Judgment :-

S.B. Sinha, J.

1. Leave granted.

2. Interpretation of GOMs No. 108 dated 20.05.1996 falls for our consideration in this batch of appeals which are being disposed of by this common judgment.

3. Respondents are owners of various industries. Indisputably, the Government of Andhra Pradesh in order to encourage industrialization in the entire State had been evolving various schemes in terms whereof incentives were to be provided to the entrepreneurs not only for the establishment of new units but also expansion thereof. Such incentives were being granted in various forms such as subsidy, deferment/ tax holiday, rebate in electricity charges, interest subsidy, etc.

For the aforementioned purpose, government orders were being issued from time to time since 1989. By reason of GOMs No. 498 dated 16.10.1989, the government provided investment subsidy at various rates depending upon the backwardness of different districts of the State apart from granting deferment/ tax holiday on sales tax.

4. The said GOMs No. 498 dated 16.10.1989 was followed by the GOMs No. 117 dated 17.03.1993 which was operative from 3.10.1992 to 31.03.1997.

5. Another GOMs No. 386 dated 26.09.1994 was issued by way of amendment to GOMs No. 117 dated 17.03.1993 on representations made by various entrepreneurs in terms whereof benefits were sought to be conferred on expansion/modernization. In the said GOMs various terms were defined including the term "base turnover" which is to the following effect:

"Base Turnover : the best production achieved during three years preceding the year of expansion or the maximum capacity expected to be achieved by the Industry as per the appraisal made by the Financial Institution before funding the project, whichever is higher."

6. Thereafter, GOMs No. 75 dated 14.03.1996 was issued by way of a clarification; the relevant portion whereof reads as under:

"After careful examination of the matter, Government hereby clarify that "tax deferral would be only on the amount of tax payable on additional local sales over and above the previous level of local sales before expansion. In case the local sales after expansion is less than or equal to the previous level, the actual tax liability."

7. The Government of Andhra Pradesh came up with a new industrial policy called `Target 2000 by way of GOMs No. 108 dated 20.05.1996. In this GOMs issued for enforcing the said policy, all other GOMs were mentioned except GOMs No. 75 dated 14.03.1996. Apart from the grant of subsidy upto 20% of the fixed capital not exceeding Rs. 20,00,000/-, tax holiday was declared for a period of seven years and deferment of tax for a period of fourteen years, apart from other benefits specified therein.

8. We may notice some provisions of GOMs No. 108 dated 20.05.1996 which are as under:

"4. After careful review and examination of the package of incentives and all the other connected factors, in modification of all the earlier orders, Government have decided to introduce a New Industrial Policy called "TARGET-2000" in order to accelerate Industrial Development of the State and issued it 7.00 Expansion projects:-

Existing industrial units, in eligible areas, setting up expansion project in products other than those listed in Annexure, involving enhancement of fixed capital investment by at least 25% as well as enhancement of capacity by 25% for the products of the same product-line, will be eligible for sales tax deferral or sales tax exemption for the enhanced turnover above the base turnover as defined for a period of 14 years or 7 years respectively, subject to a ceiling of 135% of additional fixed capital investment made, from the date of commencement of commercial production by the expansion project. Base turnover for this purpose shall be the best production achieved during three years preceding the year of expansion or the maximum capacity expected to be achieved by the industry as per the appraisal made by the financial institution before funding the