1986 (7) TMI 391 - HC - VAT and Sales Tax

Summary

Issues:
- Interpretation of exemption from sales tax under Andhra Pradesh General Sales Tax Act, 1957 for a company established in a scheduled area.
- Validity of exemption granted to the company for five years from the commencement of production.

Analysis:
The judgment by the High Court of Andhra Pradesh pertains to a writ petition filed by a company, Someswara Cement and Chemicals Limited, challenging the liability to pay sales tax for five years from the date of commencement of production, which was March 17, 1983. The company had set up a cement factory in a tribal village in a scheduled area and invested Rs. 5.9 crores for the same. The State Government initially granted exemptions through notifications under section 9 of the Andhra Pradesh General Sales Tax Act, 1957, for units set up in scheduled areas after December 17, 1976, exempting them from sales tax for five years. However, the State later amended the exemption criteria through G.O. Ms. No. 302 on March 2, 1982, limiting it to industrial units with a total capital investment not exceeding one crore rupees.

The State Government argued that the exemption granted earlier was no longer applicable to the company after the amendment in G.O. Ms. No. 302. They relied on legal precedents to support their stance. The court, however, analyzed the situation and concluded that the company had an accrued right to the exemption under the original notification, which was not affected by the subsequent amendment. Since the company had commenced production on March 17, 1983, they were entitled to the exemption from sales tax under G.O. 606 dated April 9, 1981. The court found no merit in the State's arguments and allowed the writ petition in favor of the company, granting them the exemption from sales tax for the specified period.

The judgment emphasizes the importance of upholding accrued rights under legal notifications and highlights the significance of specific exemption criteria set by the government for industries in scheduled areas. It clarifies that subsequent amendments should not affect accrued rights unless explicitly stated. The court's decision in this case reaffirms the company's entitlement to the exemption as per the original notification, safeguarding their legitimate expectations based on the government's industrial promotion schemes in scheduled areas.