Industrial tax deferral scheme: expansion units treated like new units, and Central sales tax could not be excluded from eligibility

An industrial deferral scheme for new and expansion units was held to govern the petitioner's claim for inclusion of Central sales tax liability in the eligibility certificate. Because the Government had treated expansion or diversification units on par with new units for eligibility, a separate exemption notification issued under a different provision could not restrict the deferral benefit. The exclusion of the Central sales tax component was therefore inconsistent with the governing policy, and the tax already recovered for the relevant periods had to be factored into rescheduling repayment.

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Issues: Whether the petitioner was entitled to amendment of the eligibility certificate so as to include Central sales tax liability within the deferral scheme for the expanded unit, and whether the consequential relief of restoration and rescheduling of tax already recovered should follow.

Analysis: The deferral scheme for new units and expansion or diversification units flowed from the Government policy under the relevant notifications issued in exercise of power under section 9(2) of the Central Sales Tax Act, 1956 read with section 17A(1) of the Tamil Nadu General Sales Tax Act, 1959. The notification under section 8(5) of the Central Sales Tax Act, 1956 operated in a different field and governed exemption or concession under a separate scheme. Once the Government, by G.O. Ms. No. 104 dated 12.11.2001, treated expansion or diversification units on par with new units for eligibility, the restriction sought to be drawn from G.O. Ms. No. 16 dated 01.03.2002 under section 8(5) had no relevance to the petitioner's claim for deferral. The later recovery of Central sales tax for the relevant periods was therefore consequential to the wrong exclusion of the tax component from the eligibility certificate.

Conclusion: The petitioner was entitled to inclusion of Central sales tax liability in the deferral certificate, and the related recovery was to be taken into account while rescheduling repayment.

Ratio Decidendi: Where a deferral scheme for industrial incentives is governed by notifications issued under section 9(2) of the Central Sales Tax Act, 1956 read with section 17A(1) of the Tamil Nadu General Sales Tax Act, 1959, a separate exemption notification issued under section 8(5) of the Central Sales Tax Act, 1956 cannot curtail the benefit when the Government has treated expansion units on par with new units for eligibility.

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