2009 (7) TMI 751 - SC - VAT and Sales Tax

Whether the entrepreneurs had fulfilled the conditions laid down in the said G.O.s or not? Held that - Appeal dismissed. Although the word modification may not be held to be expressly repealing the earlier notifications, indisputably, the State intended to depart from the conditions laid down in the earlier G.Os. If the condition of local sale, thus, had not been incorporated in the G.Os., we are of the opinion that no case has been made out for incorporating the same by reference or otherwise. Furthermore, even in equity, the State cannot be permitted to alter its stand as pursuant to or in furtherance of the representation made by it the entrepreneurs had not collected tax from its consumers to which they were otherwise entitled to. Mr. Venkatanarayanan also is not correct in contending that in a situation of this nature, the High Court should not have entertained the writ applications directly from the orders of assessment.As the Tribunal had already expressed its views in the matter, it has rightly been contended that appeal to the appellate authority as also the Tribunal would have been an idle formality.

Issues Involved:
1. Interpretation of G.O. Ms. No. 108 dated May 20, 1996.
2. Whether the new policy should be read with earlier G.Os.
3. Definition and application of "base turnover."
4. High Court's jurisdiction in entertaining writ applications directly against orders of assessment.

Detailed Analysis:

1. Interpretation of G.O. Ms. No. 108 dated May 20, 1996:
The central issue revolves around the interpretation of G.O. Ms. No. 108 dated May 20, 1996, which introduced a new industrial policy called "Target 2000" to accelerate industrial development in Andhra Pradesh. The G.O. provided incentives such as subsidies, tax holidays, and deferment of tax for new and expanding industries. The respondents, who are owners of various industries, applied for and were granted eligibility certificates for the expansion of their factories under this G.O., allowing them to defer sales tax to the extent of 135% of their capital investment.

2. Whether the new policy should be read with earlier G.Os:
The State argued that G.O. Ms. No. 108 should be read in conjunction with earlier G.Os. However, the court held that G.O. Ms. No. 108 is an independent and complete code by itself, not requiring reference to earlier G.Os. The court emphasized that the new policy was introduced to replace the old schemes and should be interpreted on its own terms. The term "modification" used in G.O. Ms. No. 108 was interpreted to mean a change that introduces new elements into the details but leaves the general purpose intact.

3. Definition and application of "base turnover":
The term "base turnover" was a significant point of contention. The court explained that "base turnover" in G.O. Ms. No. 108 refers to the best "production achieved" during the three years preceding the year of expansion or the "maximum capacity expected to be achieved" by the industry, as appraised by financial institutions. The court clarified that "base turnover" refers to the turnover of the quantity in goods and not its monetary value. This interpretation was crucial in determining the eligibility for tax deferment benefits. The court noted that the G.O. did not mention the amount of sales tax paid in earlier years or the maintenance of local sales as relevant factors for the scheme's enforcement.

4. High Court's jurisdiction in entertaining writ applications directly against orders of assessment:
The State contended that the High Court should not have entertained writ applications directly against the orders of assessment, arguing that the entrepreneurs should have exhausted their remedies under the Andhra Pradesh General Sales Tax Act. However, the court held that since the Tribunal had already expressed its views on the matter, appealing to the appellate authority or the Tribunal would have been an idle formality. Therefore, the High Court's decision to entertain the writ applications was justified.

Conclusion:
The Supreme Court upheld the High Court's interpretation of G.O. Ms. No. 108, affirming that it should be read independently and not in conjunction with earlier G.Os. The court emphasized that "base turnover" refers to the quantity of goods produced rather than their monetary value. The court also supported the High Court's jurisdiction in entertaining writ applications directly against the orders of assessment. Consequently, the civil appeals arising out of SLP (C) Nos. 18795, 19104, 21482 of 2006, 489, 12440, and 12151 of 2007 were dismissed, while the appeals filed by Suryachandra Paper Mills Limited were allowed with costs.

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