Sales tax deferment under incentive scheme limited by eligibility certificate, annual production basis, and delayed adjustment rules.

Sales tax deferment under the industrial incentive scheme was governed by the final eligibility certificate and the applicable Government Orders, which fixed entitlement on an annual production basis with base-turnover concepts. Tax paid during the gap between expiry of the temporary eligibility certificate and final sanction was to be adjusted only after the eligibility period ended, so adjustment could not be claimed during the currency of that period and monthly production could not replace the annual basis. The Article 14 challenge to G.O. Ms. No. 18 also failed because no vested or constitutional entitlement was shown to a different adjustment method, and the Government Order was sustained.

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Issues: (i) Whether sales tax paid during the intervening period pending issue of the final eligibility certificate could be adjusted only after expiry of the eligibility period under G.O. Ms. No. 18, and whether deferment had to be worked out on annual production basis rather than monthly production or base-production calculations urged by the petitioner. (ii) Whether G.O. Ms. No. 18 was prospective only and liable to be struck down as arbitrary and violative of Article 14 of the Constitution of India.

Issue (i): Whether sales tax paid during the intervening period pending issue of the final eligibility certificate could be adjusted only after expiry of the eligibility period under G.O. Ms. No. 18, and whether deferment had to be worked out on annual production basis rather than monthly production or base-production calculations urged by the petitioner.

Analysis: The incentive scheme and the final eligibility certificate governed the petitioner's entitlement. The certificate fixed eligibility for deferment on the basis of annual production and the base turnover concept under the governing Government Orders. G.O. Ms. No. 18 expressly provided that tax paid during the gap between the expiry of the temporary eligibility certificate and the final sanction would be adjusted against future dues only after expiry of the eligibility period. The Court held that this arrangement did not permit the petitioner to demand adjustment during the currency of the eligibility period, and that monthly production could not be substituted for the annual basis fixed by the scheme and certificate.

Conclusion: The petitioner's challenge on adjustment timing, monthly production, and base-production computation failed.

Issue (ii): Whether G.O. Ms. No. 18 was prospective only and liable to be struck down as arbitrary and violative of Article 14 of the Constitution of India.

Analysis: G.O. Ms. No. 18 was issued to address representations from industrial units that had paid sales tax during the intervening period before final sanction. The Court treated the Government Order as applicable to the petitioner's situation and held that the petitioner had no vested right to insist on adjustment before expiry of the eligibility period. The Court further held that incentives could be claimed only within the parameters of the applicable Government Orders, and not on abstract grounds of equity or fairness. The attack based on Article 14 was rejected because the petitioner failed to show any constitutional or statutory entitlement to a different mode of adjustment.

Conclusion: G.O. Ms. No. 18 was upheld and the Article 14 challenge was rejected.

Final Conclusion: The writ petition was dismissed, and the impugned circular, notice, and Government Order were sustained.

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