Deferment incentive scheme: base sales computation cannot include branch transfers, consignment sales or export sales.

Under the deferment incentive scheme for sales tax, the eligibility certificate fixed base production and base sales volume, and the petitioner was bound by paragraph 5.3 after accepting the certificate and connected agreement. The scheme was designed to protect past revenue and to confine deferral benefits to increased production and sales, so branch transfers, consignment sales and export sales could not be included in turnover for computing the qualifying base. The impugned condition was therefore valid, and repayment of deferral wrongly availed was sustained.

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Issues: Whether the petitioner was entitled to challenge paragraph 5.3 of the eligibility certificate and whether, under the deferment scheme, branch transfers and export sales could be included in the base sales volume for claiming deferral benefit.

Analysis: The deferment incentive was granted under section 17A of the Tamil Nadu General Sales Tax Act, 1959 and the governing Government Orders required the eligibility certificate to fix the base production volume and base sales volume. The petitioner had accepted the certificate and the connected agreement and sought to question the relevant condition only after a long lapse of time. On the merits, the scheme protected past revenue and the certificate limited deferral to increased production and sales. The inclusion of branch transfers, consignment sales and export sales in the turnover for computing the threshold was inconsistent with the scheme and with the certificate conditions.

Conclusion: The petitioner was bound by paragraph 5.3 of the eligibility certificate, the impugned condition was valid, and the demand for repayment of wrongly availed deferral was upheld.

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