Sales tax deferral under expansion incentive scheme begins only after both production and sales benchmarks are crossed.

A sales tax deferral incentive linked to an expansion scheme became available only after both the base production volume and the base sales volume were satisfied, with deferral accruing on the later of the two benchmarks. Until those thresholds were crossed, tax remained payable under the governing sales tax law, and there was no legal basis for paying the benchmark tax in monthly instalments. A request for a revised agreement was also not legally unsustainable, because it merely reflected the position already fixed by the Government Order, eligibility certificate and agreement. The earlier cited decision was inapplicable on its facts and relief sought.

---

---

Issues: Whether the petitioner was entitled to sales tax deferral without first satisfying both the base production volume and base sale volume, whether the tax up to the base level could be paid in monthly instalments, and whether the demand for a revised agreement was legally unsustainable.

Analysis: The eligibility certificate and the agreement were read with G.O. Ms. No. 119 dated 13.04.1994, which made deferral available only when actual production exceeded the base production volume and sales exceeded the base sales volume. The right to defer tax arose only when the later of the two benchmark conditions was reached. The scheme required payment of tax until the prescribed base levels were crossed, and no material basis existed for claiming payment of the benchmark tax in 12 instalments. The request for a revised agreement was only to reflect the legal position already flowing from the Government Order and the existing documents. The earlier decision relied upon by the petitioner did not assist because the factual setting and the relief sought were different.

Conclusion: The petitioner was not entitled to deferral before satisfying both benchmark conditions, was not entitled to pay the base tax in instalments, and the demand for a revised agreement was not illegal.

Final Conclusion: The petitions failed on the proper construction of the incentive scheme, the eligibility certificate, and the agreement, and the tax liability had to be discharged in accordance with the governing sales tax law until the deferment conditions were fulfilled.

Ratio Decidendi: Where an incentive scheme for expansion links sales tax deferral to both base production and base sales thresholds, the deferral accrues only after the later threshold is crossed, and the assessee cannot claim instalment payment or a contrary contractual rewrite inconsistent with the scheme.

---