Venkateswara Oil Mills vs Chairman, State Level Committee and Others

Syed Shah Mohammed Quadri, J.—The petitioner is a dealer under the Andhra Pradesh General Sales Tax Act, 1957 (for short "the Act"). It seeks a writ of mandamus to the fourth respondent, the Commercial Tax Officer, Mancherial, Adilabad, to refund the sum of Rs. 3,06,901 with interest forthwith and for consequential and incidental orders.

The claim arises in the following circumstances. The Government of Andhra Pradesh formulated a scheme granting certain incentives to the newly established industries. The scheme has been published in G.O. Ms. No. 498, Industries and Commerce (IA) Department dated October 16, 1989. Among the incentives is included "deferment/tax-holiday on sales tax". This is available for a period of five years subject to a ceiling of rupees thirty-five lakhs during the entire holiday period of five years in so far as small-scale industries are concerned. The petitioner is a small-scale industry established with a view to avail of the benefits granted under the said G.O. Ms. No. 498. On the application of the petitioner for the benefits under the G.O. a temporary eligibility certificate was granted by the Industries Department in a sum of Rs. 1,85,000 which was valid for a period of five years with effect from January 30, 1991 to January 29, 1996. The petitioner approached the fourth respondent to grant the benefit of tax-holiday and filed the temporary eligibility certificate for availing the tax-holiday. Ignoring the temporary eligibility certificate, the fourth respondent recovered a sum of Rs. 3,06,901 towards the sales tax due by the petitioner. The final eligibility certificate was, however, granted on December 3, 1993, for a sum of Rs. 9,06,184. It is submitted that after the final eligibility certificate was issued no recoveries are made; but in so far as the recovery of tax already made is concerned the petitioner filed an application for refund on December 15, 1993. That was followed by another representation given on January 17, 1994. As no action was taken on those representations the petitioner filed this writ petition.

"Notice before admission" was taken by the learned Government Pleader on November 29, 1994. The case underwent several adjournments. Counter-affidavit was filed by the fourth respondent on January 18, 1995. The fourth respondent stated that he was not aware as to how the final eligibility certificate was issued by the committee and it is added that the amounts were collected by him before the issuance of the final eligibility certificate and that no action was taken after issuance of the final eligibility certificate. The sales tax exemption was granted, it is submitted, for the assessment year 1991-92, without verifying the conditions and that the present incumbent, having received the application for refund, verified the facts and inspected the business premises on March 16, 1994. He pointed out that one of the conditions for grant of the incentive was that the tax in respect of which exemption was granted should be utilised for development of the industry and the second condition was that the unit should be functioning. He noted that these conditions were not complied with and prayed that the writ petition be dismissed.

Shri V. Ravi Kiran Rao, the learned counsel for the petitioner, contends that the fourth respondent has behaved high-handedly and recovered the tax ignoring the grant of the temporary eligibility certificate and, therefore, the tax recovered by coercion should be directed to be refunded with interest. Learned Government Pleader, Commercial Taxes, submits that the amount recovered relates to the arrears for the period 1990-91 to 1992-93. Thus whatever was due was recovered and that having regard to the final eligibility certificate the petitioner need not pay tax for the future period. As such, it is not a case to order refund of tax already recovered.

The short question that arises for consideration is whether the fourth respondent was justified in initiating recovery proceedings against the petitioner ignoring the temporary eligibility certificate ?

The Government of Andhra Pradesh issued guidelines (approved vide Government Memo No. 2125/IA/89-1 dated September 15, 1990) named Manual of Guidelines for Implementation of G.O. Ms. No. 498, Industries and Commerce (IA) Department, dated October 16, 1989. Paragraph 12 deals with procedure for small-scale industries to avail the facility of sales tax exemption. Para 12.1, in so far as it is relevant for our purpose, reads as follows :

"Within 10 days of receipt of application the concerned will issue a temporary eligibility certificate for availing sales tax exemption in the form at annexure XII fixing tentative eligibility for availing sales tax exemption facility to a value of 20 per cent of the fixed capital investment indicated in the approved project cost. Basing on such a temporary eligibility certificate the concerned Commercial Tax Officer will allow sales tax exemption from the first month onwards after commencement of production. On receipt of an application from the industrial unit in the form at annexure XVI along with the permanent SSI registration certificate, incentive registration certificate, temporary eligibility certificate, the concerned Commercial Tax Officer will allow the sales tax exemption to the limit as mentioned in the temporary eligibility certificate and the same will be adjusted in the final eligibility certificate to be fixed by the State/District Level Committee."

From a perusal of the above guideline it can be seen that after issuance of the temporary eligibility certificate the concerned industry is entitled to avail the sales tax exemption facility and that the amount mentioned in the temporary eligibility certificate will be adjusted in the final eligibility certificate to be fixed by the State or the District Level Committee. It is, therefore, incumbent on the fourth respondent to have given due weight to the temporary eligibility certificate issued by the concerned authority and to have given effect to the same. It is unfortunate to note that the fourth respondent has completely ignored the same. Not being content with that he has further taken steps to recover by coercive process and did recover a sum of Rs. 3,06,901. Even after an application is filed for refund of the same he did not take any steps to correct the mistake committed by him. On the other hand, he perpetuated the mistake. The only grounds on which he wanted to justify his action are that the amount of tax was not utilised for development of the industry and that the industry was closed on March 16, 1994. We do not consider these as relevant considerations either to support the illegal action of the fourth respondent for taking coercive process for recovery of the tax or for not taking appropriate action by ordering refund of tax illegally recovered. The reasons given are subsequent to the application for refund and none of them has any relevance or established. In any event, we see from the letter dated August 11, 1994 that before grant of the final eligibility certificate the alleged closure of the industry was gone into by the concerned authority. Therefore, it cannot afford a ground to the fourth respondent to deny the refund of the tax. In so far as investment of the amount for the development of the industry is concerned it is too much for the fourth respondent to expect it because the amount which could have been invested in development, had been recovered by the authority by coercive process and withheld for such a long time. In these circumstances, we find the action of the fourth respondent not merely illegal and arbitrary but also high-handed. We, therefore, consider it just and appropriate to direct the fourth respondent to refund the tax of Rs. 3,06,901 recovered on March 15, 1993 and March 29, 1993, with interest at 12 per cent per annum from the date of recovery till the date of refund. The writ petition is allowed with costs. Advocate''s fee rupees five hundred.

Writ petition allowed.