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TMI Blog2006 (12) TMI 462X X X X Extracts X X X X X X X X Extracts X X X X ..... nd the existing unit was subsequently sold to a third party, is the issue that arises for our consideration in W. P. Nos. 37042, 40030, 40031 and 44733 of 2002 and 3230, 3231, 3232, 3233, 3234 and 21162 of 2003. II. GOVERNMENT ORDERS THAT ARE RELEVANT TO DECIDE THE CONTROVERSIES Before touching the facts and circumstances pertaining to these two batches of writ petitions, it is apt to refer the Government Orders which are relevant to decide the controversies referred to above, based on which, both the petitioners, viz., India Cements and Hindustan Motors claim the benefit under the deferral of sales tax in the case of India Cements and waiver of sales tax in the case of Hindustan Motors. The Government of Tamil Nadu, with a view to promote industrialisation, introduced an Interest-free Sales Tax Deferral Scheme in G. O. Ms. No. 500, Industries (MIG-II) Department, dated May 14, 1990, as per which the State Industries Promotion Corporation of Tamil Nadu Ltd., the second respondent herein (in short, SIPCOT ) is the authorised agency to receive applications, sanction and disburse for medium and major industries and also to assess the eligibility of a new industry and issue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... litan Development Authority, the scheme of interest-free sales tax loan/deferral ordered in the Government order first, third and fourth read above is modified as follows: (i) For the existing units undertaking expansion or diversification, deferral of sales tax will be given for nine years and the total amount thus given shall not exceed 80 per cent of the additional investment made in fixed assets. (ii) For the new units, the total amount of deferral of sales tax will be given for nine years to the full extent of the total investment made in fixed assets. (b) The interest-free sales tax deferral scheme is extended to the expansion (Part-I) as well as to the starting of new industries (Part-II) in the other areas also, where this scheme was not in vogue hitherto. The deferral of sales tax for the industries in these areas will be for five years subject to a maximum of 60 per cent of the total investment made in fixed assets in the case of new industries and 50 per cent of the additional investment in fixed assets made in the case of expansion/diversification of the existing industries. (c) As a gesture to the industries to be set up in any part of Tamil Nadu with an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e eligibility certificate issued by the authority. The deferred instalments shall be payable by the assessed units after the completion of the period of deferral together with the sales tax of the current year, without any interest thereon. In case the unit avails the complete deferral/waiver benefit before the completion of specified deferment period of five years or nine years, as the case may be, the unit has to pay the normal sales tax immediately after the date of full availment of eligible deferral amount. The assessee of the unit for which the sales tax has been waived will start paying the current sales tax dues after the comple tion of the waiver period or immediately after the full availment of eligible waiver amount, whichever is earlier. However, the deferred amount of sales tax for five years or nine years, as the case may be, has to be paid after the completion of the deferral period along with the current dues, i.e., in the case of deferral of nine years the amount deferred in the first year being payable along with the sales tax due in the 10th year, the amount deferred in the second year being payable along with the sales tax dues in the 11th year and so on. 10. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... um and major industries. In the same G. O. P. No. 92, Commercial Taxes and Religious Endowments, dated February 22, 1991, in respect of the existing industries in the abovesaid most backward taluks and in three industrial complexes, the Government granted remission of sales tax on the sale of products manufactured by the capacity created by expansion/diversification only for a period of five years from the date of commencement of production on or after May 14, 1990 subject to the ceiling of the total investment made in fixed assets under expansion/diversification subject to the production of eligibility certificate issued by the General Manager, District Industries Centre in the case of small-scale industries and by the SIPCOT in the case of medium and major industries and it is made clear that such remission shall be granted for only one expansion or diversification of the existing unit, if carried out in the same taluk where the original project is located. Similarly, by the same G. O. P. No. 92, Commercial Taxes and Religious Endowments, dated February 22, 1991, the Government granted deferment of payment of sales tax payable by new industries in 75 backward taluks annexed th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same period subject to the production of eligibility certificate issued by the General Manager, District Industries Centre in the case of small-scale industries and by the SIPCOT in the case of medium and major industries and on condition that the tax so deferred shall be paid after the completion of the deferral period along with the tax assessed for that year and that the deferral of sales tax shall be eligible for only one expansion/diversification of the existing unit, if carried out in the same taluk where the original project is located. Thereafter, by notification in G. O. P. No. 396, Commercial Taxes and Religious Endowments, dated September 10, 1991, the Government in exercise of the powers conferred by sub-section (1) of section 17A of the TNGST Act granted deferral of payment of tax payable by any industry having an investment of Rs. 100 crores and above to be set up anywhere in Tamil Nadu on the sale of the products manufactured by the industry for a period of twelve years from the date of commencement of production on or after July 18, 1991 up to a ceiling of 100 per cent of the value of fixed assets after deducting the quantum of tax under the CST Act for the same pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... les tax. (iii) It may be prescribed that the assessing officers must keep a close watch over the performance of the industry and foreclose the scheme and enforce the recovery of the tax assessed for all the years covered by the scheme if the monthly returns or check of accounts during assessment or otherwise show that the industry has stopped production in excess of the permitted period. (iv) Special arrangements may be made in the offices of the Commissioner of Commercial Taxes and Deputy Commissioners to ensure that the relief given in each case is entirely in terms of the eligibility certificate issued, that the terms and conditions are complied with and recoveries when due, strictly enforced. (v) The benefit of deferral of sales tax may be restricted to diversification only where the end-products can be distinguished from the products of the old unit. (emphasis(1) supplied) Then, the Government, by G. O. Ms. No. 119, Commercial Taxes and Religious Endowments Department, dated April 13, 1994, in order to protect the revenue and also to increase the production level of industries which propose to avail the concession of deferral of sales tax, imposed certain