Sales tax incentive schemes can cover later turnover-based levies when scheme purpose and substance show intended tax deferral.

Sales tax deferral under an incentive scheme may extend to later-imposed additional tax and turnover tax where the scheme's object, context and substance show that the relief was intended to cover turnover-based imposts. The Bombay High Court treated those levies as facets or enhancements of sales tax, noted the discriminatory result of denying deferral units the same treatment as exemption units under the incentive policy, and gave weight to the representations on which the industrial unit was established. The impugned notices, demand notices and trade circular were quashed, and deferment was held available for the additional levies.

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Issues: Whether the benefit of the Package Scheme of Incentives, framed to grant sales tax relief by way of deferral, extended to additional tax and turnover tax introduced after the scheme came into force.

Analysis: The scheme was framed to attract industrial units to developing areas and defined the eligible sales tax liability broadly in terms of sales tax, general sales tax and purchase tax. Although additional tax and turnover tax were introduced later and were not expressly named in the original scheme, the Court held that these imposts were in substance only facets or enhancements of sales tax, being levied with reference to sales turnover. The Court also relied on the discriminatory consequence of treating deferral units differently from exemption units under the same incentive policy, and on the representations and assurances under which the petitioners altered their position and established the industrial unit at Solapur.

Conclusion: The petitioners were held entitled to deferment of additional tax and turnover tax under the Package Scheme of Incentives, and the impugned notices, demand notices and trade circular were quashed.

Ratio Decidendi: Taxes imposed on sales turnover, though differently named, may fall within a sales tax incentive scheme where the scheme's object, context and substance show that the intended relief extends to such imposts.

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