THE HON’BLE SRI JUSTICE V.V.S.RAO AND THE HON’BLE SRI JUSTICE RAMESH RANGANATHAN WRIT PETITION No.22679 of 2000 June 06, 2011 Between: M/s.Sri Venkateswara Carbonic Gases, Nacharam, represented by its Partner, Sri B.Satish, S/o.B.Dharma Rao … Petitioner And State of Andhra Pradesh, represented by its Secretary, Industries & Commerce Department, Secretariat, Hyderabad And others ... Respondents THE HON'BLE SRI JUSTICE V.V.S.RAO AND THE HON'BLE SRI JUSTICE RAMESH RANGANATHAN WRIT PETITION No.22679 of 2000 ORDER: (Per Hon’ble Sri Justice Ramesh Ranganathan) The relief sought for, in this writ petition, is to declare the circular memo No.20/1/2000/0144/FD, dated 17.5.2000 issued by the second respondent as illegal and consequently declare that the petitioner is entitled to all incentives including tax holiday benefit for seven years from 20.11.1998 under Target 2000 Scheme in terms of final eligibility certificate issued by the second respondent on 23.8.1999. The petitioner is a partnership firm carrying on business in conversion of liquefied carbon-di-oxide into gaseous form. The said carbon gas is filled in cylinders and sold. The petitioner was hitherto granted exemption by the Additional Director of Industries vide final eligibility certificate dated 23.8.1999. It is on the basis of the said certificate that they claimed exemption from being taxed on the sale of carbonic gases. The assessing authority, however, made a provisional assessment seeking to levy tax on the turnover relating to sale of carbonic gas, aggrieved by which the present writ petition is filed. The issue which arises for consideration, in this writ petition, is no longer res integra. A Full Bench of this Court in Panchalingal Carbonic Gas Pvt. Ltd v State of Andhra Pradesh[1] held that since conversion of liquefied carbon-di-oxide into gaseous state does not amount to manufacture, the dealers who are carrying on business in sale of such carbonic gases are not entitled for exemption in terms of G.O.Ms.No.108, dated 20.5.1996. Having so held, the Full Bench issued the following directions. a) the activity of the petitioners does not involve the process of manufacture, irrespective of the difference as to the form, in which it is purchased by the industry, and the form in which the same is supplied to its customers. b) Incentive of deferment/tax holiday on sales tax under G.O.Ms.No.108, dated 20-05-1996 are available only to those industries, where the process of manufacturing takes place, subject, to their not having been excluded under the annexure. c) The liability to pay the tax arising out of cancellation of incentives would start from the date on which such orders become operative, and it shall be open to the Government to recover any tax from such units, if it is found that they have collected the sales tax on such product during the subsistence of the incentives. In view of the Full Bench judgment referred to herein above and in terms thereof, the writ petition is also disposed of holding that the petitioner is not entitled for tax holiday on sales tax under G.O.Ms. No.108, dated 20.5.1996. However, the liability to pay tax arising out of cancellation would start from the date of such order became operative, and it shall be open to the Government to recover the tax from such units, if it is found that they have collected the sales tax on such product. There shall be no order as to costs. _______________ (V.V.S.RAO, J) _______________________________ (RAMESH RANGANATHAN, J) June 06, 2011 YS [1] (2005) 141 STC 161 (FB)