R. JAYASIMHA BABU, J.

The petitioner is a sugar mill which went into commercial production in January, 1989. By that time it went into commercial production, the scheme concerning the grant of concessions and benefits under the State's sales tax for new sugar mills had undergone a change.

The order of the Government in G.O.Ms. No. 989, Industries (MID 1) Department dated September 1, 1988, brought about the change in the pre-existing scheme. Under the scheme as it existed prior to 1988, the Government had been granting waiver of purchase tax for a period of five years from the date of commencement of commercial production of the sugar mills. It had granted such waiver to sugar mills in the co-operative sector as also in the private sector; the first of such orders having been made in G.O.Ms. No. 1294 Industries Department, dated October 24, 1975 the benefit of that order being confined to sugar factories in co-operative and public sectors.

In that order of the year 1975, a reference had been made to recommendations of the committee that had been constituted by the Government of India to go into the question of viability of sugar factories of 1, 250 tons crush per day (TCD) established at a high cost, which included the recommendation for remission of purchase tax on cane. That order stated that the Government had accepted the recommendations and had decided to grant relief in the form of annual subsidy equivalent to the quantum of purchase tax on cane due from those sugar factories, for a period of five years from the date of their going into production.

The Government's policy with regard to the licensing of new sugar factories having been subsequently changed and sugar mills in the private sector also allowed to come up, a private sugar mill known as "Ponni Sugars and Chemicals Limited", was established and that mill after commencing commercial production, sought similar subsidy for a period of five years. Government initially granted it for a period of two years, but subsequently revised to five years. That was done in the year 1984. Three years later, in 1987, similar subsidy was granted to another sugar mill in the private sector, Bannari Amman Sugar Mills Ltd., after it started commercial production.

In the Government Order of September 1, 1988 those three orders, viz., of the years 1975, 1984 and 1987 were referred to. It was thereafter stated that the Government had reviewed the existing scheme of grant of subsidy of purchase tax with respect to the new sugar mills in the context of new sugar mills which have been licensed in the seventh plan period which would be coming up both in co-operative and in the private sectors in the next two years. It went on to state that for general industrial development, the Government have sanctioned a scheme of interest-free sales tax loan for an initial period with certain ceilings on loans, both annual and for the entire period of assistance. It then referred to the fact that the scheme was being modified to one of tax deferral and that in order to bring about unity in the type of assistance given to the industrial units, the purchase tax subsidy scheme for the sugar industries be modified to one of deferral of purchase tax. Para 2 of the order of September 1, 1988 sets out the new scheme thus :

"In partial modification of the orders issued in G.Os. read above, the Government direct that the purchase tax payable by newly established sugar mills be deferred for a period of four years, subject to modifications as announced from time to time, from the date of commencement of production, subject to the following ceiling :

---------------------------------------------------------------------- Capacity of the Ceiling for a year Ceiling for four mills years ---------------------------------------------------------------------- (Rs. in lakhs)

1, 250/1, 500 TCD 70.00 240.00 2, 500 TCD 125.00 440.00 ----------------------------------------------------------------------

The above ceiling wi