Sales tax deferral under rehabilitation scheme upheld as capped by the approved package, with later clarification found valid.

A rehabilitation scheme and connected Government Orders were construed together to determine the scope of sales tax deferral. The omission of the ceiling figure in an earlier order was treated as a drafting omission, not a grant of unlimited deferment, so the later fixation of the deferral at Rs. 1,246 lakhs was upheld as consistent with the scheme. The later notification was also treated as clarificatory rather than a retrospective withdrawal of vested benefit, and the challenge to its legality failed. The sales tax deferral remained limited to the amount contemplated in the rehabilitation package.

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Issues: (i) Whether the Government Orders and notification granting sales tax deferral under the rehabilitation scheme were contrary to the BIFR-approved scheme by omitting the ceiling and whether the later Government Orders validly fixed the deferral at Rs. 1,246 lakhs. (ii) Whether the subsequent Government Orders and notification were impermissibly retrospective or otherwise invalid in law.

Issue (i): Whether the Government Orders and notification granting sales tax deferral under the rehabilitation scheme were contrary to the BIFR-approved scheme by omitting the ceiling and whether the later Government Orders validly fixed the deferral at Rs. 1,246 lakhs.

Analysis: The rehabilitation package was framed on the basis of the company's disclosed additional liabilities and the deferred tax component was always worked out on that footing. The later BIFR proceedings and the Government Orders were read together with the original scheme, and the omission of the ceiling figure in the earlier order was treated as an inadvertent drafting omission rather than a grant of unlimited deferral. The later orders only reflected the amount that had been contemplated from the beginning and did not alter the substance of the benefit sanctioned for revival of the unit.

Conclusion: The fixation of the sales tax deferral at Rs. 1,246 lakhs was valid and the challenge based on alleged inconsistency with the BIFR scheme failed.

Issue (ii): Whether the subsequent Government Orders and notification were impermissibly retrospective or otherwise invalid in law.

Analysis: The later notification was treated as clarificatory rather than as a fresh retrospective withdrawal of an already vested benefit. The Court held that the earlier orders, when properly construed, had never granted a ceilingless deferral for one full year, and therefore the later orders did not cancel or vary a benefit retrospectively. The company's conduct was also found to lack bona fides in seeking to enlarge the benefit beyond what had been contemplated in the rehabilitation package.

Conclusion: The challenge to the later Government Orders on the ground of retrospectivity or illegality failed.

Final Conclusion: The Court upheld the Government's action and rejected the writ petitions, leaving the sales tax deferral limited to the amount approved in the rehabilitation package.

Ratio Decidendi: Where a rehabilitation scheme and connected Government Orders, read as a whole, show that a tax deferment was intended only up to a quantified limit, an omitted figure may be treated as a drafting omission and later clarificatory orders may validly specify the ceiling without amounting to an impermissible retrospective withdrawal of benefit.

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