Supreme Court: Extending of any incentive in the form of exemption, rebate, concession or subsidy is a fiscal policy; Government is entitled to alter the same as deemed fit and proper

The SC on July 17, 2020 {M/S. ULTRATECH CEMENT LTD. & ANR. vs  STATE OF RAJASTHAN & ORS.} held that benefit of any ambiguity could not have been extended to the appellant company. It was held that if at all there had been any ambiguity, the benefit thereof would have only gone in favour of revenue for the simple reason that under the provisions in question, the State had agreed, by way of incentive, to part with a portion of its revenue. It was held that such provisions, whether in the statute or in the non-statutory document, by their very nature, are subject to strict interpretation so far as their applicability is concerned, the principles of law in this regard are well settled.

It was held by the Bench, comprising of Justice A.M. KHANWILKAR & Justice DINESH MAHESHWARI, that in present case it cannot be deduced, by any stretch of imagination, that a conscious decision was ever taken by BIDI at any stage that the appellant company would be extended any differential and advantageous treatment by allowing 75% subsidy in place of the ordinarily allowable 50%.

It was further held that 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, it was held that 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. It was held that as to whether the cement industry was to be granted 75% subsidy under Rajasthan Investment Promotion Scheme-2003 (in short '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 SC held that ‘Contemporanea exposition est optima et fortissimo in lege’ which means that the best way to construe a document is to read it as it would have read when made. It was 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 was held that 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. It was held that such has never been the intent of the doctrine of Contemporanea Expositio nor could such a result be countenanced.

It was further held that when the decisions of State Level Screening Committee (in short '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. It was held that the rule of “promissory estoppel” cannot be invoked for the enforcement of a “promise” or a “declaration” which is contrary to law or outside the authority or power of the Government or the person making that promise.

In the present case, it was held by the SC 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. It was held that 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. It was held that the exercise of power of revision as per Clause 13 of the Scheme remains unexceptionable in the present case.

It was held that in present case it is also clear that the doctrine of Contemporanea Expositio neither applies to this case nor inures to the benefit of appellant. It was held by the SC that 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.

The SC concluded that it has no hesitation in affirming the order of the High Court dated 11.01.2019 and in turn, approving the order of revision dated 12.03.2018 insofar the Additional Chief Secretary held that the Kotputli Cement Works Unit of the appellant company was entitled to Capital Investment Subsidy only to the extent of 50% of the payable and deposited tax 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 Committee. It was held that the SLSC was rightly directed to issue the new Entitlement Certificate for subsidy to the limit of 50% of total tax to the said Kotputli Unit of the appellant company; and the company was rightly directed to refund the amount of subsidy availed in excess of 50% of payable and deposited tax.