TaxTMI 
TaxTMI 
TaxTMI 
2008 (3) TMI 637
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....te vide G.O.Ms. No. 500, Industries (MIG-II) Department, dated May 14, 1990, whereby, the State directed, inter alia, that the new industries set up in 30 most backward taluks notified in the annexure to the said order and also in three industrial complexes of SIPCOT at Pudukottai, Cuddalore and Manamadurai, shall be eligible for full waiver of sales tax dues for a period of five years up to a ceiling of total investment made in the fixed asset and G.O.Ms. No. 43, Industries (MIG-II) Department, dated December 13, 1992, directing the package of incentives for large industries, whereby, an industry set up anywhere in the State having an investment of Rs. 100 crores and below Rs. 200 crores will be eligible for a sales tax waiver of six years or deferral for 12 years subject to a ceiling of 100 per cent of the value of fixed assets. The petitioner has further submitted that the new unit at Arakonam was established at an eligible investment of Rs. 10,198.84 lakhs made in fixed assets and it commenced production with effect from April 1, 2001 and as the petitioner was entitled to the sales tax waiver as provided in G.O.Ms. No. 43 Industries (MIG-II) Department, dated December 13, 1992....
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....section 33 of the VAT Act. Subsequent to the petitioner's representation dated December 29, 2006, the SIPCOT convened a meeting between the Special Secretary to the State Government and representatives from the industry on January 18, 2007 and the issue relating to status of the existing exemption schemes was discussed. The mechanism followed in other States such as Gujarat, Maharashtra, Karanataka and West Bengal was discussed to evolve a suitable system in the State of Tamil Nadu for the continuance of the waiver schemes introduced in the TNGST Act. The petitioner has further contended that during the said meeting the ad hoc procedure adopted by the petitioner, during the interregnum period of showing VAT invoices so as to enable his dealers to avail the input tax credit was declared by the respondent, as not prejudicing the request for continuance of the waiver scheme. Subsequently, the petitioner addressed a letter February 8, 2007, intimating the second and third respondents that pending necessary notification by the first respondent, the petitioner was availing waiver facility under the VAT Act. While the petitioner and the other industries were awaiting a notification ....
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....lore, the third respondent dated July 12, 2006. The eligibility certificate, dated May 15, 2006 was issued by SIPCOT, Chennai. The agreement as well as the certificate of SIPCOT contained several conditions for availing the waiver of payment of tax. One of the important conditions for availing the waiver scheme is that the dealer should not collect tax during the waiver period of six years on the sale of manufactured port land cement. The non-collection of tax by the unit is in order to maintain the competitive advantage and this provision is incorporated in rule 48A of the Tamil Nadu General Sales Tax Rules, 1959. The VAT Act has been introduced by January 1, 2007 by Act 32 of 2006. The fourth respondent has further submitted that as per rule 16(4) of the Tamil Nadu Value Added Tax Rules, 2007, the Government may, in the public interest or to mitigate hardship to the trade, remit the whole or any part of the tax or penalty or fee payable in respect of any period by any dealer under section 31 subject to the condition that in respect of remission of tax the dealer had not collected tax on the turnover in respect of that period for which remission is sought to be granted. It is th....
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....of waiver and retention of the same as shown in their monthly returns from January to March 2007 (continued in April 2007 also), is in violation of the waiver agreement and against rule 16(4) of the VAT Rules. It is further submitted that the existing dealers who availed waiver scheme under the provisions of the Tamil Nadu General Sales Tax Act, 1959, are permitted to continue under the scheme and the main condition for continuing in the waiver scheme is that the dealer should not collect taxes on the finished products, i.e., rule 16(4) of the Tamil Nadu VAT Rules, 2006, should not be violated and in order to maintain VAT chain, the dealer-customers of the waiver availing dealer, should not claim input tax credit. The respondent has further submitted that the petitioner has violated rule 16(4) of the TNVAT Rules, and has collected taxes of Rs. 9.72 crores from January 2007 to March 2007 and retained the same. The respondent has further submitted that as per the agreement executed by the petitioner in the year 2006 with the Assistant Commissioner (Commercial Taxes), Vellore District, the petitioner has agreed that they would not collect taxes on the sale of finished product....
