State Of Rajasthan  Vs. J.K. Udaipur Udyog Ltd.
the appeal from the High Courts order their rights thereunder were precarious. [See: Union of India vs. West Coast Paper Mills Ltd. 2004 (2) SCC 747 , 753]. 36. The mere circumstances that the respondent companies having availed of the exemption scheme were prohibited from collecting the tax from its customers or that they had not collected the sales tax from their customers, (which assertion is strongly disputed by the appellants), is of no consequence. The primary liability to pay the Sales Tax is on the seller. The seller may or may not be entitled to recover the same from the purchaser. The State Government is entitled to recover the same from the respondent-companies irrespective of the fact that the respondent-companies may have lost the chance of passing on their liability to pay sales tax to their purchasers. 37. It is true at this Court has on some occasions granted relief from payment of sales tax to an assessee despite having found against the assessee on equitable considerations. But on every occasion there was something more than the mere impossibility of the assessee passing on the tax to its purchasers. Thus in the case of British Physical Lab India Ltd. vs. State of Karnataka and Anr. 1999 (1) SCC 170 , the State Government had itself issued a notification reducing the rate of tax. The notification was struck down by Court. The State Government then sought to recover the difference between the reduced rate as had been notified by it and the rate generally applicable. This Court granted relief to the assessee since the State Government had itself issued the notification concerned. 38. Similarly in Shree Cement Limited and Anr. vs. State of Rajasthan and Others 2000(1) SCC 765, relief was granted having regard to the peculiar history of the case. By three notifications covering 1990 to 1994 issued by the State of Rajasthan the rate of tax payable by local dealers in respect of inter-state sales had been reduced. The notifications were challenged by cement manufacturers from outside the State. The High Court rejected the challenge. When the non local cement manufacturers came to this Court, this Court held that the notifications were void and quashed them. [Shri Digvijay Cement Companies vs. State of Rajasthan, 1997 (5) SCC 406]. A fourth notification was subsequently issued by the State of Rajasthan similar to the earlier three notifications which had been quashed. The fourth notification was challenged directly before this Court by means of a writ petition under Article 32. This time the Bench which entertained the writ petition disagreed with the view expressed earlier by this Court in respect of Shri Digvijay Cement and referred the matter to a larger Bench. The Constitution Bench overruled the decision in Shri Digvijay Cement 2000(1) SCC 688. The question then was whether the local manufacturers would be entitled to the benefit of the decision of the Constitution Bench despite the fact that the notifications under which they had availed of a lower rate of tax had been decided against them in Shri Digvijay Cement. This Court held in favour of the local manufacturers. The circumstance that the notifications were subsequently held to be valid by a larger Bench operated to protect them from liabilities which had arisen by virtue of the earlier erroneous decision. 39. In State of Rajasthan and anr. vs. Mahaveer Oil Industries & others 1999(4) SCC 357, this Court allowed the assessee to retain benefits under a scheme upto 4.4.1994 despite the fact that the assesses were held not entitled to such benefits, on the ground that in another proceeding this Court had allowed similar industries to retain the benefit up to 4.4.1994. What is of significance is that the assesses were denied further benefit even though they had been successful before the Single Judge, before the Division Bench of the High Court and no stay had been obtained from this Court at any stage. It was said: "The respondents have been aware throughout that the judgment of the Single Judge was appealed against. Even after the Division Bench dismissed the appeal the matter was carried further by filing the present special leave petition/appeal before this Court. The respondents continued to enjoy the benefits of the said two Schemes since no stay was obtained. Nevertheless, the question whether the respondents are entitled to the said benefits, has been sub judice throughout. Since the appeal is now being decided against the respondents, they cannot claim the benefit of an eligibility certificate which was granted entirely on account of a judgment of a Single Judge in their favour which is now being set aside." 40. As far as M/s. J.K. synthetics is concerned, their right to obtain benefits under the scheme by reason of clause 4(b) was in any event provisional. The undertaking given by this company was to the effect that the benefits of the scheme were being availed at the risk of the company till the sanction was granted by the Screening Committee. Since no sanction has been granted to the company, the company was aware that its rights to the benefits under the scheme were conditional and that it might be called upon to meet its sales tax liabilities in the event sanction was not granted on its application.41. In such circumstances it must be open to the State Government to recover sales tax dues as it is entitled to under the RST Act allowing the respondent companies to only keep such benefits as had been already availed of by then upto 7th January, 2000 and thereafter at the rates specified and according to the provisions of the scheme as modified by the corrigendum notification. However no interest or penalty will charged from the respondent companies by the appellants on the differential amounts for the period the matter was sub judice before this Court provided the respondent companies pay the principal amount of sales tax within such time as may be specified by the appellants in this regard. 42
