Madras HC quashes SIPCOT order

Our Legal Correspondent

`The scheme of incentives was intended to encourage establishment of new industries

Chennai, Oct. 10

The Madras High Court has directed the State Industries Promotion Corporation of Tamil Nadu Ltd (SIPCOT) to reconsider steel scrap produced by a new industry set up in the 30 most backward taluks in certain districts as coming within the meaning of the expression "product" so as to be eligible for the deferral payment of sales tax for a period of 9 years.

Quashing an order dated May 11, 2004 issued by the 1st respondent, SIPCOT, against the petitioner, JBM Sungwoo Ltd, holding that the petitioner was not entitled for the concession in regard to steel scrap, Mr Justice K. Chandru held that the writ petition succeeded.

The petitioner had argued that steel scrap came as a by-product while producing steel metal components, assemblies and sub-assemblies of automobile parts. As steel scrap was not wanted and got accumulated, it had to be sold in the market. The judge noting this said that SIPCOT had not applied its mind to the decision of the standing committee which had held that the product was not indicated in the application for deferral/waiver. Instead, the judge held, SIPCOT had simply issued the impugned order stating that the petitioner was not entitled for the concession.

Citing a judgement of a Division Bench of this Court, the Judge said that the scheme of incentives formulated by the State was one which was intended to encourage establishment of new industries. The Court wondered why SIPCOT shirked responsibility imposed on it even when there were authoritative pronouncements from both the High Court and the Supreme Court.

The Judge directed SIPCOT to reconsider the matter and extend the concession to the petitioner in accordance with the law and accord all benefits arising out of the same. This exercise shall be done within four weeks from date of receipt of a copy of this order, it said.

(This article was published in the Business Line print edition dated October 11, 2006)
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