Tax exemption to deferment scheme upheld where no Article 14 discrimination or actionable arbitrariness was shown.

Section 61(1)(d)(i) of the Haryana VAT Act, 2003 and rule 68 of the Haryana VAT Rules, 2003 were examined on a challenge that they unlawfully withdrew exemption benefits earlier available under the earlier sales tax regime. The court found no material to establish discrimination under Article 14 and reiterated that bare arbitrariness is not enough to invalidate fiscal legislation without a specific constitutional infringement. It also noted that the provision did not extinguish the assessee's position, but preserved a choice to opt for tax deferment instead of exemption. The request for extension of exemption was not decided on merits and was left to representation before the competent authority.

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Issues: Whether section 61(1)(d)(i) of the Haryana Value Added Tax Act, 2003 and rule 68 of the Haryana Value Added Tax Rules, 2003 were liable to be struck down as unconstitutional for withdrawing exemption benefits earlier granted under the Haryana General Sales Tax Act, 1973 and the Haryana General Sales Tax Rules, 1975, and whether the assessee was entitled to continuation or extension of exemption for a longer period.

Analysis: The impugned provisions were examined on the grounds of alleged discrimination under Article 14 and arbitrariness. The challenge based on legislative competence was not pressed for decision. The Court held that no material had been placed to establish discrimination, and that arbitrariness simpliciter was not a sufficient ground to invalidate legislation unless a specific constitutional violation was shown. It further held that section 61(1)(d)(i) did not take away the assessee's protection, but preserved its position by enabling it to opt for deferment of tax instead of an outright withdrawal of benefit. The request for a direction to treat the exemption certificate as valid for nine years was not adjudicated on merits and was left to representation before the competent authority.

Conclusion: The constitutional challenge failed, and the impugned provisions were upheld. The request for extension of exemption was not granted in the writ proceedings and was left to be considered by the competent authority on representation.

Final Conclusion: The writ petition was not allowed on merits, and the statutory scheme replacing exemption with an option of deferment was sustained.

Ratio Decidendi: A taxing statute cannot be struck down merely on a bare plea of arbitrariness; invalidity must be shown by demonstrating a specific constitutional infringement, and a provision that preserves a concession by substituting deferment for exemption is not arbitrary.

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