Petition Dismissed: Business Shift Led to Certificate Withdrawal

The court dismissed the petition challenging the withdrawal of eligibility certificate under section 13-B of the Haryana General Sales Tax Act. The court held that the petitioner's shift from manufacturing to job-work for another company constituted a discontinuance of business, leading to the withdrawal of the exemption. The court emphasized the importance of conducting business in line with exemption conditions to maintain eligibility for sales tax exemption.

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Issues:
1. Withdrawal of eligibility certificate under section 13-B of the Haryana General Sales Tax Act, 1973.
2. Interpretation of the term "discontinuance of its business" under rule 28A of the Haryana General Sales Tax Rules, 1975.
3. Applicability of exemption conditions post-availing of exemption.
4. Dispute regarding job-work activities and their impact on eligibility for sales tax exemption.

Issue 1: Withdrawal of eligibility certificate under section 13-B of the Haryana General Sales Tax Act, 1973:
The petitioner, a registered company under the Act, filed an application for exemption under section 13-B of the Act. The exemption was granted for a period of nine years. However, a notice was later issued questioning the petitioner's eligibility due to alleged discontinuance of business. The Higher Level Screening Committee decided to withdraw the eligibility certificate based on the lack of production and sales during specific periods, leading to the conclusion that the industrial unit was not conducting business as per the Act.

Issue 2: Interpretation of the term "discontinuance of its business" under rule 28A of the Haryana General Sales Tax Rules, 1975:
The Tribunal upheld the withdrawal of the eligibility certificate, emphasizing that the petitioner's shift from manufacturing bulk drugs as an owner to conducting job-work for another company constituted a discontinuance of business. The Tribunal highlighted that the exemption was based on the petitioner's direct sales, and since no turnover was generated post the change in manufacturing operations, the eligibility for sales tax exemption was deemed void.

Issue 3: Applicability of exemption conditions post-availing of exemption:
The State justified the withdrawal of exemption citing rule 28A(11), which required the unit to maintain production levels and refrain from making sales outside the State post-exemption. The lack of intra-State or inter-State sales by the petitioner raised concerns regarding the fulfillment of exemption conditions, leading to the withdrawal decision.

Issue 4: Dispute regarding job-work activities and their impact on eligibility for sales tax exemption:
The petitioner argued that engaging in job-work for third parties did not constitute a discontinuance of business as production continued. However, the court emphasized that the business must be conducted on the unit's account, not on behalf of others, to maintain eligibility for exemption. The court concluded that the petitioner's job-work activities did not align with the conditions for exemption, resulting in the dismissal of the writ petition.

In conclusion, the court dismissed the petition, highlighting the importance of maintaining production and sales activities in line with the exemption conditions to retain eligibility for sales tax exemption under the Haryana General Sales Tax Act and Rules.

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