M/S Ultratech Cement LTD and ANR


State of Rajasthan and ORS

Civil Appeal No. 2773 of 2020

Provisions Involved

Companies act 1956, Central Sales Tax Act 1956, Section 33 of Rajasthan value added tax act 2013.


This appeal is against the judgement dated 11.01.2019 passed in D.B. Civil petition No. 9090 of 2018.

The appellant No.1 is the M/S Ultratech Cement LTD (unit of kotputli cement works) this is a public ltd company registered under Companies act 1956 engaged in the manufacturing and marketing of cement and allied products, but previously the appellant was carrying business in the name of M/S Grading Industries LTD. Which is a company of the Aditya Birla Group engaged in making of staple, fiber, cement, textiles, sponge iron etc. The appellant No.2 is the senior general manager of the kotputli unit of the appellant No.1.

The Additional Chief Secretary of Rajasthan held that the company’s kotputli unit was entitled to Capital Investment Subsidy only to the extent of 50 percent of the payable and deposited sales tax/vat and not to the extent of 75 percent which they availed by following the mistakenly issued certificates by State Level Screening Committee. And also directed company to refund the amount of subsidy availed in excess of 50 percent with interest of 18 percent per annum. State deleted the sub clauses (vi) and (vii) of clause 7 of Rajasthan Investment and Promotion Scheme 2003.

Being aggrieved by the order passed by the Additional Chief Secretary of Rajasthan on 12.03.2018 of issuance of there revised Entitlement Certificate and the order dated 04.04.2018 of the ACS of demanding excess subsidy amount of RS 15,96,37,794/- with interest amount of Rs 17,18,33,816/- the appellant filled the writ petition before High Court of Rajasthan.

The High Court has dismissed the writ petition of the appellant because of the following reasons:

· The first reason behind rejecting the petition was that if there was any mistake in granting subsidy that could be rectified only within the period of four years as prescribed under section 33 of Rajasthan value added tax act 2003.

· The company asks for the benefits under sub clauses (vii) of clause 7 but both sub clauses (vi) and(vii) were deleted by government and  the company was aware of the fact that these sub-clauses were deleted.

· High Court also rejected the appeal of the appellant that tax incentives cannot be withdrawn.


The core issue in this case was, whether the company was entitled to the subsidy to the extent of 75 percent of tax payable and deposited or entitled to only 50 percent?


· It was found that the appellant started availing the benefit of 75 percent subsidy from the month of February 2010 and availed until the month of February 2017.

· The doctrine of contemporanea exposition and the principles of promissory estoppel did not apply in this case.

· In case of new investment made by the company then the capital investment subsidy would be subject to a maximum limit of 50 percent of tax payable and deposited under the Rajasthan sales tax act 1994 and central Sales tax act 1956 and Rajasthan value added tax act 2003.

· In case of investment made by company for modernization and expansion, the amount of capital investment subsidy is subject to limit of 50 percent of the central Sales tax and vat payable on deposited on it’s additional capacity.

· The principal amount of excess subsidy Rs 15,96,37,794 has been recovered already.


This appeal is partly allowed. The respondent shall be entitled to recover interest at the rate of 12 percent per annum from the date of availing of excessive subsidy 25 percent by the appellants until recovery.

Nikita Malhotra