IMPORTANT POINT
Circular no. G.O.Ms.No.119, dated 13th April, 1994, is binding in law on the adjudicating authority under the TNGST Act.

Headnote:(a) Interpretation of Statutes – A beneficial and promotional exemption should be construed liberally. (Para 13)
        (2011) 2 SCC 74 – Relied upon
        (b) Tamil Nadu General Sales Tax Act – Section 17A – Sales tax deferral scheme – Benchmark for availing benefit of the sales tax deferral scheme having been fixed both with reference to the production as also to the sales, it is immaterial whether the unit concerned reaches BPV or BSV earlier – In order to avail of the benefit of sales tax deferral for sales made in the year in excess of the BSV, the industry must achieve in that year the BPV, which is the highest production of the last three years prior to the expansion, for every assessment year of the total number of years, viz., 12 years, besides reaching BSV in that particular year – If for any reason the beneficiary ultimately fails to achieve the BPV during the financial year, the benefit of deferral of sales tax availed of by it on achieving BSV becomes refundable forthwith along with interest thereon – In light of the intention behind the schemes, clause 3(ii) of the G.O.Ms.No.119 cannot be construed to mean that the benefit would flow only from the date of reaching the BPV and not from the date of reaching the BSV. (Para 16)
        (c) Interpretation of statutes – If a plain meaning given to the provision for the purpose of considering as to whether the applicant had fulfilled the eligibility criteria is found to be clear, purpose and object the notification seeks to achieve must be given effect to. (Para 16)
        (2009) 2 SCC 90 – Relied upon
        (d) Administrative Law – Circulars issued by the revenue are binding on the departmental authorities – They cannot be permitted to repudiate the same on the plea that it is inconsistent with the statutory provisions or it mitigates the rigour of the law – However the law pronounced by Court on the interpretation of the circular would be binding. (Paras 18 and 22)
        (1999) 7 SCC 84; (2002) 2 SCC 127; (2004) 3 SCC 488; (2008) 13 SCC 1 – Relied upon
       Facts of the case:
        In this case the judgment of the High Court holding that the first respondent viz. M/s India Cements Ltd. is entitled to the benefit of deferral of sales tax as claimed by them under the interest free sales tax deferral scheme, introduced by the State of Tamil Nadu has been challenged.
        The question under consideration is whether the first respondent would be eligible for sales tax deferral in any financial year for the sales made in that year in excess of the base sales volume (BSV) as soon as they exceed the BSV or only when their production also exceeds the base production volume (BPV) in that year?
       Finding of the Court:
        The circular no. G.O.Ms.No.119, dated 13th April, 1994, is binding in law on the adjudicating authority under the TNGST Act.
       Result : Appeal dismissed.

JUDGMENT

D.K. Jain, J. —

1. This appeal is directed against the final judgment and order dated 22nd December, 2006 rendered by the High Court of Judicature at Madras in W.P.Nos.13697 and 13698 of 2002. By the impugned judgment, while setting aside the order dated 19th April, 2002 passed by the Taxation Special Tribunal (for short “the Tribunal”) in O.P. Nos. 322 and 351 of 2002, the High Court has held that the first respondent viz. M/s India Cements Ltd. is entitled to the benefit of deferral of sales tax as claimed by them under the interest free sales tax deferral scheme, introduced by the State of Tamil Nadu under G.O.Ms.No.119 dated 13th April, 1994 issued by the Commercial Taxes & Religious Endowments Department of the State.

2. Before we traverse the facts, which have given rise to the present appeal, in order to appreciate the issue involved, it would be expedient to refer to the relevant State Government orders/memorandum notified from time to time, in exercise of powers conferred under Section 17A of the Tamil Nadu General Sales Tax Act, 1959 (for short “the TNGST Act”) and Section 9(2) of the Central Sales Tax Act, 1956 (for short “the CST Act”).

2.1 With a view to promote industrialisation, the Government of Tamil Nadu had declared 105 taluks of the State as industrially backward for the purpose of grant of interest free sales tax loan, interest free sales tax deferral, state capital subsidy etc. In furtherance thereof and to correct regional imbalances in industrialisation, vide G.O.Ms. No.500 dated 14th May, 1990, the Government declared 30 taluks from amongst the 105 industrially backward taluks to be industrially most backward taluks, offering them further incentives. It was directed that the new industries to be set up in these 30 most backward taluks as also in the three industrial complexes of State Industries Promotion Corporation of Tamil Nadu (for short “the SIPCOT”) at three named places, in addition to the existing concessions, would be entitled to full waiver of sales-tax dues for a period of five years upto a ceiling of the total investment made in the fixed assets. It was also stipulated that existing units in these areas/complexes undertaking expansion/diversification shall also be entitled to deferral of sales tax for nine years, limited to 80% of the additional investment made in fixed assets. However, the benefit of sales tax deferral to the new units was to the full extent of the total investment made in the fixed assets. The scheme was subject to the sales tax payable on products manufactured by the capacity created by expansion/diversification units only.

2.2 Subsequently, certain clarifications were issued vide G.O.P.No.92 CT dated 22nd February, 1991 and G.O.P.No.396 dated 10th September, 1991 whereby benefit of deferral of payment of sales-tax payable was extended to all industries to be set up anywhere in Tamil Nadu having an investment of ‘100 crores and above on sale of the products manufactured by the industry for a period of twelve years from the date of commencement of production on or after 18th July, 1991 upto a ceiling of 100% of the value of fixed assets, after deducting the quantum of tax under the CST Act for the same period and subject to production of eligibility certificate to be issued by SIPCOT. By G.O.Ms.No.376, dated 27th October, 1992, in exercise of powers conferred by clause (a) of sub-section 5 of Section 8 and sub-section 2 of Section 9 of the CST Act, the Government extended the benefit of remission/deferral of tax payable under the CST Act, as similar to G.O.P.No.92 dated 22nd February 1991, to the new industries as well as to the existing industries, on the same conditions prescribed under G.O.P.No.92. These government orders were followed by another G.O.M.No.43, Industries (MIG-II) Department, dated 13th December, 1992 whereby special incentives were introduced for mega industries, subject to fulfilment of the prescribed conditions.

2.3 It appears that with a v

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Judicial Analysis

SupremeToday

2011 Supreme(SC) 439

2011 (3) Supreme 382SUPREME COURT OF INDIAD.K. Jain and H.L. Dattu, JJ. State of Tamil Nadu & Anr. — AppellantsversusIndia Cements Ltd. & Anr. — RespondentsCivil Appeal No. 4233 of 2007Decided on : 21-4-2011

IMPORTANT POINT Circular no. G.O.Ms.No.119, dated 13th April, 1994, is binding in law on the adjudicating authority under the TNGST Act.

Cases Referred (6)

Judicial Analysis

2011 (3) Supreme 382
SUPREME COURT OF INDIA
D.K. Jain and H.L. Dattu, JJ.
State of Tamil Nadu & Anr. — Appellants
versus
India Cements Ltd. & Anr. — Respondents
Civil Appeal No. 4233 of 2007
Decided on : 21-4-2011

IMPORTANT POINT
Circular no. G.O.Ms.No.119, dated 13th April, 1994, is binding in law on the adjudicating authority under the TNGST Act.