conditio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... epartment before the expansion, it was considered that the above conditions, i.e., fixing of base production volume and base sales volume may be insisted in all industries seeking the benefits of deferral of sales tax to their taking up of expansion projects. The Special Commissioner and Commissioner of Commercial Taxes, Madras has now reported that while issuing eligibility certificate for expansion cases, SIPCOT alone adds a clause that past revenue before the expansion should be protected as other organisations, particularly District Industries Centre, do not seem to be aware of this system and issue very open-ended eligibility certificates, which often cause problems to the Commercial Taxes Department, especially when some industries tend to take on more and more of the manufacture in the expanded units and decrease it in the old units. Accordingly, Commissioner of Commercial Taxes, for the reason stated above, has recommended that the principles laid down for Ashok Leyland Limited, referred to in Government Letter Ms. No. 113, Industries dated March 15, 1993, may be adopted as general principles for all expansion cases and therefore he has suggested certain conditions. 3.. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... March 4, 1997 and September 24, 1997 proposed to set up an expanded unit at Dalavoi village, Sendurai taluk to avail the benefit of Sales tax Deferral Scheme under G. O. Ms. No. 119, Commercial Taxes and Religious Endowments Department, dated April 13, 1994 and addressed to the SIPCOT for the issue of eligibility certificate and made an application to that effect in prescribed form. The SIPCOT issued an eligibility certificate under Interest-free Sales Tax Deferral Scheme/Expansion on February 13, 1998 which reads as follows: STATE INDUSTRIES PROMOTION CORPORATION OF TAMIL NADU LIMITED, 19A, RUKMANI LAKSHMIPATHY ROAD, EGMORE, Chennai 600 008 Eligibility Certificate Under IFST Deferral Scheme Expn. Eligibility Certificate No.: 4/XII/D/E. Date of issue: 13-2-1998 This eligibility certificate is hereby granted to M/s. The India Cements Ltd., located at Dalavoi Village, Sendurai Taluk, Perambalur District, manufacturing cement under the new Interest-free Sales Tax Deferral Scheme of the Government of Tamil Nadu. 2.. Subject to the conditions mentioned in the sales tax deferral scheme and those mentioned hereinafter, the holder of this certificate shall be ent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1.4.2008 31.3.2009 1.4.2020 31.3.2021 1.4.2009 31.5.2009 1.4.2021 31.5.2021 5.2. The unit shall enter into an agreement with the Assistant Commissioner (Commercial Taxes) concerned as per terms and conditions stipulated by that department. 5.3. The company is eligible for deferral of sales tax only on the increased volume of production/sale. For the purpose of determining the increased volume of production, the base figure would be the highest of the volume of production/sale in the company in any one of the years during the last 3 years. Till reaching the volume of production/ sale specified earlier the company would continue to pay tax and any liability in excess of the production/sale specified above alone will be eligible for deferment. The highest production/sales achieved by the company prior to the proposed expansion/diversification in the last three years is: Portland cement production in lakh tonnes 25.86 (95-96)/ S.T.O. Rs. 72,882 lakhs (1996-97). Production details: Cement plant Location Quantity in lakh tonnes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lity certificate and the connected Government Orders will result in withdrawal of deferral entirely. Sd/- for Managing Director Sd/- for Managing Director (emphasis(1) supplied) The SIPCOT, by letter dated August 13, 1999, issued an amendment to the eligibility certificate to the effect that M/s. India Cements would be eligible for deferral of sales tax to the tune of Rs. 270.21 crores instead of Rs. 205.13 crores, as referred to in paras 3 and 4.2 of the eligibility certificate dated February 13, 1998. Pursuant to the said eligibility certificate dated February 13, 1998, as amended by letter dated August 13, 1999, and in compliance with clause 5.2 thereof, M/s. India Cements entered into an agreement with the Zonal Assistant Commissioner, Commercial Taxes on April 12, 2000 specifically agreeing to comply with BPV/BSV so that it will be eligible for the deferral of sales tax to the tune of Rs. 270.21 crores. The agreement dated April 12, 2000 reads as under: DEED OF AGREEMENT FOR DEEMED PAYMENT OF DEFERRED SALES TAX-DEEMED RELOANING AND RECOVERY OF LOAN This deed of agreement is made at Chennai on this twelfth day of April, two thousand between the Govern ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he products manufactured by them in their premises shall be deemed to have been paid to the assessing authority and an identical amount shall be treated as Government loan. (a) In the case of new industries, it shall be for the full tax subject to ceiling specified in eligibility certificate. (b) In the case of expansion/diversification: (i) the company is eligible for deferral of sales tax on the increased volume of production. For the purpose of determining the increased volume of production, the base figure shall be the highest of the volume of production/sales in the company in any one of the year during the last 3 years period preceding the date of commencement of deferral. (ii) the company has to go on paying the tax to the level of base volume of production/sales and once it reaches this level, then any further tax liability will be eligible for deferral of sales tax. (iii) based on the above, the holder of this eligibility certificate will be eligible for deferral of sales tax not exceeding Rs. 270.21 crores (rupees two hundred and seventy crores and twenty one lakhs only) interest-free for twelve years from the month in which the holder's unit commenced ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e party of second part shall maintain the fixed assets in good condition so that the market value of the assets is maintained from time to time. 7.. The party of second part shall furnish to the party of first part the audited balance sheet and profit and loss account certified by the chartered accountant within six months of the close of the financial year. 8.. Tax, etc., or penalty levied/leviable on taxable turnover suppressions (for the purpose of this clause the term 'turnover suppressions' means the taxable turnovers not shown or not declared as such in the monthly returns filed by the party of the second part) are not eligible for the loan scheme. 9. If the new/expanded/diversification unit availing the loan scheme stopped normal production for a continuous period of 6 months or more except in conditions of 'force majeure' the entire Government loan outstanding will be recovered in one lump sum from the party of the second part and the loan scheme concession will cease thereafter. 