Sales tax deferment conditions upheld where nominee director and repayment terms protected rehabilitation funds and public revenue.

Conditions attached to sales tax deferment for a sick industrial unit were upheld because the State's commitment under the rehabilitation package extended only to the agreed concessions, and the beneficiary could not demand a different mode or timing of implementation. The Madras HC accepted that requiring repayment from the fourth year and appointing a nominee director to monitor deferred tax funds were protective measures aimed at safeguarding the mills, workmen and public revenue. The court found that these conditions did not conflict with the rehabilitation scheme or unlawfully interfere with management, and the writ petition was dismissed.

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Issues: Whether the conditions imposed by the State while granting sales tax deferment, including repayment from the fourth year and appointment of a nominee director with specified powers, were inconsistent with the sanctioned rehabilitation scheme and liable to be quashed.

Analysis: The petitioner's sick industrial unit had obtained a rehabilitation package under the statutory scheme governing sick companies, and the State had consented to only two concessions, namely power cut exemption and sales tax deferment for three years. The Court noted that the Government order implementing those concessions also imposed conditions regarding a nominee director and monitoring of the deferred tax funds. It held that the State's commitment before the appellate authority was limited to granting the concessions, that the relief was discretionary, and that the beneficiary could not insist on the manner or timing of the concession. The Court further accepted the State's explanation that the nominee director condition was intended to safeguard the mills, the workmen, and the deferred public revenue, and that the condition did not invalidate the concession or unlawfully interfere with the petitioner's management.

Conclusion: The impugned conditions were held to be valid, and the writ petition was dismissed.

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