Whereas the Government in G.O.Ms. No. 498, Industries and Commerce (I.A.) Department, dated the 16th October, 1989 issued orders extending certain concessions under the Liberalised State Incentive Scheme for setting up of new industries in the State of Andhra Pradesh, except in the Industries specified in the Annexure to the order and those to be located in the Municipal Corporation limits of Hyderabad, Visakhapatnam and Vijayawada;

And whereas, a concession of five years Sales Tax Holiday subject to a ceiling of rupees thirty five lakhs on Sales Tax during the entire holiday period has been allowed to the small scale in industries to be set up on or after the 3rd October, 1989 and going into commercial production before the 31st March, 1995;

And whereas, it has been brought to the notice of the Government that there is every likelihood of under exploitation of the concession of the Sales Tax Holiday of rupees thirty five lakhs allowed in the aforesaid G.O., by some of the units with every small fixed capital investment but with high turnover by viritue of components bought out;

To And whereas, while approving the comprehensive guidelines for effective implementation of the Incentive Scheme issued in Memo. No. 2125/IA/89, Industries and Commerce Department dated 15-9-1990 it has been made clear in para 6(2)(B)(ii) of the and guidelines that small scale industries are exempted from payment of Sales Tax for a period of five years from the date of commercial production limited to 100% of fixed capital investment or rupees thirty five lakhs whichever is less;

And whereas, the demand notices for payment of Sales Tax in accordance with the guidelines evolved were issued to certain malt scale industries;

And whereas, the said small scale unit have challenged the said demand notices in the High Court of Andhra Pradesh, on the pretext that they are eligible for the Sales Tax Holiday benefit up to a maximum of rupees thirty five lakhs in accordance with the orders issued in the said G.O., irrespective of that capital investment;

And whereas, in W.P. No. 16570/91 and batch the High Court of Andhra Pradesh, while upholding the contention of the petitioners, directed not to demand or collect Sales Tax from the petitioners except as otherwise provided in the said G.O.;

And whereas, the intention of the Government is only to allow the small scale units a Sales Tax Holiday to an extent of 100% of their capital investment or a maximum of rupees thirty five lakhs whichever is less during the entire holiday period vide para 6-B (ii) of the guidelines issued in Memo No. 2125/IA/87-1, dated the 15th September, 1990 for implementation of the Liberalised State Incentive Scheme, 1989;

And whereas, the High Court of Andhra Pradesh in W.P. No. 16570/91 and batch hold that limiting the extent of eligibility to a sum lessor than rupees thirty five lakhs could have been effected only by another notified order issued under clause (2) of article 166 of the Constitution rather than by a Memorandum and held that the respondent are not entitled to rely upon the alteration or reduction in the eligibility of the petitioners for exemption to any amount lessor than that which was promised in clause 3 of G.O.Ms. No. 479, Industries and Commerce (I.A.) Department dated 16-10-1989;

And whereas, the implementation of the said directions of the High Court would run against the policy of the Government and it amounts to allowing the small scale units with loss capital investment and high turnover, taking undue advantage of the policy of the Government;

And whereas, the implementation of the judgement of the High Court would result in the colossal loss of revenue to the Government;

Be it enacted by the Legislative Assembly of the State of Andhra Pradesh in the Forty-sixth Year of the Republic of India, as follows: