LexSTATE OF TAMIL NADU AND ANR. versus INDIA CEMENTS LTD. AND ANR.
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[2011] 7 S.C.R. 395 STATE. OF TAMIL NADU AND ANR. v. INDIA CEMENTS LTD. AND ANR. (Civil Appeal No. 4233 of 2007) APRIL 21, 2011 · [D.K. JAIN AND H.L. DATTU, JJ.] Sa/es Tax - Tamil Nadu General Sa/es Tax Act, 1959 - A B ss. 17 A and 28A -Interest free sales tax deferral scheme introduced by the State of Tamil Nadu under G. 0. Ms. No. H 9 C dated 1 jth April, 1994 for manufacturing units undertaking expansion/diversification - Scheme providing for deferral of sales tax based on increased volume of production/sales - Interpretation of the scheme - Held: The benchmark for availing the benefit of the sales tax deferral scheme having D been fixed both with reference to the production as a/so to the sales, it was immaterial whether the unit concerned reached base production volume (BPV) or the base sales volume (BSV) earlier- Any other interpretation of the said GOM would frustrate the. object of the scheme - Benefit of sales tax E deferral sch.eme would be available to a dealer from the date of reaching of BPV or BSV, whichever is earlier - Interpretation of Statutes. Circulars /Notifications - Revenue Circulars - Binding effect of - Held: Circulars issued by the revenue are binding F on the departmental authorities and they cannot be permitted to repudiate the same on the plea that it is inconsistent with the statutory provisions or it mitigates the rigour of the law. The State of Tamil Nadu vide G.0.Ms.No.119 dated G 13th April, 1994 introduced interest free sales tax deferral scheme for manufacturing units undertaking expansion/ diversification. The said G.O.M. provided that deferral of sales tax will. only be on the increased volume of 395 ' H 396 SUPREME COURT REPORTS [2011] 7 S.C.R. A production/sales and for the purpose of determining such increased volume, the base figure would be the highest of the volume of production/sale in any year during the last three years prior to expansion. 8 The first respondent, which was engaged in the manufacture and marketing of cement in the State of Tamil Nadu and Andhra Pradesh, claimed entitlement to the benefit of deferral of sales tax. The Taxation Special Tribunal held that before the first respondent could claim deferral of sales tax, it was required to reach both the C base production volume (BPV) and base sales volume (BSV); in other words, if the BSV had been reached earlier but BPV had not been reached, the first respondent will not be entitled to get the deferral facility, till it achieved BPV. Being aggrieved, the first respondent D preferred Writ Petitions before the High Court which allowed the petitions and set aside the order passed by the Tribunal. In the instant appeal, the question which arose for E consideration was whether the first respondent would be eligible for sales tax deferral in any financial year for the sales made in that year in excess of the base sales volume (BSV) as soon as they exceed the BSV or only when their production also exceeds the base production F volume (BPV) in that year. Dismissing the appeal, the Court HELD: 1. The source of the sales tax deferral scheme is traceable to Section 17A of the Tamil Nadu General G Sales Tax Act, 1959 (TNGST Act) which enables the Government to notify deferred payment of tax for new Industries, etc. subject to such restrictions and conditions as may be deemed fit. Therefore, the scheme in question has a statutory flavour. From a comparative H reading of G.O.P.No.92 dated 22nd February, 1991 and STATE OF TAMIL NADU AND ANR. v. INDIA 397 CEMENTS LTD. AND ANR. G.O.Ms.No.376 dated 27th October, 1992 on the one hand A and G.O.Ms.No.119 dated 13th April, 1994, the eligibility certificate issued thereunder to the first respondent as also the consequential agreement entered between the parties on the other hand, it is evident that G.O.P.No.92 and G.O.Ms.No.376 is the source of power to grant B exemption and G.O.Ms.No.119 lays down the methodology and the machinery to implement the scheme. These are complementary to each other. Therefore, the terms and conditions stipulated in the schemes; the eligibility certificate as also the c consequential agreement, between the first respondent and the revenue, having the statutory force, undoubtedly violation of any one of the terms and conditions thereof would disentitle the beneficiary of the benefit of the sales tax deferral scheme. [Para 15] [410-C-F] · Commissioner of Custom
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