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TMI Blog2005 (2) TMI 510X X X X Extracts X X X X X X X X Extracts X X X X ..... tries Companies (Special Provisions) Act, 1985 (referred to hereafter as "SICA"). Ultimately on 28th September, 1993 a scheme was sanctioned by the Board of Industrial and Financial Reconstruction (hereinafter referred to as "BIFR") for rehabilitation of the appellant. Under the heading, "Cost of the scheme and Means of financing", the BIFR noted the requirement of funds for the rehabilitation of the appellant and the means of finance. As far as the requirements of funds are concerned it was assessed at Rs. 1,491 lakhs. To meet this requirement, the means of finance from three sources were identified, namely: 1. Interest from secured loans Rs. 5,68,00,000 2. Promoters and new some items rights of issue of equity capital Rs. 3,00,00,000 3. Deferment of sales tax by Govt. of Tamil Nadu 3. Clause (B) of the Scheme under the heading "Reliefs and Rs. 6,23,00,000 Total Rs. 14,91,00,000 Concessions" required the State Government to "grant interest-free deferment of sales tax payable to Tamil Nadu Government on sales of furfural and IMFS during the 6 months period from January 1993 to June 1993 (Rs. 623 lakhs approx). The deferred amount of sales tax as above shall be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arties, the BIFR sanctioned the enhanced cost of rehabilitation of Rs. 2,114 lakhs. It also stated that the additional cost of Rs. 623 lakhs would be financed out of sales tax deferment of Rs. 623 lakhs. 8.. Consequent to this amendment of the scheme, an amendment notification was published by the State Government on 3rd February, 1995 seeking to amend the notification dated 4th March, 1994. The amendment notification stated that for the expression "for period of one year from the 1st October, 1993, subject to the condition that the deferral tax shall be paid over a period of five years in equal instalments after a moratorium of one year that is from 1st October, 1995 to 30th September, 2000" in the earlier notification, the following expression shall be substituted namely: "for a period of one year from the 1st October, 1993, subject to the following conditions namely: (i) The deferred sum of Rs. 1,246 lakhs shall be paid over a period of five years in equal instalments from 1st October, 1995 to 30th September, 2000 after availing a moratorium of one year (1st October 1994 to 30th September, 1995); and (ii) The amount of tax deferred shall not exceed the fixed deferred amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble on the deferred payment. It was made clear that the appellant was liable to pay penal interest at 24 per cent per annum on the outstanding arrears till the date of the payment of the arrears under section 24(3) of the Tamil Nadu General Sales Tax Act, 1959. 13.. The appellant did not challenge this order. The subsequent demand for interest for the period of November 1, 1996 to November 10, 1996 together with the earlier demands, totalling Rs. 10,00,09,892 was cleared by the appellant on 10th January, 1997 and 14th March, 1997 by two separate payments of Rs. 4,94,20,141 and Rs. 5,05,89,751 amounting to the exact figure of 10,00,09,892. 14. Subsequently however the appellant claimed that the payment of Rs. 5,05,89,751 made by it on 14th March, 2003 was not towards the demanded amount but towards the regular tax for February, 1997. This was rejected by the respondent No. 1 and on 1st April, 1997, the appellant sought for permission from the respondent to pay the penal interest of Rs. 4.37 crores in three equal instalments. 15.. Without waiting for a response between 9th April, 1997 and 4th May, 1998, the appellant filed original petitions before the Tamil Nadu Taxation Special ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, neither the Scheme nor the first notification had granted an unlimited sales tax deferral as claimed by the appellant. The original scheme envisaged a deferment of sales tax of 6 crores 23 lakhs. This limit was subsequently raised to Rs. 1,246 lakhs at the request of the appellant and on the recommendation of the IDBI. There was as such no question of retrospective operation of the amendment notification nor violation of any scheme sanctioned by the BIFR. In any event, it is submitted that section 15 of the Tamil Nadu General Sales Tax Act, 1959 would apply to section 17-A permitting the State Government to undo what it may have the power to do under that section. It is also submitted that the appellant had collected the entire sales tax from its customers for the period October 1, 1993 to September 30, 1994. It was entitled to the deferment of the sales tax only to the extent it was required to meet the cost of rehabilitation as sanctioned by the BIFR. It is further submitted that the appellant in any event, on its own accord, sought release from the provisions of the SICA and at least from the period subsequent to such release, it should have cleared all outstanding tax liabil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... We see no reason to interfere with this concurrent finding of fact. The sales tax deferral was part of the scheme and was granted as a measure of financial assistance to meet a projected need for the purposes of the appellant being rehabilitated. Both the figures were firm. It has been conceded by the learned counsel for the appellant that a scheme for rehabilitation under the SICA must necessarily contain firm figures. Unless the figure had been fixed by the Scheme when framed in 1993, it would in our opinion be illogical to ask for an enhanced limit of need to be sanctioned and for a consequent enhancement of the financial assistance on August 18, 1994. It is true that the first notification only mentioned the period of deferral and did not specify the amount, but the background in which the notification was issued clearly showed that the State Government had been required by BIFR to render assistance of Rs. 623 lakhs by way of sales tax deferral. The object and purpose of the notification was to fulfil that obligation cast on the State Government under section 19(3) of SICA. It is improbable that the State Government, not being required to do so, would in an act of unprecedente ..... X X X X Extracts X X X X X X X X Extracts X X X X
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