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....rned under section 17(4) of the Tamil Nadu General Sales Tax Act, 1959. As per rule 48A of the TNGST Rules, 1959, the dealer availing waiver should not have collected tax and after the introduction of VAT Act, 2006, the dealer should not collect tax under rule 16(4) of the VAT Rules to avail Waiver Scheme. The honourable Taxation Tribunal by order in O.P. No. 669 of 2001, dated January 4, 2002 in the case of V.V.K. Packaging Private Ltd. v. Assistant Commissioner (CT), Tuticorin has held that the dealer availing the waiver concession should not have collected taxes and it amounted to violation. It is further submitted that only under the deferral scheme, the dealers are permitted to collect taxes, which are to be paid later on to the Government as per schedule of payment. It is further submitted that as per the Tamil Nadu Industrial Policy and G.O.Ms. No. 500, and Notification G.O.P. No. 396, dated September 10, 1991, published in the Government Gazette, collection of tax is illegal. The Assistant Commissioner (Commercial Taxes), Vellore, the third respondent, is empowered to cancel the waiver agreement. It is further submitted that as per the guidelines of the empowered committe....
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....ed that they are only a nodal agency in implementing the scheme and the policy of the Government, and they are not competent to take action on the representation of the petitioner unilaterally. Mr. Sathish Parasaran, learned counsel for the petitioner, submitted that by the impugned communication, the fourth respondent without giving an opportunity of hearing, has come to an erroneous conclusion that the petitioner has committed a grave offence of keeping the Government money and that the said finding is unjust and in violation of the principles of natural justice. He further submitted that the impugned communication, treating the petitioner's request for continuance of waiver, even in the absence of a notification or an order to that effect by the Government, is contrary to the express provisions contained in section 33 of the TNVAT Act. According to him, such an approach of the fourth respondent militates against the deeming fiction introduced in section 33 of the Act to the effect, the remission of tax made under the repealed TNGST Act, 1959, shall be deemed to be a deferred payment of tax under section 33 of the TNVAT Act for the unexpired period for such remission. The l....
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....ransport Appellate Tribunal [1997] 1 SCC 650 submitted that the legal fiction created under the deeming provision should be recognised. Mr. Haja Nazurudeen, learned Special Government Pleader for the State, submitted that with view to promote industrialisation, in certain most backward taluks, the Government have introduced incentive schemes for industries and interest-free sales tax deferral/waiver schemes were formulated. The petitioner by taking advantage of the industrial policy of the State of Tamil Nadu to avail sales tax waiver entered into an agreement, dated July 12, 2006 with the Government. He further submitted that an eligibility certificate, dated May 15, 2006 was issued by the SIPCOT, Chennai and one of the conditions for availing the waiver scheme is that the dealer should not collect tax during the period of waiver, i.e., for six years on the sales of the final product, cement. The non-collection of the tax in the waiver unit is to help the units in order to maintain the competitive advantage and this provision is incorporated in the rule 48A of the TNGST Rules, 1959. Referring to the notification issued under sub-section (4) of section 17 of the TNGST Act in G.O.....
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....reliance on the industrial policy of the Government, the terms of the agreement, eligibility certificate, the intention of the petitioner to continue under waiver scheme as per their own representations and the prayer sought in the writ petition, learned counsel for the respondent submitted that the petitioner cannot approbate and reprobate and as long as the agreement and eligibility certificate remain in force without any variation, the statutory obligations under the documents, read with rule 48A of the TNGST Rules and rule 16(4) of the TNVAT Rules, 2007, continue to operate and any violation of the waiver scheme under the Act entails cancellation of eligibility certificate. Heard the counsel appearing for the parties and perused the materials available on record. The Government of Tamil Nadu, with a view to promote industrialisation, have introduced an Interest-free Sales Tax Deferral Scheme in G.O. Ms. No. 500, Industries (MIG-II) Department, dated May 14, 1990, by which, the State Industries Promotion Corporation of Tamil Nadu Ltd., the second respondent herein (in short, "SIPCOT") is the authorised agency to receive applications, sanction and disburse for medium and major ....
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....g Madras Export Processing Zone, Madras Metropolitan Development Authority, the scheme of interestfree sales tax loan/deferral ordered in the Government order first, third and fourth read above is modified as follows: (i) For the existing units undertaking expansion or diversification, deferral of sales tax will be given for nine years and the total amount thus given shall not exceed 80 per cent of the additional investment made in fixed assets. (ii) For the new units, the total amount of deferral of sales tax will be given for nine years to the full extent of the total investment made in fixed assets. (b) The interest-free sales tax deferral scheme is extended to the expansion (Part I) as well as to the starting of new industries (Part II) in the other areas also, where this scheme was not in vogue hitherto. The deferral of sales tax for the industries in these areas will be for five years subject to a maximum of 60 per cent of the total investment made in fixed assets in the case of new industries and 50 per cent of the additional investment in fixed assets made in the case of expansion/diversification, of the existing industries. (c) As a gesture to the industries to be set....
