2017 (2) TMI 928 - HC - VAT and Sales Tax

Benefit of concessions provided by G.O.Ms.No.500 - benefit to industrially backward Taluks - later, Instead of declaring a Taluk as a backward or most backward area, the Government decided to declare a block comprising several Taluks as backward or most backward - the Government and the Secretary to Government, by communication dated 30.09.1996, has referred to this anomaly and in order to alleviate the hardships, had directed that the units in backward Taluks which had commenced production on before 18.09.1997 will be entitled to 9 years interest free sales tax deferral. Unfortunately, the petitioner commenced his production in December 1997 and therefore, the petitioner s unit became disentitled to the benefits of 9 years interest free sales tax deferral, whereas, he was given 5 years interest free sales tax deferral - whether the petitioner who was taking steps to develop a Taluk, will be entitled for the benefit for 9 years? Held that - This writ petition was admitted in the year 2003 and more than 9 years have lapsed. After lapse of 9 years, the petitioner has paid the sales tax to a tune of ₹ 1,50,97,285/- to the Department. Thus, in effect, even without any Government Order, the petitioner has availed the benefits of the interest free deferral scheme. In the light of the above, nothing survives in this writ petition. However, there is some justification in the contention of the petitioner that after having invested so much of money on the assurance given by the Government in G.O.Ms.No.500, he cannot be suddenly denied the benefits of the said Government Order on the ground that he had not started production on 18.09.1997. Petition closed.

Summary

Issues:
1. Change in government policy affecting industrial concessions in backward areas.
2. Disentitlement of certain concessions due to change in classification of industrially backward areas.
3. Challenge to denial of benefits under G.O.Ms.No.500.
4. Conditional interim injunction granted and subsequent writ appeal.
5. Payment of sales tax and availing benefits without a government order.

Issue 1: Change in government policy affecting industrial concessions in backward areas
The case involves a challenge to a change in government policy affecting industrial concessions in backward areas. Initially, the government declared certain Taluks as industrially backward, providing concessions like interest-free sales tax deferral. However, a subsequent government decision changed the classification to blocks comprising several Taluks, affecting the entitlement to concessions.

Issue 2: Disentitlement of certain concessions due to change in classification of industrially backward areas
The petitioner, who had started steps to establish an industrial unit in a backward Taluk based on the original classification, faced disentitlement to concessions due to the change in classification. The change caused prejudice to entrepreneurs who had invested based on the assurances given under the previous government order, leading to a loss of benefits like interest-free sales tax deferral.

Issue 3: Challenge to denial of benefits under G.O.Ms.No.500
The petitioner challenged the denial of benefits under G.O.Ms.No.500, which entitled units in backward Taluks to specific concessions. Despite representations and legal challenges, the petitioner faced difficulties in availing the benefits due to the change in government policy and subsequent denials by authorities.

Issue 4: Conditional interim injunction granted and subsequent writ appeal
The petitioner obtained a conditional interim injunction in a writ petition, followed by a writ appeal challenging the same. The writ appeal was disposed of after several years, with the interim order being made final due to the respondents' inaction. The court emphasized expediting the hearing of the writ petition while closing the miscellaneous petition.

Issue 5: Payment of sales tax and availing benefits without a government order
After more than nine years, the petitioner paid a substantial amount of sales tax to the department, effectively availing benefits under the interest-free deferral scheme without a specific government order. The court acknowledged the petitioner's investment based on government assurances and observed that sudden denial of benefits was unjust, even though the petition was closed due to the petitioner already availing benefits.

In conclusion, the judgment highlighted the challenges faced by the petitioner due to a change in government policy affecting industrial concessions, leading to the denial of benefits despite investments made based on earlier assurances. The court recognized the petitioner's predicament but closed the petition acknowledging the benefits already availed by the petitioner.