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2019 (3) TMI 1480 - HC - VAT and Sales TaxBenefit of free sales tax deferral scheme - deferral towards the sale of scrap - whether the deferral would be limited only to the particular product, i.e., sheets or would it also include to scrap? - Held that - This issue was settled by a judgment of this Court, in COMMERCIAL TAX OFFICER, THIRUPPARANGUNDRAM ASSESSMENT CIRCLE & OTHERS Vs. THIAGARAJAR MILLS LTD 2001 (12) TMI 859 - MADRAS HIGH COURT , stating that the object of G.O.P.No.92, dated 22/2/1991, is to promote industrialization, within in the State of Tamil Nadu and that it would be only in consonance with the spirit of the Government Order that the benefit of deferral of sales tax is extended on the sale of waste and scrap. This Court, therefore, held that expression product found in the G.O., must be given a wider meaning to include waste and scrap, to sub-serve the object of the scheme of the incentive. This issue has been answered, in favor of the industry, which has set up its unit, in accordance with the Government orders. The appellant is having its manufacturing unit in its very same place. The appellant is manufacturing steel sheets. Scrap is a by-product. The Hon ble Supreme Court and this Court have repeatedly held that the turnover by sale of by-product would also be entitled to the benefit of deferral scheme. Benefit is being given to the industry which has been set up in a remote place in accordance with the government order - The technical objection raised by the appellant therefore, cannot be sustained. In the facts of this very case, the issue stands governed by the order, dated 13/9/2006, made in W.P.No.6754 of 2005, whereby the order, dated 11/5/2004, rejecting the application has been set aside by this Court. The authorities were therefore, duty bound to grant the deferral. In fact, the authorities have actually committed contempt of the order of this Court - appeal allowed.
Issues Involved:
1. Denial of deferral of sales tax on turnover for the years 2001-02, 2002-03, and 2003-04. 2. Eligibility and scope of the sales tax deferral scheme, particularly regarding the inclusion of by-products like scrap. 3. Compliance with the eligibility certificate issued by SIPCOT and subsequent amendments. 4. Interpretation of relevant Government Orders and judicial precedents. Detailed Analysis: 1. Denial of Deferral of Sales Tax: The appellant challenged the denial of deferral of sales tax on turnovers of ?8,12,27,823/-, ?14,15,36,795, and ?9,26,82,244/- for the years 2001-02, 2002-03, and 2003-04, respectively. The learned Single Judge had refused to accept the appellant's case, leading to the current writ appeals. 2. Eligibility and Scope of Sales Tax Deferral Scheme: The Government of Tamil Nadu, through G.O.Ms.No.500, Industries (MIG – II) Department, dated 14/5/1990, and G.O.P.No.92, Commercial Taxes and Religious Endowments, dated 22/2/1991, granted a nine-year deferral of sales tax for new industries in 75 backward Taluks. The eligibility certificate issued by SIPCOT on 10/4/2001 stated that the appellant was eligible for deferral of sales tax not exceeding ?1521.17 lakhs for nine years from 1/7/1998 to 30/6/2007, later rescheduled to 1/4/2001 to 31/3/2010. 3. Inclusion of By-Products like Scrap: The appellant sought clarification on whether the deferral would include by-products like scrap, referencing the judgment in COMMERCIAL TAX OFFICER, THIRUPPARANGUNDRAM ASSESSMENT CIRCLE & OTHERS Vs. THIAGARAJAR MILLS LTD {(2004) 134 STC 58 (Mad)}, which held that the term "product" should include waste and scrap to promote industrialization. The Hon'ble Supreme Court in ITC BHADRACHALAM PAPER BOARDS LTD., Vs. STATE OF ANDHRA PRADESH {126 STC 541} also supported the inclusion of by-products under such schemes. 4. Compliance with Eligibility Certificate: Despite the High Court's order in W.P.No.6754 of 2005, which directed SIPCOT to reconsider the inclusion of scrap in the eligibility certificate, the assessing authority refused to grant the deferral for the sale of scrap. The learned Single Judge's reasoning, that the eligibility certificate did not include scrap and could not be reviewed by the court, was found to be contrary to the earlier High Court order and judicial precedents. Conclusion: The Court, in the instant writ appeals, found that the appellant was entitled to the deferral of sales tax on the sale of scrap. The authorities were duty-bound to grant the deferral as per the High Court's earlier order and the judicial precedents. The technical objections raised by the respondents were not sustained. The writ appeals were allowed, and the appellant was granted the deferral of sales tax on the sale of scrap for the specified years.
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