THE HONOURABLE SRI JUSTICE GODA RAGHURAM AND THE HONOURABLE SRI JUSTICE RAMESH RANGANATHAN WRIT PETITION No. 20829 of 2009 Dated: 20-10-2009 Between: M/s My Home Industries Limited, rep. by its Chairman and Managing Director, situated at Mellacheruvu Village, Nalgonda District, registered Office at Madhapur, Hyderabad. …Petitioner’ and Assistant Commissioner (CT), (LTU), Commercial Taxes Department, Nalgonda Division, Nalgonda. …Respondents. ORAL ORDER: (Per RR, J) The order of the Assistant Commissioner (CT), Nalgonda dated 17-9-2009, for the tax period April to July, 2009 under the A.P. VAT Act, 2005, calling upon the petitioner to arrange payment of the wrong adjustments of tax due, under tax deferment, for Rs. 7,90,64,705-00, is under challenge in this writ petition. The petitioner, a Company incorporated under the Companies Act, 1956, is a dealer on the file of the Assistant Commissioner (CT), Nalgonda. It is engaged in the business of manufacture and sale of cement in its industrial unit in Mellacheruvu Village, Nalgonda District. It initially commenced commercial production from 23-3-1998. In terms of G.O.Ms. No.108, Industries and Commerce (IP) Department, dated 20-5-1996, issued by the Government of Andhra Pradesh, the State Level Committee issued Final Eligibility Certificate dated 30- 11-1998 allowing tax deferment for Rs.77, 37,60,980-00 to be availed by the petitioner within a period of 14 years from 23-3-1998 to 22-3-2012. The petitioner, thereafter, undertook expansion of its production capacity in the year 2000 enhancing it from 1,98,000 MTs per annum to 4,95,000 MTs per annum. Again, in terms of G.O.Ms. No.108, the petitioner was issued Final Eligibility Certificate dated 6-6-2000 allowing sales tax exemption (holiday) for Rs.34,81,65,000-00 over a period of seven years from 22-3-2000 to 21-3-2007 on the expanded unit. The sales tax exemption was allowable subject to the condition that the petitioner achieved base production of 1,98,000 MTs per annum. The petitioner contends that, from the inception, it has been availing tax deferment benefit on the base production, in terms of first Final Eligibility Certificate in respect of the original Unit. The petitioner availed tax deferment on the base production of 1,98,000 MTs per annum and Tax Holiday for production over and above the base production, in respect of the expanded capacity and such availment was accepted by the Commercial Taxes Department from 22-3-2000 to 21-3-2007. While matters stood thus, the respondent issued notice dated 24-8-2009, for the period April to July, 2009 as well as for the years 2007-08 and 2008-09, informing the petitioner that they should have separately indicated the production and sale of cement referable to the original unit and the expanded unit and, in the absence of such information, being furnished, the department was left with no option but to treat the entire production as traceable to the expanded unit. The respondent proposed to deny the benefit of tax deferment in respect of production traceable to the unexpanded plant in its entirety. In its objections filed on 31-8-2009, the petitioner contended that there being no controversy whatsoever with regard to its entitlement to claim the benefit of tax deferment in respect of production referable to the un-expanded plant, their action in claiming tax deferment in respect of the base production of 1,98,000 MTs per annum, traceable to the original unit, was legally valid. The petitioner contended that there was no requirement, in the Target-2000 scheme, to dissect and furnish the production traceable to the original unit and the expanded project distinctly for claiming the benefit, that it was humanly impossible for any entrepreneur to identify the production referable to the pre-existing plant and the expanded unit and it is for this reason that the concept of base production was evolved by the State Government in the context of extension of industrial incentives. The petitioner also contended that, in the context of extension of Tax holiday benefit from 22-3-2000 to 21-3-2007, the Commercial Taxes department did not indicate segregation of production referable to the pre-existing plant and the expanded plant and if, during the said period, the production referable to the pre-existing plant i.e., 1,98,000 MTs per annum was considered for extending the benefit of deferment, there was no reason why the department could not extend the same basis for the current period also. The petitioner also placed reliance upon a judgment of this Court in Prabha Enterprises v. DCTO[1]. Despite the objections raised, the impugned assessment order was passed. It is evident from the counter-affidavit, filed by the Assistant Commissioner, that these facts are not in dispute. The Assistant Commissioner would, however, contend that, since the petitioner was neither prepared nor willing to furnish separate quantitative particulars relatable to the original unit and the expanded unit, which was mandatory, they lost their eligibility to claim tax deferment on the entire production achieved from the original unit and the expanded unit though upto a limit of 1,98,000 MTs per annum. Alternatively, it is contended that the petitioner is required to segregate the quantities referable to the original unit and the expanded unit which they could have done by adopting a notional or proportionate method, whichever was appropriate/relevant, for bifurcating the quantities depending upon the original installed capacities or production achieved on a month to month basis referable to the original unit and the expanded unit. He would place reliance on the judgment of the Sales Tax Appellate Tribunal in M/s Kanti Brothers v. State of A.P.[2] to contend that wherever material is available from which proportionate quantities can be ascertained then that benefit has to be extended to the assessee, and it cannot be denied to him merely on the ground that he had not maintained separate accounts indicating full details of the transactions to prove the same clinchingly. According to the Assistant Commissioner, the petitioner-company could easily have segregated the quantities month to month on a proportionate basis of their original installed capacity and the expanded capacity. On the ground that the petitioner had not segregated production between the original unit and the expanded unit, the assessing authority proposed to deny the petitioner the entire benefit of tax under the tax deferment scheme. Even if production from the original unit and the expanded unit are to be taken proportionately, the petitioner is, nevertheless, entitled for the benefit of tax deferment scheme which, under the assessment order, has been denied to them. The impugned assessment order, whereby the benefit of tax deferment scheme has been denied to the petitioner in its entirety, is unsustainable and is, accordingly, set aside. Sri S.R. Ashok, Learned senior counsel, submits that the order is perverse and that the respondent should be mulcted with exemplary costs. We are of the opinion that the respondent should have undertaken the exercise of extending tax deferment benefit under the scheme apportioning the production relatable to the original unit and the expanded unit notionally or proportionately, whichever he considered appropriate or relevant. The respondent shall put the petitioner on notice regarding the notional basis which it proposes to adopt for bifurcating production between the original and the expanded unit, and thereafter make the assessment de novo after giving the petitioner an opportunity of being heard. The writ petition is allowed and the impugned order is, accordingly, set aside. However, in the circumstances, without costs. ______________________ GODA RAGHURAM, J _____________________________ RAMESH RANGANATHAN, J 20th October, 2009. GRR [1] 13 APSTJ 234 [2] 11 APSTJ 201