Ultratech Cement Ltd. & Anr. Vs State of Rajasthan & Ors (Supreme Court)
The issue under consideration is whether interest will be levied on availment of excessive subsidies of 25% under Rajasthan Investment Promotion Scheme-2003 until the whole excessive subsidies are recovered?
Supreme Court states 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. In the given set of facts and circumstances of this case, reliance on the decisions of this Court in India Carbon Ltd., J.K. Synthetics Ltd. and Maruti Wire Industries Pvt. Ltd. (supra), dealing the scheme of particular taxing statutes for charging of interest, does not make out a case of total waiver of interest because the fact remains that the appellant company had indeed availed excessive 25% subsidy under the non-statutory scheme and unequivocal undertaking was stated on its behalf to refund the excess amount together with interest @ 12% per annum.
FULL TEXT OF THE SUPREME COURT JUDGEMENT
Leave granted.
2. This appeal is directed against the judgment and order dated 01.2019 passed in D.B. Civil Writ Petition No. 9090 of 2018, whereby the High Court of Judicature for Rajasthan, Bench at Jaipur, dismissed the writ petition filed by the appellants while upholding the order of revision dated 12.03.2018 as passed by the Additional Chief Secretary, Finance, Government of Rajasthan, Jaipur1 in revision proceedings under Clause 13 of the Rajasthan Investment Promotion Scheme-20032.
2.1 The appellant No.1, M/s Ultratech Cement Limited (Unit-Kotputli Cement Works), is a public limited company registered under the Companies Act, 1956 and engaged in the business of manufacturing and marketing of cement and allied products. It may be noted that previously, the appellant was carrying on its business in the name of M/s Grasim Industries Limited3, a company of the Aditya Birla Group, which was engaged in manufacturing staple fiber, cement, textiles, sponge iron, aluminum etc. The company originally had two cement plants, one situated in Chittorgarh District and another in Jodhpur District in the State of Rajasthan. The appellant No.2 is said to be the Senior General Manager of the said Kotputli Unit of the appellant No.1. The matter in issue in the present case essentially relates to the extent to which the appellant No.1 company was entitled, under RIPS- 2003, to avail the Capital Investment Subsidy4 in relation to its Kotputli 5
2.2 The respondent No.1 herein is the State of Rajasthan and respondent Nos.2 to 5 are its officers related with respective departments whereas respondent No.6 is the State Level Screening Committee, who was the prescribed authority for determining eligibility for subsidy under the Scheme in question.6
2.3. By the aforesaid order of revision dated 12.03.2018, the ACS held that the Kotputli Unit of the company was entitled to Capital Investment Subsidy only to the extent of 50% of the payable and deposited Sales Tax/VAT and not to the extent of 75%, as availed by it pursuant to the Entitlement Certificates dated 29.04.2011 and 24.11.2011 erroneously issued by the State Level Screening Committee7. The SLSC was directed to issue a new Entitlement Certificate for subsidy to the limit of 50% of total tax to the said Kotputli Unit of the company; and the company was directed to refund the amount of subsidy availed in excess of 50% of the payable and deposited tax together with interest at the rate of 18% per annum.
3. Put in a nutshell, case of the appellant is that the subsidy in question, to the extent of 75% of tax payable and deposited, was availed by it under the Rajasthan Investment Promotion Scheme-2003 only in terms of and pursuant to: (a) the decision taken by the high-powered Board of Infrastructure Development and Investment Institution8 on 01.04.2006; (b) the Memorandum of Understanding9 entered with the State Government on 11.2007; and (c) the Entitlement Certificates issued by SLSC on 29.04.2011 and 24.11.2011. Therefore, according to the appellant, there was no occasion for the ACS to invoke Clause 13 of the Scheme; and the appellant can neither be forced to repay the amount of subsidy already availed of nor could any interest be charged. Per contra, stand of the respondents is that the decision of BIDI dated 01.04.2006 is of no good for the appellant because the package referred therein was withdrawn and the corresponding provisions in the Scheme were deleted on 28.04.2006; and the benefits under the deleted provisions could have been granted only until the date of their deletion, i.e., 28.04.2006. Thus, according to the respondents, understanding of the State Government with the company had only been to extend the benefit of incentive in terms of subsidy to the extent permissible under the Scheme and not beyond. The respondents would assert that the aforesaid Entitlement Certificates were erroneously issued by SLSC and the matter being related to public exchequer, the appellant is not entitled to claim any relief contrary to the applicable provisions/stipulations.
