TMI Blog1994 (12) TMI 302X X X X Extracts X X X X X X X X Extracts X X X X ..... have heard all these petitions together and decide them by this common order. 2.. The State Government with a view to encourage all new industries and the expansion of the existing industries in the backward and most backward areas of the State, has been giving incentives for establishment of new industries and also for expansion and diversification of the existing industries. Though such a programme of the State starts from the year 1971, we need not trace the incentive given by the State Government for establishment of industries from the year 1971. For our purpose, it is sufficient if we refer the various orders issued by the State Government from G.O. Ms. No. 305 dated May 22, 1989 onwards. G.O. Ms. No. 305 dated May 22, 1989, was issued in exercise of the power under article 162 of the Constitution offering interest-free sales tax loan scheme for existing units undertaking expansion or diversification and also interestfree sales tax loan scheme to new units other than the existing units and not for expansion or diversification. It was done as a long term strategy to stimulate industrial growth in the State of Tamil Nadu. However, the conventional industries like cement, suga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... subsidy and special subsidy for pioneer industries, eligible industries in the taluks now declared backward will be eligible for these concessions with effect from May 22, 1989, i.e., the date of issue of the order in the Government Orders seventh and eighth read above. 5.. The declaration of backward taluks made in para 3 above is meant for medium, major as well as small-scale industries. 6.. This order issues with the concurrence of Public Works and Finance Departments vide their U.O. No. 143/SP/D/9-1 dated June 30, 1989 and U.O. No. 2007/FS/P/89 dated July 7, 1989. " Again, on August 19, 1989, another G.O. Ms. No. 564, Industries Department, was issued under which all new small-scale industries were made eligible for deferment of payment of sales tax for five years for a total amount, which shall be the least of (a) the actual sales tax payable for five years, (b) Rs. 10 lacs for five years together and (c) 80 per cent of the capital invested for the units located at State Industries Promotion Corporation of Tamil Nadu Complex and growth centres or 70 per cent of the capital invested in respect of the units located at other places. It was further stated therein as follows ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... est annual production achieved during the last 3 years; (b) The sales tax deferment will be for a period of 3 years and the total amount will be the least of (i) 25 per cent of the fixed assets added during the expansion programme. (ii) Rs. 10 lakhs over the entire 3 years during which deferral is allowed under this scheme. (iii) Increase in sales tax assessed per annum over and above the 3 years average sales tax assessed before the expansion for a period of 3 years. (c) The eligible amount shall be deferred for a period of 3 years from the date of completion of the expansion project. (d) These three annual deferred instalments will be repayable by the assessee during the 6th, 7th and 8th year respectively. (e) The application for interest-free sales tax loan should be submitted before implementation of expansion scheme to the General Manager, District Industries Centres concerned. (f) During the lifetime of any small-scale industries unit, interest-free sales tax deferred would be granted only for one substantial expansion apart from that for the original project. (g) Second hand machinery purchased for substantial expansion will be totally excluded for consider ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... General Sales Tax Act (hereinafter referred to as "the Act") modifies G.O. Ms. No. 500 dated May 14, 1990 and other Government Orders issued prior to February 22, 1991, such result or consequence would be only prospective and applicable to such of those industries, which have been established subsequent to February 22, 1991 or such of those existing industries which have gone in for expansion or diversification subsequent to February 22, 1991, that the State Government is competent to offer incentive for establishment of new industries and also expansion and diversification of existing industries for the purpose of ensuring industrial growth in the State in exercise of its executive power under article 162 of the Constitution and that such offering of incentives is not prohibited under any law, much less under the Tamil Nadu General Sales Tax Act which specifically provides under section 17-A for deferring the payment by any new industrial unit or sick unit or sick textile mill of the whole or any part of the tax payable in respect of any period either prospectively or retrospectively. Apart from that, there is no prohibition contained in the Act, therefore the orders of the State ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also on the new industries commenced pursuant to G.O. Ms. No. 500 dated May 14, 1990 and the expansion and diversification undertaken by the existing industries pursuant to the aforesaid G.O. Ms. No. 500? (iii) If the answer to point (ii) is to the effect that G.O. Ms. No. 92 dated February 22, 1991 affects the operation of G.O. Ms. No. 500 dated May 14, 1990, whether the State Government can be estopped from giving effect to the same in respect of the new industries commenced pursuant to G.O. Ms. No. 500 and the diversification and expansion undertaken by the existing industries pursuant thereto? Point (i): 6.. G.O. Ms. No. 500 dated May 14, 1990, reads thus: "The Government in the order second read above declared 105 taluks of the State as industrially backward for the purposes of grant of interest-free sales tax loan, interest-free sales tax deferral, State capital subsidy, etc. 2.. With a view to correct regional imbalances in the industrialisation in the State by giving further incentives to more backward areas, the Government direct that 30 taluks from among the 105 industrially backward taluks be declared as industrially most backward taluks. The names of 30 taluks ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... up in any part of Tamil Nadu with an investment in fixed assets of more than Rs. 50 crores, a special incentive of deferral of sales tax for a period of 9 years to the extent of total investment made in fixed assets will be given. This deferral concession will also be available to the existing industries going in for expansion/diversification with an additional investment in fixed assets for more than Rs. 50 crores. 5.. The sales tax deferral/waiver of expansion/diversification ordered in paras 3-4 above is subject to the sales tax payable on products manufactured by the capacity created by expansion/diversification units only. 6.. The industries in the most backward taluks and in the SIPCOT complexes at Cuddalore, Manamadurai and Pudukottai can opt either for the full waiver of sales tax for the period of five years ordered in para 3 above or for the deferral of sales tax for nine years as applicable to the industries in the backward taluks ordered in para 4(a) above. The option should be exercised along with the application to be submitted to the authority for issuing eligibility certificate. The option once exercised and accepted will be final and cannot be changed. 7.. