LAWS(MAD)-2002-3-171

SRI JAYAJOTHI & COMPANY LIMITED, RAJAPALAYAM AND SRI JAYAJOTHI TEXTILE MILLS PRIVATE LIMITED, RAJAPALAYAM Vs. THE COMMERCIAL TAX OFFICER - II, RAJAPALAYAM,

Decided On March 14, 2002
Sri Jayajothi And Company Limited, Rajapalayam And Sri Jayajothi Textile Mills Private Limited, Rajapalayam Appellant
V/S
The Commercial Tax Officer - Ii, Rajapalayam, Respondents

JUDGEMENT

(1.) This judgment shall govern two writ petitions - they being W.P. Nos.20099 and 20100 of 1999. A brief history would be necessary to understand the controversy.

(2.) The first petitioner is a public limited company, registered under the Companies Act whereas, the second petitioner is a private limited company and a subsidiary company of the first petitioner. The first petitioner had set up a textile industrial unit, styling it as "B" Unit, at Keelarajakularaman, Rajapalayam Taluk, which is an industrially backward area. Under the policy of the Government to boost the industries and more particularly setting up of more industries in the rural areas, the Government came out with a Government Order, G.O.Ms. No.500 14 -5 -1990. Under the said Government Order, such industrial units which were opened in the demarcated regions contemplated by the said Government Order were to be given sales -tax deferral for certain period. Accordingly the first petitioner availed of that benefit in respect of its "B" unit at Keelarajakularaman. An agreement came to be executed between the petitioner company and the Assistant Commissioner who was empowered by the Government under Sec. 17 -A(1) of the Tamil Nadu General Sales Tax Act. Thereafter, the Government came out with the necessary Government Order and ultimately a final agreement came to be executed. Under the clause (4) of the agreement, the petitioner was not to transfer, alienate, dispose, encumber or lease out the fixed assets nor could it remove the fixed assets from the unit premises without the express prior permission from the party of the first part, meaning thereby the Assistant Commissioner. The petitioner has also agreed that breach of any of the conditions of the said agreement could result in the cancellation of the agreement and the company being liable for the repayment of the tax dues if necessary along with the interest under Sec. 24(2) of the Tamil Nadu General Sales Tax Act. It seems that the sales tax deferral was for the period between 1992 and 1997 and the repayment of this tax was to be in five years' period beginning from April, 1997 to 2002.

(3.) It was found by the Government that the petitioner company had transferred, without prior permission of the Government or as the case may be the Assistant Commissioner, the said "B" unit to the second petitioner company. On this a notice came to be issued on 2 -1 -1997 to the petitioner company that it had breached the relevant condition in the agreement and had made itself liable. Under that notice, the petitioner company was directed to pay the entire sales -tax deferral availed so far during the assessment year and it was directed not to wait for the actual due dates for the agreement already made in that regard. Another notice also came to be issued whereby the interest also came to be claimed under Sec.24(2) of the Act. The notice was challenged by the petitioner company in O.P. No.561 of 1997.