Tax-deferment eligibility under Haryana sales tax rules turns on alternative conditions and requires a prior hearing before rejection.

Rule 17B of the Haryana General Sales Tax Rules, 1975 was read as prescribing alternative eligibility criteria for a tax-deferment certificate: a new industrial unit qualified if it satisfied either the minimum investment requirement in plant and machinery or the employment requirement. The Committee had wrongly treated both conditions as cumulative. The text also states that applications for fiscal concession could not be rejected without giving the applicants a fair opportunity of being heard, because administrative decisions affecting eligibility must comply with natural justice. It further notes that, on reconsideration, recovery of tax was to remain deferred until eligibility was determined.

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Issues: (i) Whether eligibility for a tax-deferment certificate under the Haryana General Sales Tax Rules, 1975 was available on satisfaction of either the investment criterion or the employment criterion under Rule 17B; (ii) whether the State Level Committee could reject applications without giving the applicants an opportunity of being heard.

Issue (i): Whether eligibility for a tax-deferment certificate under the Haryana General Sales Tax Rules, 1975 was available on satisfaction of either the investment criterion or the employment criterion under Rule 17B.

Analysis: Rule 17A permits deferment of tax payment to eligible industrial units, and Rule 17B defines such eligibility. The rule was read as laying down two alternative prerequisites: a new industrial unit having investment of Rs. 5 lakhs or more in plant and machinery, or a unit employing not less than 10 persons. The Committee had proceeded on the mistaken assumption that both conditions had to be satisfied cumulatively.

Conclusion: Satisfaction of either condition was sufficient, and the Committee's contrary view was incorrect.

Issue (ii): Whether the State Level Committee could reject applications without giving the applicants an opportunity of being heard.

Analysis: A decision affecting eligibility for tax deferment had to be taken on a fair and informed basis. The applicants were entitled to be heard, and the Committee could not decide the matter in chambers without seeking explanations where required. Denial of an opportunity of hearing would defeat the purpose of the concession scheme.

Conclusion: The applicants were entitled to a hearing before rejection, and the impugned report was not valid to the extent it concerned them.

Final Conclusion: The applications were required to be reconsidered afresh by the State Level Committee after affording the petitioners an opportunity of hearing, and the recovery of tax was to remain deferred until the eligibility question was decided.

Ratio Decidendi: Where a fiscal concession scheme makes eligibility dependent on alternative statutory conditions, satisfaction of any one condition is enough, and administrative rejection affecting such entitlement must comply with the principles of natural justice.

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