10 (a) Party of the second part certifies that: (i) Promoters/partners/directors have not made any default to commercial tax department. (ii) that they have no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e TNGST Act and CST Act as stated hereunder: Deferral period Financial Year of Repayment 1.6.1997 31.3.1998 1.6.2009 31.3.2010 1.4.1998 31.3.1999 1.4.2010 31.3.2011 1.4.1999 31.3.2000 1.4.2011 31.3.2012 1.4.2000 31.3.2001 1.4.2012 31.3.2013 1.4.2001 31.3.2002 1.4.2013 31.3.2014 1.4.2002 31.3.2003 1.4.2014 31.3.2015 1.4.2003 31.3.2004 1.4.2015 31.3.2016 1.4.2004 31.3.2005 1.4.2016 31.3.2017 1.4.2005 31.3.2006 1.4.2017 31.3.2018 1.4.2006 31.3.2007 1.4.2018 31.3.2019 1.4.2007 31.3.2008 1.4.2019 31.3.2020 1.4.2008 31.3.2009 1.4.2020 31.3.2021 1.4.2009 31.5.2009 1.4.2021 31.5.2021 In the said proceed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble only for the unit at Dalavoi and the deferral could not be stretched to include the production of other units and accordingly, demanded M/s. India Cements to pay a sum of Rs. 5,322.14 lakhs which had been availed in excess as deferral of sales tax, as detailed below: Year Deferral of taxes eligible (for expansion unit only) Taxes availed as deferral for all units Excess of taxes availed as deferral 1997-98 (Rupees in lakhs) 692.52 1146 453.48 1998-99 2131.00 3177 1046.00 1999-00 2750.00 4057 1307.00 2000-01 2808.00 4375 1567.00 2001-02 1669.34 2618 948.66 Total 5322.14 In the above-said notice dated March 19, 2002, it was also informed that M/s. India ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... riod from 1998-99 as detailed below: (Rs. in lakhs) 1998-1999 . . . Rs. 1,289.67 1999-2000 . . . Rs. 1,555.08 2000-2001 . . . Rs. 1,484.47 2001-2002 . . . Rs. 1,544.29 Total . . . Rs. 5,873.51 In the said revised notice dated March 22, 2002 it is also made clear that the eligibility certificate for deferral of sales tax was granted to the unit located at Dalavoi village only as an expansion unit, but M/s. India Cements was availing deferral for the existing units at Sankar Nagar and Sankari also which is not in order and the benefit of deferral of sales tax was given only to the expansion unit and hence, M/s. India Cements should pay the taxes relating to the units at Sankar Nagar and Sankari for the whole year. Aggrieved by the said demand notice dated March 22, 2002, M/s. India Cements filed O. P. No. 322 of 2002 before the Tamil Nadu Taxation Special Tribunal, the fourth respondent herein, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rvient to the statutory notifications which gain the status of the authority of law. In any event, no tax can be levied or collected without any authority of law as per article 265 of the Constitution of India, more so after granting the benefit of deferral of sales tax scheme by statutory notifications. On the other hand, the Revenue justified the demand made in the notice dated March 22, 2002 as well as the validity of para 5.3 of the eligibility certificate dated February 13, 1998 on all fours, particularly placing reliance on the decision of division Bench of this court dated December 5, 2001 in Madras Cements Ltd. v. State of Tamil Nadu [W. P. No. 18199 of 1999] which arose out of the order of the Taxation Special Tribunal dated November 5, 1999(1) in O.P. No. 1347 and 1348 of 1999 wherein the Tribunal incidentally interpreted Clause 3(ii) of G. O. Ms. No. 119 dated April 13, 1994 as follows: This Government order makes it clear that even if the production in the industry has reached the base production volume, the industry would be eligible for deferral of sales tax for 'sales' made in that year only if they reach the base sale volume. In other words, when ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the M/s. India Cements Ltd., having availed the benefit based on the eligibility certificate as per the terms and conditions of the consequential agreement dated April 12, 2000 is bound to comply with the qualifications prescribed in the eligibility certificate dated February 13, 1998 and also the conditions in the agreement dated April 12, 2000 and cannot go back and contend that para 5.3 of the eligibility certificate and the corresponding terms of the agreement dated April 12, 2000, which required M/s. India Cements Ltd., to achieve the base production volume/base sales volume are ultra vires the deferral of sales tax scheme declared by the Government by statutory notifications. Aggrieved by the same, M/s. India Cements Ltd., has come forward with W. P. Nos. 13697 and 13698 of 2002. Pending the above writ petitions, M/s. India Cements Ltd., also filed W. M. P. No. 44918 of 2003 to raise additional grounds that the impugned demand, towards excessive deferral sales tax availed by M/s. India Cements Ltd., dated March 22, 2002 is contrary to the circular dated May 1, 2000 issued by the Principal Commissioner and Commissioner of Sales Tax, inasmuch as the first respondent is bound ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f these petitions, are as under: M/s. Hindustan Motors Ltd., is a registered company. It has two divisions in Tamil Nadu, one at Hosur wherein it manufactures powershift transmissions for earth moving equipments. The second division is at Adhigathur where Hindustan Motors Ltd., is manufacturing Lancer cars in technical collaboration with M/s. Mitsubishi Motor Corporation, Japan. M/s. Hindustan Motors Ltd., set up a completely new unit for the manufacture of Lancer cars. Earlier, Hindustan Motors Ltd., had another division at Hosur in Tamil Nadu manufacturing earth moving equipments which was subsequently sold to M/s. Caterpillar India Pvt. Ltd., on February 9, 2001 due to financial crunch in India. 1. Here italicised. Lured by the Interest-free Sales Tax Waiver Scheme, M/s. Hindustan Motors Ltd., made an application to SIPCOT on October 29, 1998 seeking the benefit of waiver of sales tax for car unit and the SIPCOT also granted eligibility certificate on December 22, 1998. The eligibility certificate dated December 22, 1998 issued to M/s. Hindustan Motors Ltd., reads as under: STATE INDUSTRIES PROMOTION CORPORATION OF TAMIL NADU LIMITED, 19A, RUKMANI LAKSHMIPATHY RO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... periodical reports to the Commercial Tax Department on the extent of sales and sales tax waiver availed from time to time, during the period of operation as defined in para 5. 7. After expiry of the period of operation, as defined under para 5, the company shall immediately on further sales, start remitting the applicable sales tax to the Commercial Tax Department 8. The unit shall enter into an agreement with the Assistant Commissioner (Commercial Taxes) concerned on the terms and conditions stipulated by that department. 9. Sales tax waiver benefit is subject to the sales tax payable on products manufactured by the capacity created by the expansion scheme at Adhigathur village, Kadambathur Block, Thiruvallur District only. 10. The company is eligible for waiver of sales tax only on the increased volume of production/sale. For the purpose of determining the increased volume of production, the base figure would be the highest of the volume of production/sale in the company in any one of the year during the last 3 years. Till reaching the volume of production/sale specified earlier the company would continue to pay tax and any liability in excess of the production/sale s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , Chennai Eligibility Certificate No. 44/E/W/5 years dated 22.12.98 waiver. This deed of agreement is made at Chennai on the 23rd day of March, Two Thousand between the Government of Tamil Nadu represented by the Assistant Commissioner of Commercial Taxes, Zone VII of the one part; (1)Here italicised. And Thiru/Tvl. HINDUSTAN MOTORS LTD. Having their registered office at 6.B, GST Road, Alandur, Chennai 600 016 represented by Tvl. G. Shyam Sundar, Vice President on the other part; both parties herein shall include their respective successors/legal heirs, legal representatives, executors, administrators, nominees and assignees. Whereas Tvl. HINDUSTAN MOTORS LTD., have (a) established a new industrial unit at Adhigathur Post Office, Kadambathur 631 203, Thiruvallur and have commenced production of their products at the new unit. (b) undertaken expansion/diversification of the existing unit at Adhigathur Post Office, Kadambathur 631 203, Thiruvallur and have commenced production of their products at this unit. Whereas Government have, by their order Ms. No. 500 Industries (MIG. II) Department dated May 14, 1990 directed that the new Industries to be set up in the 30 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the close of the financial year. 8.. The party of the first part reserves the right to cancel or modify any of the above conditions at any time during the period of waiver without any notice. 