SWAMIJEE MILLS LIMITED, BY ITS MANAGING DIRECTOR, P.K.S.A.A. Vs. THE STATE OF TAMIL NADU, REPRESENTED BY THE SECRETARY TO GOVERNMENT, REVENUE DEPARTMENT AND ORS.

JUDGEMENT

(1.) The Petitioner is a spinning mill at Sivakasi having lets than 20,000 spindless in 1969. It was paying tax under Rule 18 of the Tamil Nadu General Sales Tax Rules, 1959 on the sales of cotton yarn and also on the purchase of cotton inside the State of Tamil Nadu. In G.O. Ms. No. 2871, Revenue dated, 30th September, 1969, the spinning mills with installed capacity of 20,000 spindless and below were allowed to retain 50 percent of the sales tax payable by them as interest free loans for a period of five years with effect from 1st June, 1969 and to pay the arrears in half -yearly installments from the sixty years As the Petitioner mill fell under the category of mills having less than 20,000 spindless, they were allowed to pay 50 percent of the tax due on the first sales of cotton yarn from May, 1970 retaining the other 50 percent as interest free loans. Subsequently, the Government passed G.O. Ms. No. 2111, Industries dated 8th September, 1971 under which a scheme of advancement of cash loans to the sick mills by the Handlooms Department to cover the collection of 50 percent sales tax deferred in the earlier G.O. was introduced. Under the second G.O. of the year 1971, the Director of Handlooms was instructed to disburse loans to the respective mills and to give credit to the Commercial Taxes Department by book adjustment towards sales tax dues of the respective mills. In view of the second G.O. referred to above, the first G.O., namely, G.O. No. 2171, Revenue, dated 30th September 1969 was cancelled in G.O. Ms. No. 1878, Revenue dated 26th June 1972. In view of last G.O. of the year, 1972 canceling the earlier G.O. of the year 1969 permitting the retention of 50 percent of the sales tax as interest free loan, the third Respondent, by a notice dated 31st July 1972, called upon the Petitioner mill to pay the arrears of tax from April, 1972 onwards. The Petitioner contended that G.O. of the year 1972 will be applicable only to sick mills and not to the mills having less than 20,000 spindless. The third Respondent, however, did not agree with the objections put forward by the Petitioner and, therefore, issued B -2 notices on the basis of A -2 returns submitted by the Assessees for the period subsequent to 1972. Against such action of the third Respondent the Petitioner preferred a revision petition to the Deputy Commissioner (Commercial Taxes), Madurai, who dismissed the revision petition holding that the Petitioner is not eligible to retain 50 percent of the tax after the issuance of the G.O. Ms. No. 1878, Revenue, dated 26th June 1972. Thereafter, the third Respondent issued notice on 12th December 1972 calling upon the Petitioner to remit the arrears of tax within three days from the date of the receipt of the notice. At this stage, the Petitioner has approached this Court, praying for a writ of mandamus directing the Respondents not to give effect to the G.O. Ms. No. 1878, Revenue, dated 26th June 1972.

(2.) The contentions advanced by the Petitioner in this writ petition are two -fold. Firstly, G.O. Ms. No. 1878, Revenue, dated 26th June, 1972 will apply only to the sick mills, that the original G.O. Ms. No. 2171, Revenue, dated 30th September, 1969 is still applicable to the mills having less than 20,000 spindles s and that therefore, the Petitioner is still entitled to retain 50 percent of the sales tax as per the 1969 G.O. Secondly, it is contended that even assuming that the said 1972 G.O. is applicable to the mills having less than 20,000 spindless, the benefit given under the 1969 G.O. to the Petitioner cannot be withdrawn, as the Petitioner has suffered a detriment by way of investment of the said 50 percent of the tax retained by it for the purchase of machinery and for improvement of the mills and that, therefore, the Government is estopped from taking away the benefit unilaterally and calling upon the Petitioner to pay the tax retained under the said G.O. Thus the first contention of the Petitioner involves an interpretation of the G.O. Ms. No. 1878, Revenue dated 26th June, 1972 and the other is based on the plea of estoppel.

(3.) G.O. Ms. No. 2171, dated 30th September 1969 (hereinafter referred to as the 1969, G.O.) permits the retention of 50 percent of the sales tax on sale of yarn as interest free loan with effect from 1st June 1969 for a period of five years by the following milk: