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TMI Blog2019 (3) TMI 1480X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. - Writ Appeal Nos.1177 to 1179 of 2012 - - - Dated:- 3-1-2019 - Mr. Justice S. Manikumar And Mr. Justice Subramonium Prasad For the Appellant : Mr.N.Prasad for Mr.N.Inbarajan For the Respondents : Mrs.Narmada Sampath Additional Government Pleader, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assets of more than ₹ 50 crores, a special incentive of deferral of sales tax for a period of 9 years to the extent of total investment made in fixed assets will be given. This deferral concession will also be available to the existing industries going in for expansion/diversification with an additional investment in fixed assets for more than ₹ 50 crores. 5. The sales tax deferral/waiver of expansion/diversification ordered in paras 3-4 above is subject to the sales tax payable on products manufactured by the capacity created by expansion/diversification units only. 6. The industries in the Most backward taluks and in the SIPCOT Complexes at Cuddalore, Manamadurai and Pudukottai can opt either for the full waiver of sales tax for a period of five years ordered in para 3 above or for the deferral of sales tax for nine years as applicable to the industries in the backward taluks ordered in para 4(a) above. The option should be exercised along with the application to be submitted to the authority for issuing eligibility certificate. The option once exercised and accepted will be final and cannot be changed. 7. The application for interest free sales tax de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assed G.O.P.No.92, Commercial Taxes and Religious Endowments, dated 22/2/1991. This Notification was issued, in exercise of powers, conferred by sub-Section (i) of Section 17 - A of the Tamil Nadu General Sales Tax Act, 1959 (Tamil Nadu Act 1 of 1959). The aforesaid Notification, granted a nine year deferral of sales tax, for new industries, in 75 backward Taluks, on the sale of the products, manufactured by the industry, upto the ceiling of total investment, made in fixed assets, subject to the condition that the units produce to the assessing authority, an eligibility certificate, issued by the State Industries Promotion Corporation of Tamil Nadu (SIPCOT). 4. The appellant, set up a factory, for the manufacture of assemblies and sub assemblies of sheet metal components, which are automobile parts. An application was made to SIPCOT, for an eligibility certificate, under G.O.Ms.No.500, dated 14/5/1990, r/w. G.O.P.No.92 (CT RE), dated 22/2/1991. 5. Eligibility certificate was issued to the appellant, on 10/4/2001, by SIPCOT. Relevant portion is extracted hereunder:- 2. Subject to the conditions mentioned in the sales tax deferral scheme and those mentioned hereinafter, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1/3/2010 as per powers delegated by the Government in their Lr.No.229, Inds.Dept.dated 27/5/1991. The sales tax benefit for the period from 1/7/2007 to 31/3/2010 will be restricted to actual sales tax remitted during the period from 1/7/1998 to 31/3/2001. 7. An issue arose as to whether the deferral would be limited only to the particular product, i.e., sheets or would it also include to scrap. This issue was settled by a judgment of this Court, in COMMERCIAL TAX OFFICER, THIRUPPARANGUNDRAM ASSESSMENT CIRCLE OTHERS Vs. THIAGARAJAR MILLS LTD {(2004) 134 STC 58 (Mad)}, (W.P.No.17985 of 1999), 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. 8. The appellant, therefore, asked for a clarification, on the basis of the above said order, that the appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the statutory notification, it is not clear as to why the matter was sent to the Standing Committee. It transpires that the matter was pending before Standing Committee and as stated in the counter affidavit filed on behalf of the first respondent that on 16.4.2004, the Standing Committee felt that the product is not indicated in the application for deferral / waiver and, therefore, it should not be qualified for IFST concession and directed the first respondent to declare accordingly. Instead of applying their mind, as directed by the Committee, the first respondent simply issued the impugned order dated 11.5.2004 stating that the writ petitioner is not entitled for deferral concession in the matter of steel scrap, which are found available after the manufacturing process are over. 8. The only short question before this Court is that having granted deferral concession for the product manufactured by the writ petitioner, whether the steel scrap, which is the by-product, should also be covered by the term 'product'. In fact, the entire concession was conceived and executed only because the Industries were directly located in backward regions and the scheme itself does n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct distinct and different from the material from which that by-product is obtained. 