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TMI Blog2023 (7) TMI 41X X X X Extracts X X X X X X X X Extracts X X X X ..... contrary to Rule 67 and it provided for 14 years deferment. As per the settled position of law, an illustration cannot govern the Rule but it is the Rule which shall govern and the illustration is always for clarification and it is to explain what is provided under the Rule. But the illustration cannot be contrary to the main statute namely, Rule and/or Act. Therefore, thereafter when the illustration came to be amended subsequently, vide G.O.Ms. No.503 Revenue (CT-II) Department dated 08.05.2009, to bring it in line with the statutory provision Rule 67, it cannot be said that the same is illegal and/or contrary to the parent act and/or contrary to the original industrial scheme - In fact, the State Government has taken care of the interest of the industrial units by providing double the balance period while converting the industrial units, who earlier availed the tax holiday as the units having tax deferment. Therefore, it cannot be said that the State was not aware of the interest of the industrial units under the VAT regime. The High Court has rightly dismissed the writ petitions upholding the subsequent G.O.Ms. No.503 Revenue (CT-II) Department dated 08.05.2009 and amen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the impugned common judgment and order passed by the High Court of Andhra Pradesh at Hyderabad in Writ Petition No. 12804 of 2009 and other allied writ petitions and also feeling aggrieved and dissatisfied with the impugned orders passed by the High Court dismissing the writ petitions relying upon the common judgment and order passed in Writ Petition No. 12804 of 2009 and other allied writ petitions, the respective original writ petitioners dealers have preferred the present appeals. 1.1 That before the High Court, the respective original writ petitioners dealers challenged the validity of G.O.Ms. No. 503 Revenue (CT-II) Department dated 08.05.2009, whereby Rule 67 of the A.P. VAT Rules, 2005 (hereinafter referred to as Rules, 2005 ) came to be amended, inter alia on the ground that the same is illegal, arbitrary and contrary to the industrial policy of the State Government in G.0.Ms. No. 108 dated 20.05.1996. The original writ petitioners dealers also challenged the consequential demand notices, whereby they were called upon to pay the deferred sales tax immediately. 2. The facts leading to the present appeals in nutshell are as under:- 2.1 In order to encoura ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o Rule 67, the deferment period provided was 14 years. However, thereafter, when the State realized the mistake in providing 14 years deferment as per illustration to Rule 67, the State Government came out with the amended G.O. whereby the illustration to Rule 67 of the Rules, 2005 came to be amended and it provided that deferment shall be doubled the remaining period under the old regime. Therefore, all the industrial units were issued demand notices in the year 2019 as by the amendment to Rule 67 vide G.O.Ms. No.503 Revenue (CT-II) Department dated 08.05.2009, the deferment period came to be reduced. The amendment to Rule 67 of the Rules, 2005 vide G.O.Ms. No.503 Revenue (CT-II) Department dated 08.05.2009 and the consequential demands were the subject matter of writ petitions before the High Court. 2.3 Before the High Court, it was the case on behalf of the respective industrial units that the amendment in question was contrary to the earlier industrial policy called Target-2000 and also to the G.O.Ms. No.108 dated 20.05.1996. 2.4 It was submitted that under G.O.Ms. No.108 dated 20.05.1996, the tax deferment units were required to repay the tax collected by them on compl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is further submitted that even otherwise when the Rule 67 came to be amended in the year 2009, the same cannot be made applicable retrospectively and the State is not justified in charging the interest on the tax amount for the period between 2005 to 2009 as the liability to pay tax by the amended Rule Rule 67 of the Rules, 2005 can be said to have arisen only by way of amendment to Rule 67 of Rules, 2005 vide G.O.Ms. No.503 Revenue (CT-II) Department dated 08.05.2009. 4. All these appeals are vehemently opposed by Shri Sriharsha Peechara, learned counsel appearing on behalf of the State. 4.1 It is submitted that as such the earlier scheme and the G.O.Ms. No.108 dated 20.05.1996 were in A.P. GST Act regime under which the tax holiday / tax exemption was permissible. It is submitted that, however, thereafter, when the A.P. GST Act came to be repleaded and the A.P. VAT Act came into force w.e.f. 01.04.2005 as there was no provision for tax exemption / tax holiday in the A.P. VAT Act, 2005, the option of tax holiday / exemption came to be withdrawn. However, taking into consideration the industrial policy, all the industrial units, who availed the option of tax holiday / e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liday, the same was permissible under the old Sales Tax Regime. However, subsequently, the A.P. VAT Act, 2005 came into force w.e.f. 01.04.2005 under which there was no provision for tax exemption / holiday or even tax deferment. However, Section 69 provided for the tax deferment and under Section 69 Notwithstanding anything contained in the A.P. VAT Act, any industrial unit availing a tax holiday or tax exemption on the date of commencement of the Act, 2005 shall be treated as a unit availing tax deferment. Therefore, the tax deferment benefit came to be continued under the new regime, i.e., the Act, 2005 as per Section 69. Section 69 reads as under:- 69. Tax Deferment:- (1) Notwithstanding anything contained in the Act, any industrial unit availing a tax holiday or tax exemption on the date of commencement of the Act shall be treated as a unit availing tax deferment. (2) The unit availing tax deferment as specified in sub-section (1) shall be eligible to issue tax invoices and to claim input tax credit subject to provisions of Section 13 of the Act. (3) The period of eligibility, the method of debiting eligibility amount, the repayment and any other benefits for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le 67, all those industrial units, who availed the option of tax holiday / exemption prior to 2005, came to be converted to the unit availing tax deferment, however, with condition that the balance period of tax holiday / exemption available as on 31.03.2005 to such units shall be doubled for the purpose of tax deferment. Meaning thereby, an industrial unit having two years balance period available as tax holiday / exemption as on 31.03.2005, the same shall be converted to the unit availing tax deferment for four years, i.e., double the balance period. However, the illustration to Rule 67 provided contrary to Rule 67 and it provided for 14 years deferment. That thereafter, having realized the mistake and having found that the illustration to Rule 67 stating 14 years deferment was just contrary to Rule 67, by the impugned notification dated G.O.Ms. No.503 Revenue (CT-II) Department dated 08.05.2009, the State Government has amended the Rule 67, more particularly, the illustration to Rule 67 providing double the balance period for tax deferment, which as such can be said to be in consonance with Rule 67. 5.4 As per the settled position of law, an illustration cannot govern the Rul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot be any interest liability and even the penalty for the period between 01.04.2005 and May, 2009. To that extent, the impugned judgments and orders passed by the High Court are required to be modified and the present appeals are required to be partly allowed to the aforesaid extent. 6. In view of the above and for the reasons stated above, present appeals succeed in part. The impugned judgments and orders passed by the High Court upholding the validity of the amendment to Rule 67 of the Rules, 2005 vide G.O.Ms. No.503 Revenue (CT-II) Department dated 08.05.2009 is/are hereby confirmed. Therefore, the challenge to the amendment to the illustration to Rule 67 of the Rules, 2005 vide G.O.Ms. No.503 Revenue (CT-II) Department dated 08.05.2009 fails. However, it is directed that there shall not be any interest liability and/or levy of penalty, if any, for the period between 01.04.2005 to May, 2009 on non-payment of any tax during the said period. It goes without saying that if any industrial unit has paid the interest for the period between 01.04.2005 to May, 2009, the same shall be refunded to them within a period of eight weeks from today. The Civil Appeals are partly allowed t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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