HYDERABAD CYLINDERS Vs. ASSISTANT COMMISSIONER OF COMMERCIAL TAXES

JUDGEMENT

(1.) THIS writ petition has been filed challenging an order of the Sales Tax Appellate Tribunal and the authorities below. The writ petitioner also sought a direction to adjust the excess tax of Rs. 42,25,897 paid in respect of the production in excess of base year production for the period from October 4, 1998 to January 17, 2000 towards the base year tax payable for the assessment years 2000-01 and 2001-02 in terms of final eligibility certificate dated January 17, 2000.

(2.) THE facts which have given rise to filing of this writ petition are that the petitioner undertook expansion of his industrial unit with effect from October 4, 1998. He made an application for deferment of sales tax in terms of G. O. Ms. No. 108, dated May 20, 1996 in September, 1999. The Industries Department issued eligibility certificate to the petitioner on January 17, 2000 quantifying the deferment of sales tax benefit of Rs. 3,02,65,370 to be availed for a period of 14 years from 1998-99 to 2012-2013 for the expansion of unit with base production turnover value of Rs. 42,25,897 (1,20,000 units of cylinders ). Since the application for grant of deferment was pending, the petitioner - assessee paid tax of Rs. 46,73,120 for the periods 1998-99 to January 17, 2000. The petitioner requested for adjustment of the excess tax paid for the years 1998-99 and 1999-2000 against the tax due for the assessment years 2000-01, 2001-02 and 2002-03. This request was turned down by the Assistant Commissioner of Commercial Taxes, first respondent, in the light of G. O. Ms. No. 18. The matter was taken to the first appellate authority and then to the Tribunal, therefore the writ petition.

(3.) ANOTHER argument made by the learned Senior Counsel appearing for the petitioner is that no temporary eligibility certificates are given in case of the units which expand, but only permanent eligibility certificates are issued by the department, therefore the G. O. Ms. No. 18 would not apply as it applies to the period between the date of expiry of temporary eligibility certificate and final eligibility certificate of deferment for sales tax deferment. That is true, in case of the units which expand their activity, no temporary eligibility certificate is required to be given and only a final eligibility certificate is given, but there is no difficulty in coming to the conclusion that in case of units which expand their activity, the time gap can be taken as a period for which the unit had paid the tax and the period for which eligibility certificate had not been issued. The whole purpose of giving incentives of deferment or exemption from sales tax is to give breathing time to the new unit or expanded unit to establish themselves and on this ground alone such a policy of the Government has been accepted by the court, otherwise it appears that it is harsh on the tax-payers that the tax collected from them is being allowed to be retained by an industrialist for enhancement of his business and he pays back after 14 years without an interest to the Government. If this principle is kept in sight, then there would be no difficulty in coming to the conclusion that the treatment given to an existing industry in expansion should not be better than the one who is establishing new business. The question has already been considered by this court in a judgment reported in Madras Cements Ltd. v. State of Andhra Pradesh [2002] 125 STC 1; [2001] 33 AP STJ 190. For these reasons, we do not find merit in this writ petition which is accordingly dismissed. No costs.