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....verall ceiling for which the eligibility certificate is issued by the authority. The deferred instalments shall be payable by the assessed units after the completion of the period of deferral together with the sales tax of the current year, without any interest thereon. In case the units avails the complete deferral/waiver benefit before the completion of specified deferment period of five years or nine years, as the case may be, the unit has to pay the normal sales tax immediately after the date of full availment of eligible deferral amount. The assessee of the unit for which the sales tax has been waived will start paying the current sales tax dues after the completion of the waiver period or immediately after the full availment of eligible waiver amount, whichever is earlier. However, the deferred amount of sales tax for five years or nine years as the case may be, has to be paid after the completion of the deferral period along with the current dues, i.e., in the case of deferral of nine years, the amount deferred in the first year being payable along with the sales tax due in the tenth year, the amount deferred in the second year being payable along with the sales tax dues in ....
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....Ms. No. 43, Industries (MIG. 2) Department, dated February 13, 1992, G.O.Ms. No. 127, Industries (MIG.2) Department, dated March 22, 2000 and G.O.Ms. No. 13, Commercial Taxes Department, dated January 24, 2000. 3. Based on the above, the holder of this EC will be eligible for waiver of sales tax not exceeding Rs. 10,198.84 lakhs (rupees ten thousand one hundred and ninety-eight lakhs and eighty-four thousand only) under the waiver scheme for the six years from the month in which the holder's unit commenced its commercial production, i.e., from April 1, 2001 to March 31, 2007. 4. The actual amount waiver shall however be the least of the amounts mentioned in 4.1 and 4.2 below: 4.1(a) Notional sales tax liability on account of general sales tax, additional sales tax, surcharge and additional surcharge which would have accrued during the period of waiver on the sale of finished goods manufactured by the unit. 4.2. 100 per cent of the value of initial gross fixed assets, i.e., Rs. 10,198.84 lakhs (rupees ten thousand one hundred and ninetyeight lakhs and eighty-four thousand only). 5. The period of operation of sales tax waiver scheme shall be within the period of full availme....
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....sented by Thiru. G.R. Poobalarayan, Territorial Assistant Commissioner (Commercial Taxes), Vellore, on the first part and Tvl. Ultra Tech Cement Limited, having their factory at Chitteri Village, Arakkonam Taluk, Vellore District, Tamil Nadu, Pin 631 003, represented by Thiru. M.V. Ramana Rao, General Manager and Unit Head, Power of Attorney Holder, on the second part; both parties herein shall include their respective successors, legal heirs, legal representatives, executors, nominees, assignees, etc. Whereas, Tvl. Ultra Tech Cement Limited has established a new cement plant at Arakkonam, and has commenced production of their products from April 1, 2001. Whereas the Government have by their G.O.Ms. No. 500 Industries (MIG-II) Department, dated May 14, 1990, directed that the new industries to be set up in the 30 most backward taluks notified in the annexure to the order and also in three industrial complexes of SIPCOT at Pudukkottai, Cuddalore and Manamadurai be eligible for full waiver of sales tax dues for a period of five years up to a ceiling of the total investment made in the fixed assets, and that existing industries in the most backward taluks and in the three SIPCOT com....
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....ot alienate or dispose or encumber or lease out the said fixed assets until the period of waiver nor shall they remove the fixed assets from the unit's premises, without the prior permission from the party of the first part who in turn shall obtain appropriate orders from the Government for the same. 7.. The party of the second part shall insure the fixed assets at a value not less than the value certified by the SIPCOT, Chennai, and keep the insurance policies alive by renewing it every year until the period of waiver is completed and shall produce the policy for inspection by the party of the first part on or before the 30th June of every year. 8.. The party of the second part shall maintain the fixed assets in good condition, so that the market value of the assets is maintained from time to time. 9.. The party of the second part shall obtain permission of the party of the first part before the sale of the fixed assets. 10.. The party of the second part shall furnish to the party of the first part the audited balance sheet and profit and loss account certified by the chartered accountant, within six months of the close of the financial year. 11.. The waiver scheme....
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.... Scheme shall be within the period of full availment of the eligible amount or six years period, whichever is earlier. During the period of operation, the company shall not collect the sales tax on the sale of its manufactured products. (2) the tax, surcharge and additional sales tax under the TNGST Act, 1959, to be waived shall relate to the tax on the sales of the products manufactured by the unit. (3) The total amount of tax, surcharge and additional sales tax waived shall not exceed the limit of the total investment made in fixed assets in the case of the new unit. As per rule 48A of the TNGST Rules, the Government may, in the public interest or to mitigate hardship to the trade remit the whole or any part of the tax or penalty or fee payable in respect of any period by any dealer under sub-section (4) of section 17 of the Act subject to the condition that in respect of remission of tax the dealer had not collected sales tax on the turnover in respect of that period for which remission is sought to be granted. Value added tax has been introduced by the Government and Tamil Nadu Value Added Tax Act, 2006 was notified on January 1, 2007 and as per the Act, the set-off ....
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.... 32. The tax payable in respect of the unexpired period of such remission or balance amount of tax remitted shall be paid in such manner as may be prescribed: Provided that the Government may, if it considers necessary, on application from any industrial unit availing such remission, allow such unit to continue such remission for the unexpired period or till the balance of amount of tax remitted, whichever is earlier." Rule 16(4) of the TNVAT Rules which is similar to the then rule 48A of the TNGST Rules, is extracted: "The Government may, in the public interest or to mitigate hardship to the trade remit the whole or any part of the tax or penalty or fee payable in respect of any period by any dealer under section 31 subject to the condition that in respect of remission of tax the dealer had not collected tax on the turnover in respect of that period for which remission is sought to be granted." The impugned communication dated March 20, 2007 passed by the Deputy Commercial Tax Officer, Arakkonam, fourth respondent herein, reads that as per the eligibility certificate dated May 15, 2006 and agreement dated July 12, 2006, the company shall not collect sales tax on the sal....
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....e product, for which, the eligibility certificate has been issued or manufactures any other goods, under the guise of the product, for which, the certificate has been issued by the Commissioner for Commercial Taxes Department and if he is of the opinion that the unit is not manufacturing the product, for which, the eligibility certificate has been issued, the said certificate would stand cancelled. The petitioner has availed the waiver scheme for the period from August 1, 2006 to July 31, 2012, subject to the following conditions in the agreement: "(1) The tax/surcharge/additional surcharge/additional tax to be waived shall relate to the tax on the sale of the product, i.e., cement manufactured by the new unit in Tamil Nadu. (3) The party of second part shall not collect sales tax on the local sales of cement for six years. (5) The party of the second part shall submit every month, monthly return showing the sales turnover under the TNGST Act and CST Act, to the assessing authority of the jurisdiction concerned and to the Assistant Commissioner (Commercial Taxes) concerned." The eligibility certificate dated May 15, 2006 granted by the Nodal Agency, SIPCOT has been issu....
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....is nothing but a presumption of the existence of the state of affairs which in actuality is non-existent. The effect of such a legal fiction is that a position which otherwise would not obtain is deemed to obtain under the circumstances. In Commissioner of Commercial Tax v. Swarn Rekha Cokes and Coals Pvt. Ltd. reported in [2004] 136 STC 57 (SC); [2004] 6 SCC 689, considered the nature and scope of sections 84 and 85 of the Bihar Reorganisation Act, 2000 and held that the laws which were applicable to the undivided State of Bihar would continue to apply in the new State of Jharkhand created by the Act. The question which arose before the Supreme Court was whether on bifurcation from the appointed day, i.e., November 15, 2000, the sales tax exemption benefits flowing from the Industrial Policy, 1995 of the unified State of Bihar, crystallised in the notification of the Government of Bihar, dated December 22, 1995, would be extended to the new industrial unit situated within the territory of the new State, Jharkhand, set up before November 15, 2000 and found eligible for grant of exemption certificate under the industrial policy of the State of Bihar of the year 1995. Interpreting s....
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....ntention of the petitioner that they are eligible to collect tax during the period till a decision taken by the Government is accepted, then there is no continuity in the waiver scheme. It is a well recognised principle of interpretation of statutes that the provisions of the legislation are to be read in consonance with each other so that they do not render the statutory provisions inoperative during a particular period. VAT chain has to be continuous on and from January 1, 2007 and it is not open to the dealers to snap the chain for a particular period to suit their convenience on the ground that their representations are still pending. It is to be noted that the dealers-customers of the petitioner would claim input tax credit during the transition period for the payment of tax made to the manufacturing unit. Courts have consistently held that tax once collected from the consumers has to be paid to the Government and the dealers cannot retain the same. In the case on hand, the dealer by claiming that they intend to continue under the waiver scheme cannot simultaneously collect tax, presuming that by operation of the deeming provision, the unit has switched over to the deferral sc....