WP/936/1996 of M/S COASTEL PACTERS [P] LTD Vs G/T BY SECY TO GOVT, on 5 December 2003

:ORDER

The petitioner challenges the letter dated 28.07.1995, issuedby the Department of Industries, Government of Tamil Nadu - first respondent herein, rejecting their request for sales tax waiver. The petitioner has alsoprayed for a direction to the respondents to issue eligibility certificate tothe effect that the petitioner Factory is eligible for total waiver of salestax with effect from 08.03.1994 under the Incentive Schemes notified by theState Government.

2. The case of the petitioner is briefly stated hereunder:

The petitioner Company availed a loan of Rs.27.40 lakhs fromthe second respondent - State Financial Corporation. The second respondentsanctioned a loan on 06.11.1992 and even after sanction, there wasconsiderable delay in the disbursement of the loan amount. By G.O.Ms.No.305Industries (MIG-2) Department dated 22.05.1989, the first respondent, whilereviewing the working of the interest-free sales tax loan Scheme and insuppression of the earlier Government Orders, notified that new Units otherthan those specifically included in the said notification located in theBackward Taluks will be eligible for various concessions, the interest-freesales tax loan scheme upto a particular limit as per the stipulationscontained therein. In G.O.Ms. No.423 (Industries - MIG 2) Department dated07.07.1989, the Government declared 105 taluks in the State as industriallybackward for the purpose of grant of concession like power tariff concession,interest-free sales tax, State Capital subsidy and special subsidy forindustries with effect from 22.05.1989. The same was liberalised in G.O.Ms.No.563 (Industries SIC 2) Department dated 19.08.1989. In G.O.Ms. No.564(Industries SIC) Department dated 19.08.1989, the Government extended theincentives for expansion or for diversification of the existing Units.

3. In G.O.Ms.No.500 (Industries MIG II) Department dated

3. In G.O.Ms.No.500 (Industries MIG II) Department dated 14.05.1990 , the Government liberalised the Incentive Scheme for Industriesand directed that new industries to be set up in 30 most backward Taluks andthree industrial complexes of State Industries Promotion Corporation of TamilNadu (SIPCOT), namely, Cuddalore, Manamadurai and Pudukottai. Apart fromother existing concessions, they will have full waiver of sales tax due for aperiod of five years upto a ceiling of total investment made in fixed assets.The petitioner, a Small Scale and New Industry located in Cuddalore SIPCOTcomplex is entitled to avail the benefits notified by the first respondent inG.O.Ms.No.500 ( Industries MIG II) Department dated 14.05.1990, in addition toother benefits which the petitioner is eligible to avail. In terms of thesaid notification, new Units will be entitled to waiver of sales tax, besidesother incentives. The petitioner Company satisfies the stipulations set outin the Government Order and is eligible for total waiver of sales tax for aperiod of five years from the date of its commercial production. Thepetitioner Company submitted an application to respondents 2 and 3 forissuance of eligibility certificate for waiver of sales tax in the prescribedform. Instead of granting total waiver of sales tax, the third respondent hadissued an eligibility certificate in favour of the petitioner to the effectthat the petitioner industry is entitled to pay sales tax under the sales taxdeferral scheme for a period of nine years from 23.02.1994 to 22.02.2003.Even the subsequent representation of the petitioner was not acceded to, hencethe present writ petition.

4. The respondents 2 and 3 have filed a counter affidavit, wherein it is stated that the petitioner Company was sanctioned a loan ofRs.27.40 lakhs on 11.11.1992 for the purpose of establishment of an industryat SIPCOT Industrial Complex, Cuddalore. The petitioner after availing a sumof Rs.24.32 lakhs out of the loan sanctioned, started its commercialproduction and the petitioner claimed concession in payment of sales tax. Therespondents issued the eligibility certificate as authorised by the Governmentof Tamil Nadu under deferral scheme. The first respondent in the impugnedletter dated 28.07.1995 stated that the industrial units which commencedcommercial production after 10.08.1993, were eligible for concessions asapplicable to backward Taluks under sales tax deferral scheme only. Since thepetitioner industry commenced its commercial production on 08.03.1994, it waseligible for concession under sales tax deferral scheme. There was no delayon the part of the second and third respondents in disbursing the loan amount.

5. In the light of the above pleadings, I have heard Mr. P.

Srinivas, learned counsel for the petitioner, Mr. S. Venkatesh, learnedAdditional Government Pleader for the first respondent and Mr. P.S.Sethuraman, learned counsel for respondents 2 and 3.

6. The only point for consideration in this writ petition is, whether the petitioner industry is entitled total waiver of sales tax, asclaimed?

7. There is no dispute that based on various Government

Orders, the petitioner started its factory at SIPCOT complex, Cuddalore forthe manufacture of corrugated boxes and boards. Though the petitioner isentitled certain concession in payment of sales tax, a perusal of variousGovernment Orders referred to in the affidavit as well as filed in the typedset of papers show that the petitioner cannot claim total waiver of sales tax.There is no dispute with regard to the fact that the petitioner is a smallscale and new industry located in Cuddalore SIPCOT complex, entitled to availthe benefits notified by the first respondent in G.O.500 Industries (MIG II)Department dated 1 4.05.1990. Admittedly, the petitioner Unit commenced itscommercial production on 08.03.1994, i.e., after the cut off date, viz.,10.08.1 993, in which case the petitioner and other similarly placed personsare eligible for concessions as applicable to backward taluks under sales taxdeferral scheme.

8. As a matter of fact, when the petitioner applied for eligibility certificate, after considering various Government Ordersapplicable, eligibility certificate under sales tax deferral scheme for aperiod of nine years i.e., from 23.02.1994 to 22.02.2003 had been issued inthe letter dated 13.03.1995. Though the petitioner was aware of this fact andafter knowing the same, they prayed for full waiver as a special case, whichwas negatived in the impugned letter dated 28.07.1 995. Inasmuch as thepetitioner industry commenced its commercial production after 10.08.1993, I amsatisfied that as per various clauses in the Government Orders and theclarification issued, the petitioner is eligible for concession as applicableto backward taluks, i.e., sales tax deferral concession. In the light of thefact that the petitioner company commenced their commercial production only on08.03.1994, i.e., after the cut of date, they are eligible for sales tax deferral concession only and the respondents are fully justified in rejectingthe request of the petitioner for sales tax waiver benefit as claimed. Asstated earlier, in the light of the various clauses in the Government Ordersapplicable to the petitioner and of the fact that the petitioner commenced itscommercial production after 10.08.1993 , the petitioner was granted sales taxdeferral concession for a period of nine years is in accordance with theGovernment Orders. Though the petitioner has claimed total sales tax waiverfor a period of five years, the first respondent has granted deferral in salestax for a period of nine years, which cannot be faulted with.

In the light of what is stated above, I do not find any meritin the claim made by the petitioner. Consequently, the writ petition failsand the same is dismissed. No costs. Connected WPMP., is also dismissed.

Index:YesInternet:Yes

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To

1. The Secretary to Government,Government of Tamil NaduIndustries DepartmentFort St. GeorgeMadras 600 009.

2. The Managing DirectorTamil Nadu IndustriallyInvestment Corporation Ltd., (TIIC)"Arul Manai" No.27 Whites RoadMadras 600 014.

3. The ManagerTamil Nadu Industrial InvestmentCorporation Ltd.,1 Bharathi RoadArcot Woodlands (Annexe) 3rd FloorCuddalore 607 001.