Sree Kaderi Ambal Mills Ltd. vs Secretary to Government, Industries Department, Chennai and Others

Mrs. Chitra Venkataraman, J.—The petitioner has sought for issuance of a writ of certiorarified mandamus to quash the proceedings of the second respondent dated May 14, 2008 and to direct the first and second respondents, namely, the Government and the SIPCOT, to amend the eligibility certificate issued for Interest Free Sales Tax Deferral Scheme by fixing the base production volume and base sales volume as per the petitioner''s representation dated January 10, 2008. The petitioner, who is manufacturing cotton and synthetic yarn, went in for the Interest Free Deferral Scheme for a period of nine years in respect of the expanded unit. By proceedings dated June 18, 2002, the second respondent granted the eligibility certificate, granting deferral of sales tax not exceeding Rs. 512.22 lakhs for nine years from January 1, 2001 to December 31, 2009. The repayment schedule commenced from January 1, 2010 to December 31, 2018. Paragraph 5.3 of the certificate stipulated that the petitioner would be eligible for the deferral of sales tax on the increased volume of production/sale. For the purpose of determining the increased volume of production/sale, the base figure would be the highest of the volume/production and sales in any one of the years during the last three years. Till the petitioner reached the bench mark, the petitioner would have to continue to pay the tax and the liability in excess of the production and sale specified above, would qualify for deferral. Accordingly the highest production/sales achieved by the company prior to the proposed expansion in the last three years was fixed at 50,95,084 kgs. of cotton and synthetic yarn and Rs. 3,882.23 lakhs relating to the year 1997-98. The petitioner furnished the production capacity and sales turnover for the period 1998-99 and 2000-01 and requested the second respondent to re-fix the production capacity at 41,76,554 kgs. and the sales value at Rs. 3,280.16. On August 6, 2002, the second respondent passed an order, re-scheduling the eligibility period as from June 1, 2002 to May 31, 2011 and the sales tax benefit for the period January 1, 2010 to May 31, 2011 shall be restricted to actual sales tax remitted during the period January 1, 2001 to May 31, 2002.

It is seen from the papers filed before this court that the petitioner made further representations on January 27, 2004, March 5, 2004 and April 24, 2004, requesting amendment of the base production volume. However, the second respondent rejected the same in its proceedings dated May 5, 2004, citing G.O. Ms. No. 119, Commercial Taxes and Religious Endowment Department dated April 13, 1994, that the base production volume cannot be amended.

The representations of the petitioner reveal that the petitioner sought for an exclusion of the export turnover as well as the turnover relating to the consignment turnover to be excluded from the sales turnover, so that the benefit of fixing the sales turnover is restricted to the actual taxable turnover.

Be that as it may, the petitioner, confronted by the letter dated May 5, 2004, once again made a representation before the Government in its letter dated January 10, 2008, wherein the petitioner pointed out to the representation made to correct the incorrectly fixed base production volume as well as the base sales volume and that SIPCOT, had merely deducted the export sales turnover from the already fixed base sales volume, but omitting to deduct the consignments sales turnover and depot sales turnover effected outside the States. The petitioner further pointed out that as regards the production turnover, considering the change in the variety in the yarn manufactured, the base figures in respect of production as well as sales, required a change. While making the representation before the Industries Department, the petitioner had also marked a copy to the second respondent herein. However, on May 14, 2008, the second respondent passed an order, referring to the letter from the Industries Department dated March 5, 2008, that the petitioner''s request for amendment to the base production volume in the eligibility certificate could not be considered. Aggrieved by the same, the present writ petition has been filed.

On notice; the second respondent has filed a counter and additional counter, wherein, referring to the averments, in paragraphs 6 and 8 of the additional affidavit filed by the petitioner, it specifically stated in paragraph 5 that in respect of the similar request made by M/s. Tamil Nadu Newsprint and Papers Ltd., for amendment in the eligibility certificate, the same was placed before the High Level Joint Meeting of Industries Department, Commercial Taxes Department, Finance. Department, SIPCOT and the assessee. Based on the deliberation before the High Level Committee, the eligibility certificate was amended. As far as the present case of the petitioner is concerned, the request made originally for amendment was granted to the petitioner as regards the base sales volume and base production volume for domestic sales for the year 1998-99. Since the petitioner''s request had already been complied with, the present writ petition is not maintainable.

Based on the above averment in the additional counter filed by the second respondent, learned counsel appearing for the petitioner submits that going by the averment in paragraph 5 of the additional counter that the decision had to come from the High Level Committee, the plea of the petitioner should have been placed before the High Level Joint Meeting and not before the second respondent. Hence the decision, per se, made by the second respondent, merits to be set aside by this court. He further pointed out that the petitioner''s request, for amendment both as regards the base production volume as well as base sales volume, was rejected without even adverting to the facts which necessitated the amendment. Thus going by the statement in paragraph 5 of the additional counter-affidavit by the second respondent, the proper authority to take a decision is the High Level Joint Committee, as had been done in the case of M/s. Tamil Nadu Newsprint and Papers Ltd. Hence the learned counsel appearing for the petitioner submitted that the order impugned has to be set aside.

I agree with the said submission of the learned counsel appearing for the petitioner. Considering the fact that the prayer of the petitioner is for amendment of the eligibility certificate in fixing the base level production volume and sales value under the stated circumstances of the petitioner undertaking manufacture of finest variety of yarn as against the coarse variety originally manufactured and with the application pending before the Government for its consideration, it is not open to the second respondent to pass an order, that too without assigning any reason.

In the circumstances, taking note of the course adopted by the second respondent to the similarly placed assessee, who had sought for an amendment in the eligibility certificate and in the context of the representation made by the petitioner before the Government, I have no hesitation in setting aside the order passed by the second respondent. Accordingly, the order passed by the second respondent stands set aside and the first respondent is hereby directed to place the matter before the High Level Joint Committee consisting the Industries Department, Commercial Taxes Department, Finance Department, SIPCOT and the second respondent and afford an opportunity of personal hearing to the petitioner to state its case before the Committee, which shall consider the same and pass orders in accordance with law within a period of twelve weeks from the date of receipt of a copy of the order. Considering the fact that the petitioner has made the representation as early as January 10, 2008, the petitioner is directed to make a fresh representation, enclosing all the documents and the copy of the representation dated January 10, 2008 before the first respondent.