1998 (11) TMI 636 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Eligibility for Sales Tax Waiver
2. Definition and Classification of "New Industry"
3. Application of Res Judicata
4. Interpretation of Government Orders and Incentive Schemes

Detailed Analysis:

1. Eligibility for Sales Tax Waiver:
The petitioner, a public limited company engaged in sugar manufacturing, applied for an eligibility certificate for a new unit at Tirumandankudi under G.O. Ms. No. 500 dated May 14, 1990, which offers full waiver of sales tax for five years for new industries in most backward taluks. The first respondent rejected the application, stating sugar mills are not eligible for the incentive on purchase tax. The court quashed this decision and directed reconsideration in light of the Division Bench's decision in Sulochana Cotton Spinning Mills (P) Ltd. v. State of Tamil Nadu.

2. Definition and Classification of "New Industry":
The petitioner argued that the new unit at Tirumandankudi is a new industry, not an expansion of the existing unit at Vadapathimangalam. The first respondent contended that the unit is not a new industry but an expansion. The court examined the Government Order, which does not differentiate based on the company's existing status but focuses on the establishment of new units in most backward taluks. The court found that the new unit at Tirumandankudi is a self-contained new sugar mill with its own plant, machinery, and independent infrastructure, thus qualifying as a new industry under the Government Order.

3. Application of Res Judicata:
The petitioner argued that the principle of res judicata applies, preventing the first respondent from reopening the matter. The court clarified that the Division Bench's earlier decision did not conclusively determine the petitioner's entitlement but directed a fresh consideration. Thus, res judicata did not apply to prevent the first respondent from reconsidering the issue.

4. Interpretation of Government Orders and Incentive Schemes:
The court emphasized the purpose of G.O. Ms. No. 500, which is to promote industrialization in backward areas by offering incentives. The Government Order should be interpreted liberally to advance its objective. The court found that the first respondent erred in referring to previous Government Orders and not adhering to the specific provisions of G.O. Ms. No. 500, which repeals conflicting earlier orders.

Conclusion:
The court held that the new sugar factory at Tirumandankudi is a new industry entitled to the benefits under G.O. Ms. No. 500 dated May 14, 1990. The court quashed the first respondent's order dated November 8, 1996, and directed the issuance of an eligibility certificate to the petitioner's new unit, granting full waiver of sales tax for five years. The writ petition was allowed, with no order as to costs.