2007 (3) TMI 668 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Eligibility for waiver of sales tax.
2. Delay in issuing the eligibility certificate.
3. Rescheduling of the waiver period.
4. Restriction on the waiver benefit.

Summary:

Issue 1: Eligibility for waiver of sales tax
The Government of Tamil Nadu introduced an Interest-free Sales Tax Deferral Scheme in G.O.Ms.No.500, Industries (MIG-II) Department, dated 14.5.1990, to promote industrialization. The State Industries Promotion Corporation of Tamil Nadu Ltd. (SIPCOT) was authorized to issue eligibility certificates under the scheme. The petitioner applied for an eligibility certificate on 20.11.1993 for their new industrial unit and was issued the certificate on 6.12.1994, granting a waiver of sales tax for Rs.1044.21 lakhs for five years from 1.9.1993 to 31.8.1998.

Issue 2: Delay in issuing the eligibility certificate
Due to the delay in issuing the eligibility certificate, the petitioner paid sales tax from 1.9.1993 to 6.12.1994 and requested a refund, which was rejected by the revenue. The petitioner challenged this in W.P.No.1851 of 1995, resulting in a direction to the Assessing Officer to pass an order of assessment and refund the claim.

Issue 3: Rescheduling of the waiver period
SIPCOT rescheduled the waiver period from 1.11.1994 to 31.10.1999 and restricted the sales tax benefit for the period from 1.9.1998 to 31.10.1999 to the actual sales tax remitted during 1.9.1993 to 31.10.1994. The petitioner filed W.P.No.4275 of 1999 challenging this restriction.

Issue 4: Restriction on the waiver benefit
The court held that the petitioner is entitled to the maximum waiver of Rs.1044.21 lakhs without any restriction. The restriction imposed by SIPCOT was contrary to the spirit and substance of G.O.Ms.No.500, Industries (MIG-II) Department, dated 14.5.1990. The court struck down the restriction that limited the sales tax benefit for the period from 1.9.1998 to 31.10.1999 to the actual sales tax remitted during 1.9.1993 to 31.10.1994. Consequently, the order of the learned single judge was set aside, and the writ appeal was allowed.