TMI Blog2005 (11) TMI 447X X X X Extracts X X X X X X X X Extracts X X X X ..... anced the contention that the benefit of deferment of sales tax in respect of expanded units have to be computed as and when a particular unit has achieved the base production in terms of quantity as defined under G.O. Ms. No. 108, dated May 20, 1996 and not with reference to either the turnover or with reference to the level of sales tax paid or payable. But the said contention was not accepted by the Tribunal also. Hence all the dealers are with the present tax revision cases. As identical issue is involved even for the subsequent assessment years and as the decision of the Tribunal is already known, as was decided for the earlier years, the dealers have come up directly with the writ petitions, as according to them, filing of the first appeal and the second appeal are only an empty formality, as the decision of the authorities including the Tribunal is already known. Hence the present writ petitions. The question that arises for consideration in all these batch of tax revision cases and the writ petitions is the meaning to be assigned to the term "base turnover" as contained in para 7 of G.O. Ms. No. 108, dated May 20, 1996 for the purpose of computation of the benefit of de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder G.O. Ms. No. 498, dated October 16, 1989 are applicable only to the new industrial units which are holding valid registration/letters of intent and have taken steps for the first time on or before October 3, 1989 and the said G.O, shall be in force till October 2, 1992. The abovesaid G.O. was followed by G.O. Ms. No. 117, dated March 17, 1993, which is effective from October 3, 1992 till March 31, 1997. The said G.O. was issued in the light of the new Industrial Policy Statement-1992 commenced in May, 1992. Under this G.O., all the districts within the State, except the areas covered by the corporation, are classified into three areas for the purpose of conferment of the benefits and with reference to Area-I, 20 per cent of the total cost not exceeding Rs. 20,00,000 by way of investment subsidy; while in respect of Areas-II and III, it was only 15 per cent. Similarly, with reference to the deferment/tax holiday on sales tax, Area-I is entitled for 100 per cent of the fixed capital cost for a period of ten years, while in respect of Area-II, it was restricted to 75 per cent of the fixed capital for the same period; and in respect of Area-III, it was 50 per cent for the same p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y that 'tax deferral would be only on the amount of tax payable on additional local sales over and above the previous level of local sales before expansion. In case the local sales after expansion is less than or equal to the previous level, the actual tax liability on such lower sales will be payable and there will not be any scope for tax deferral as there would not arise any additional tax liability'." While so, the Government has come up with a new industrial policy called "TARGET-2000" and issued G. O. Ms. No. 108, dated May 20, 1996. Under this G.O., all the districts in the State excluding the areas covered by the Corporations have been treated as a single unit for the purpose of granting the benefit of incentives. In this G. O., reference was made to almost all the earlier G. Os., that were issued, except G. O. Ms. No. 75, dated March 14, 1996 and observed that in modification of all the earlier orders, the Government have decided to introduce the new industrial policy. In this G. O., investment subsidy was provided up to 20 per cent of the fixed capital not exceeding Rs. 20,00,000. Deferment and tax holiday is provided to the extent of 135 per cent of the fixed capital ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax payable by them. This claim was, however, either rejected or restricted to a lesser amount while framing the assessments. During the course of assessment proceedings the petitioners/ dealers claimed that they are entitled for the deferment benefit in terms of the G.O. Ms. No. 108, when once they crossed the base production level as contemplated under the G.O. Negativing the said claim, the departmental authorities framed assessments taking the stand that the dealers are entitled for the benefit of deferment of sales tax not only after crossing the base level turnover but also if they exceed the level of sales tax both under the Andhra Pradesh General Sales Tax Act as well as the Central Sales Tax Act and not otherwise. Accordingly, the assessments were framed. Even before the Tribunal though the dealers were successful insofar as the Central sales tax level fixed by the authorities, but the Tribunal also took the view that the dealers have not only to comply with the base turnover in terms of eligibility certificate but also required to comply with the level of local sales tax payment and it is only thereafter, the dealers are entitled for the benefit of deferment. The said vi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontended by referring to the counters filed on behalf of the Commercial Tax Department as well as the Industries Department that a different and exactly opposite stands have been taken, which clearly shows that the Commercial Tax Department was treating the G.O., as if it was only intended to gather the revenue to the State and not as providing industrial incentives for the industrialisation of the State. The learned counsel also contended that the counter filed by the Assistant Director of Industries on behalf of the Commissioner of Industries clearly refers how the Industries Department understood the G.O. Ms. No. 108 for the purpose of granting the benefit of deferment in respect of the expanded units. It clearly supported the stand of the petitioners that the benefit of the G.O., for exemption or deferment is available if the unit crosses the best production in terms of the quantity fixed under the eligibility certificate. In the counter it was also specifically mentioned that the sale of the base turnover whether within the State or outside the State is immaterial. It was categorically admitted that with reference to G.O. Ms. No. 108 there is no mention of maintaining local sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o. 108 also indicate that the said G.O., was issued in modification of the earlier Government orders referred to therein, where all the Government orders are referred to. Therefore, the order in question is not an independent and altogether a new one, but was introduced in modification of the earlier schemes of the industrial incentives. The learned counsel also contended that since G.O. Ms. No. 386 was referred specifically in G.O. Ms. No. 108 and further as G.O. Ms. No. 75 was issued clarifying certain aspects of G.O. Ms. No. 386, even in the absence of any specific reference to G.O. Ms. No. 75, the same would equally apply for the purpose of ascertaining the meaning of the "base turnover", which term has been used not only in G.O. Ms. No. 386, but also in G.O. Ms. No. 108, which was explained in G.O. Ms. No. 75. Therefore, it is not open to the petitioners to contend that the earlier Government orders have no application while considering the benefit of incentives under G.O. Ms. No. 108, and if all Government orders are read together, it is very clear that the "base turnover" would mean only the turnover in terms of the G.O., the best production preceding the three years of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 149, dated March 31, 1993; G.O. Ms. No. 238 dated November 26, 1993; G.O. Ms. No. 1331 dated April 13, 1994. Therefore, it would not be proper for the Commercial Tax Department to contend that the G.O., has to be read together with the earlier G.Os., in order to ascertain with reference to what the industrial incentives are to be extended. Further, the "base turnover" was defined in G.O. Ms. No. 386 differently with that of the definition contained in the present G.O. As per G.O. Ms. No. 386, the term "base turnover": "The best annual turnover in terms of value in the preceding three years period to expansion/modernisation/diversification is termed as base turnover". In fact, this was amended by G.O. Ms. No. 34, dated January 31, 1996 and the same reads: "The best production achieved during three years preceding the year of expansion or the maximum capacity expected to be achieved by the industry as per the appraisal made by the financial institution before funding the project, whichever is higher." This was again clarified in G.O. Ms. No. 75, and the said clarification reads: "After careful examination of the matter Government hereby clarify that 'tax deferral would be only on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earing, though we have specifically asked the counsel appearing for the department to specify which part of the earlier Government orders are applicable or which part of the earlier G.O., can be treated as part of the present G.O., to consider any specific benefit the learned counsel was not able to specify the same, which would go to show that though the G.O., reads as if it was issued in modification of the earlier G.Os., but the scheme of incentives provided under this G.O., is totally new and independent containing all the terms as required for the determination and conferment of incentives. In fact, a division Bench of this court to which one of us (BRSR, J.) was a party, on an earlier occasion in SHV Energy South East Ltd. v. State Investment Promotion Board [2004] 136 STC 100; [2003] 36 APSTJ 37, while considering the terms of this G.O., held that the G.O., is a complete code by itself covering all the areas where the State intended to grant or extend the benefit of incentives. Further, when a totally different definition was adopted as to the "base turnover" in the present G.O., there is absolutely no justification for the Department to rely upon the different definition pr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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