9.. Any indulgence in malpractice of goods being disguided as manufactured goods then the waiver scheme could be foreclosed by Commercial Taxes Department and the tax assessed for all the years covered by the scheme be recovered in one lump sum. The total cost of fixed assets is Rs. 8428.94 lacs. The sales tax waiver period will be as follows: Waiver period: (1) 1998-1999 (1.10.1998) (1.01.1999) (2) 1999-2000 (3) 2000-2001 (4) 2001-2002 (5) 2002-2003 (30.9.2003) 10.. During the period of waiver, the party of the second part shall not collect any tax covered by waiver scheme. 11.. In case of default of any of the conditions mentioned in paras 3, 4, 5, 6 and 7 the waiver thus granted may be withdrawn for the period for which the same was granted. In such case of withdrawal of waiver, the tax and the interest and any penalty due thereon shall have such authority and be payable in such manner as specified under section 24(2) and such amount is also liable for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dant caution, also filed O.P. No. 866 of 2002 before the Tamil Nadu Taxation Special Tribunal to quash paragraph 10 of the eligibility certificate dated December 22, 1998 as ultra vires the notification in G. O. P. No. 396, dated September 10, 1991 issued under section 17(4) of the TNGST Act. In the meanwhile, a notice dated September 12, 2002 was served on M/s. Hindustan Motors Ltd., stating that M/s. Hindustan Motors Ltd., was granted the benefit of waiver of sales tax for the manufacture of passenger cars based on the eligibility certificate granted by the SIPCOT dated December 22, 1998 pursuant to which M/s. Hindustan Motors Ltd., also entered into an agreement with the Assistant Commissioner, Commercial Taxes on March 23, 2000, and both the eligibility certificate and the agreement provide that M/s. Hindustan Motors Ltd., would not be eligible for waiver in case of any violation of conditions prescribed in the eligibility certificate and the agreement. Alleging that M/s. Hindustan Motors Ltd., did not comply with the conditions imposed in para 10 of the eligibility certificate and therefore they were not entitled to the waiver of sales tax, the Revenue raised a demand for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns of the Sales Tax Act when the holder of the eligibility certificate dated December 22, 1998 failed to comply with the conditions prescribed in the eligibility certificate dated December 22, 1998 and the terms and conditions of the consequential agreement. The abovesaid O.P. Nos. 867, 965, 966 and 1095 of 2002 were heard along with O.P. No. 866 of 2002 by the Taxation Special Tribunal, which, by order dated January 24, 2003, held that since the eligibility certificate dated December 22, 1998 issued to M/s. Hindustan Motors Ltd., and the terms and conditions incorporated in the agreement dated March 23, 2000 entered into between M/s. Hindustan Motors Ltd., and the Zonal Assistant Commissioner are only pursuant to paragraph 3(v) in G. O. Ms. No. 119, Commercial Taxes and Religious Endowments Department, dated April 13, 1994, the same is valid in law, and accordingly, dismissed the above original petitions. Challenging the above order of the Taxation Special Tribunal, the petitioner filed W. P. Nos. 3230 to 3234 of 2003. Citing the pendency of all the writ petitions filed by M/s. Hindustan Motors Ltd., referred to above and also interim orders obtained thereunder, pursuant to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 13, 1994 are all subservient to the statutory rights conferred under the said statutory notifications made in G. O. P. No. 92, Commercial Taxes and Religious Endowments, dated February 22, 1991 and G. O. Ms. No. 376, dated October 27, 1992, by exercising the power conferred under section 17A of the TNGST Act and section 9(2) of the CST Act; (iii) as per article 265 of the Constitution of India no tax can be levied or collected without authority of law. Since the M/s. India Cements Ltd., are entitled to the benefit of sales tax deferral scheme by virtue of statutory notifications made in G. O. P. No. 92, Commercial Taxes and Religious Endowments, dated February 22, 1991 and G. O. Ms. No. 376, dated October 27, 1992, by exercising the power conferred under section 17A of the TNGST Act and section 9(2) of the CST Act, such benefits cannot be whittled down by directions issued under executive orders, namely G. O. Ms. No. 119, Industries (MIG.II) dated April 13, 1994, much less the consequential qualification prescribed in the eligibility certificate dated February 13, 1998 or by the terms and conditions of the agreement dated April 12, 2000 entered into between India Cements and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, therefore, contended that the word when cannot be construed with reference to the time of an event for claiming the deferral of sales tax, but only with reference to a qualification prescribed for availing the benefit of sales tax deferral. Only by liberal interpretation of clause 3(ii), the object sought to be achieved by the sales tax deferral scheme can be achieved; (viii) the Revenue having given the benefit of deferral of sales tax for 12 years, of course, prescribing certain conditions, with reference to reaching of BPV/BSV, with the object of achieving the highest production and sale of the existing unit in the last three years prior to the commencement of the commercial production in the expansion unit, the same should not be either dilated or denied in any financial year of the total period of 12 years if the industry reaches BSV/BPV in that financial year, whichever is earlier. The benchmark for availing the benefit of the sales tax deferral scheme should be that the industry should have reached BSV in that particular financial year. It is immaterial whether the industry reaches the BSV/BPV earlier and in any event, the conferment of partial benefit of the scheme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d section 9(2) of the CST Act. Since the scheme notified under the said G. O. P. No. 92, Commercial Taxes and Religious Endowments, dated February 22, 1991 and G. O. Ms. No. 376, dated October 27, 1992 do not provide the manner in which the said scheme has to be implemented, the Government is well within its executive power through G.O. Ms. No. 119, Industries (MIG.II) dated April 13, 1994 invoking the power conferred under article 162 of the Constitution of India to prescribe the method and also to provide the machinery with suitable directions and the procedure to be followed thereunder by the authorised agency, in the instant