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Judgment
K. Chandru, J.—The petitioner is a dealer under the Tamil Nadu General Sales Tax Act, 1959. The petitioner has set-up a manufacturing
unit at the SIDCO Campus, Theni, which is classified as a backward area and persons setting up Units were eligible to avail the deferral scheme.
The petitioner made an application for availing the said scheme by an application dated 08.02.1994.
As a pre-requisite for availing the said scheme, the petitioner will have to get an Eligibility Certificate from the Tamil Nadu Industrial Investment
Corporation Ltd., (TIIC), which is the third respondent herein. The 3rd respondent/Corporation gave an Eligibility Certificate dated 27.09.1994,
granting the benefit of deferral spread out for a period of nine years as contemplated under the scheme.
Pursuant to this Eligibility Certificate, the petitioner entered into an agreement for payment of deferred sales tax by an agreement dated
07.12.1994. It was, thereafter a contention arose whether the petitioner was bound by the G.O.Ms. No. 119 dated 13.04.1994 or G.O.Ms. No.
500 dated 14.05.1990. It was the stand of the petitioner that the Department should not be allowed to enforce G.O.Ms. No. 119 dated
13.04.1994.
The Department when it sought to enforce the said G.O., the petitioner filed a writ petition being W.P. 4626 of 2002 before this Court. This
Court by an order dated 15.12.2004 without going into the merits of the case, directed the respondents to pass appropriate orders after giving
notice to the petitioner.
Accordingly, the Commercial Tax Officer - II, Theni by an detailed order dated 10.03.2005 has rejected the request of the petitioner and in the
order he observed as follows:
It was impermissible to go back on the agreement made with the Department. The objections of the dealers were not acceptable. As the G.O.Ms.
Published on 13.4.94, Eligibility certificate was obtained on 27.9.94 and the deferral period was only from 1.10.94, the dealers have to pay Bench
Mark Tax to avail IFST Deferral loan on expansion.
Therefore, the petitioner has come forward to challenge the order in his second round of litigation.
The learned Counsel for the petitioner submitted that the issue whether G.O.Ms. No. 119 was prospective or not has been squarely covered by
the judgment of the Division Bench of this Court made in W.A. No. 509 of 1994 dated 22.02.1995 relating to Thiagarajar Mills Ltd., Singanallur
v. Assistant Commissioner (CT), Central Assessment Circle I, Coimbatore and Ors. It is observed as follows:
We may also make it clear that G.O.Ms. No. 199, CT & RE. Department, dated 13.4.1994 is prospective and such of the expansion units or
diversified units which are set up after 13.4.1994 will only be governed by G.O.Ms. No. 119 dated 13.4.1994. As the expansion unit involved in
this writ appeal had come into existence long before 13.4.1994, it will not be governed by G.O.Ms. No. 119 dated 13.4.1994 and as such, its
sales tax liability has to be determined without reference to the said Government Order and only as per the G.O.Ms. No. 500 dated 14.5.1990.
Accordingly, the writ appeal is allowed and the order of the learned single Judge is set aside. The demand made by the first respondent is quashed.
The respondents are directed to determine the tax liability of the petitioner - appellant in respect of the expansion unit without reference to the
existing unit. There will be no order as to costs.
Therefore, the learned Counsel for the petitioner submits that inasmuch as his proposal was given before the order in G.O.Ms. No. 119 dated
13.04.1994 was issued, it cannot be dealt with by that Government Order. It is in this context, the learned Counsel for the petitioner submitted that
he was a bonafide dealer and should not be subjected to the conditions imposed by the new Government Order. He also submitted that the
Eligibility Certificate cannot be interfered with the Department.
On behalf of the first respondent a detailed counter affidavit dated 05.04.2008 has been filed, disputing the stand taken by the petitioner, it is
stated in paragraph 12, which reads as follows:
With regard to the averments made in Grounds of the affidavit, it is submitted that the Eligibility Certificate has been issued by the Tamil Nadu
Industrial Investment Corporation, Madras only on 27.9.94. In the G.O.Ms. No. 119/94, CT & RE Department, dt. 13.4.94, it is clearly stated
that the industry will be eligible for sales tax deferral only if in a financial year, production exceeds the base production volume which is the highest
annual production in the three years prior to expansion. When the actual production in the industry in any financial year exceeds base production
volume, then only the industry would be eligible for deferral of Sales tax for the sales made in that year in excess of the base sales volume under
TNGST Act, 1959 which is the highest of the annual sales in the last three years prior to expansion.
The question that arises for consideration in this case is that whether the Department can interfere with the Eligibility Certificate and whether the
date of the application should be taken into account for implementing the deferral. In the present case, the Eligibility Certificate came to be issued
after the Government Order was issued and the petitioner had also entered into an agreement for availing the scheme with the Department.
(i) The Deferral Scheme is a concession shown for an industry established in a backward area. The concession cannot be interpreted by this Court
as if it is part of a legislation or Rule made thereunder. In a concession given by the Department, there is no scope for this Court to interfere when
there is no scope for interpretation to find out whether an assessee is eligible for benefit under A or B Scheme.
(ii) In this case, after this Court gave a direction, the Department had taken a specific stand that the petitioner is covered by new Government
Order of 1994 and also stated that the eligibility certificate as well as commercial production commenced by the industry commenced after 1994.
Hence, there is no scope for interfering with the impugned order. This Writ Petition is therefore dismissed. No costs. Consequently, connected
Miscellaneous Petitions is dismissed.