JUDGMENT
S. Parvatha Rao, J.
1. The petitioners in these four writ petitions state that they have established new industries registered in 1993 as small-scale industries and that they are eligible for the incentives under G.O.Ms. No. 498 dated October 16, 1989, read with G.O.Ms. No. 117 dated March 17, 1993, of the Government of Andhra Pradesh. They state that they went into commercial production about the middle of 1994, i.e., between May and July, 1994.
2. The petitioners claim that one of the incentives given under the said G.Os. to the small-scale industries is “sales tax holiday” for a period of five years. It is their contention that under the sales tax holiday incentive they are entitled to collect the sales tax exigible on the goods produced and sold by them during that period of five years up to a maximum limit of Rs. 35,00,000. On their application, they were issued temporary eligibility certificates “for availment of sales tax exemption”. They are aggrieved by the clause in those certificates issued to them which imposes the following condition for availing tentative eligibility :
“1. The SSI unit is not entitled to collect sales tax from the consumers and further they would be liable to remit the sales tax collected to Government in case they collect sales tax during the availment period of sales tax exemption.”
3. After hearing Mr. E. Manohar, learned counsel appearing for the petitioners, and the learned Government Pleader for Industries who has taken notice for the respondents, we are of the view that there is no substance in the claim of the petitioners that under the sales tax incentive of “sales tax holiday” applicable to them, they are entitled to collect sales tax during the period of five years for which they are eligible for that incentive and appropriate it without payment to the Government. A reading of the G.O. supports our view. As regards the incentive in respect of sales tax, item “B” in paragraph 3 of G.O.Ms. No. 498 provides as follows :
“B. Deferment/tax holiday on sales tax
————————————————————————
Place Sales tax percentage of deferment/tax Period
holiday (on products manufactured
in the new industrial units)
————————————————————————
Medium and large scale industries
sales tax deferment
Srikakulam, 100 per cent of the fixed capital Up to a
Anantapur and investment during the entire maximum
Adilabad districts deferment period period of
10 years
All other 50 per cent to 75 per cent of the Up to a
districts of fixed capital investment during maximum
the State the entire deferment period period of
10 years.
Note. – 1. Notification of the areas with the eligible percentage of sales tax deferment of 50 per cent to 75 per cent as also guidelines for prescribing the period of deferment taking into account the nature of industries would be issued separately.
2. Fixed capital investment is the investment made on land, buildings and machinery of the new industrial unit.
Small-scale industries – Sales tax holiday
All districts in the State 5 years sales tax holiday subject
to a ceiling of Rs. 35 lakhs on
sales tax during the entire
holiday period.”
4. From this it is clear that in the case of medium and large scale industries, the incentive is “sales tax deferment” and under the scheme applicable to the said industries up to a maximum period of 10 years, the said industries ar entitled to collect sales tax, but they need not pay sales tax collected immediately to the State. This scheme provides for deferment of the said payment. When the deferred sales tax becomes payable, it can be paid without interest as provided under paragraph 4 of the said G.O. which reads as follows :
“4. The total amount of sales tax deferred would become payable without interest in as many annual instalments as the number of years for which tax deferment is allowed and would commence immediately after the expiry of the deferment period. Delayed payments would attract interest in the manner to be prescribed. Detailed orders would be issued separately regarding the manner in which the scheme should be implemented.”
5. In the case of small-scale industries, the incentive given is “sales tax holiday”, which in the context, means exemption from sales tax for a period of five years subject to a ceiling of Rs. 35 lakhs. It is in view of this that the impugned condition in the temporary eligibility certificates given to the petitioners requires that the SSI units concerned are not entitled to collect sales tax.
6. The manual of guidelines for implementation of the incentives scheme under G.O.Ms. No. 498 clarifies the position. A copy of the said guidelines is placed before us by the learned Government Pleader. It states that the manual received the approval of the Government in Memo No. 2125/IA/89-1 dated September 15, 1990.
7. In the form given in the said manual for application for issue of sales tax deferment/sales tax exemption temporary eligibility certificate, the expression used is not “sales tax holiday” but “sales tax exemption”. The form for temporary eligibility certificate fixing limits for availing deferment of sales tax/sales tax exemption given in the said manual also does not use the expression “sales tax holiday”. The learned counsel for the petitioners draws our attention to the pro forma application form prescribed in that manual “for claiming incentives under liberalised State Incentives Scheme vide G.O.Ms. No. 498, Industries and Commerce (I.A.) Department dated October 16, 1989”. Item No. 21 of the said application provides, inter alia, as follows :
“21(a) ………
(b) I/we hereby assure that the incentives under the scheme if sanctioned to my/our unit, will be utilised for the development of my/our industry only.
(c) ……….”
8. It is not disputed that the pro forma application prescribed was common for all industries, i.e., large scale industries, medium scale industries and small-scale industries. As regards the large scale and medium scale industries, as already pointed out earlier, paragraph 4 of G.O.Ms. No. 498 clearly provides that the deferred sales tax has to be repaid in instalments after expiry of the deferment period. It is obvious that it is in respect of this deferred sales tax that the applicant is required to give the said assurance. This becomes obvious also from the form prescribed for “application for availing deferment of sales tax against temporary eligibility certificate obtained”. Column 15 of that form of application is as follows.
“15. Remarks
I/we certify that the amount of sales tax deferred Rs. … allowed till date has been utilised for the development of the industrial unit and A2 returns and necessary bonds, etc., are being submitted to Government regularly.
I/we request for deferring the sales tax mentioned at para 10 above.”
