1998 (1) TMI 494 - HC - VAT and Sales Tax

Summary

Issues:
Challenge to sales tax deferment orders for expanded industrial unit, entitlement to deferment benefits for medium industrial unit, interpretation of government notification on benefits for industrial units.

Analysis:
The petitioner, a refractory bricks manufacturer, challenged sales tax deferment orders for its expanded industrial unit. The Sales Tax Officer held that while the unit was entitled to benefits under the Industrial Policy Resolution (I.P.R.) 1989 as a medium unit, deferment of tax was not permissible as per S.R.O. No. 790/90. The petitioner argued that if certified as a medium unit post-expansion, it should be entitled to deferment benefits, contrary to the narrow interpretation of the S.R.O. The Court agreed, emphasizing that once certified as a medium unit post-December 1, 1989, deferment benefits should apply. The impugned orders were quashed, and the petitioner was directed to receive deferment benefits.

The judgment delves into the interpretation of a government notification granting benefits to industrial units, specifically regarding deferred payment of sales tax. The notification specified benefits for medium/large industrial units set up after December 1, 1989, undergoing expansion based on project reports. The Court rejected the argument that medium industrial units were not entitled to benefits, emphasizing that if a unit was certified as medium post-expansion and set up after the specified date, it should receive deferment benefits. This interpretation aligned with the purpose of the notification and the certification given to the petitioner.

The Court's analysis focused on the eligibility of the petitioner as a medium industrial unit post-expansion and the entitlement to deferment benefits. Despite the Sales Tax Officer's initial denial of deferment based on S.R.O. No. 790/90, the Court emphasized that the petitioner, certified as a medium unit, should receive deferment benefits as part of the I.P.R. benefits. By considering all necessary documents and certifying the petitioner as a medium industrial unit, the Court concluded that deferment of tax was a rightful benefit. Consequently, the impugned orders were quashed, and the petitioner was directed to receive the deferment of payment of tax as one of the benefits available.