case, SIPCOT, for implementing the scheme; (ii) the contention of the M/s. India Cements Ltd., that G. O. Ms. No. 119, Industries (MIG.II) dated April 13, 1994 and the eligibility certificate as well as the terms of the agreement whittle down the benefit provided under the scheme vide G. O. P. No. 92, Commercial Taxes and Religious Endowments, dated February 22, 1991 and G. O. Ms. No. 376, dated October 27, 1992 is totally misconceived as the later notifies the deferral scheme as a source and the former provides the method and machinery for implemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the base production volume is reached that the right of deferral accrues. Vice-versa, if the base production volume had been reached later, it is only after the base sale volume is reached that the petitioner will be entitled to get the deferral facility. This, in effect, means whichever condition is reached later then alone the petitioner gets the right to defer the payment of sales tax , as the said view of the Special Tribunal was confirmed by the division Bench of this court by order dated December 5, 2001 in W. P. No. 18199 of 1999. Mr. Devaraj, learned counsel appearing for the SIPCOT while adopting the arguments of Mr. P. S. Raman, learned Additional Advocate-General appearing for the Revenue, also contends that the eligibility certificate derives the statutory status by virtue of G. O. Ms. No. 119, Industries (MIG-I) dated April 13, 1994 read with G. O. P. No. 92, Commercial Taxes and Religious Endowments dated February 22, 1991 and G. O. Ms. No. 376 dated October 27, 1992 and any violation of the qualifications prescribed in the eligibility certificates would disentitle the assessee to avail the benefits of the Sales Tax Deferral Scheme. V CONTENTIONS MADE IN M/S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in clause 3(i) to 3(v) in G. O. Ms. No. 119, Commercial Taxes and Religious Endowments Department, dated April 13, 1994 are all intended only to the expansion units, which seek the deferral of sales tax and not to the diversified units which seeks benefit of waiver of sales tax, merely because G. O. P. No. 92, Commercial Taxes and Religious Endowments, dated February 22, 1991 and G. O. Ms. No. 376, dated October 27, 1992 issued under section 17(4) of the TNGST Act and section 8(5) of the CST Act contemplate that the diversified unit should get the eligibility certificate from the SIPCOT and clause 3(v) of G. O. Ms. No. 119, Commercial Taxes and Religious Endowments Department, dated April 13, 1994 provides that in the said eligibility certificate the SIPCOT should work out the BPV/BSV and therefore clause 10 of the eligibility certificate dated December 22, 1998 or any related conditions provided under the agreement dated March 23, 2000 are arbitrary and unreasonable and in any event the same are inapplicable to the diversified unit, which is set up for manufacture of a different product, viz., Lancer cars, than the existing industry. It is therefore contended that the question ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same. Consequently, the directions mentioned in the eligibility certificate dated December 22, 1998 obtained from SIPCOT as per G. O. P. No. 92, Commercial Taxes and Religious Endowments, dated February 22, 1991 and G. O. Ms. No. 376, dated October 27, 1992 should be complied with as per the directions prescribed in G. O. Ms. No. 119, Commercial Taxes and Religious Endowments Department, dated April 13, 1994. After having applied for such eligibility certificate and submitting themselves for the qualifications prescribed in the eligibility certificate which had attained a statutory character on account of G. O. Ms. No. 119, Commercial Taxes and Religious Endowments Department, dated April 13, 1994 issued under the executive power of the Government issued under article 162, any violation of such directions would disentitle the industry to avail the benefit of waiver of sales tax scheme; (ii) there is an absolute necessity for the fulfilment of the condition that both the expansion as well as the diversified units should achieve the BPV apart from reaching the BSV for availing either the benefit of the deferral or the waiver scheme, because the very object of the scheme is to inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the eligibility certificates would disentitle the assessee to avail the benefits of the Sales Tax Waiver Scheme. VI COMMON CONTENTIONS AS TO THE INTEREST PAYABLE BY EITHER SIDES, VIZ., DEALER OR REVENUE Mr. C. Natarajan, learned Senior Counsel appearing for M/s. India Cements in India Cements deferral of sales tax cases and Mr. Sriprasath, learned counsel appearing for M/s. Hindustan Motors Limited in Hindustan Motors Limited waiver of sales tax cases as well as Mr. P. S. Raman, learned Additional Advocate-General appearing for the Revenue, submitted that the dealer as well as the Revenue would forego the interest on the tax payable by the dealer or on the amount refundable by the Revenue, as the case may be. VII CONSIDERATION AND FINDING We have given our careful consideration to the arguments advanced on behalf of all the parties. Since both the batch of cases, viz., one filed by M/s. India Cements Ltd., claiming the benefit of deferral of sales tax; and another filed by M/s. Hindustan Motors Ltd., claiming the benefit of waiver of sales tax, revolve on the point that the directions given in clause 3 of G. O. Ms. No. 119, Commercial Taxes and Religious Endowm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the constitutional aspirations of this land. The Government of Tamil Nadu, namely, the 3rd respondent herein, enunciating the above new industrial policy in the national context of economy in transition, have come forward with the constructive incentives such as, sales tax deferral/sales tax waiver invoking the statutory power conferred on them under the relevant statutes, viz., the TNGST Act and the CST Act, in order to create a congenial atmosphere to the industries for stimulating rapid growth of industrialisation in the State, so that the State economy will grow faster and these incentives have been proposed to enhance the competitiveness of the State and also foster the pace of industrialisation in this part of the country. Accordingly, the Government issued statutory notifications, notifying the deferral of sales tax scheme under section 17A of the TNGST Act and section 9(2) of the CST Act and notifying the waiver of sales tax scheme under section 17(4) of the TNGST Act and section 8(5) of the CST Act. Under the Sales Tax Deferral/Waiver Scheme, new units as well as expansion/diversification units of existing undertakings proposed to be set up in most backward/back ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd Sales Tax Waiver Scheme is traceable to statutory provisions as the Sales Tax Deferral Scheme is notified in exercise of power conferred under section 17A of the TNGST Act and section 9(2) of the CST Act by way of G. O. P. No. 92, Commercial Taxes and Religious Endowments Department, dated February 22, 1991 and G. O. Ms. No. 376, dated October 27, 1992 and the Sales Tax Waiver Scheme is notified in exercise of power conferred under section 17(4) of the TNGST Act and section 8(5) of the CST Act by way of G. O. P. No. 92, Commercial Taxes and Religious Endowments Department, dated February 22, 1991 and G. O. Ms. No. 376, dated October 27, 1992. Concededly, both the Government Orders are published in the Gazette as contemplated