10. While considering the deferral scheme, the Supreme Court had an occasion to consider a similar issue in the decision reported in 126 STC 541 [ITC Bhadrachalam Paper Boards Ltd. v. State of A.P.] wherein the main production activity was manufacture of paper and paper products and the coal ash, which was left over as a residue because burning coal was used as fuel, would be a by-product was considered and the Supreme Court found that the coal ash was produced as a result of burning of the coal as part of the appellant industry and held that though it may not be the principal product for which the industry was established but, yet, it will be a by-product qualifying for the concessional scheme. When there is a clear authoritative pronouncement of this Court and the Supreme Court, it is not understandable as to why the first respondent should shirk the responsibility imposed on them when deciding the elementary issue, which has been projected in this writ petition. 11. In the light of the above, the writ petition succeeds and will stand allowed. The impugned order of the first respondent d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notice of the court the pendency of other matters in relation to the same subject. Even otherwise this court merely directed the respondents to reconsider the question as to whether the steel scrap produced by the petitioner industry will qualify to be the product so as to enjoy the eligibility certificate. 27.When once the eligibility certificate is given, the petitioner is bound by the same. The Sales Tax authorities are merely acting on the terms of the eligibility certificate. Thereafter, when the petitioner moved the authorities for reconsidering their stand, impliedly they have said that the earlier eligibility certificate did not include the scrap produced 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 pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 30th January 2012 To The Chairman and Managing Director State Industries Promotion Corporation of Tamil Nadu Ltd (SIPCOT) No.19 A Rukmani Lakshmipathy Road Egmore, Chennai 600 008. Respected Sir, With reference to the above cited communications and discussions had with SIPCOT officials, we hereby submit the following facts for your kind perusal and necessary remedial action. Our Company was allotted 15 acres of developed industrial plot by SIPCOT at Irungattukottai Industrial Complex, Kancheepuram District, Tamil Nadu for the manufacture of automobile parts. Incorporation: Sungwoo Gestamp Hitech (Chennai) Limited (Incorporated asJBM Sungwoo Ltd on 01 July 1997 and subsequently known as Technical Stampings Automotive Ltd vide fresh certification of incorporation issued by Registrar of Companies dated 29th Nov 2005) is working under the Joint venture between (i) M/s. Sungwoo Hitech Company Ltd., Korea (ii). M/s. Gestamp Toledo, Spain to operate a manufacturing Company for manufacture of automobile parts to supply to Original Equipment (Car) Manufacturers (OEMs). The entire project in its technicality, functionali ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Mitsubishi Corporation 4. M/s. Five Star Engineering Corp, Korea 26.00% 50.00% 19.00% 5.00% 26th March 2003 1. M/s. Sungwoo Hitech, Korea 2. M/s. Tata Autocomp Systems Limited 3. M/s. Mitsubishi Corporation 4. M/s. Five Star Engineering Corp, Korea 26.00% 50.00% 19.00% 5,00% 16th March 2005 1. M/s. Sungwoo Hitech, Korea 2. M/s. Tata Autocomp Systems Limited 3. M/s. Five Star Engineering Corp, Korea 45.00% 50.00% 5.00% 4th Feb 2009 1. M/s. Sungwoo Hitech, Korea 2. M/s. Gestamp Toledo 3. M/s. Five Star Engineering Corp, Korea 45.00% 50.00% 5.00% We have duly informed about the above changes to SIPCOT time to time. We had provided hereunder a brief about the background of each share transfers effected during the previous period. Share Transfer Details Share transfer on 9th October 1998 From : M/s. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plies and requested details to various letters of SIPCOT and request SIPCOT to condone the default and to approve the change in name, directors and shareholding pattern of the Company. We are ready to submit any other proof that may be required by you. We therefore, request you to kindly approve the transfer of the shares and we will be glad to provide necessary additional documents, if required for this process. 17. For the reasons best known to the State, Application has not been considered. Sales tax defferal is granted to the unit which has been established pursuant to the scheme of the government. 18. The short question before the Court is as to whether the appellant is entitled to deferral towards the sale of scrap. This issue has been answered, in favour 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 give ..... X X X X Extracts X X X X X X X X Extracts X X X X
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