TMI Blog2011 (4) TMI 1080X X X X Extracts X X X X X X X X Extracts X X X X ..... Kumar Singh, C. Thiruppathi, Hari Shankar K., Vikas Singh Jangra, Kavin Gulati, Praveen Kumar, Kumar Rajesh Singh, Ms. Ruby Singh Ahuja, Ms. Ruchikra Gupta, Ms. Deepti Sarin, Siddhanth Kochhar and Manu Agarwal.appearing parties -------------------------------------------------- The judgment of the court was delivered by D.K. JAIN J. This appeal is directed against the final judgment and order dated December 22, 2006 Reported as India Cements Limited v. Assistant Commissioner (CT), Chennai [2007] 6 VST 140 (Mad). rendered by the High Court of Judicature at Madras in W.P. Nos. 13697 and 13698 of 2002. By the impugned judgment, while setting aside the order dated April 19, 2002 passed by the Taxation Special Tribunal (for short, "the Tribunal") in O.P. Nos. 322 and 351 of 2002, the High Court has held that the first respondent, viz., M/s. India Cements Ltd. is entitled to the benefit of deferral of sales tax as claimed by them under the interest-free sales tax deferral scheme, introduced by the State of Tamil Nadu under G.O. Ms. No. 119 dated April 13, 1994 issued by the Commercial Taxes and Religious Endowments Department of the State. Before we traverse the fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue by SIPCOT and District Industries Centres." The first respondent, engaged in the manufacture and marketing of cement in the States of Tamil Nadu and Andhra Pradesh was having man- ufacturing units at Sankari and Sankar Nagar. By their letters dated March 13, 1996, March 4, 1997 and September 24, 1997 they proposed to set up an expanded unit at Dalavoi village, Sendurai taluk to avail of the benefit of sales tax deferral scheme under G.O. Ms. No. 119, dated April 13, 1994. On being approached, on February 13, 1998, SIPCOT issued the requisite eligibility certificate to the first respondent, inter alia, mentioning that: (i) the first respondent will be eligible for deferral of sales tax not exceeding Rs. 205.13 crores (later on revised to Rs. 270.21 crores), interest-free for a period of twelve years from the month in which the first respondent s unit commenced its commercial production, i.e., from July 1, 1997 to May 31, 2009 (cl. 3); (ii) deferral of sales tax will only be on the increased volume of production/sales; (iii) for the purpose of determining the increased volume of production, the base figure would be the highest of the volume of production/sale in the comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... commenced its commercial production, i.e., from July 1, 1997 to May 31, 2009 (cl. 3); (ii) deferral of sales tax will only be on the increased volume of production/sales; (iii) for the purpose of determining the increased volume of production, the base figure would be the highest of the volume of production/sale in the company in any one of the year during the last three years; (iv) till reaching the volume of production/sale specified earlier, the company would continue to pay tax and any liability in excess of the production/sale specified therein alone will be eligible for deferment (cl. 5.3); (v) the deferral scheme will be applicable to the unit/company only as long as it manufactures products for which the eligibility certificate had been issued (cl. 6) and (vi) violation of any of the conditions as stipulated in the eligibility certificate and the connected Government orders will result in withdrawal of deferral facility in entirety (cl. 7). In compliance with clause 5.2 of the eligibility certificate, on April 12, 2000, the first respondent entered into an agreement with the Zonal Assistant Commissioner, Commercial Taxes, undertaking to comply with the base p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the base sale volume and further sale volume beyond the base volume should be treated as a result of the expansion investment. In the meanwhile, consequent to the erratum issued in notice dated March 21, 2002, the Assistant Commissioner issued a revised notice dated March 22, 2002, informing the first respondent that they had availed of deferral before they had reached the BPV, which is violative of the conditions laid down in the eligibility certificate. The respondent was thus, informed that they were liable to pay an amount of Rs. 5,873.51 lakhs as excess availment of deferral of sales tax for the period from 1998-99 to 2001-02. Aggrieved by the said demand notice, the first respondent filed O.P. No. 322 of 2002 before the Tribunal seeking quashing of the said notice. Subsequently, they filed another O.P. No. 351 of 2002 to declare clause 5.3 of the eligibility certificate dated February 13, 1998 as ultra vires the Notification No. II(1)/CTRE/158/91 in G.O.P. No. 396 dated September 10, 1991 and Notification No. II(1)/CTRE/213/92 in G.O. Ms. No. 376 dated October 27, 1992. In both the said petitions, it was contended that clauses 3(i) and (ii) of G.O. Ms. No. 119 dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esides reaching BSV in that particular year. By insisting that the BSV should also be reached, the revenue of the State gets protected in every assessment year during the entire period of deferral or waiver. 21.6 To determine the date from which such benefit of deferral or waiver would follow, viz., from the date of reaching BPV or from the date of reaching BSV, or whichever is earlier or whichever is later, in the light of the intention behind the schemes, clause 3(ii) of G.O. Ms. No. 119, Commercial Taxes and Religious Endowments Department, dated April 13, 1994 cannot be construed to mean that the benefit would flow only from the date of reaching the BPV, not from the date of reaching the BSV, as the object of the schemes is to increase the productivity, but without compromising with the revenue of the State. 