Madras High Court

M/S.Vicnivaas Agency vs The State Of Tamil Nadu on 27 January, 2021

1 W.P.(MD)NO.11544 OF 2010

BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT

DATED: 27.01.2021

CORAM

THE HONOURABLE MR.JUSTICE G.R.SWAMINATHAN

W.P.(MD)No.11544 of 2010

M/s.Vicnivaas Agency,
289D, Sivanthakulam Road,
Thoothukudi District,
Rep. by its partner,
T.P.S.Ponkumar. ... Petitioner

Vs.

1. The State of Tamil Nadu,
Rep. by its Principal Secretary to Government,
Industries Department,
Fort St. George,
Chennai – 600 009.

2. The Directorate of Industries and Commerce
Rep. by the Industries Commissioner and
Director of Industries and Commerce,
Chepauk, Chennai – 600 005.

3. The General Manager,
District Industries Centre,
Palayamkottai Road,
Near Bypass Road,
Korampallam,
Thoothukudi – 628 101.

4. The Commercial Tax Officer II,
Office of the Commercial Tax Officer,
Beach Road,
Thoothukudi – 628 001.

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2 W.P.(MD)NO.11544 OF 2010

5. The State Industries Promotion Corporation
of Tamil Nadu,
Rep. by the Chairman and Managing Director,
19-A, Rukmani Lakshmipathy Road,
Egmore, Chennai – 600 008. ... Respondents

Prayer: Writ petition is filed under Article 226 of the
Constitution of India, to issue a Writ of Certiorarified
Mandamus, calling for the records relating to the order passed
by the second respondent dated 18.03.2010 in R.C.
No.40905/LC4/2000 and quash the same and direct the
respondents to grant State Capital subsidy and sales tax
waiver to the petitioner firm as requested in their applications
both dated 09.12.1997 in accordance with G.O.Ms.No.500
dated 14.05.1990 Industries(MIG) (II) Department.

For Petitioner : Mr.N.Dilip Kumar
For R-4 : Ms.J.Padmavathi Devi
For R-1,R-2,R-3
& R-5 : No appearance.

***

ORDER

The writ petitioner is a registered partnership firm

that was manufacturing Poly Propylene Woven Sacks. The

petitioner took part in the auction sale conducted by the

SIPCOT Industrial Complex in October 1995. SIPCOT had

allotted a plot bearing No.C-78 in their industrial estate in http://www.judis.nic.in

3 W.P.(MD)NO.11544 OF 2010

favour of one M/s.Tuticorin Oxygen Private Limited. The said

company commenced construction of the unit. But then, it

failed to complete the same. Therefore, the site with the

incomplete construction was brought to sale on “as is where

basis”. The petitioner was the successful purchaser and all the

allotment formalities were concluded in favour of the

petitioner on 31.10.1995 and the site was handed over to the

petitioner on 14.06.1996. The petitioner completed the

construction and commenced their production of Poly

Propylene Woven Sacks.

2. The industrial estate was located in a backward

area. The petitioner therefore claimed concession available

under G.O.Ms.No.500 Industries (MIG.II) Department dated

14.05.1990. The petitioner's request was rejected primarily on

the ground that the parent assets of the petitioner were

already owned by M/s.Tuticorin Oxygen Private Limited and

therefore, they would be considered as a second hand

machinery. The rejection order was put to challenge by the

petitioner in W.P.No.6560 of 2000. Vide order dated

19.12.2006, the rejection order was set aside and the matter

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4 W.P.(MD)NO.11544 OF 2010

was remitted to the file of the second respondent to pass

orders afresh in accordance with law. The reasons assigned by

the learned Judge while allowing the writ petition are set out

in the following paragraph:-

“9 . From the above, it is clear that

the industry started by the petitioner is a

new industry, which has commenced

operation on 13.12.1996. For new industries,

the only impediment in Clause 12 of the G.O.

is that the second hand machinery will not be

part of the investment eligible for the

computation of deferral or waiver of sales

tax. The one and only reason stated by the

respondents is that part of the asset has been

created by the other entrepreneur. It is

obvious that even though the asset was

partly created, subsequently, it has been

acquired and allotted to the petitioner for

valuable consideration by the SIPCOT itself.

Hence, from the point of view of the

petitioner that asset can only be regarded as

a new asset which has been acquired by the

petitioner for the purpose of putting up http://www.judis.nic.in

5 W.P.(MD)NO.11544 OF 2010

industry in the most backward area. Hence, I

am of the view that the reason stated by the

Industries Commissioner, which has been

reproduced by General Manager, District

Industries Centre to non-suit petitioner

cannot be regarded as a reason and it cannot

be legally sustainable in law and as such the

reasoning stated in the impugned order is

extraneous to the G.O with which reliance

has been placed. For the foregoing reasons,

the impugned order is set aside and the

matter is remitted back to the respondent

authorities to reconsider the issue and pass

appropriate orders in accordance with law,

having regard to the requirements as

enunciated in G.O.Ms. No. 500 dated

14.5.1990, which has been considered in

various Judgments including the Judgment in

Sulochana Cotton Spinning Mills (P) Ltd. v.

