Judgment :- R.Jayasimha Babu, J. It is undisputed that the assessee is entitled to deferral of sales tax liability in respect of the units set up by it at Alathiyur, Perambalur District. An agreement dated 3.9.98 has been entered into between the petitioner company and the State in this regard. 2. It is not in dispute that the petitioner achieved the base level production referred to in that agreement in August 2000 and reached the base sales volume in September, 2000. It is also not in dispute that the petitioner had paid sales tax along with additional sales tax on the sales effected by it before it reached those base levels. The State does not dispute the petitioner's right to deferral of it's liability for sales tax after it reached those base levels, in respect of the sales effected by it after having reached that level. 3. The tax that is deferred has been described in the agreement as "including sales tax, surcharge, additional surcharge, additional sales tax and central sales tax". 4. The liability for additional sales tax on the sales effected by the petitioner after it reached the base sales volume is clearly required to be deferred along with other taxes referred to in the agreement. 5. The agreement in Clause (1) (b) provides thus:- "The company has to go on paying the tax to the level of base volume of production/sales and once it reaches this level, then any further tax liability will be eligible for deferral of sales tax." 6. The additional sales tax is payable at rates which vary having regard to the turn over of the assessee. If the turn over is less than Rs.300 crores, the rate at the relevant time was 2.5 per cent. In September 2000, the assessee has reached the sales volume of Rs.134 crores and, therefore, the additional sales tax had been paid at the rate of 2.5 per cent. The company, however, crossed the sales volume of Rs.300 crores by the time the year ended. The Revenue has taken the stand that the higher rate of tax payable as a consequence is required to be regarded as the rate at which the assessee should have paid tax even before it reached the base sales volume, as the assessment is to be made at the end of the year and not during the middle of the year. 7. 7. The fact that the assessment is to be made at the end of the year is not of materiality so far as the right of the petitioner to secure deferral in terms of the agreement is concerned. The agreement does not state that the petitioner has to wait till the year end so as to claim the right to have it's further tax liability deferred, even though it had reached the base volume much before the end of the year. 8. The liability which the petitioner incurred by way of having to pay the additional sales tax at a higher rate by reason of it's sales volume crossing Rs.300 crores at the end of the year was a liability that was incurred after it had reached the base sales volume. 9. Clause 1 (b) of the agreement which has already been extracted clearly provides that once the base level of production and sale have been reached then any further liability will be eligible for deferral of sales tax. The higher rate at which tax was required to be paid by the petitioner which was an event which accrued subsequent to the reaching of the base sales volume was, therefore, an amount which was required to be deferred in terms of this clause. 10. It is necessary to notice that the sales volume at the end of the ear comprises not only of the figures representing the base sales but also the sales effected thereafter. If the additional sales had not been effected by reason of the additional capacity having been installed, it is very likely that the total sales for the year would have been very much less than Rs.300 crores. The additional liability which is incurred by way of having to pay additional sales tax at a higher rate was a consequence of the additional sales effected by it from the new capacity which it had created. 11. The object of the deferral scheme is to enable the assessee to retain with it the extent of the tax which would otherwise have become payable in terms of the sales tax, additional sales tax, surcharge etc., so that those monies could be used as working capital for the newly created capacity. 12. 11. The object of the deferral scheme is to enable the assessee to retain with it the extent of the tax which would otherwise have become payable in terms of the sales tax, additional sales tax, surcharge etc., so that those monies could be used as working capital for the newly created capacity. 12. The Tribunal was in error in upholding the demand that had been raised by the assessing officer for payment of additional amounts ignoring the provisions of the agreement. The impugned order is, therefore, set aside and the writ petition is allowed.