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on. 10. All eligible units which have commenced production before the date of issue of the order will be eligible for interest-free sales tax loan/deferral as per the orders existing on the date of commencement of production. Units which have availed interest-free sales tax loan under existing schemes, may opt for the deferral facility to the extent of uncompleted period and unutilised amount of the earlier scheme. 11. The original project in a taluk may go in for expansion/diversification in the same taluk where the original project is located or in any other taluk and avail the interest-free sales tax deferral/waiver concession. However, this concession would be granted for one expansion/diversification only if carried out in the same taluk where the original project is located. 12. Second-hand machinery will not be part of the investment eligible for the computation of deferral or waiver of sales tax. 13. This order modifies all the previous orders available on the subjectmatter or to the extent to which the scheme has been covered by this order. 14. This order issues with the concurrence of Commercial Taxes and Religious Endowment and Finance Department vide their U. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... offered under the earlier Government Orders referred to in the opening portion of this order, the following other incentives were offered: (1) Waiver of sales tax due for a period of 5 years up to a ceiling of total investments made in fixed assets. (ii) Regarding the existing industries in the most backward taluks and also in 3 State Industries Promotion Corporation of Tamil Nadu complexes, diversification and expansion undertaken by them were also made eligible for full waiver of sales tax due for a period of 5 years subject to a ceiling of total investment made in fixed assets under expansion or diversification. Thus, the new industries set up in 30 most backward taluks and the existing industries undertaking expansion and diversification in those areas were given additional incentives in addition to the existing concessions of full waiver of sales tax dues for a period of five years, ofcourse, the upper limit being the total investment made in fixed assets under expansion or diversification. The second part of the Government Order relates to 75 backward taluks, which is in paragraph 4 of the Government Order. According to that, in the industrial estates developed by any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the existing industries by extending full waiver of sales tax dues for a period of 5 years up to a certain ceiling as specified in paragraphs 3 and 4. If that be the object of the Government Order and if the Government intended to restrict the incentive in respect of new industries, it could have very well included the new industries also in paragraph 5 of the order. Though paragraph 3 is referred to in paragraph 5 of the order, it is referred to only in respect of deferral or waiver of expansion/diversification as contemplated in paragraphs 3 and 4 of the order. Paragraph 4 of the order also deals with establishment of new industries as well as expansion and diversification of the existing industries in 75 backward taluks. That being so, when the Government Order, in paragraph 5, specifically deals with only the expansion/diversification of the existing units and does not include the new industries, it is not possible to interpret paragraph 5 of the Government Order as modifying the incentives offered in paragraphs 3 and 4 of the said order in respect of the industries newly established pursuant to the aforesaid Government Order. Paragraph 6 also relates to the industries in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Major Incentives offered by the Government of Tamil Nadu." 9.. We may also mention here that the expression "sales tax" used in G.O. Ms. No. 500 dated May 14, 1990, includes sales tax payable on the purchase of raw materials as well as sale of finished products. In fact, the very Act itself relates to levy of general tax on the sale or purchase of goods in the State of Tamil Nadu. "Dealer" is defined as meaning any person who carries on the business of buying, selling, supplying or distributing goods directly or otherwise whether for cash or for deferred payment or for commission or other valuable consideration. "Total turnover" means the aggregate amount for which goods are bought or sold or delivered or supplied or otherwise disposed of in any of the ways referred to in clause (n) by a dealer either directly or through another on his own account or on account of others whether for cash or for deferred payment or other valuable consideration, provided that the proceeds of the sale by a person of agricultural or horticultural produce, other than tea and rubber (natural rubber latex and all varieties and grades of raw rubber) grown within the State by himself or on any land in whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay 14, 1990 subject to the ceiling of the initial investment made in fixed assets under expansion/diversification subject to the condition that the units produce before the assessing authority the eligibility certificates. The other notification, viz., G.O. Ms. No. 92 dated February 22, 1991, bearing number CTRE 82/91 deals with new industries and expansion and diversification of the existing industries in the remaining 75 backward taluks. It is also similarly worded. G.O.P. No. 92 dated February 22, 1991, bearing CTRE 83/91 relates to payment of sales tax payable for a period of 5 years by the industrial estates developed by Madras Export Processing Zone and Madras Metropolitan Development Authority on sale of products manufactured by the said units. This G.O. is also similarly worded. The last of the series G.O. P. No. 92 bearing CTRE 84 of 1991 relates to payment of sales tax payable by new or existing industries within the State of Tamil Nadu in 30 or 75 most backward taluks in certain districts notified by Government. In substance, the said Government Order is also to the same effect as the other G.Os. referred to above. Thus, it is clear from the aforesaid 4 G.Os. issued un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nment to offer such an incentive as the one under consideration, the representation made by the State Government through G.O. Ms. No. 500 dated May 14, 1990 to the industrialists to take advantage of those concessions and establish industries can in unequivocal terms be construed as a lawful promise made by the State Government to the industrialists. It is also not in dispute that the industrialists acting upon such promise, established new industries and also commenced production before April 24, 1991. There is no illegality, no lack of bona fides on the part of industries. Everything has been fair and proper. If that be so, the State Government cannot turn back and cannot withdraw the concession or restrict it. In view of the fact that the State Government is entitled to exercise the power under section 17-A of the Act which even if construed as an act of the delegatee, in other words, exercise of the legislative power, the State Government cannot escape from the promise made by it. What applies to the Legislature, does not apply to the State Government, in other words, there is no estoppel against law, but there is estoppel against the State Government. That it is so, is well es ..... X X X X Extracts X X X X X X X X Extracts X X X X
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