MADRAS CEMENTS LTD. Vs. STATE OF ANDHRA PRADESH

JUDGEMENT

(1.) THE petitioner is a public limited company incorporated under the Companies Act, having its registered office in Tamil Nadu and factory at Jayanthipuram in the State of Andhra Pradesh. The petitioner Company is engaged in the manufacture of cement and is a registered dealer on the rolls of the Commercial Tax Officer, Nandigama, the 5th respondent herein. The petitioner Company applied for deferment of sales tax under G.O.Ms. No. 117 Industries and Commerce Department dated 17.3.1993 as amended by G.O.Ms. No. 386 Industries & Commerce (IFR) Department dated 26.9.1994. The petitioner expanded the unit in order to increase the production of cement. By virtue of G.O.Ms. No. 117, as amended G.O.Ms. No. 386, referred to above, the petitioner is entitled for deferment of tax in respect of additional quantity of cement produced consequent to the expansion of the unit. The expansion of the unit leading to increase in production of cement took place with effect from 15.2.1995. Under the deferment of sales tax scheme, the petitioner company was entitled for deferment of sales tax/tax holiday even in respect of additional quantity produced consequent to the expansion of its unit. The petitioner Company, therefore, applied for deferment of the sales tax on 10.8.1995. The said application was filed before the Commissioner of Industries, Andhra Pradesh, Hyderabad, the 3rd respondent herein. The 3rd respondent on consideration of the said application issued the proceeding No. 20/3/6/0734, dated 15.5.1996. It reads: GOVERNMENT OF ANDHRA PRADESHCOMMISSIONERATE OF INDUSTRIES

(2.) SRI K. Raji Reddy, learned counsel for the petitioner placed two contentions before us for consideration. The 1st contention is that the tax paid by the petitioner pending the issuance of the final eligibility certificate for the period from 15.2.1996 to 30.4.1996 is required to be adjusted towards the tax payable by the petitioner company for the month of April, 1997 and for subsequent period, but only during the period of final eligibility certificate and the stand taken by the Commercial Tax Department, that the said tax paid during the above period would be adjusted towards the future sales tax dues only after the expiry of the eligibility period is totally irrational, arbitrary, violative of Article 14 of the Constitution and against the very object of the scheme of deferment granted to industries in terms of G.O.Ms. No. 117, dated 17.3.1993 as amended by G.O.Ms. No. 386, dated 26.9.1994. The learned counsel would also maintain that the provisions contained in G.O.Ms. No. 18, dated 30.1.1997 that the tax paid by the industrial units pending issuance of final eligibility certificate would be adjusted against the future sales tax dues payable only after the expiry of the eligibility period, is totally irrational, arbitrary and cannot be given effect to literally. Secondly, the learned counsel would contend that G.O.Ms. No. 18, dated 30.1.1997 and the said G.O. would be applicable only prospectively and that G.O. cannot be pressed into service by the respondent authorities in respect of sales effected in the past. In other words, the learned counsel would maintain that G.O.Ms. No. 18 is only prospective and not retrospective in its operation. The learned counsel would further con tend that the deferment can be claimed on the basis of the monthly average production also, and not necessarily on the basis of the annual production. The learned counsel would also attack the mode of computation of base production by the respondents. On the other hand, Sri Bhaskar Reddy, learned Special Government Pleader for Taxes would support the impugned circular and notice issued by the 2nd respondent and 5th respondent respectively and also the validity of G.O.Ms. No. 18, dated 30.1.1997.

(3.) THE Government of Andhra Pradesh by issuing G.O.Ms. No. 117, Industries & Commerce Department, dated 17.3.1993 introduced the New Comprehensive Scheme of State Incentives (NCSSI 92) for new industries with effect from 3.10.1992. The scheme inter alia provides Sales Tax Concession to the existing industries undertaking substantial Expansion/Modernisation/Diversification for a period of 10 years from the date of deferment for the original unit. Para 5B(iii) of the above G.O. stipulates that the existing industrial units who have been allowed Sales Tax deferment under the earlier deferment scheme would be eligible for Sales Tax deferment on their substantial Expansion/Modernisation/Diversification projects. It was realized that this limited facility afforded in the G.O. for substantial Expansion/Modernisation/Diversification may help the industry coming up under later parts of NSIS'84 and LSIS 89 if the industries undertaking Expansion/Modernisation/Diversification and the scope for such units going on for Expansion/Modernisation/Diversification is very limited, the units having been recently established and as it takes substantial period for stabilization during the period of post production. In that view of the matter, the government after having examined the matter in detail issued G.O.Ms. No. 386, Industries & Commerce (IFR) Department, dated 26.9.1994 directing extension of the Sales Tax concession to existing units undertaking substantial Expansion/Modernisation/Diversification subject to eligibility etc., criteria laid down in the G.O. Relevant portion of para (3) of that G.O.Ms. No. 386, dated 26.9.1994 reads: