STATE OF GUJARAT & Ors. v. ESSAR OIL LIMITED & Anr.

Judgment

2 S.C.R. 1127 STATE OF GUJARAT & OTHERS v. ESSAR OIL LIMITED AND ANOTHER (Civil Appeal No. 599 of 2012) JANUARY 17, 2012 [ASOK KUMAR GANGULY AND JAGDISH SINGH KHEHAR, JJ.] A B Sales Tax - Tax incentive scheme - For new industrial units - Units seeking benefit under the scheme were required C to commence commercial production within a particular time frame - Respondent sought to set up a new Oil refinery project - Pipelines for the project were required to be laid through forest land including national park and sanctuary area - Respondent could not obtain requisite permission/licence D from the State Government for laying down the pipelines in view of injunction/restraint orders passed by the High Court. in certain PILs - High Court orders subsequently set aside by Supreme Court and requisite permission/licence thereafter granted to respondent - Respondent commenced E commercial production, albeit after the time frame stipulated under the incentive scheme - It filed writ petition contending that the delay in commencement of commercial production was on account of the injunction granted by the High Court; that this situation continued till respondent was granted F permission/licence pursuant to the judgment of Supreme Court, and therefore it was entitled to get benefit of exclusion of the intervening period for calculating the time limit for commencement of commercial production - High Court excluded the intervening period and granted respondent the benefit of the incentive scheme on the principle of restitution G and on the ground that respondent could not be made to lose benefit under the scheme, for an act of Court - Justification of - Held: Not justified - Principle of restitution was not applicable against the appellant-State Government since it 1127 H - 1128 SUPREME COURT REPORTS [2012] 2 S.C.R. A was nobody's case that it received any unjust benefit or any unjust enrichment in view of stay orders passed by the High Court on the P/Ls - Order passed by High Court in the P/Ls was overturned by Supreme Court on a different interpretation of s.29 of, fhe WPA - In case of a mere erroneous judgment 8 of a Court the principle of "actus curiae" cannot be invoked - A mere mistake or error committed by Court cannot be a ground for restitution - The exercise undertaken by the High Court in the impugned judgment by directing various adjustments which virtually re-wrote the State's exemption C scheme, was an exercise which was neither warranted in Jaw nor supported by precedents - There was no question of equity - Wildlife Protection Act - ss. 29 and 35. D Doctrines - Doctrine of Restitution - Principles and applicability of - Discussed - Held: The concept of restitution is basically founded on the idea that when a decree is reversed, Jaw imposes an obligation on the party who received an unjust benefit of the erroneous decree to restitute the other party for what the other party Jost during the period the erroneous decree was in operation - The Court while granting E restitution is required to restore the parties as far as possible · to their same position as they were in at the time when the Court by its erroneous action displaced them - A person who has conferred a benefit upon another in compliance with a judgment or whose property has been taken thereunder, is F entitled to restitution if the judgment is reversed or set-aside, unless restitution would be inequitable. Maxims - and applicability of. "actus curiae neminem gravabit" - Concept G Taxation - Sa/es tax - Exception/Exemption provision - Interpretation of - Held: The principle that in case of ambiguity, a taxing statute should be construed in favour of the assessee, does not apply to the construction of an exception or an exempting provision, as the same have to be H construed strictly - Further a person invoking an exception STATE OF GUJARAT & ORS. v. ESSAR.OIL LTD 1129 AND ANR. or an exemption provision to relieve him of the tax liability A must establish clearly that he is covered by the said provision and in case of doubt or ambiguity, benefit of it must go to the State - An exemption is a stand alone process - Either an . industry claiming exemption comes within it or it does· not. B In 1995, the appellant-State Government introduced a Capital Investment Incentive Scheme which envisaged grant of Sales Tax incentives by way of sales tax exemption/ deferment for new industrial units. Units seeking benefit of sales tax exemption /deferment under C the scheme were required to commence commercial production within a particular time frame, i.e. upto 15-8- 2003. Respondent no.1-Essar, which sought to set up a 100% export oriented unit for refining of petroleum products, had opted for the sales-tax deferment scheme. It had filed application for right of way over 15.49 hectares D of forest land for laying pipelines for establishment of the said oil Refinery Project. The said 15.49 hectares of forest land included 8.79 hectares of Marine National Park and Sanctuary. Permission under Section 2 of the Forest Conservation Act ("FCA") was required for the entire E 15.49 hectares, which was granted to respondent no.1. However, respondent no.1 also required permission of the State Government under the Wildlife Protection Act ("WPA") for the said 8.79 hectares of Marine National Park F and Sanctuary. But, in view of the orders of the High Court dated 13.07.2000/ 03.08.2000 in certain Public Interest Litigations (Plls), whereby the State Government was restrained from granting further permission under the WPA, Respondent no.1-Essar was not given G permission to lay down pipelines by the State Government. ,. Respondent no.1-Essar challenged the said orders of the High Court before this Court. This Court initially stayed the High Court order insofar as Essar was H '1130 SUPREME COURT REPORTS [2012] 2 S.C.R. A concerned and ultimately set aside the judgment of High Court and directed the State Government to issue authorization to Essar under Sections 29 and 35 of the Wild Life (Protection) Act after disapproving the interpretation placed by the High Court on the provisions B of the Wild Life (Protection) Act, 1972. Consequently, on 27-2-2004, Essar was given permission for laying pipeline iin the National Marine Park/Sanctuary area and ~hereafter, on 26-11-2006, respondent no.1-Essar commenced commercial production. c Respondent no.1 filed writ petition before the High Court contending that the reason for delay in commencement of commercial production was on account of the injunction granted by the High Court on 13.07.2000 /03.08.2000; that this situation continued till D 27.02.2004, when pursuant to the judgmentof this Court, IEssar was granted requisite permission under the Wildlife Protection Act; and therefore Essar was entitled to get l:>enefit of the exclusion of the said intervening period of from 13.07.2000 to 27.02.2004 in calculating the time limit E for commencement of commercial production for !Purpose of availing benefit under the said tax deferment scheme. The High Court excluded the aforesaid intervening F period and granted respondent no.1 the benefit of the said sales tax incentive scheme on two basic line of reasoning- that the respondents were entitled to the benefit of sales tax waiver scheme firstly on the principle of restitution and secondly, that the respondents could G not be made to lose benefit under the sales tax waiver scheme, for an act of Court. Hence the present appeal. Allowing the appeal, the Court HELD: 1.1. The concept of restitution is basically H founded on the idea that when a decree is reversed, law STATE OF GUJARAT & ORS. v. ESSAR OIL LTD 1131 AND ANR. imposes an obligation on the party who received an A ·unjust benefit of the erroneous decree to restitute the other party for what the other party has lost during the period the erroneous decree was in operation. Therefore, the Court while granting restitution is required to restore the parties as far as possible to their same position as 8 they were in at the time when the Court by its erroneous action displaced them. [Para 60] [1154-C-E]

1.2. The concept of restitution is virtually a common law principle and it is a remedy against unjust enrichment . or unjust benefit. The core of the concept lies in the C conscience of the Court which prevents a party from retaining money or some benefit derived from another which he has received by way of an erroneous decree of Court. Such remedy in English Law is generally different from a remedy in contract or in tort and falls D within a third category of common law remedy which is called quasi contract or restitution. [Para 62] [1155-8-C]

1.3. The obligation to restitute lies on the person or the authority that has received unjust enrichment or E unjust benefit. [Para 63] [1155-D]

1.4. A person is enriched if he has received a benefit and similarly a person is unjustly enriched if the retention of the benefit would be unjust. Now the question is what constitutes a benefit. A person confers benefit upon another if he gives to the other possession of or some other interest in money, land, chattels, or performs services beneficial to or at the request of the other, satisfies a debt or a dl, Jty of the other or in a way adds to the other's security or advantage. He confers a benefit G not only where he adds to the property of another but also where he saves the other from expense or loss. Thus the word "benefit" therefore denotes any form of advantage. Ordinarily in cases of restitution if there is a benefit to one, there is a corresponding loss to other and H F 1132 SUPREME COURT REPORTS [2012] 2 S.C.R. A 8 in such cases; the benefiting party is also under a duty to give to the losing party, the amount by which he has been enriched. A person who has conferred a benefit upon another in compliance with a judgment or whose property has been taken thereunder, is entitled to restitution if the judgment is reversed or set-aside, unless restitution would be inequitable. [Paras 64, 65 and 66) [1155-E-H; 1156-A-B]

1.5. Equity demands that if one party has not been unjustly enriched, no order of recovery can be made C against that party. Other situation would be when a party acquires benefits lawfully, which are not conferred by the party claiming restitution, Court cannot order restitution. [Para 67) [1156-C-D] D