4. The factual aspects of the matter are not of much controversy but, for what has been noticed hereinabove and for what has been contended on behalf of the parties before us, the major questions involved in this matter, including those relating to the effect of the decision of BIDI as also the MoU entered into between the parties, revolve around the terms and stipulations of the Rajasthan Investment Promotion Scheme-2003. Hence, at the outset, it shall be apposite to take note of the relevant Clauses of this Scheme having bearing on the case.
Rajasthan Investment Promotion Scheme-2003: Relevant Clauses and their amendments/revisions up to 05.08.2010
5. Rajasthan Investment Promotion Scheme-2003, with which we are concerned in this case, had been a non-statutory Scheme announced by the Government of Rajasthan through its Finance Department Order dated 28.07.200310. It is apparent from the material placed before us that this Scheme had undergone umpteen number of amendments/revisions from time to time. We may refer to the relevant Clauses as also their important amendments/revisions as infra.11
5.1 As per the Preamble, the Scheme was introduced by the State Government with a view to ‘provide investors an attractive opportunity to invest in the State of Rajasthan’. As per its revised Clause 2, the Scheme was to come into operation e.f. 01.07.2003 and was to remain in force up to 31.03.201112. The applicability of the Scheme, in its amended form, had been specified as follows:-
“3. APPLICABILITY OF THE SCHEME
The Scheme shall be applicable to all new investments and investments made by existing units and enterprises for Modernization/Expansion/Diversification, including the units/ enterprise, covered under policy for promotion of Agro-processing and Agri-business, 2010 subject to the condition that such units shall commence commercial production/operations owing to such investment during the operative period of the Scheme.”
5.2. Some of the expressions and phrases used in the text of the Scheme had been defined in Clause 4 thereof. Then, the eligibility for availing Capital Investment Subsidy had been provided in Clause 5 of the Scheme as follows13:-
“5. ELIGIBILITY:
The benefits Capital Investment subsidy as per Clause 7 and exemptions as per Clause 8 under the Scheme shall be available to all units, other than those covered in the list of ineligible units, subject to the fulfilment of the following conditions:
(i) the term loan sanctioned by the State/Central financial institution(s)/International Financial Institution/Corporation and/or Scheduled Commercial Bank(s) including co- operative Bank(s), has been sanctioned and utilized during the operative period of the Scheme;
Provided that this condition shall not apply for the benefits pertaining to purchase/use of land.
(ii) the unit shall have a minimum borrowing for investment of Rs. 10 lacs or having an investment of at least Rs. 10 lacs in land and /or building calculated on the basis of DLC/RIICO rate for land, and Rs. 3228/- per sq. metre (Rs. 300/- per sq. ft.) for building, during the operative period;
provided that the above limit of Rs. 10 lacs shall be Rs. 5 lacs in case of Small Scale Industries.
(iii) to claim Capital Investment Subsidy (Wage component) the unit shall provide:
(a) direct employment to at least ten persons in case of a new unit; and
(b) twenty five percent additional direct employment subject to a minimum of ten persons in case of diversification, modernization or
(iv) the unit shall be eligible for Capital Investment Subsidy (Interest component) and/or Capital Investment Subsidy (Wage component) only if it commences first commercial production/operation during the operative period of the Scheme;
(v) there has been no default in repayment of dues against term loan of the concerned financial institution(s) and/or Bank(s); and
(vi) the applications as required under this Scheme are presented with full particulars and supporting documents, as required, before the appropriate authority within 90 days of commencement of commercial production/operation of the project in respect of which the Capital Investment Subsidy (Wage component)/Capital Investment Subsidy (Interest component) is sought. Such commercial production/operation should however commence during the operative period of the Scheme, i.e., on or before March 31 st
5.3. The provisions relating to the prescribed authority for granting benefits under the Scheme and the prescribed authority to recommend grant of customized incentive package, as contained in Clauses 6 and 6A had been as follows14:-
“6. AUTHORITY TO GRANT BENEFITS UNDER THE SCHEME:
The prescribed authority for determining the eligibility, except for exemption from stamp duty and/ or conversion charges, under this Scheme shall be the following Screening Committees, whose decisions, subject to other provisions of the Scheme, shall be final:
