Velappar Spinning Pvt. Ltd. vs The Tamilnadu Taxation Special Tribunal and Others

P.K. Misra, J.—The petitioner has prayed for issuing a writ of certiorarified mandamus to quash the order dated 17.9.2001 passed by the

Tamilnadu Taxation Special Tribunal, the first respondent, in O.P.No.574 of 2001, and to direct the second respondent to include the entire taxes

paid by the petitioner during the period from 1.12.1992 to 31.7.1996 including the purchase tax element, as per the Eligibility Certificate issued by

the third respondent.

The facts in brief are as follows :-

Petitioner is a private limited company. A cotton spinning mill had been established by the petitioner at Kulathur, considered to be a most

backward taluk in the State of Tamil Nadu. The petitioner applied for availing the benefit under G.O.Ms.No.500 dated 14.5.1990. The third

respondent issued Eligibility Certificate dated 30.7.1996 indicating that the holder of such certificate would be eligible for waiver of sales tax for a

sum not exceeding Rs.33.21 lakhs under the Sales Tax Waiver Scheme for a period of five years, from the month in which the unit commences its

commercial production, i.e., 1.12.1992 to 30.11.1997. However, before such certificate was issued, the petitioner company had already remitted

the sales tax for the period of 44 months. In such view of the matter, the petitioner requested the third respondent to issue re-schedulement and the

third respondent accepting the request of the petitioner, issued a revised certificate where under, clause 3 of the original eligibility certificate was

substituted by the following paragraph :-

Based on the above, the holder of this EC will be eligible for waiver of sales tax not exceeding Rs.33.21 lakhs (Rupees Thirty three lakhs and

twenty one thousand only) for FIVE years from the month in which the holder''s unit commenced its commercial production i.e. from 1.12.1992 to

30.11.1997. However, as the company has declared in its letter dt. 24.3.1997 that it has remitted sales tax upto 31.7.96 and requested

reschedulement, the period of eligibility has been rescheduled as from 1.8.1996 to 31.7.2001 as per powers delegated by the Govt. in their

lr.No.229, Inds.Dept. dt. 27.5.91. The sales tax benefit for the period from 1.12.1997 to 31.7.2001 will be restricted to actual sales tax remitted

during the period from 1.12.92 to 31.7.1996.

Thereafter, the petitioner approached the second respondent for a certificate regarding the ""taxes paid"" by the petitioner for the period of 44

months and a certificate was issued indicating that the petitioner had paid taxes to the tune of Rs.14,48,567/-. Subsequently, the fourth respondent

issued order relating to benefit of Interest Free Sales Tax Scheme as per G.O.Ms.No.500. While issuing the above said order, fourth respondent

calculated Rs.9,00,356/- as the amount of taxes paid by the petitioner. The second respondent issued proceedings dated 12.7.2001 directing the

petitioner to pay a sum of Rs.4,65,407/-, which amount reflected the purchase tax component in the entire tax paid by the petitioner during the

relevant 44 months period. Aggrieved by the aforesaid action of the second respondent, the petitioner filed original petition before the first

respondent for quashing the said direction. It was the contention of the petitioner before the Tribunal that as per the revised eligibility certificate, the

benefit of the entire tax paid by the petitioner during the period of 44 months should have been given to the petitioner. The Tribunal, on

consideration of the materials on record, by its order dated 17.9.2001, held that the petitioner was only entitled to get the benefit in respect to the

actual sales tax amount paid and since the amount paid towards the purchase tax was not coming within the purview of the deferral scheme, the

petitioner was not entitled to the benefit of the same. Accordingly, the Tribunal did not find any illegality in the notice issued by the second

respondent and rejected the petition, giving rise to the present writ petition.

Learned counsel appearing for the petitioner has vehemently contended that as per the revised Eligibility Certificate, the petitioner was entitled to

the benefit upto the extent of "" actual sales tax remitted during the period 1.12.1992 to 31.7.1996"" and as per the certificate issued by the

Department, such amount was to the tune of Rs.14,48,567/- including a sum of Rs.4,65,407/-, which had been paid by the petitioner as purchase

tax. It has been further contended that since ""sales tax"" also includes ""purchase tax"", the second respondent committed an irregularity in issuing the

notice and the Tribunal has committed error apparent on the face of record by not correcting such illegal action of the second respondent.

Learned counsel appearing for the respondents has supported the notice issued by the second respondent and has supported the order passed

by the first respondent. It has been contended by him that under the Scheme, there is no provision for availing any benefit so far as payment of

purchase tax is concerned and as such the amount paid towards purchase tax cannot be taken into consideration.

After hearing the learned counsel for the petitioner and the respondents at length and after going through the materials on record, we are unable

to accept the submissions made by the petitioner. In the revised eligibility certificate, it had been indicated "" the sales tax benefit for the period from

1-12-1997 to 31-7-2001 will be restricted to actual sales tax remitted during the period from 1-12-1992 to 31-7-1996"". It is of course true that

under the Tamil Nadu General Sales Tax Act, the expression ""tax"" includes within its fold ""purchase tax"". In that generic sense, tax or sales tax may

include purchase tax. But, however, in the eligibility certificate the use of the expression ""actual sales tax remitted"" rather emphasises that the benefit

would be in relation to the amount paid towards ""sales tax"" in a restricted sense and not in a generic sense. This is more particularly so because the

undisputed position is that deferral scheme did not envisage any benefit towards purchase tax.

Learned counsel for the petitioner has placed reliance upon the decision reported in 98 STC 125 (SULOCHANA COTTON SPINNING

MILLS (P) LTD v. STATE OF TAMIL NADU AND ORS.), wherein it has been indicated that sales tax includes tax payable on purchase of

raw materials. However, the said decision, rendered in a different context, has no application to the facts and circumstances of the present case.

Learned counsel for the petitioner has also contended that as per the original eligibility certificate, the limit of the benefit had been indicated as

Rs.33.21 lakhs, whereas under the revised certificate it has been restricted, which was not reasonable. This contention cannot be countenanced at

this stage inasmuch as such revised certificate had been issued long back in the year 1997, whereas the petitioner filed the Original Petition before

the Tribunal in 2001. It is obvious that the petitioner has accepted the revised eligibility certificate.

The Tribunal while rejecting the petition of the petitioner, has considered the relevant facts and circumstances. It cannot be said that there has

been any error apparent on the face of record in the order passed by the Tribunal warranting interference under Article 226 of the Constitution of

India.

For the aforesaid reasons, we do not find any merit in the writ petition, which is accordingly dismissed. No costs. Consequently,

WPMP.No.44856 of 2002 is closed.

A.S. Venkatachalamoorthy and P.K. Misra, JJ.—At the request of the petitioner, the matter has been posted today ''for being mentioned''.

The petitioner has filed an affidavit dated 14.3.2004 that the industry is facing a crisis and he is not able to pay the amount due to the taxation

Department and requests that some time may be granted to make the payment. In the affidavit dated Nil April 2004, he has given an undertaking

that he would pay whatever tax due to the Department and the same may be permitted to be paid in instalments.

We heard the learned counsel for the petitioner as well as the Department. On consideration of the entire matter, this court is of the view that the

petitioner can be permitted to pay the tax amount due in two equal monthly instalments. 50% of such amount shall be paid on or before 15th of

May 2004 and the remaining by 15th of June 2004.