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TMI Blog2013 (9) TMI 36X X X X Extracts X X X X X X X X Extracts X X X X ..... sales tax of Rs. 14,15,36,795/- being the turnover relating to sale of steel scrap made by the petitioner in their factory located at SIPCOT, Irungattukottai. 3. The third writ petition (W.P.No.18275 of 2006) challenges the order dated 31.3.2006 so far as denying deferral sales tax of Rs. 9.26,82,244/- being the turnover relating to sale of steel scrap made by the petitioner in their factory located at SIPCOT, Irungattukottai. 4. All the three writ petitions were admitted on 19.4.2006. Pending writ petitions, this court granted an interim stay on the basis of the order passed by this court relating to CTO, Thiruparankundram Assessment Circle and others Vs. Thiagarajar Mills Ltd. reported in 2004 (134) STC 58 and also the judgment of the Supreme Court in ITC Batrachalam Vs. State of A.P. reported in (2002) 126 STC 541 interpreting the similar government order in Andhra Pradesh. 5. On notice from this court, on behalf of the first respondent, a common counter affidavit, dated 10.10.2007 has been filed. On behalf of the third respondent SIPCOT, a common counter affidavit dated 8.2.2012 has also been filed. 6. The case of the petitioner company was that they have set up a factory ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sand five hundred and twenty one lakhs and seventeen thousands only) interest free for NINE YEARS from the month in which the holder's unit commenced its commercial production i.e. From 1.7.1998 to 30.6.2007. 4.The actual shall however be the least of the amounts mentioned in 4.1 and 4.2 below : 4.1(a)Actual sales tax liability on account of General Sales Tax, Central Sales Tax, additional Salex Tax, Surcharge and Additional Surcharge liability accruing in favour of the Government during the period of deferral on the sale of finished goods manufactured by the unit. 4.2.100% of the value of initial gross fixed assets i.e. Rs. 1521.17 lakhs (Rupees One thousand five hundred and twenty one lakhs and seventeen thousands only). ..... 6. The deferral scheme will be applicable to the unit/company only as long as it manufactures products for which the E.C has been issued. If the unit/company fails to manufacture the product for which the E.C has been issued or manufactures any other goods under the guise of the products of which the certificate has been issued or if the Commercial Tax Dept., is of the opinion that the unit/company is not manufacturing the product for which the E.C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rge, Additional Surcharge, Additional Sales tax and Central Sales Tax to be deferred shall relate to the tax on the sale of the products manufactured by the New units in Tamil Nadu on or after 1.7.98." 10. The petitioner company thereafter on getting doubts regarding the clauses in the agreement, asked for clarification from the third respondent SIPCOT by forwarding the letter dated 20.6.2002. They wanted the SIPCOT to inform the scope of the existing eligibility certificate dated 10.4.2001 issued by them in their letter. After referring to the agreement, they had stated as follows: "....While so, doubts have been expressed at the level of our assessing authority as to whether we can lawfully avail the benefit of deferral of sales tax on the sale of iron and steel scraps effected by our unit to various manufactures of various other automobile components who use the iron and steel scraps as raw material. We are anxious that there should not be any irregularity on our part in the availment of deferral on the sale of iron and steel scraps. ..... ...We wish to submit the scrap emerges as a marketable by-product in our industrial activity. There are industrial consumers ready ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ending the benefit of amendment for the entire period of deferral as per existing eligibility certificate." 14. They submitted a return in Form A-1 under the TNGST Act for the year 2003-2004. The first respondent by proceedings, dated 28.12.2005 had issued a notice to the petitioner. Apart from pointing out other aspects, in the same notice he informed the petitioner as follows : "The dealers have claimed deferral facility for the sales of scrap amounting to Rs. 14,06,35,035.00. But deferral facility can be allowed for the manufactured goods only. Therefore the turnover of Rs. 14,06,35,035.00 cannot be treated as covered by deferral scheme." 15. The petitioner company sent a reply with reference to the scrap sale by reply dated 15.2.2006 and in paragraph 4, they took the following stand which is as follows: "4) Scrap Sales: Rs. 14,06,35,035/- In this regard, we would like to state that basically scrap is generated only out of manufacturing activity and hence it forms part and parcel of production activity only though it is a by-product. Basically deferral facility was extended to the manufacturing unit those situated in the back ward area irrespective of the product they manu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stand. Hence the remedy by way of an appeal is an illusory. It was contended that the eligibility certificate was issued pursuant to the order of the Government in G.O.Ms.No.500, Industries Department, dated 14.5.1990 and G.O.P.No.92, Commercial Taxes and Religious Endowments Department, dated 22.2.1991. G.O.P.N.92, using the term "products manufactured" came to be interpreted by the division bench of this court in Thiagarajar Mills Ltd.'s case (cited supra) so as to include the benefit of deferral or waiver even for waste or scrap emerged as by-product in the unit. 21.The Supreme Court vide its judgment in ITC Bhadrachalam Paper Boards Ltd. Vs. State of A.P. Reported in (2002) 126 STC 541 held that the industrial waste emerged as by-product is also to be considered as a product of that industry. It was further claimed that the deferral of sales tax has been fixed at Rs. 1521.17 lakhs. The term used "initial" will have to have the meaning that the deferral of sales tax fixed is with respect to initial gross fixed assets and that will increase the value of the fixed assets. No additional amount can be claimed as deferral. The petitioner had not claimed any additional deferral ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bhadrachalam Paper Board Ltd.'s cas in support of the said order. The said decision since reported in (2007) 6 VST 527 (Mad) [JBM Sungwoo Ltd. Vs. State Industries Promotion Corporation of Tamil Nadu Ltd.]. In the operative portion of the order it was stated as follows: "In the light of the above, the writ petition succeeds and will stand allowed. The impugned order of the first respondent dated May 11, 2004 is hereby quashed and the first respondent is directed to re-consider the steel scrap produced in the writ petitioner's industry as coming within the meaning of the word "product" so as to enjoy the eligibility certificate as per section 4(1)(a) of the certificate dated April 10,2001 in accordance with the law laid down herein and accord all the necessary benefits arising out of the same. This exercise shall be done within four weeks from the date of receipt of a copy of his order....." (Emphasis added) 24. Even after the direction, the contention raised by the third respondent SIPCOT as projected by Ms. Narmada Sampath was that there is no warrant for expanding the scope of the eligibility certificate. Once it is allowed, it may give rise to several chain reactions. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uced during the manufacturing of goods. Having sought for clarification and failed in their attempt, they cannot now make use of this court to seek to expand the scope of the eligibility certificate. The eligibility certificate once granted cannot be reviewed by this court under any circumstances as it is only the beneficial scheme for deferral. It is not the case of the petitioner that tax is levied on a different basis. On the other hand, the liability to pay the tax was accepted. It was only the deferral of tax payment as concession that was obtained by the petitioner is now sought to be revised. The eligibility certificate followed by an agreement reached between the parties cannot be reopened at the instance of the petitioner that too sitting under Article 226 of the Constitution. In different circumstances, the common sense meaning of certain products can mean different things and difference places especially in the context of deferral scheme. 28. Under Section 4-A of the U.P. Trade Tax Act, a soft drink company claimed eligibility certificate for deferral payment. The eligibility certificate defined the financial limit for fixed capital investment for availing deferrals. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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