1[ds]In any event, the High Court erred in fact in holding that M/s. J.K. Synthetics had a vested right to the benefits of the scheme. Clause 4 of the scheme clearly provides that the benefits under the scheme were subject to the sanction of the Screening Committee. No sanction has been issued to M/s. J.K. Synthetics tillfrom this, the exemption being a creature of the scheme is subject to the scheme. Clause 9 of the scheme makes it clear that the right under the scheme was temporary in the sense that the scheme could be modified or reviewed. It is true that clause 9 also provides that such review or modification could take place only in the public interest. But nevertheless the right conferred was a modifiable or revocable one. If any right under the scheme is held to be unmodifiable it would be contrary to the scheme itself. Therefore even if one were to assume that the respondent companies were entitled to the benefits of the scheme on par with new units under Srl. No.1 with effect from the date of the certification of their application under clause 4(h), the right could be modified with effect from the date on which the scheme was modified. The further argument of the respondent that the subsequent notification could not be construed as a modification and would apply only to subsequent applicants is unacceptable. 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 thethrust 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 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 Industrialcounsel for the respondents additional contention is that the Screening Committee had proceeded on the basis that the sick cement units were covered under Srl. No.4 and not Srl.No.3. It is argued that such decision of the Screening Committee being final in terms of Clause 4(a) of the scheme, it was not open to the State to contend otherwise. The argument is without force. The finality given to the decision of Screening Committee in terms of Clause 4(a) is "subject to other provisions provided for in the scheme". Any decision of the Screening Committee cannot be contrary to the provisions of the scheme. Besides all that the Screening Committee has held is that the respondent companies are to be treated on par with other cement companies, with effect from the date of the subsequent notification. That is also what the appellants contend, namely that Srl.No.4(a) expressly puts sick cement units on par with new cement units under Srl.No.3.34. The respondent companies are therefore required to avail of the benefits under the scheme on the basis of the corrigendum with effect from 7.1.2000. Learned counsel for the respondent companies may be right in his contention that if a sanction is granted and an Eligibility. Certificate issued on the basis of the sanction, then having regard to the provisions of Section 4(h) the period of exemption under the sanction ought to cover the date of the certification of the application as complete under Clause 4(h). But it is again unnecessary to decide the ambit of the Screening Committees power, as the appellants have not argued that the benefits of the higher rate of exemption already availed of by the respondent companies with effect from the date of certification under clause 4(h) up to 7th January, 2000 should be taken away fromfar as M/s. J.K. synthetics is concerned, their right to obtain benefits under the scheme by reason of clause 4(b) was in any event provisional. The undertaking given by this company was to the effect that the benefits of the scheme were being availed at the risk of the company till the sanction was granted by the Screening Committee. Since no sanction has been granted to the company, the company was aware that its rights to the benefits under the scheme were conditional and that it might be called upon to meet its sales tax liabilities in the event sanction was not granted on its application.41. In such circumstances it must be open to the State Government to recover sales tax dues as it is entitled to under the RST Act allowing the respondent companies to only keep such benefits as had been already availed of by then upto 7th January, 2000 and thereafter at the rates specified and according to the provisions of the scheme as modified by the corrigendum notification. However no interest or penalty will charged from the respondent companies by the appellants on the differential amounts for the period the matter was sub judice before this Court provided the respondent companies pay the principal amount of sales tax within such time as may be specified by the appellants in this
### Instruction:
Evaluate the case proceeding to forecast the court's decision (1 for yes, 0 for no), and elucidate the reasoning behind this prediction with important textual evidence from the case.

