Sales tax deferment incentive cannot be restricted prospectively when the original sanctioned deferment period already covers the disputed phase.

Sales tax deferment incentive under the industrial policy was held to run for the full sanctioned deferment period, and the later sanction could not confine the Phase II benefit prospectively from the date of that order. As the original incentive had already been approved for 14 years from 5 June 1997, and the delay in completing Phase II was accepted as beyond the assessee's control, the later order could enhance the eligible amount but not curtail the operative benefit. The restriction was found unjust and arbitrary, and the assessee was entitled to deferment from the commencement of production in Phase II.

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Issues: Whether the sales tax deferment incentive granted under the industrial policy could be made operative prospectively only from the date of the State Level Committee's later sanction, thereby excluding the period from commencement of production in Phase II.

Analysis: The incentive had already been sanctioned for a period of 14 years from 5 June 1997, and the later order merely enhanced the eligible amount after accepting that the delay in completing Phase II was for reasons beyond the assessee's control. The order, while retaining the original deferment period, curtailed the practical benefit by making Phase II incentives prospective from the date of the later decision. Since the tax liability itself stood deferred for the full period, any tax attributable to the disputed three-year period would also fall within the same deferment period. The restriction was therefore found to be unjust and arbitrary.

Conclusion: The prospective restriction on the incentive was quashed and the assessee was held entitled to the benefit from the date of commencement of production in Phase II.

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