Sales tax deferment applies only after the fixed base production and sales level is met under the governing agreement.

A sales tax deferment scheme granted fiscal relief only on production and sales beyond the stipulated base level. The eligibility certificate and executed agreement required tax to be paid until the fixed base production and base sales turnover was reached, and deferment applied only to the excess liability thereafter. Because the agreement was never modified, its terms remained binding on the parties, and a notice demanding payment of the shortfall merely enforced those terms. The assessee could not claim deferment on reaching only one of the two stipulated figures, and the challenge to the demand failed.

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Issues: Whether, under the eligibility certificate and agreement governing deferment of sales tax, the assessee was entitled to deferment upon achieving either the base production volume or the base sales volume, or only after reaching both the stipulated base production and base sales figures, including the corresponding tax effect.

Analysis: The scheme of deferment was intended to give fiscal relief only on increased production and sales beyond the stipulated base level. Clause 5.3 of the eligibility certificate required the assessee to continue paying tax till the specified production/sales volume was reached, and only the excess liability thereafter became eligible for deferment. The agreement executed between the parties expressly fixed the base taxable turnover and tax effect and reiterated that tax had to be paid up to that base level. Since the agreement was never modified, its terms governed the parties, and the notice demanding payment of the shortfall merely enforced those terms.

Conclusion: The assessee was not entitled to deferment merely on reaching one of the two figures. The impugned notice was valid, and the challenge failed.

Final Conclusion: The original petition was dismissed, and the demand for payment of the shortfall in tax was upheld.

Ratio Decidendi: Where a deferment scheme and the executed agreement stipulate payment of tax up to a fixed base production and sales level, deferment accrues only after that base tax liability is discharged, and the contractual terms bind the parties unless lawfully modified.

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