9911796707
TMI Blog1996 (10) TMI 480X X X X Extracts X X X X X X X X Extracts X X X X ..... ed a total amount of ₹ 19,17,608,67 in setting up the said industry. By a resolution dated 5th January 1980, the respondent No. 1 brought into force a modified Package Scheme of Incentives with retrospective effect from 1st August 1979. The Package Scheme of Incentives comprised mainly of incentive qua sales tax relief in electricity tariff, octroi etc. The Western Maharashtra Development Corporation Ltd. was appointed as implementing agency for implementing the scheme for the District of Solapur. The Scheme provided for criteria for eligibility under the Scheme and also inter alia provided that incentives under the said scheme should not be claimed unless an eligibility certificate had been issued by the implementing agency concerned and the unit had complied with the conditions contained therein. The Scheme was widely published by the respondent No. 1 which also issued a press note setting out the incentives under the Scheme for persons setting up industrial units in the developing areas of the State. By a resolution dated 5th July 1986, the respondent No. 1 modified their resolution dated 5th January 1980 and inter alia provided further relief in Sales Tax. It is the petit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ame across a trade circular dated 14th July 1986 wherein the respondent No. 3, after referring to the introduction of turnover tax under section 9 of the said Act, stated that in case of a unit entitled to deferment of taxes by virtue of the eligibility certificate and entitlement certificate granted to it under the Package Scheme of Incentives, the deferment of taxes would be permissible only in respect of sales tax and purchase tax payable by it as reduced by the set-off admissible to it. It was further stated that the deferment would not be permissible in respect of turnover tax payable by the unit. The petitioners in the present petition have thus challenged the above notice, demand notice and the Trade Circular. 4. Shri Presswala the learned Counsel appearing for the petitioners, submitted that the Turnover Tax and Additional Tax were nothing else but the sales tax under the said Act and therefore the facility of deferral payment opted for by the petitioners was available qua these two taxes also. Shri Zambre, learned Additional Government Pleader, on the other hand submitted that the scheme under which the benefits are claimed by the petitioners specifically provided for s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... repeal thereof or the Maharashtra Sales Tax Act 1979 from such date it is brought into force by the State Government by issuance of Notification in the Official Gazette. Para 2. 10 provides that an industrial unit for the setting up of which at least one of the final effective steps is completed after 1st August 1979 would be considered a new unit provided that it satisfies the two conditions mentioned therein. Para 2. 11 provides for Notional Sales Tax Liability as to mean briefly the sales tax, general sales tax, purchase tax and taxes payable under the Central Sales Tax Act 1956. Para 2. 12 provides for period of eligibility as being 3 years, 7 years, 5 years, 9 years or 13 years as the case may be. Para 2. 16 defines sales tax liability as meaning sales tax/ purchase tax/general sales tax as the case may be payable and paid under the Local Sales Tax Law during that period on purchases of raw materials reduced by the set-off at appropriate rates, if any, admissible thereunder and also on sales of finished products of the eligible unit. Para 4. 2 provides for Regional Development Corporations for implementing the said Scheme in respect of small scale units. Para 4. 3 provides ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are sales tax, general sales tax and purchase tax and that there is no mention of turnover tax or additional tax. The reason is obvious as when the Scheme came into force, neither turnover tax nor additional tax found its place on the statute. As mentioned earlier, additional tax came on the statute of 1983 as a result of new section 15A(1) which was introduced by Amending Act 7 of 1983. Similarly, the turnover tax came on the statute under section 9 in the year 1986 as a result of Amending Act 28 of 1986. Shri Presswala submitted that the very idea of giving package incentives and inter alia providing for a relief in the form of deferral payment of sales tax would be defeated if the scheme when it speaks of only for sales tax, general sales tax and purchase tax is restricted only to those three and not extended to 'additional tax' and turnover tax. It was his submission that even after modification of the scheme by Government Resolution dated 5th July 1982, whenever further modification has taken place, the law as it stood on the date of such modification of Scheme was incorporated in the Scheme inasmuch as the last incentive is in force today under the Government Resolut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the State Legislature has no power to pass the measure, we are of the view that the additional tax is really a tax on the sale of goods. The object of the Act, as is clear from its provisions, is to increase the tax on the sale or purchase of goods imposed by the Tamil Nadu General Sales Tax Act 1959 and the fact that the quantum of the additional tax is determined with reference to the sales tax imposed would not alter its character. It may be noted that the additional tax is to be imposed only if the turnover of a dealer exceeds ₹ 10 lakhs. It is in reality a tax on the aggregate of sales effected by a dealer during a year. The additional tax, therefore, is an enhancement in the rate of the sales tax when the turnover of a dealer exceeds ₹ 10 lakhs a year and it is a tax on the aggregate of the sales effected by the dealer during the year. The decision in Ernakulam Radio Company v. State of Kerala, which was affirmed by a Division Bench of the Kerala High Court in Kilikar v. Sales Tax Officer took that view. The same view was taken by the Andhra Pradesh High Court in A. S. Ramachandra Rao v. State of Andhra Pradesh. This is the correct view. Entry 54 in List II aut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deferral part of the said Resolution resulting in issuance of notice and demand notice on them. We did not see any answer forthcoming from the respondents. It is obvious that this cannot be the objective of the Scheme to treat similarly situated entrepreneurs in a different manner. 10. Lastly, it was submitted that the action on the part of the respondents was arbitrary and unreasonable inasmuch as the effect of the deferral payment was only postponement of payment for a period of 12 years and that under no circumstances, the respondent No. 1 would be deprived of their revenue inasmuch as the payment of the petitioner No. 1's sales tax liability by whatever name called would be effective after the expiry of the stipulated interval. It was thus submitted that the respondents were not losing any revenue and that their action in enforcing recovery of the turnover tax and additional tax is squarely irregular particularly when they have permitted to postpone payment of sales tax and purchase tax payable under the Bombay Sales Tax Act and Central Sales Tax Act. We see considerable merit in the above submission. There cannot be two opinions about it as to the effect of allowing def ..... X X X X Extracts X X X X X X X X Extracts X X X X
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