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of <h1>Qualification for sales-tax concessions for 'unit in pipeline' u/r 28C - denied where preconditions and IEM registration absent</h1> Whether petitioners qualified for sales-tax concessions under Rule 28C (HGST Rules) - HC held the statutory definition of 'eligible industrial unit' and ... Denial of tax concessions under Rule 28C of Haryana General Sales Tax Rules, 1975 - requirement of registration of unit with Department of Industries for qualifying as a unit in pipeline - HELD THAT:- It is a matter of record in each of the three writ petitions that petitioner - companies in question had been established in the years 1991, 1994, 1997 Sales tax exemptions, as were applicable at the relevant time, had been duly afforded to petitioners. Notification dated 28.07.2000 was issued which provided that sales tax concession would be available only to new industrial units/expanded unit/diversified unit. Eligible industrial unit is duly defined in Rule 28C(3)(c)(vi) of HGST Rules as the one which has come into commercial production during the operative period or was in pipeline on 30.04.2000 or any other later date as notified by the Government. Subsequently, vide notification dated 15.10.2001, clause (o) was added to clause 28C(3) whereby definition of ‘units in pipeline’ was clearly delineated. Said clause (o) specifically provides that ‘units in pipeline’ means an industrial unit which as on 30.04.2000 is registered with the Department of Industries, has arranged land or premises by way of purchase, allotment, lease or rent, has applied for finances from regular financial institution and start production within two years i.e. before 01.05.2002. The argument raised by learned counsel for petitioner that firstly IEM registration for expanded unit/expansion is not even required and in any case it should relate back to first registration is attractive at first flush but the same is devoid of any merit on closer scrutiny. It is a matter of record and not denied by learned counsel for petitioners in all the three petitions that sales tax concession i.e. sought under Rule 28C is only qua expanded unit and not for the entire production. In such a situation, it cannot be concluded that IEM registration should relate back to original or the first IEM which was issued for original unit. Very purpose or foundation of this provision itself would stand defeated. There is clear cut provision that four conditions should be satisfied before the concession in question can be afforded. Argument raised by learned counsel for petitioner in CWP-8802-2004 that intimation regarding expansion has been sent to the respondent is of no avail to petitioner as it is admitted position that IEM registration was not available with the petitioner on the cut off date. Admittedly, in all the three writ petitions petitioners do not meet the requisite parameters as provided in the applicable rules to be eligible for sales tax benefit as sought. In our considered opinion, respondents have correctly denied this benefit to the petitioners. Learned counsel for petitioners were unable to point out any illegality, irregularity or infirmity in the action taken by the respondents, which calls for interference. There are no ground to cause interference in these matters in exercise of jurisdiction under Article 226 of Constitution of India - petition dismissed. Issues: (i) Whether tax concessions under Rule 28C of the Haryana General Sales Tax Rules, 1975 could be denied to applicants who did not satisfy the statutory criteria for being a 'unit in pipeline' as on the cut-off date of 30.04.2000.Analysis: The applicable legal framework comprises Rule 28C which defines an 'eligible industrial unit' and, by clause (o) added w.e.f. 15.11.1999 (deemed), delineates 'units in pipeline' requiring, as on 30.04.2000, registration with the Department of Industries (IEM/acknowledgement), arrangement of land/premises, application for finance from a regular financial institution, and commencement of production within two years. The rule conditions are distinct and apply specifically to the incremental/expanded capacity for which concession is claimed. Subsequent issuance of IEM for an expanded unit after the cut-off date does not operate retrospectively to satisfy the pipeline criteria applicable to that expanded capacity. The administrative scheme entrusts determinations of pipeline eligibility to the designated committees whose decisions are final under the rule; strict compliance with the statutory conditions is required for entitlement to the concession.Conclusion: The tax concession under Rule 28C is not available to applicants who failed to fulfil the statutory 'units in pipeline' criteria as on the cut-off date; the denial of benefit was upheld and the writ petitions dismissed.
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