### Input:
the appeal from the High Courts order their rights thereunder were precarious. [See: Union of India vs. West Coast Paper Mills Ltd. 2004 (2) SCC 747 , 753]. 36. The mere circumstances that the respondent companies having availed of the exemption scheme were prohibited from collecting the tax from its customers or that they had not collected the sales tax from their customers, (which assertion is strongly disputed by the appellants), is of no consequence. The primary liability to pay the Sales Tax is on the seller. The seller may or may not be entitled to recover the same from the purchaser. The State Government is entitled to recover the same from the respondent-companies irrespective of the fact that the respondent-companies may have lost the chance of passing on their liability to pay sales tax to their purchasers. 37. It is true at this Court has on some occasions granted relief from payment of sales tax to an assessee despite having found against the assessee on equitable considerations. But on every occasion there was something more than the mere impossibility of the assessee passing on the tax to its purchasers. Thus in the case of British Physical Lab India Ltd. vs. State of Karnataka and Anr. 1999 (1) SCC 170 , the State Government had itself issued a notification reducing the rate of tax. The notification was struck down by Court. The State Government then sought to recover the difference between the reduced rate as had been notified by it and the rate generally applicable. This Court granted relief to the assessee since the State Government had itself issued the notification concerned. 38. Similarly in Shree Cement Limited and Anr. vs. State of Rajasthan and Others 2000(1) SCC 765, relief was granted having regard to the peculiar history of the case. By three notifications covering 1990 to 1994 issued by the State of Rajasthan the rate of tax payable by local dealers in respect of inter-state sales had been reduced. The notifications were challenged by cement manufacturers from outside the State. The High Court rejected the challenge. When the non local cement manufacturers came to this Court, this Court held that the notifications were void and quashed them. [Shri Digvijay Cement Companies vs. State of Rajasthan, 1997 (5) SCC 406]. A fourth notification was subsequently issued by the State of Rajasthan similar to the earlier three notifications which had been quashed. The fourth notification was challenged directly before this Court by means of a writ petition under Article 32. This time the Bench which entertained the writ petition disagreed with the view expressed earlier by this Court in respect of Shri Digvijay Cement and referred the matter to a larger Bench. The Constitution Bench overruled the decision in Shri Digvijay Cement 2000(1) SCC 688. The question then was whether the local manufacturers would be entitled to the benefit of the decision of the Constitution Bench despite the fact that the notifications under which they had availed of a lower rate of tax had been decided against them in Shri Digvijay Cement. This Court held in favour of the local manufacturers. The circumstance that the notifications were subsequently held to be valid by a larger Bench operated to protect them from liabilities which had arisen by virtue of the earlier erroneous decision. 39. In State of Rajasthan and anr. vs. Mahaveer Oil Industries & others 1999(4) SCC 357, this Court allowed the assessee to retain benefits under a scheme upto 4.4.1994 despite the fact that the assesses were held not entitled to such benefits, on the ground that in another proceeding this Court had allowed similar industries to retain the benefit up to 4.4.1994. What is of significance is that the assesses were denied further benefit even though they had been successful before the Single Judge, before the Division Bench of the High Court and no stay had been obtained from this Court at any stage. It was said: "The respondents have been aware throughout that the judgment of the Single Judge was appealed against. Even after the Division Bench dismissed the appeal the matter was carried further by filing the present special leave petition/appeal before this Court. The respondents continued to enjoy the benefits of the said two Schemes since no stay was obtained. Nevertheless, the question whether the respondents are entitled to the said benefits, has been sub judice throughout. Since the appeal is now being decided against the respondents, they cannot claim the benefit of an eligibility certificate which was granted entirely on account of a judgment of a Single Judge in their favour which is now being set aside." 