BIDI directed that the recently announced cement package and RIPS 2003 shall be applicable on the company. Any changes post VAT regime will also be available to other units. The petitioners submitted option for availing benefits under the aforesaid newly inserted sub-clause (vii) on 26.04.2006 under new notification dated 02.12.2005. However, both the subclauses (vi) and (vii) were deleted by the Government vide notification dated 28.04.2006. The petitioner-company was fully conscious of this fact that it shall not receive the tax subsidy under deleted sub-clause (vii) supra, which is evident from the representation whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 1 to 6 below, qualify for benefits under deleted sub-clause (vi) and (vii) of clause 7 of RIPS-2003 on or after 28.4.2006.: 1. Where the option was submitted before 28.04.2006 and benefits were also granted by SLSC before 28.04.2006, 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 have not been granted by SLSC, 4. Where the option was submitted after 27.04.2006 but within 180 days of 02.12.2005 and benefits has 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 SLSC, and 6. 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. The Government then vide notification dated 30.09.2008 by way of amendment introduced another proviso after existing provisos in sub-clause (iii) of Clause 7 of the RIPS- 2003 provided that the investment made or committed before 22.05.2008 or under MOU signed during Resurgent Rajasthan Summit for both new cement unit or unit under expans ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the enhanced subsidy upto 75% to it became infructuous. Request of the petitioners to withdraw the notification dated 28.04.2006 was not acceded to as is evident from communication dated 17.06.2006 sent to the petitioners by the Bureau of Investment Promotion and clarification dated 22.05.2008. The argument that the SLSC which consisted of the officers mostly from the Finance Department of the State by virtue of doctrine of Contemporenea Expositio was in the best position to consider decision of the BIDI is noted to be rejected firstly because there is no ambiguity whatsoever in the decision of the BIDI and secondly, such decision has to be read in context of the facts. The BIDI never explained its understanding subsequently on 01.04.2006. The SLSC thus misunderstood the decision of the BIDI. The RIPS-2003 also does not provide any clarification for such a decision. In the cited judgments on this aspect, it has been indicated that such interpretation by a particular authority has by no means a controlling effect upon the courts and if occasion arises, has to be disregarded for cogent and perspective reason and in a clear case of error, the court would without hesitation refus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax incentive upto 75% to the entrepreneurs on fulfillment of the conditions contained therein, but these two sub-clauses were soon thereafter deleted on 28.04.2006. The SLSC was therefore left with no authority whatsoever to decide in its meeting dated 17.03.2011 to grant 75% tax subsidy to the petitioner-company. Thus clearly, it is basically decision of the SLSC which has been revised by the Principal Secretary, Finance Department on behalf of the State Government and not the decision of the BIDI. As regards the contention that amendment made in Clause 7(iii) of RIPS-2003 vide notification dated 30.09.2008 protected investments made under MOU signed during Resurgent Rajasthan Summit, provided commercial production started by 31.03.2011 also does not improve the case of the petitioners. Even though Clause 7(iii) had protected MOUs signed during Resurgent Rajasthan Summit but this amendment does not in any manner confer any additional power on the SLSC to grant more subsidy than what it otherwise wielded. On the date of aforesaid amendment, the SLSC was competent to grant subsidy to the extent of 50% and no more than that. The SLSC, however, wrongly accepted the application ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ench of the Supreme Court in Commissioner of Customs (Import), Mumbai Vs. Dilip Kumar Company Others (supra) held that where there is ambiguity in an exemption notification or exemption clause, the benefit of such ambiguity cannot be extended to the assessee by applying the principle that an obscure and/or ambiguity or doubtful fiscal statute must receive a construction favouring the assessee. Both the situations are different and while considering an exemption notification, the distinction cannot be ignored. Thus, in case of ambiguity in charging provisions, the benefit must necessarily go in favour of assessee, but the same is not true for an exemption notification or exemption clause wherein the benefit of ambiguity must be strictly interpreted in favour of the Revenue/State. Furthermore, the burden of proving applicability of exemption would be on the assessee to show that his case comes squarely within the parameters of the exemption notification or exemption clause. The question whether assessee falls in the notification or in the exemption clause, has to be strictly construed and when once the ambiguity or doubt is resolved by interpreting the applicability of exe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Report did not approve of the interpretation placed by Madras High Court in Venkatakrishna Rice Co. Vs. CIT, (1987) 163 ITR 129 (Mad) on the phrase prejudicial to the interests of the Revenue and held that the scheme of the Act is to levy and collect tax in accordance with the provisions of the Act and this task is entrusted to the Revenue. If due to an erroneous order of the Income Tax Officer, the Revenue is losing tax lawfully payable by a person, it will certainly be prejudicial to the interests of the Revenue. The phrase prejudicial to the interests of the Revenue is not an expression of art and is not defined in the Act. When this phrase is understood in its ordinary meaning, it is of wide import and is not confined to loss of tax. Relevant discussion is found in Paras 8, 9 and 10 of the Report, which are reproduced as follows: 8. The phrase prejudicial to the interests of the Revenue is not an expression of art and is not defined in the Act. Understood in its ordinary meaning it is of wide import and is not confined to loss of tax. The High Court of Calcutta in Dawjee Dadabhoy Co. v. S.P. Jain (1957) 31 ITR 872 (Cal), the High Court of Karnataka in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atio of the aforesaid judgment on the facts of the present case, it has to be accepted that due to erroneous reading of the order of the BIDI, which did not by itself direct for grant of 75% tax subsidy but merely directed that the recently announced cement package and the RIPS-2003 shall be applicable on the company , the SLSC could have extended only such tax subsidy which it was competent to do. The SLSC by erroneously misconstruing the aforesaid decision of the BIDI extended the benefit of sub-clause (vii) whereas the said clause stood deleted only two days after the option was exercised by the petitioner-company. Order of the SLSC was therefore certainly prejudicial to interest of the revenue in the sense this phrase has been used in Clause 13 of the RIPS-2003. Although in a different way, allowing the petitioners to retain 25% differential amount would tantamount to loss of Revenue and gain of the petitioner-company at the cost of State exchequer which is after all public money. The petitioner-company was entitled to grant of 50% tax subsidy only as on the date on which the SLSC met to consider its case and resolved to grant subsidy of 75%, it was not competent for that. M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y enactment. (f) Manifest arbitrariness/unreasonableness (to an extent where the court might well say that the legislature never intended to give authority to make such rules). It is pertinent to mention here that neither in the memo of writ petition, nor during the course of arguments, the petitioners have questioned the competence of the Government in framing the policy in question, nor have they been able to demonstrate that a provision of revision contained in Clause 13, in any manner violates the fundamental rights of the petitioners or any provision of the Constitution or any enactment or otherwise exceeds the limit of the authority conferred on the competent authority which framed the policy or are otherwise repugnant to the laws of the land or suffer from manifest arbitrariness/unreasonableness. It would be evident from Clause 13 supra that the State Government in its 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. Subclause (b) to Clause 13 furthe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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