The Hindu Business Line : Bench ruling on ST deferral scheme for units in backward areas

Chennai, Oct 1 The Madurai Bench of the Madras High Court has rejected the plea of a dealer registered under the TN General Sales Tax Act, 1959 that the ‘deferral scheme’ launched by the TN Government should be available to them as the essential pre-requisite of an ‘eligibility certificate’ was issued to them after the GO Ms.No.119/94 dated 13-4-1994 was enforced.

The scheme was a concession extended to industries established in a backward area. Hearing a writ petition from an industrial unit pleading for grant of the scheme to them, Mr Justice K. Chandru ruled that the scheme launched by the Government could not be interpreted by this Court as if it was part of a legislation or rule made thereunder.

In a concession granted by the Department, there was no scope for the court to interfere when there was no scope for interpretation to find out whether a dealer was eligible for the benefit under A or B scheme, the Judge held.

In this case, after this court gave a direction, the Department had taken a specific stand that the petitioner was covered by the new GO of 1994, and also stated that the eligibility certificate as well as commercial production at the unit commenced after 1994. Hence, there was no scope for interfering with the impugned order dated March 10, 2005 demanding the entire amount of Rs 7,99,200 along with interest at 2 per cent, as ex-facie illegal and unlawful.

The petitioner, M.M. Synthetics, Theni, contended that they had set up a manufacturing unit at the SIDCO campus, Theni, which was classified as a backward area. Persons setting up units were eligible to avail themselves of the ‘deferral scheme’. They made an application on February 8, 1994 for availing the benefit. They had also entered into an agreement on December 7, 1994 for payment of deferred ST. The Commercial Tax Officer, Theni, R-1, submitted that the eligibility certificate was obtained on September 27, 1994, and the deferral period was only from October 1, 1994. Hence, dealers had to pay Bench Mark Tax to avail IFST deferral loan on expansion. The industry was therefore not eligible to avail the deferral scheme.

The petitioner, in the writ petition, prayed for quashing the impugned proceedings dated March 10, 2005 of R-1 and direct the CTO to extend the deferral of ST for the expanded unit as per GO dated 14-5-1990 without insisting on payment of Bench Mark Tax.

The petition was dismissed.

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