under section 53(5) of the TNGST Act. It is well-settled law that exemption notifications are statutory in nature and therefore the notifications notifying both the schemes have to be given statutory force. Consequently, they got the authority of law under article 265 of the Constitution of India [Video Electronics Pvt. Ltd. v. State of Punjab [1990] 77 STC 82 (SC)]. It is true that article 265 of the Constitution is a bar for G. O. Ms. No. 119, Commercia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... authority of law within the meaning of article 265 of the Constitution of India [Video Electronics Pvt. Ltd. v. State of Punjab [1990] 77 STC 82 (SC)]. In this regard, it is apt to refer article 265 of the Constitution of India: Article 265. Taxes not to be imposed save by authority of law. No tax shall be levied or collected except by authority of law. The words levied and collected used in article 265 of the Constitution of India enjoin that at every stage, the process of taxation must be authorised by law, otherwise it lacks jurisdiction. Once such levy and collection of tax is exempted by the very same legislative power, by issuance of notification invoking the rule-making power conferred under the very statute, by virtue of legal fiction, the State is precluded to levy and collect such tax exempted either under the deferral of sales tax scheme or waiver of sales tax scheme. According to the dealers, the benefit conferred under the Deferral of Sales Tax Scheme or Waiver of Sales Tax Scheme cannot be cancelled or whittled down or modified by executive orders or the eligibility certificate or the terms and conditions incorporated in the consequential agreements enter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7, 1992 are referred to the source of power under the relevant provisions of the statute, viz., section 17A of the TNGST Act and section 9(2) of the CST Act in the case deferral of sales tax and section 17(4) of the TNGST Act and section 8(5) of the CST Act in the case of waiver of sales tax, and confer the jurisdiction on the Government to grant the benefit under the deferral/waiver scheme, the G. O. Ms. No. 119, Commercial Taxes and Religious Endowments Department, dated April 13, 1994 provides the method and machinery and the terms and conditions that could be imposed by way of regulatory procedure and thus, stands on a different plane, but to achieve the same object, viz., to advance productivity by way of industrialisation under the new industrial policy of the State without compromising with the revenue of the State. Hence, it cannot be said that G. O. Ms. No. 119, Commercial Taxes and Religious Endowments Department, dated April 13, 1994 is an inroad into the field occupied by G. O. P. No. 92, Commercial Taxes and Religious Endowments Department, dated February 22, 1991 and G. O. Ms. No. 376, dated October 27, 1992. Therefore, inasmuch as G. O. P. No. 92, Commercial Taxes an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld be presumed or implied. It is also trite that the principle that fiscal statutes should be strictly construed does not rule out the application of the principle of reasonable construction to give effect to the purpose or intention of any particular provision as apparent from the scheme of the Act, with the assistance of such external aids, as are permissible under law [Shree Sajjan Mills Ltd. v. Commissioner of Income-tax, M. P. Bhopal [1985] 156 ITR 585 (SC); 1986 Tax LR 48]. In order to apply the principle of reasonable construction to give effect to the purpose or intention of the provision, as apparent from the scheme of the Act, the court must endeavour to harmonise the source of the Schemes as well as the regulatory procedure, because the statute should be interpreted in such a way as to avoid absurdity and oracular interpretation and to have harmonious construction to advance the implementation of the schemes and to make them workable, unless it is impossible to do so, rather than making it meaningless. This leads us to refer back the intention behind the Sales Tax Deferral/ Waiver Scheme. The power conferred on the State to notify the Schemes, either for deferra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al Taxes and Religious Endowments Department, dated February 22, 1991 and G.O. Ms. No. 376, dated October 27, 1992 have not prescribed the method and machinery for the implementation of the schemes, it cannot be stated that it occupied the field. Consequently, the contention that, by way of executive order in G.O. Ms. No. 119, Commercial Taxes and Religious Endowments Department, dated April 13, 1994 and the eligibility certificates issued pursuant to the said G.O., and the consequential agreements, the benefit conferred under deferral of sales tax scheme or waiver of sales tax scheme is sought to be whittled down stands rejected. On the other hand, by virtue of G.O. Ms. No. 119, Commercial Taxes and Religious Endowments Department, dated April 13, 1994, the eligibility certificates issued thereunder would also gain the statutory status and therefore, the qualifications prescribed thereunder by the SIPCOT are to be read into G.O. Ms. No. 119, Commercial Taxes and Religious Endowments Department, dated April 13, 1994 and hence, binding on the beneficiaries. Similarly, the terms and conditions imposed in the consequential agreements entered into between the dealers and the Revenue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owments Department, dated February 22, 1991 and G. O. Ms. No. 376, dated October 27, 1992 and that there are conflicts between them is totally illogical and irrational. Consequently, the dealers having by their conduct and agreement elected to comply with the directions in G. O. Ms. No. 119, Commercial Taxes and Religious Endowments Department, dated April 13, 1994, and the qualifications prescribed in the eligibility certificates and the terms and conditions incorporated in the consequential agreements, with a specific knowledge that any violation thereof would deprive them of the benefit of the respective schemes, and thus, the dealers having approbated are not entitled to reprobate. It is thus inevitable to harmonise the directions given in G. O. Ms. No. 119, Commercial Taxes and Religious Endowments Department, dated April 13, 1994, the qualifications prescribed in the eligibility certificates issued pursuant to the said G. O. Ms. No. 119, Commercial Taxes and Religious Endowments Department, dated April 13, 1994 and the terms and conditions of the consequential agreements entered into between the dealers and the Revenue which all form part of the regulatory procedure with t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , to maintain a sustainable growth in productivity, to enhance gainful employment and to achieve the optimal utilisation of human resources so that the economy, industry, trade and commerce and the standard of living of the subjects of the State would grow and improve in all spheres, unit-wise which would qualify the country to compete globally in the matter of industrialisation. VII-(E) STATUTORY EFFECT OF ELIGIBILITY CERTIFICATES AND AGREEMENTS We have already held that since no room is provided for method and machinery for implementation of the Schemes in G. O. P. No. 92, Commercial Taxes and Religious Endowments Department, dated February 22, 1991 and G.O. Ms. No. 376, dated October 27, 1992, the Government, as an independent authority, has rightly passed the executive order, in G.O. Ms. No. 