Ramesh Ranganathan, J.

The order of the Assistant Commissioner (CT), Nalgonda dated September 17, 2009, for the tax period April to July, 2009 under the Andhra Pradesh Value Added Tax Act, 2005, calling upon the petitioner to arrange payment of the wrong adjustments of tax due, under tax deferment, for Rs. 7,90,64,705, is under challenge in this writ petition.

The petitioner, a company incorporated under the Companies Act, 1956, is a dealer on the file of the Assistant Commissioner (CT), Nalgonda. It is engaged in the business of manufacture and sale of cement in its industrial unit in Mellacheruvu Village, Nalgonda District. It initially commenced commercial production from March 23, 1998. In terms of G.O. Ms. No. 108, Industries and Commerce (IP) Department, dated May 20, 1996, issued by the Government of Andhra Pradesh, the State Level Committee issued final eligibility certificate dated November 30, 1998 allowing tax deferment for Rs. 77,37,60,980 to be availed of by the petitioner within a period of 14 years from March 23, 1998 to March 22, 2012. The petitioner, thereafter, undertook expansion of its production capacity in the year 2000 enhancing it from 1,98,000 MTs per annum to 4,95,000 MTs. per annum. Again, in terms of G.O. Ms. No. 108, the petitioner was issued final eligibility certificate dated June 6, 2000 allowing sales tax exemption (holiday) for Rs. 34,81,65,000 over a period of seven years from March 22, 2000 to March 21, 2007 on the expanded unit. The sales tax exemption was allowable subject to the condition that the petitioner achieved base production of 1,98,000 MTs per annum.

The petitioner contends that, from the inception, it has been availing of tax deferment benefit on the base production, in terms of first final eligibility certificate in respect of the original unit. The petitioner availed of tax deferment on the base production of 1,98,000 MTs per annum and tax holiday for production over and above the base production, in respect of the expanded capacity and such availment was accepted by the Commercial Taxes Department from March 22, 2000 to March 21, 2007.

While matters stood thus, the respondent issued notice dated August 24, 2009, for the period April to July, 2009 as well as for the years 2007-08 and 2008-09, informing the petitioner that they should have separately indicated the production and sale of cement referable to the original unit and the expanded unit and, in the absence of such information, being furnished, the Department was left with no option but to treat the entire production as traceable to the expanded unit. The respondent proposed to deny the benefit of tax deferment in respect of production traceable to the unexpanded plant in its entirety. In its objections filed on August 31, 2009, the petitioner contended that there being no controversy whatsoever with regard to its entitlement to claim the benefit of tax deferment in respect of production referable to the unexpanded plant, their action in claiming tax deferment in respect of the base production of 1,98,000 Mts per annum, traceable to the original unit, was legally valid. The petitioner contended that there was no requirement, in the target 2000 scheme, to dissect and furnish the production traceable to the original unit and the expanded project distinctly for claiming the benefit, that it was humanly impossible for any entrepreneur to identify the production referable to the pre-existing plant and the expanded unit and it is for this reason that the concept of base production was evolved by the State Government in the context of extension of industrial incentives. The petitioner also contended that, in the context of extension of tax holiday benefit from March 22, 2000 to March 21, 2007, the Commercial Taxes Department did not indicate segregation of production referable to the pre-existing plant and the expanded plant and if, during the said period, the production referable to the pre-existing plant, i.e., 1,98,00