2005 Supreme(SC) 216

2005(2) Supreme 375
Supreme Court of India
(From Madras High Court)
Mrs. Ruma Pal, Arijit Pasayat & C.K. Thakker, JJ.
Southern Agrifurane Industries Ltd. —Appellant
versus
Commercial Tax Officer & Ors. —Respondents
Civil Appeal Nos. 8607-8610 of 2002
Decided on 8-2-2005
Counsel for the Parties :
For the Appellant : A.K. Ganguli, Sr. Advocate, S.K. Bagaria, K.K. Mani, N. Prasad and K.B. Sandeep, Advocates.
For the Respondents : S. Balakrishnan, Sr. Advocate, Subramonium Prasad, S.N. Jha and R. Gopalakrishnan, Advocates.

Headnote:Tamil Nadu General Sales Tax Act, 1959—Sections 17A(2) and 24(3)—Sick Industries Companies (Special Provisions) Act, 1985—Sections 18(1), (4), (8) r/w 19(3) and 32—Power on the State Government to notify deferred payment of tax for certain industries including sick units—Interest is not payable on deferred payment of tax provided conditions laid down were satisfied—A scheme was sanctioned by BIFR for rehabilitation of sick appellant unit in September, 1993—Rehabilitation measures proved effective and appellant’s not worth became positive by September, 1995—Whether appellant was liable to pay interest on balance of sales tax dues for period 1.10.93 to 30.9.94 u/s 24(3) of Tamil Nadu Sales Tax Act or was it exempt from so under Section 17A(2) of the Act? Yes.

       Held : Both the Tribunal and the High Court have found as a fact that the scheme which was sanctioned by the BIFR initially on 28.7.1993 provided for a limit on the quantum of Sales Tax deferral namely Rs. 623 lacs. We see no reason to interfere with this concurrent finding fact. The sales tax deferral was part of the scheme and was granted as a measure of financial assistance to meet a projected need for the purposes of the appellant being rehabilitated. Both the figures were firm. It has been conceded by the learned counsel for the appellant that a scheme for rehabilitation under the SICA must necessarily contain firm figures. Unless the figure had been fixed by the Scheme when framed in 1993, it would in our opinion be illogical to ask for an enhanced limit of need to be sanctioned and for a consequent enhancement of the financial assistance on 18.8.1994. It is true that the first notification only mentioned the period of deferral and did not specify the amount, but the background in which the notification was issued clearly showed that the State Government had been required by BIFR to render assistance of Rs. 623 lakhs by way of sales tax deferral. The object and purpose of the notification was to fulfill that obligation cast on the State Government under Section 19(3) of SICA. It is improbable that the State Government, not being required to do so, would in an act of unprecedented generosity deprive its exchequer of funds to which it was otherwise entitled. The State’s understanding was that the original limit of Rs. 623 lakhs needed revision upwards pursuant to the revision in the scheme. The increase in the outer limit could be justified as far as the State was concerned to double the original figure sanctioned, since the period of deferral was doubled from 6 months to a year. This was apparently how the appellant also understood the position. It did not protest initially against the amendment notification when it was published in February 1995. Again its response to the demand in 1996 of the Sales Tax Authorities was not that the claim was in violation of the scheme or the notifications but was a plea for grant of instalments which plea was acceded to by the State Government on 31.12.1996 in exercise of its powers under Section 24(1). In compliance with the order dated 31.12.1996, the payment was in fact made by the appellant. As such the amended notification was indeed an amendment of the first notification dated 28.7.1993 consequent upon the revised sanction of the BIFR on 18.8.1994 enhancing the need and assistance limits and it was not seeking to retrospectively deny any benefit already conferred on the appellant. We therefore do not need to go into the further question whether the High Court was right in importing Section 15 of the Tamil Nadu General Clauses Act into Section 17A. Finally, the appellant was entitled to the relief of sales tax deferral only to the extent it was necessary to take it out of “sickness” i.e. on rehabilitation. That is so provided under Section 17A(2). Anything in excess of such rehabilitation would not be covered by Section 17A but would fall under Section 24(3) of the Tamil Nadu General Sales Tax Act, 1959. The BIFR had fixed the quantum for rehabilitation at Rs. 2114 lakhs. The Rs. 1246 lakhs of deferral of sales tax admittedly met this need. Any further tax deferral therefore would only be a benefit conferred on a non-sick company and be permissible under Section 24(1) in which event the appellant would be liable to pay interest under Section 24(3) as held by the High Court. (Paras 22 to 24)