119, Commercial Taxes and Religious Endowments Department, dated April 13, 1994 to cover the field which is not occupied by G. O. P. No. 92, Commercial Taxes and Religious Endowments Department, dated February 22, 1991 and G.O. Ms. No. 376, dated October 27, 1992. Since G.O. Ms. No. 119, Commercial Taxes and Religious Endowments Department, dated April 13, 1994 is validly sustainable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble for deferral of sales tax only on the increased volume of production/sale. For the purpose of determining the increased volume of production, the base figure would be the highest of the volume of production/sale in the company in any one of the year during the last 3 years. Till reaching the volume of production/sale specified earlier the company would continue to pay tax and any liability in excess of the production/sale specified above alone will be eligible for deferment. The highest production/sales achieved by the company prior to the proposed expansion/diversification in the last three years is: Portland cement production in lakh tonnes 25.86 (95-96)/Sales Turnover Rs. 72882 lakhs (1996-97). Production details Cement plant Location Quantity in lakh tonnes Sankar Nagar Tamil Nadu 10.60 Sankari Durg Tamil Nadu 6.09 Chilamkur Andhra Pradesh 9.21 25.86 Sales turnover details: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on/sales in the company in any one of the years during the last 3 years preceding the date of commencement of deferral. (ii) the company has to go on paying the tax to the level of base volume of production/sales and once it reaches this level, then any further tax liability will be eligible for deferral of sales tax. (iii) based on the above, the holder of this eligibility certificate will be eligible for deferral of sales tax not exceeding Rs. 270.21 crores (rupees two hundred and seventy crores and twenty one lakhs only) interest-free for twelve years from the month in which the holder's unit commenced its commercial production, i.e. from July 1, 1997 to May 31, 2009. (in the matter of M/s. Hindustan Motors Limited Agreement dated April 12, 2000): 3. The party of the second part shall not alienate/or dispose or encumber or lease out the said fixed assets until the period of waiver nor shall he/they remove the fixed assets from the unit's premises. Reading both the sources of the scheme, viz., G. O. P. No. 92, Commercial Taxes and Religious Endowments Department, dated February 22, 1991 and G.O. Ms. No. 376, dated October 27, 1992 as well as the regulator ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... latory procedures, prescribing the method and machinery to implement the object behind the Schemes, whether it is deferral or waiver issued in G. O. P. No. 92, Commercial Taxes and Religious Endowments Department, dated February 22, 1991 and G.O. Ms. No. 376, dated October 27, 1992 which has the statutory force. A combined reading of clauses 3(i) and (ii) of G.O. Ms. No. 119, Commercial Taxes and Religious Endowments Department, dated April 13, 1994 and paragraph 5.3 of eligibility certificate dated February 13, 1998 in the case of M/s. India Cements Ltd., and para 10 of eligibility certificate dated December 22, 1998 in the case of M/s. Hindustan Motors Limited and the terms and conditions incorporated in the consequential agreements in both the cases, would go to show that the word when mentioned in clause 3(ii) of G.O. Ms. No. 119, Commercial Taxes and Religious Endowments Department, dated April 13, 1994, if read as if or after whatever the case may be, the BPV which is the highest production of the last three years prior to the expansion should be achieved by the holder of the eligibility certificate for every assessment year of the total number of years, viz., 12 yea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , Commercial Taxes and Religious Endowment Department, Fort St. George, Chennai 600 009 and three others), to the cases on hand. The Writ Petition No. 18199 of 1999 arose against the order of the Taxation Special Tribunal dated November 5, 1999 in O.P. Nos. 1347 1348 of 1999 (between Tvl. Madras Cements Ltd., and State of Tamil Nadu rep. by Secretary to Government, Commercial Taxes and Religious Endowment Department, Fort St. George, Chennai 600 009 and three others), whereunder the Special Tribunal held as follows: . . . The only interpretation that could be given to the said clause which is reflected in the eligibility certificate and the agreement entered into by the petitioner is, that both the base production volume and base sale volume should have to be reached before the petitioner could claim deferral of sales tax. In the alternative it means that if the base sale volume had been reached earlier, but the base production volume had not been reached, the petitioner will not be entitled to get the deferral facility. It is only after the base production volume is reached that the right of deferral accrues. Vice-versa, if the base production volume had been reached later, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntage of the beneficial scheme. The view taken in M/s. India Cements Ltd., deferral of sales tax case was also incidentally referred to and applied by the Tribunal in Hindustan Motors Limited case, but a careful analysis of the issue in Madras Cements Case, referred supra, with the cases on hand would reveal that the issue in the present case is totally different from that of the Madras Cements Case, referred supra. The question agitated and decided by the division Bench of this court by order dated December 5, 2001, in Madras Cements Ltd. v. State of Tamil Nadu W. P. No. 18199 of 1999 was whether a dealer is entitled to estimate his turnover for the whole year at the beginning of the year and can make a rational estimate of the turnover in excess of base production from month to month and file a return accordingly, and the division Bench negatived the same confirming the earlier order of the Taxation Special Tribunal dated November 5, 1999(1) made in O. P. No. 1347 1. Reported in [2006] 143 STC 208. and 1348 of 1999 (Madras Cements Ltd. v. State of Tamil Nadu). But, the issue in the present batch of cases is whether the holder of eligibility certificate is entitled to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... apex court in State Bank of Travancore v. Commissioner of Income-tax [1986] 158 ITR 102 held that even though the clarifications issued by the Revenue being executive in character cannot alter the provisions of the Act, since they are in the nature of concessions, they can always be prospectively withdrawn. In the instant case, even though the clarification dated November 9, 1989 is executive in nature, the concessions given to the assessee could be withdrawn only prospectively, but not retrospectively because, such executive circulars are binding on the authorities, as held by the apex court in Keshavji Ravji Co. v. Commissioner of Income-tax [1990] 183 ITR 1. In Keshavji Ravji and Co. v. Commissioner of Income-tax [1990] 183 ITR 1, while dealing with section 119 of the Income-tax Act, which is pari materia to section 28-A of the Tamil Nadu General Sales Tax Act, the apex court held that the benefits of such circulars to assessees have been held to be permissible even though the circulars might have departed from the strict tenor of the statutory provision and mitigated the rigour of the law. That apart, the clarification dated December 27, 2000 gains a statutory force in view o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Delhi), it was held that the Board has power to issue circulars under section 119 of the Income-tax Act and it is trite that circulars which are issued by the Central Board of Direct Taxes are legally binding on the Revenue. 