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TMI Blog2020 (1) TMI 887X X X X Extracts X X X X X X X X Extracts X X X X ..... ial Taxes Department on April 15, 2002 in line with which proceedings under section 17A of even date were issued by the assessing officer. The period of defer ral and of repayment are as follows : Deferral period Financial year of repayment From To 01.10.2001 31.03.2002 01.04.2002 31.03.2003 01.04.2003 31.03.2004 01.04.2004 31.03.2005 01.04.2005 31.03.2006 01.04.2006 30.09.2006 01.10.2006 31.03.2007 01.04.2007 31.03.2008 01.04.2008 31.03.2009 01.04.2009 31.03.2010 01.04.2010 31.03.2011 01.04.2011 30.09.2011 3. The petitioner is a new unit and had commenced commercial production on October 1, 2001. During the period October 1, 2001 to November, 2003, the installed capacity of the factory was utilised by the petitioner for its own manufacturing purposes. However and thereafter, the petitioner found that the business was not successful and the unit had not been able to achieve even fifteen per cent installed capacity by the end of financial year, 2003, accumulating losses. It thus became necessary for the petitioner to devise means and methods to save its investment, safeguard the interests of the workers and to enable it to repay financial institutions an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... petitioner and Mr. Haribabu, learned Additional Government Pleader (Tax) for the respondent. 9. The spirit and object behind Sales tax deferral for Industries has been captured in G. O. Ms. No. 500 Industries (MIG-II) Department, dated May 14, 1990 and relevant portions of the same are extracted below : "G. O. Ms. No. 500, dated May 14, 1990 : The Government in the order second read above declared 105 taluks of this State as industrially backward for the purposes of grant of interest free sales tax loan, interest free sales tax deferral, State capital subsidy, etc. 2. With a view to correct regional imbalances in the industrialisa tion in the State by giving further incentives to more backward areas, the Government direct that 30 taluks, from among the 105 industrially backward taluk be declared as industrially most back taluks. The name of 30 taluks are annexed to this order. 3. . . . 4. With a view to encourage more industries in Tamil Nadu, the Government direct that the following concessions also be made avail able to the industries : (a) For the industries to be started in the 75 backward taluks, i. e., Other than the 30 most backward taluks, from among the 105 b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng eligibility certificate. The option once exercised and accepted will be final and cannot be changed." 10. In the present case the petitioner has been granted sales tax deferral thus confirming the position that it has satisfied all requirements as stated in the above circular. Clearly the intention is to encourage industries in Tamil Nadu specifically, in the most backward taluks. 11. In Assessing Authority-cum-Excise and Taxation Officer, Gurgaon v. East India Cotton Mfg. Co. Ltd. [1981] 48 STC 239 (SC), a Full Bench of the Supreme Court dealt with the interpretation of section 8(3)(iii) of the Central Sales tax Act, 1956. The aforesaid provision, which deals with transactions of inter-State trade, provides for a concessional rate of tax in respect of transactions where prescribed declaration forms are filed by the assessee. The provision is extracted below (page 244 in 48 STC) : "Section 8. . . . (3) The goods referred to in clause (b) of sub-section (1)- (a) . . . (b) are goods of the class or classes specified in the certificate of registration of the registered dealer purchasing the goods as being intended for re-sale by him or subject to any Rules made by the Cen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 4 of the Rajasthan Sales tax Act, 1954 (Rajasthan Act 29 of 1954), the State Government, being satisfied that it is expedient in the public interest so to do, hereby notifies the 'Sales Tax New Incentive Scheme for Industries, 1989' (hereinafter referred to as the 'New Incentive Scheme') and exempt the industrial units from payment of tax on the sales of the goods including bye products and waste items manufac tured by them within the State and in case of packing material used therewith the benefit will be available only if it is linked with fixed capital investment, in the manner and to the extent and for the period as covered by this notification." 15. The above notification allowed for an exemption to industrial units from payment of tax on sale of the goods including by-products and waste items manufactured by them within the State. The contention of the revenue was to state that such exemption would be available only if the goods were manufactured by the very assessee that had sought benefit under notification. According to the Revenue the entire manufacturing capacity of the industrial units seeking the incentive should be utilised only by the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ical amount shall be treated as Government loan. 2. to 8. . . . 9. The party of the second part shall keep the normal production during the period of IFST as stipulated in the eligibility certificate. If the unit availing the loan stopped normal production for a period exceeding six continuous months except in the condition of force-mejure the entire outstanding loan will become recoverable in one lump sum. The concerned assessing office shall be permitted to keep 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 return of check of accounts during the assessment or otherwise show that the industry has stopped production in excess of permitted period." 18. The Revenue argues that the use of the word "normal" in relation to production means that such production has to be only by the assessee availing the deferral. I do not agree. The term "normal production" has to be read qua the "production capacity" and not qua "the entity". Thus, a proper understanding of clause 9, in my view, is that production qua installed capacity in the factory should not stand in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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