IMPORTANT POINT
The scheme for grant of exemption to industrial units from payment of the sales tax both under Section 15 of the Rajasthan Sales Tax Act and Section 8(5) of the Central Sales Tax Act being in the public interest, the State Government was competent to modify or revoke the grant for the same reason.

Headnote:Cental Sales Tax Act, 1956-Section 8(5)-Rajasthan Sales Tax Act, 1994-Section 15-Rajasthan Sales Tax/Central Sales Tax Exemption Scheme for Industries, 1998-Grant of exemption to industrial units from payment of sales tax on intra state and inter-state sale of goods and by-products manufactured within State of Rajasthan-By subsequent notification, extent of percentage of exemption available to sick industries was sought to be corrected-Validity of corrigendum-Respondent companies manufacturing cement in different units within the State of Rajasthan are sick units-For the purposes of deferring the rate of exemption, cement plants/units have been separately placed at Srl.No. 3-Respondent companies applied for exemption under the scheme claiming benefits at par with units under Srl.No. 1-While the application of respondent was pending for consideration by the Screening Committee, corrigendum was issued on 30.9.1999 amending the third column against Srl.No. 4, by replacing the phrase New units at Srl.No. 1 with New units at Srl. No. 1, 2 and 3 -Sick cement units under Srl. No. 4 were expressly put on par with new cement units under Srl.No. 3-Eligibility certificate was issued to respondent restricting the benefits under the scheme on the basis of corrigendum-Writ petitions filed challenging the corrigendum-Whether corrigendum issued can be said to be violative of Article 14 of the Constitution-(No).
       Held : 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. (Para 25)
       In this case the scheme being notified under the power in the State Government to grant exemptions both under Section 15 of the RST and Section 8(5) of the CST in the public interest, the State Government was competent to modify or revoke the grant for the same reason. Thus what is granted can be withdrawn unless the Government is precluded from doing so on the ground of promissory estoppel, which principle is itself subject to considerations of equity and public interest. (Para 26)
       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. 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 3 of Annexure B to the scheme. (Paras 28 and 29)
       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. (Para 30)
       It was to clarify this ambiguity that the subsequent notification was issued by the State Government to correct or amend Annexure B to the extent that it could be interpreted in a manner not in keeping with the published industrial policy of the State and the substantive provisions of the scheme. For these reasons also the corrigendum cannot be said to be violative of Article 14. On the contrary, if the corrigendum were not to be given effect to, the entire scheme would operate irrationally by making an invidious distinction between sick cement units. (Paras 31 and 32)

JUDGMENT

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 the different kinds of industries with exemption/deferment incentives for 11 years in respect of some industries and 14 years for others. A greater incentive was granted to industries being set up in the five industrial growth centres in the State. The incentives available during the first year were to be gradually tapered off to a particular percentage of the fixed capital investment at different rates in respect of some industries. However, in respect of cement industries the percentage of exemption proposed was at a flat rate of 25 for 11 years. According to the policy the scheme would also give benefits for the first time to sick units. The sick units were classified into two categories as follows:

(1) "Those units which have not availed of any benefits in the past will get full benefits at par with a new unit.

(2) Those units which have availed of sales tax benefits in the past will get ST benefit on a tapering basis up to 11 years (maximum 80 and minimum 10 exemption/deferment on a tampering basis)".

3. Pursuant to this Policy the Rajasthan Sales Tax/Central Sales Tax Exemption Scheme for Industries, 1998 (referred to as the scheme ) was framed and notified in exercise of the powers conferred on the State Government by section 15 of the Rajasthan Sales Tax Act, 1994 (referred to as "RST Act") and by sub-section (5) of Section 8 of the Central Sales Tax Act, 1956 (referred to as the CST Act ). The scheme came into force from 1st April 1998. Clause 1-(b) of the scheme envisages that "an industrial unit which commences commercial production during the operative period of this scheme, shall be entitled to claim benefits under this scheme." Clause 3(a) provides that the scheme shall be applicable to :

(i) the new industrial units;

(ii) the industrial units going for expansion;

(iii) the industrial units launching diversification; and

(iv) the sick industrial units.

4. A "New Industrial Unit" has been defined in clause 2(k) as:-

(i) "New Industrial Unit" means an industrial unit which commences commercial production during the operative period of this Scheme including a unit set up on the site of an existing industrial unit by making separately identifiable capital investment; subject however, that where an industrial unit manufacturing the same product is established on the site of an existing unit, the benefit permissible for a new unit shall be available to it only on the production in excess of 80 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 of the depreciated value of the assets of such unit".

5. The respondents in these appe

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2004 Supreme(SC) 1199

Cases Referred (10)