40. As far as M/s. J.K. synthetics is concerned, their right to obtain benefits under the scheme by reason of clause 4(b) was in any event provisional. The undertaking given by this company was to the effect that the benefits of the scheme were being availed at the risk of the company till the sanction was granted by the Screening Committee. Since no sanction has been granted to the company, the company was aware that its rights to the benefits under the scheme were conditional and that it might be called upon to meet its sales tax liabilities in the event sanction was not granted on its application.41. In such circumstances it must be open to the State Government to recover sales tax dues as it is entitled to under the RST Act allowing the respondent companies to only keep such benefits as had been already availed of by then upto 7th January, 2000 and thereafter at the rates specified and according to the provisions of the scheme as modified by the corrigendum notification. However no interest or penalty will charged from the respondent companies by the appellants on the differential amounts for the period the matter was sub judice before this Court provided the respondent companies pay the principal amount of sales tax within such time as may be specified by the appellants in this regard. 42

### Response:
1

### Explanation:
modification could take place only in the public interest. But nevertheless the right conferred was a modifiable or revocable one. If any right under the scheme is held to be unmodifiable it would be contrary to the scheme itself. Therefore even if one were to assume that the respondent companies were entitled to the benefits of the scheme on par with new units under Srl. No.1 with effect from the date of the certification of their application under clause 4(h), the right could be modified with effect from the date on which the scheme was modified. The further argument of the respondent that the subsequent notification could not be construed as a modification and would apply only to subsequent applicants is unacceptable. 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 thethrust 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 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 Industrialcounsel for the respondents additional contention is that the Screening Committee had proceeded on the basis that the sick cement units were covered under Srl. No.4 and not Srl.No.3. It is argued that such decision of the Screening Committee being final in terms of Clause 4(a) of the scheme, it was not open to the State to contend otherwise. The argument is without force. The finality given to the decision of Screening Committee in terms of Clause 4(a) is "subject to other provisions provided for in the scheme". Any decision of the Screening Committee cannot be contrary to the provisions of the scheme. Besides all that the Screening Committee has held is that the respondent companies are to be treated on par with other cement companies, with effect from the date of the subsequent notification. That is also what the appellants contend, namely that Srl.No.4(a) expressly puts sick cement units on par with new cement units under Srl.No.3.34. The respondent companies are therefore required to avail of the benefits under the scheme on the basis of the corrigendum with effect from 7.1.2000. Learned counsel for the respondent companies may be right in his contention that if a sanction is granted and an Eligibility. Certificate issued on the basis of the sanction, then having regard to the provisions of Section 4(h) the period of exemption under the sanction ought to cover the date of the certification of the application as complete under Clause 4(h). But it is again unnecessary to decide the ambit of the Screening Committees power, as the appellants have not argued that the benefits of the higher rate of exemption already availed of by the respondent companies with effect from the date of certification under clause 4(h) up to 7th January, 2000 should be taken away fromfar as M/s. J.K. synthetics is concerned, their right to obtain benefits under the scheme by reason of clause 4(b) was in any event provisional. The undertaking given by this company was to the effect that the benefits of the scheme were being availed at the risk of the company till the sanction was granted by the Screening Committee. Since no sanction has been granted to the company, the company was aware that its rights to the benefits under the scheme were conditional and that it might be called upon to meet its sales tax liabilities in the event sanction was not granted on its application.41. In such circumstances it must be open to the State Government to recover sales tax dues as it is entitled to under the RST Act allowing the respondent companies to only keep such benefits as had been already availed of by then upto 7th January, 2000 and thereafter at the rates specified and according to the provisions of the scheme as modified by the corrigendum notification. However no interest or penalty will charged from the respondent companies by the appellants on the differential amounts for the period the matter was sub judice before this Court provided the respondent companies pay the principal amount of sales tax within such time as may be specified by the appellants in this