21.7 As per the rules of interpretation applicable to the case of fiscal laws, the words must say what they mean and nothing should be presumed or implied. Applying the said plain interpretation and reading the word when even plainly as when , the blending of two clauses 3(i) and 3(ii) as suggested by us above, by way of harmonized and reasonable construction, is ine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iling of the sales tax deferral and clause 3(ii) of the said G.O. enables the expansion/diversified unit, of the existing industry to avail of the benefit of sales tax deferral either from the date of achieving the BSV or BPV, whichever is earlier, in that financial year. It was contended that if the BSV is achieved earlier and the BPV is reached later in the financial year, the benefit of sales tax deferral should date back to the earlier date of achieving BSV and similarly if the BPV is achieved earlier and BSV is achieved later, it should date back to the earlier date of achieving BPV and only then the object of deferral scheme can be achieved. According to the learned counsel, any other interpretation would frustrate the object of the scheme. The learned counsel also urged that even if the word "when" as appearing in clause 3(ii) is read as "after" even then the first respondent would be eligible for deferral of sales tax on the sales in excess of BSV after the actual production of the unit in the financial year exceeds the BPV and the benefit should date back to the date of reaching the BSV. The learned counsel also argued that in light of the circular dated May 1, 2000 issu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ility certificate issued to the first respondent, to which reference was made by learned counsel for the State. It reads as follows: "5.3. The company is eligible for deferral of sales tax only on the increased volume of production/sale. For the purpose of determining the increased volume of production, the base figure would be the highest of the volume of production/sale in the company in any one of the years during the last three years. Till reaching the volume of production/sale specified earlier the company would continue to pay tax and any liability in excess of the production/sale specified above alone will be eligible for deferment. . ." A conjoint reading of clauses 3(i) and (ii) of G.O. Ms. No. 119 dated April 13, 1994, and paragraph 5.3 of eligibility certificate dated February 13, 1998 would show that the object of the conditions with reference to reaching of BPV is to ensure that the concerned unit achieves the highest production and sale of the existing unit in the last three years prior to the commencement of the commercial production in the expansion unit, resulting in higher revenue on higher sales. The benchmark for availing of the benefit of the sales tax defe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ke of ready reference, the relevant portion of the circular is extracted below: "As per G.O. Ms No. 119, CT RE/April 13, 1994 as regards expansion cases it was decided that the past revenue obtained prior to expansion shall be protected. The BPV/BSV is fixed on the basis of highest annual production/sales in the three years prior to expansion. Thus the industries will have to pay the taxes due upon the turnover until the base production volume/base sales volume mentioned in the eligibility certificate is achieved. The BPV/BSV shall have to be worked out and incorporated in the eligibility certificate by SIPCOT and other district centres as per above Government order. Hence if the details are not available the particulars of production/sales for prior three years shall be ascertained from the books of the dealers and eligibility certificate got amended to incorporate the particulars to avoid any dispute. As per the decision of the Tamil Nadu Taxation Special Tribunal in O.P. 1229/1230/1231/98 dated November 23, 1998, Mercury Fittings (P) Ltd., it was held that G.O.M. No. 1998/ CTRE/April 13, 1992 contemplate the liability to pay tax with reference to base production volume or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SCC 488., dealing with the circular issued by the Board under section 151A of the Customs Act, 1962, which is again in pari materia with section 28A of the TNGST Act, Ruma Pal J., had opined that the circular will be binding primarily on the basis of the language of the statutory provisions buttressed by the need of the adjudicating officers to maintain uniformity in the levy of tax/duty throughout the country. Although in the same judgment, while concurring with the view expressed by Ruma Pal J., on the facts of that case, P. Venkatarama Reddi J., entertaining certain doubts as to the correctness of the proposition laid down by the Constitution Bench in Dhiren Chemical Industries1, had observed that there was a need to redefine succinctly the extent and parameters of the binding character of the circulars of the Central Board of Direct Taxes or Central Excise, etc., by another Constitution Bench, yet the learned judge did not disagree with the proposition that it is not open to the Revenue to file an appeal against the order passed by an appellate authority which is in conformity with a departmental circular. In fact, His Lordship went on to observe that when there is a statutory ..... X X X X Extracts X X X X X X X X Extracts X X X X
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