Sales tax deferral scheme interpretation confirms benefit once base production or sales volume is reached under binding circulars.

Interpretation of the sales tax deferral scheme in expansion cases required the benefit to be allowed once actual production exceeded the base production volume. The earlier Division Bench ruling, affirmed by the Supreme Court, stated that deferral could not be denied where sales exceeded the base sales volume or base production volume, whichever occurred first. A departmental circular issued under Section 28A of the Tamil Nadu General Sales Tax Act clarified that the benefit operates from the date the BPV or BSV is reached, and such circulars bind departmental authorities. On that basis, the assessee was held entitled to the deferral benefit and the denial in assessment was unsustainable.

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Issues: Whether the assessee was entitled to the benefit of the sales tax deferral scheme and whether the assessment order denying such benefit could be sustained.

Analysis: The dispute turned on the interpretation of the deferral scheme and the Government order governing expansion cases. The earlier Division Bench decision, as affirmed by the Supreme Court, held that the benefit of deferral could not be denied once the actual production exceeded the base production volume, and that the dealer would be eligible for deferral for sales in excess of the base sales volume or base production volume, whichever was earlier. The Court also noted that the departmental circular issued under Section 28A of the Tamil Nadu General Sales Tax Act clarified that the deferral benefit would operate from the date BPV or BSV was reached, and that such circulars are binding on departmental authorities.

Conclusion: The assessee was entitled to the deferral benefit, and the assessment order denying it could not be sustained.

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