8.6.8. The Constitution Bench of the apex court in Collector of Central Excise, Vadodara v. Dhiren Chemical Industries [2002] 126 STC 122, held that if there are circulars which have been issued by the Central Board of Excise and Customs which place a different interpretation upon the said phrase, that interpretation will be binding upon the Revenue. Similar view was taken by the apex court in Collector of Central Excise, Vadodara v. Dhiren Chemical Industries [2002] 143 ELT 19. 8.6.9. In Commissioner of Customs, Calcutta v. Indian Oil Corporation Ltd. [2006] 144 STC 146 (SC); [2004] 2 RC 586 (SC); [2004] 165 ELT 257, the apex court held that the circulars issued by the Revenue under section 37-B of the Central Excise Act, 1944 (which is pari materia to section 28-A of the Act) are binding primarily on the basis of the language of statutory provisions buttressed by need of adjudicating officers to maintain uniformity in levy of tax/duty throughout the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion by blending of clauses 3(i) and 3(ii) of G.O. Ms. No. 119, Commercial Taxes and Religious Endowments Department, dated April 13, 1994, as held above. VII-(H) QUANTIFICATION OF THE BENFITS UNDER THE WAIVER SCHEME IN THE CASE OF DIVERSIFIED UNITS MANUFACTURED DIFFERENT PRODUCTS: Even though the legal and logical conclusion derived by harmonious construction of the statutory provisions relating to the deferral of sales tax 1. Since reported in [2007] 6 vst 100. 2. Since reported in [2006 143 stc 208. in the case of expansion units is equally applicable to diversified units as well as new units for waiver of sales tax, the case of M/s. Hindustan Motors Limited stands on different footing for the reason that the production of the diversified unit is totally different from that of the existing industry, as, the existing unit, viz., earth moving equipment division was manufacturing earth moving equipment and the diversified unit was set up to manufacture Lancer cars. Further, the production and sale of earth moving equipment cannot be equated with that of Lancer cars as fairly conceded by the learned Additional Advocate-General, whereas the SIPCOT adopted the benchmark of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Limited to modify or revoke the grant. However, the fact remains that M/s. Hindustan Motors Limited has chosen to sell the earth moving equipment division to M/s. Caterpillar Pvt. Ltd., after availing the benefit of waiver, but, during the period of waiver Scheme and thereby committed a violation of the terms and conditions of the consequential agreement. Once we are convinced that the BPV/BSV of the existing industry that manufactured earth moving equipment cannot be the basis for the diversified unit manufacturing Lancer cars, there is no other option except to treat the diversified unit as new unit, set up for manufacturing a totally new product which is also entitled to the benefit of the waiver Scheme. Therefore, applying the reasonable construction, in order to achieve the object of the Scheme, we are satisfied to hold that M/s. Hindustan Motors Limited is entitled to the benefit permissible for the new unit. But, this court cannot undertake such an exercise invoking article 226 of the Constitution of India, as the power of judicial review conferred under article 226 of the Constitution of India, as repeatedly held by the apex court, is only to decide the error in the deci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppropriate decision in the matter, which power, in our considered opinion is fully within the domain of the State and cannot be usurped by us, by exercising the power of judicial review, whatever the reason may be. [State of Rajasthan v. J. K. Udaipur Udyog Ltd. [2004] 137 STC 438 (SC); [2004] 7 SCC 673]. VII-(I) INTEREST On the submissions made on both the sides regarding interest on the tax payable by the dealer or the interest on the amount refundable by the Revenue, as the case may be, it is apt to refer to the following provisions of the TNGST Act and the CST Act. TNGST Act: Section 24. Payment and recovery of tax. (1) to (2) . . . (3) On any amount remaining unpaid after the date specified for its payment as referred to in sub-section (1) or in the order permitting payment in instalments, the dealer or person shall pay, in addition to the amount due, interest at one and half per cent per month of such amount for the first three months of default and at two per cent per month of such amount for the subsequent period of default: Provided that if the amount remaining unpaid is less than one hundred rupees and the period of default is not more than a month, no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interest or penalty payable by a dealer under this Act as if the tax, or interest or penalty payable by such a dealer under this Act is a tax or interest or penalty payable under the general sales tax law of the State; and for this purpose they may exercise all or any of the powers they have under the general sales tax law of the State; and the provisions of such law, including provisions relating to returns, provisional assessment, advance payment of tax, registration of the transferee of any business, imposition of the tax liability of a person carrying on business on the transferee of, or successor to, such business, transfer of liability of any firm or Hindu undivided family to pay tax in the event of the dissolution of such firm or partition of such family, recovery of tax from third parties, appeals, reviews, revisions, references, refunds, rebates, penalties, charging or payment of interest, compounding of offences and treatment of documents furnished by a dealer as confidential, shall apply accordingly: Provided that if in any State or part thereof there is no general sales tax law in force, the Central Government may, by rules made in this behalf, make necessary provis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the benefit of deferral of sales tax for the sales made in excess of the base sales volume cannot be denied to the holder of the eligibility certificate if the actual production of the industry in any financial year during the period of deferral exceeds the base production volume. Therefore, the directions in clauses 3(i) and 3(ii) of G.O. Ms. No. 119, Commercial Taxes and Religious Endowments Department, dated April 13, 1994 and para 5.3 of eligibility certificate dated February 13, 1998, if read harmoniously, the only conclusion that would follow is that the dealer will be eligible for sales tax deferral in any financial year if the production exceeds the base production volume for the sales made in that year in excess of the base sales volume or base production volume, whichever is earlier. PART-B (In the matter of Hindustan Motors Limited) Similarly, following the detailed discussions made above, we are of the considered opinion that para 10 of the eligibility certificate is not applicable to M/s. Hindustan Motors Limited as the production in the diversified unit is entirely different from the existing industry which was manufacturing earth moving equipment which in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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