2002 (3) TMI 905 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Legality of Government Orders G.O. Ms. Nos. 18 and 31.
2. Retrospective effect of notifications.
3. Compliance with the BIFR scheme.
4. Bona fides of the petitioner company.

Detailed Analysis:

1. Legality of Government Orders G.O. Ms. Nos. 18 and 31:
The petitioner challenged the Government Orders G.O. Ms. Nos. 18 and 31, arguing that they imposed a ceiling on tax deferral which was not present in the original BIFR scheme. The court noted that the BIFR had initially fixed the ceiling of the tax deferral at Rs. 623 lakhs for six months, which was later extended to one year with a ceiling of Rs. 1,246 lakhs. The court found that the subsequent Government Orders were consistent with the BIFR scheme and did not introduce any new limitations but merely clarified the existing ones. The court concluded that the Government Orders were within the powers of the government and not vitiated by illegality.

2. Retrospective Effect of Notifications:
The petitioner argued that the notifications had an impermissible retrospective effect, which was not allowed under the Tamil Nadu General Sales Tax Act. The court distinguished between Section 17 and Section 17A of the Act, noting that Section 17A allowed for the deferral of tax payments and did not wipe out the tax liability. The court held that the clarifications made by the Government Orders were not retrospective modifications but necessary clarifications of the existing scheme. Therefore, the argument that the notifications were impermissible retrospectively was rejected.

3. Compliance with the BIFR Scheme:
The petitioner claimed that the Government Orders were inconsistent with the BIFR scheme. The court examined the BIFR orders and found that the BIFR had indeed amended the scheme to include the ceiling of Rs. 1,246 lakhs for the tax deferral. The court noted that the petitioner had initially sought this amount and that the BIFR had approved it. Therefore, the Government Orders were in compliance with the BIFR scheme and not contrary to it.

4. Bona Fides of the Petitioner Company:
The court scrutinized the actions of the petitioner company and found a lack of bona fides. It noted that the petitioner had initially agreed to the ceiling of Rs. 1,246 lakhs and had later tried to take advantage of the omission of this figure in the Government Orders. The court highlighted the inconsistent and misleading letters sent by the petitioner, which demonstrated an attempt to avoid tax liabilities. The court concluded that the petitioner's actions were not bona fide and that the writ petitions lacked merit.

Conclusion:
The court dismissed the writ petitions, holding that the Government Orders G.O. Ms. Nos. 18 and 31 were legal, did not have an impermissible retrospective effect, were in compliance with the BIFR scheme, and that the petitioner company lacked bona fides. The petitions were dismissed without any orders as to costs.