Distinct exemption rules for diversified industrial units: old machinery bar in new-unit clause cannot be imported into diversification eligibility.
Rule 28A of the Haryana General Sales Tax Rules, 1975 treated a new industrial unit and an expansion or diversification unit as separate categories with distinct eligibility conditions. The restriction in clause (c) against a unit formed from old machinery applied only to new industrial units and could not be imported into clause (d) for diversified units. A diversified unit remains eligible where it satisfies clause (d), including the required additional fixed capital investment and commencement of manufacture of different products, even if some old machinery was purchased. The text also notes that the exemption rejection was set aside and the matter remitted for fresh decision on the exemption application.
Issues: (i) Whether clause (c) of sub-rule (2) of rule 28A of the Haryana General Sales Tax Rules, 1975, which restricts a new industrial unit formed from old machinery, applies to a diversified industrial unit claiming exemption. (ii) Whether the petitioner's diversified unit satisfied clause (d) of sub-rule (2) of rule 28A of the Haryana General Sales Tax Rules, 1975, notwithstanding the purchase of old machinery.
Issue (i): Whether clause (c) of sub-rule (2) of rule 28A of the Haryana General Sales Tax Rules, 1975, which restricts a new industrial unit formed from old machinery, applies to a diversified industrial unit claiming exemption.
Analysis: Rule 28A drew a clear distinction between a "new industrial unit" under clause (c) and an "expansion/diversification of industrial unit" under clause (d). The bar against formation from purchase or transfer of old machinery was attached to the category of new industrial unit. A diversified unit was governed by its own separate conditions under clause (d), and the two clauses were independent and self-contained.
Conclusion: Clause (c) did not apply to the petitioner's diversified unit.
Issue (ii): Whether the petitioner's diversified unit satisfied clause (d) of sub-rule (2) of rule 28A of the Haryana General Sales Tax Rules, 1975, notwithstanding the purchase of old machinery.
Analysis: The petitioner's unit was established during the operative period, commenced manufacture of different products, and made additional fixed capital investment exceeding 25 per cent of the existing unit's investment. The disputed purchase of old machinery did not violate clause (d), and even on reduction of that amount, the additional investment remained above the prescribed threshold. The unit therefore met the conditions for diversification and qualified for consideration for exemption.
Conclusion: The petitioner's diversified unit satisfied clause (d) and was eligible to seek exemption from sales tax.
Final Conclusion: The impugned rejection was set aside, the petitioner's diversified unit was held entitled to be treated as an eligible industrial unit, and the matter was sent back for fresh decision on the exemption application in accordance with law.
Ratio Decidendi: Where a sales tax exemption scheme separately governs new industrial units and diversified industrial units, the eligibility conditions attached to the former cannot be imported into the latter unless the rule expressly so provides.
TaxTMI 
AI Drafter ✕
TaxTMI 