9. In the form for “application for availing sales tax exemption against temporary eligibility certificate obtained” no such column is there. On the other hand, column 11 in that application is as follows :
“11. Certified that the particulars furnished above are true and correct. The monthly returns prescribed will be submitted regularly as required. It is requested to grant sales tax exemption to the extent of :
(a) Taxable turnover for the month of …… 90 : Rs. ……
(b) Assessable tax sought to be exempted. : Rs. ……”
10. What is meant by “sales tax holiday” is “sales tax exemption” is placed beyond controversy by G.O.Ms. No. 117, Industries and Commerce (IFR) Department dated March 17, 1993, which extended the general incentives scheme in G.O.Ms. No. 498 dated October 16, 1989 and also the special scheme of State incentives for Scheduled Castes and Scheduled Tribes entrepreneurs till the end of 8th Plan period, i.e., up to March 31, 1977. Under the heading “Deferment/Tax holiday on sales tax”, this G.O. describes the sales tax incentive given to tiny and small-scale industries as sales tax (holiday) exemption and places the matter beyond any doubt as follows :
“5 years sales tax holiday. (Exemption from sales tax subject to a ceiling of 100 per cent on fixed capital cost or Rs. 35 lakhs whichever is less during the entire holiday period).”
Note (b) also provides :
“(b) The tiny and small-scale industrial units have an option to avail the sales tax exemption in less than 5 years also and are liable to pay the sales tax after exhausting the eligibility limit.”
11. From the above, we have no doubt in our minds that under G.O.Ms. No. 117 dated March 17, 1993, read with G.O.Ms. No. 498 dated October 16, 1989, the Government intended only to grant exemption of sales tax to the small-scale industries. This exemption the Government is empowered to give under section 9 of the Andhra Pradesh General Sales Tax Act, 1957. Under clause (ii) of sub-section (1) of section 9, the Government may by notification, make an exemption in respect of any tax payable under that Act “by any specified class of persons, in regard to the whole or any part of their turnover”. Clause (b) of sub-section (2) of section 9 provides that such exemption from tax “may be subject to such restrictions and conditions as may be specified in the notification, including conditions as to licences and licence fees”. When exemption in respect of the tax payable under that Act is given under section 9, we fail to see how the petitioners can collect the sales tax. Collection of exempted sales tax would be unauthorised. Sub-sections (1) and (2) of section 30-B of that Act provides that “no dealer shall collect any sum by way of tax, in respect of sale or purchase of any goods, on which tax is not payable under this Act” and that “no dealer, shall collect any amount by way of tax in excess of the amount of tax payable by him under the provisions of this Act”. Therefore, the petitioners cannot collect sales tax that has been exempted.
12. The petitioners rely on sales tax holiday benefits allowed to some third parties, namely, (i) Srinivasa Conductors, (ii) Kranti Conductors, and (iii) Rajam Aluminium Metal Products Pvt. Ltd. and on the final eligibility certificate dated August 4, 1993, issued to M/s. Sri Srinivasa Conductors – the petitioners have not filed the final eligibility certificates issued to the other two – and in particular the conditions for availing the incentive specified in the said certificate dated August 4, 1993, which provide as follows :
“(i) In case of sales tax deferred, total sales tax deferred in a year should be repaid at the end of 10th year without interest.
(ii) In case of non-remittance of the tax on the due date an interest of 18 per cent will be charged from the due date till the date of payment. The Government will have the right to recover such amounts due under this account treating the same as arrears of land revenue under A.P. Act, 1864.
(iii) The sales tax incentives should be utilised for the development of industry only and should not be utilised for any other purpose.”
13. From these conditions it does not follow that Sri Srinivasa Conductors is enabled to collect the sales tax even after it has been given sales tax holiday. A reading of the said conditions shows that they apply only to cases where payment of sales tax is deferred.
14. The learned counsel for the petitioners submits that if small-scale industries are not allowed to collect sales tax, there would not be any real incentive for them and that that would be worse than the position obtaining prior to G.O.Ms. No. 498 of 1989. The learned counsel states that then they were able to collect sales tax like large scale and medium scale industries and were allowed to retain the same for a specified period and then repay the same thereby having the benefit of interest-free credit for a number of years. According to the learned counsel for the petitioners, the real incentive that is intended under the G.Os. is cash subsidy of the sales tax amount which they could collect during the tax holiday period without any condition for payment, thus placing them in a better position than the large scale and medium scale industries. According to the learned counsel, “tax holiday” should and can mean only that. We are unable to agree with this submission. There is no doubt that if they are allowed to collect sales tax and appropriate the same without prying it to the State, they would be much better off, but we do not understand the G.Os. as giving them that gift. The G.Os. have provided for “investment subsidy” separately to small, medium and large scale industries. As regards sales tax, the benefit given to small-scale industries by the said G.Os. is only exemption from that tax up to a certain limit for a specified period : the likely object is to make their products more competitive price-wise. It is common knowledge that the cost of production of small-scale units is higher than that of large scale or medium scale units. The small-scale units would be placed in a disadvantageous position in marketing their high cost products if sales tax is also added to the price of those products. Because of the exemption from sales tax, in a sellers market, i.e., when demand is high, the small-scale units will have the advantage of increasing the price of their products without the burden of sales tax; and in a buyers market they can market their products better by reducing the price to the extent possible below the price of the products of medium and large scale units burdened with sales tax. These are not mean advantages. What incentives are to be given and to what extent and to whom are all matters of policy and that is beyond our pale.
15. In the circumstances, we do not find any merit in these writ petitions and accordingly they are dismissed.
16. Writ petitions dismissed.