Beneficial sales tax exemption scheme allowed eligible industrial units to claim relief despite earlier commercial production during negative-list status.

Rule 28A of the Haryana General Sales Tax Rules, 1975 was treated as a beneficial exemption scheme, with sub-rules (3) and (4)(a) allowing an eligible industrial unit to opt for exemption or deferment from either the date of commercial production or the date of issue of the certificate. The rejection of exemption only because commercial production began when the product was still in the negative list was held unjustified, especially where the unit had applied within time and the product had been removed from the negative list by the time of application. The claim was therefore required to be considered from the date of application or the date of certificate, and the rejection orders were unsustainable.

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Issues: Whether an industrial unit that went into commercial production while its product was in the negative list could still claim sales tax exemption when the applicable rule allowed the eligible unit to opt for exemption from the date of commercial production or from the date of issue of the entitlement or exemption certificate.

Analysis: The exemption scheme under rule 28A of the Haryana General Sales Tax Rules, 1975 was treated as a beneficial provision. Sub-rule (3) allowed an eligible industrial unit to opt for exemption or deferment, while sub-rule (4)(a) permitted the benefit to run either from the date of commercial production or from the date of issue of the certificate, depending on the option exercised. The Court held that this choice was not to be read rigidly as irrevocable in every case, particularly where the unit had applied within time and the relevant product had been removed from the negative list by the time the application was made. The rejection of the claim solely because production had commenced before the deletion from the negative list was held to be unjustified.

Conclusion: The petitioner was entitled to have its claim considered for exemption from the date of application or from the date of issue of the certificate, and the rejection orders were unsustainable.

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