State of Tamil Nadu and Others. (98 STC

125.) ''

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6 W.P.(MD)NO.11544 OF 2010

3. Pursuant to the order of rejection, the matter was

reconsidered by the second respondent and once again, the

petitioner's request for the grant of incentives and interest

from sales tax waiver was rejected. The reasons for denial of

the petitioner's request was that the petitioner has ceased to

be in possession of the assets in question and that they have

already sold the unit to M/s.Thim Poly Bags.

4. This rejection order dated 18.03.2010 is put to

challenge in this writ petition.

5. Though the impugned order was passed by the

second respondent itself, the third respondent has filed the

counter affidavit. The stand of the third respondent is that the

rejection order is very much in consonance with

G.O.Ms.No.500 Industries (MIG.II) Department dated

14.05.1990. According to the respondents, the petitioner has

failed to fulfill the eligibility criteria.

6. When the matter was taken up for disposal, there

was no representation on the side of respondents 2 and 3. The

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7 W.P.(MD)NO.11544 OF 2010

matter was adjourned on more than one occasion. I do not

know as to which the Government counsel has to enter

appearance. Of course Ms.Padmavathi Devi, learned Special

Government Pleader for Tax appeared for the fourth

respondent. But then, she obviously cannot make submissions

as regards the impugned order. In fact, the fourth respondent

is more a formal party.

7. Therefore, I went through the materials on record

and decided the issue.

8. The only reason for rejecting the petitioner's

request is that the petitioner has already sold the unit to a

third party. I called upon the petitioner to state as to when the

sale of the unit took place. The unit appears to have been sold

in the year 2002. The petitioner has made it clear that their

request is confined to the period commencing from

14.06.1996 to the date when they sold the unit to M/s.Thim

Poly Bags.

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8 W.P.(MD)NO.11544 OF 2010

9. Clause 3 of G.O.Ms.No.500 Industries (MIG.II)

Department dated 14.05.1990 reads as follows:-

“3. The Government direct that the

new industries to be set up in the 30 most

backward taluks ordered in para 2 above and

also in the three industrial complexes of State

Industries Promotion Corporation of Tamil

Nadu at Pudukottai, Cuddalore and

Manamadurai be eligible, apart form other

existing concessions, for full waiver of sales

tax dues for a period of five years upto a

ceiling of the total investment made in fixed

assets. Existing industries in the most

backward taluks and in the three State

Industries Promotion Corporation of

Tamilnadu (SIPCOT) complexes, undertaking

expansion/diversification are also eligible for

full waiver of sales tax dues for a period of

five years subject to a ceiling of the total

investment made in fixed assets under

expansion/diversification.”

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9 W.P.(MD)NO.11544 OF 2010

10. It is obvious that the question of availing

concessions and waiver is restricted to the period of five

years. Applying the aforesaid Clause, the period would end on

13.06.2001. The sale of the unit had taken place in the year

2002. Therefore, the ground on which the impugned order is

predicated is rather irrelevant. All the other aspects have

already been adjudicated and decided in favour of the writ

petitioner vide order dated 19.12.2006 in W.P.No.6560 of

2000.

11. In this view of the matter, the order impugned in

this writ petition is quashed. This writ petition stands allowed.

The respondents shall disburse the benefits payable to the

petitioner within a period of three months from the date of

receipt of a copy of this order. No costs.



                                                                             27.01.2021

                      Index    : Yes / No
                      Internet : Yes/ No
                      pmu

Note: 1.Issue order copy within one day after the same received by the Court Officers Section.

2.In view of the present lock down owing to COVID-19 pandemic, a web copy of the order may be utilized for official purposes, but, ensuring that the copy of the order that is presented is the correct copy, shall be the responsibility of the advocate/litigant concerned.

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                                                     10          W.P.(MD)NO.11544 OF 2010


                                                            G.R.SWAMINATHAN,J.


                                                                                    PMU


                      To:

                      1. The State of Tamil Nadu,

Rep. by its Principal Secretary to Government, Industries Department, Fort St. George, Chennai – 600 009.

2. The Directorate of Industries and Commerce Rep. by the Industries Commissioner and Director of Industries and Commerce, Chepauk, Chennai – 600 005.

3. The General Manager, District Industries Centre, Palayamkottai Road, Near Bypass Road, Korampallam, Thoothukudi – 628 101.

4. The Commercial Tax Officer II, Office of the Commercial Tax Officer, Beach Road, Thoothukudi – 628 001.

5. The State Industries Promotion Corporation of Tamil Nadu, Rep. by the Chairman and Managing Director, 19-A, Rukmani Lakshmipathy Road, Egmore, Chennai – 600 008.

W.P.(MD)No.11544 of 2010

27.01.2021

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11 W.P.(MD)NO.11544 OF 2010

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