Mixed security for sales tax deferment cannot be replaced by a mandatory full bank guarantee under the conversion scheme.

On conversion of sales tax exemption into deferment under the Haryana VAT Act and Rules, the statutory framework allowed an industrial unit to shift for the remaining benefit period without insisting on a fresh security format beyond what the scheme permitted. Section 61(2)(d) preserved the exemption regime while enabling conversion to deferment, and Rules 69 and 70 governed the forms of security for deferred tax. Where the applicable scheme contemplated mixed security, including 15% bank guarantee and 85% personal sureties, a demand for a 100% bank guarantee was unsupported by the statute and scheme. The unit was therefore entitled to the deferment certificate on the security already furnished.

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Issues: Whether, on conversion of sales tax exemption into deferment under the Haryana Value Added Tax Act, 2003 and the Haryana Value Added Tax Rules, 2003, the industrial unit could be compelled to furnish a 100% bank guarantee despite having already furnished 15% bank guarantee and 85% surety in terms of the applicable scheme and rules.

Analysis: Section 61(2)(d) of the Haryana Value Added Tax Act, 2003 preserved the existing exemption provisions while permitting an industrial unit to change over to deferment for the remaining period and extent of benefit. Rule 69 of the Haryana Value Added Tax Rules, 2003 required security for the full amount of deferred tax where no security was otherwise required, and Rule 70 prescribed the forms of security, including bank guarantee and personal bond with solvent sureties. The scheme placed on record specifically contemplated mixed security, including 15% bank guarantee and 85% personal sureties. The demand for a full bank guarantee had no support in the statutory text or in the scheme governing conversion, and was inconsistent with the permissible forms of security.

Conclusion: The demand for 100% bank guarantee was unjustified, and the petitioner was entitled to deferment certificate on the security already furnished.

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