Unit-wise tax exemption cannot be preserved by clubbing production from a separate expansion unit.

Tax exemption under Section 13-B and Rule 28-A operates unit-wise, so entitlement for an original industrial unit must be tested independently on the conditions attached to that unit. Production from a separate expansion unit cannot be clubbed with the original unit to satisfy the statutory production requirement in sub-rule (11), and the registration or exemption status of the expansion unit does not alter that unit-specific test. The refusal of exemption to the expansion unit therefore does not permit aggregation of its production for preserving the original unit's benefit.

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Issues: Whether, after rejection of the exemption claim for the expansion unit, the production of that unit could be clubbed with the original unit for testing compliance with the conditions of tax exemption under Rule 28-A, and whether the refusal of exemption to the expansion unit altered the unit-wise character of the exemption already granted to the original unit.

Analysis: The exemption scheme under Section 13-B of the Haryana Sales Tax Act and Rule 28-A of the Haryana General Sales Tax Rules, 1975 is unit-specific. Eligibility for exemption and the continued entitlement to retain it depend upon the conditions attached to the particular unit for which the exemption is granted. Registration of an expansion unit may be relevant for eligibility, but it does not mean that the production of that unit can be added to the production of the original unit for satisfying the production requirement in sub-rule (11). The Court applied the principle that clubbing of production of separate units is impermissible for the purpose of preserving exemption benefits, and that whether the second unit remained closed, had its exemption refused, or registration subsisted was irrelevant to the question whether the first unit met the statutory production conditions.

Conclusion: The production of the expansion unit could not be combined with the original unit, and the exemption conditions of the original unit had to be tested independently. The answer was against the assessee and in favour of the Revenue.

Final Conclusion: The appeals failed because the exemption framework operates unit-wise and does not permit aggregation of production from separate units to satisfy the statutory conditions for continuing tax benefit.

Ratio Decidendi: Tax exemption granted to an industrial unit must be tested on a unit-wise basis, and production of a separate expansion unit cannot be clubbed with the original unit to satisfy the conditions for retaining the exemption.

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