TaxTMI 
TaxTMI 
2008 (8) TMI 551
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....rtificate after its validity period was over on June 30, 1997 did not attract the provisions of clause (v) of sub-rule (10) of rule 28A of the Haryana General Sales Tax Rules, 1975 (hereinafter referred to as, "the Rules"). According to the High Court, it was clearly not a case of cancellation of exemption certificate because it was done after expiry of the period. In that view of the matter, it was held that the Deputy Excise and Taxation Commissioner (in short, "the DETC") was not justified in directing the respondent to deposit an amount of Rs. 40,45,324 in respect of the exemption availed of by it for the period up to June 30, 1997. The High Court did not think it necessary to examine whether sub-rule (10)(v) of rule 28A in so far as it empowers the department to withdraw the tax exemption certificate was valid or not. However, liberty was granted to the present appellants, if there was a case for withdrawal of the eligibility certificate under sub-rule (8) of rule 28A of the Rules, to proceed in accordance with law. The State of Haryana has filed the appeals in respect of orders of the High Court in writ petition filed by the respondent in each case. The first judgment was ....
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.... 28A. The respondent was directed to deposit the tax in respect of the exemption as has already been availed and also to pay the interest. Stand of the present respondent in the writ petition was that since the unit had remained closed on account of non-availability of coal which was a factor beyond its control there was no question of any non-renewal. It was contended that even if the cancella- tion of the exemption certificate was to be upheld under sub-rule (9)(i) of rule 28A the same cannot operate retrospectively and the respondent cannot be asked to deposit the amount. This amount pertains to the period when the industrial unit was in production. Stand of the State, which is the appellant in this appeal, was that since there is no production since January, 1997 the exemption certificate was liable to be cancelled in terms of sub-rule (i) of rule 28A. There was no exceptional circumstances provided under which consequence could be availed. It was pointed out that after the eligibility certificate is granted, the dealer is required to obtain an exemption certificate which is valid up to a certain date. Thereafter the exemption certificate is required to be renewed on year to....
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....hts under that provision. The learned counsel for the appellant-State submitted that after having held that the cancellation was right, the High Court was not correct to say that it can only be withdrawn for the period concerned. Reference is made to sub-rule (11). It provides that the benefit of tax exemption/deferment after it is availed shall continue for the next five years. Sub-rule (10)(v) deals with currency of the certificate and sub-rule (11)(b) proviso that DETC has the authority to ask for deposit of the amount in respect of which exemption has been availed if there is violation of any of the conditions stipulated. The learned counsel for the respondents on the other hand submitted that once certificate has lost its currency and the application was made after the expiry of the period, there could not have been any cancellation and there was also no question of any renewal. It is also pointed out that pursuant to the directions of the High Court, the eligibility certificate has been withdrawn by the concerned authority and the eligibility certificate has been cancelled with effect from June 27, 2007, an appeal has already been dismissed on June 8, 2006 and the writ ....
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.... a genuine and valid eligibility certificate, has furnished adequate security and that his application is in order will issue him the exemption/entitlement certificate, as the case may be, within thirty days of the receipt of the application. One copy of the certificate shall be sent to the Director of Industries or the General Manager, District Industries Centre, as the case may be, and one copy shall be retained in the record. The certificate issued shall be valid unless cancelled or withdrawn from the date of commercial production or from the date of issue of entitlement/exemption certificate, as the case may be, to the June 30, next or when notion sales tax liability first exceeds the quantum of tax exemption/deferment fixed for the unit, whichever is earlier. Note: The agreement or the mortgage deed or the bank guarantee, as the case may be, is an important document and shall be entered in a register to be maintained in form S.T. 75 by the Deputy Excise and Taxation Commissioner concerned in his personal custody. At the time of transfer of the charge of his office, the Deputy Excise and Taxation Commissioner shall hand over the register as well as the documents to his succe....
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....in the specified time, he may reject the application after giving the applicant an opportunity of being heard. (c) An appeal against the order passed by the Deputy Excise and Taxation Commissioner under clause (b) of this sub-rule shall lie to the Excise and Taxation Commissioner, Haryana, if preferred within thirty days of the communication of the order appealed against. (8)(a) The eligibility certificate granted to an industrial unit shall be liable to be withdrawn at any time during its currency by the appropriate screening committee, in the following circumstances- (i) if it is discovered that it has been obtained by fraud, deceit, misrepresentation, mis-statement or concealment of material facts; (ii) discontinuance of its business by the unit or closing down of its business for a continuous period exceeding six months except in case of fire, flood and other natural calamities, riots, strike or lock-out which in the opinion of the committee concerned is beyond the control of the unit; (iii) disposal or transfer by the unit of any of its fixed assets adversely affecting its manufacturing or production capacity: Provided that no order of withdrawal of the eligi....
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....o returns, the eligible industrial unit which has availed of the benefit of sales tax deferment shall make payment of the deferred amount after the expiry of a period of five years to the extent of the amount deferred, every quarter or month, as the case may be, within the period specified in the rules. (v) On cancellation of eligibility certificate or exemption/entitlement certificate before it is due for expiry, the entire amount of tax exempted/deferred shall become payable immediately, in lumpsum, and the provisions relating to recovery of tax, interest and imposition of penalty shall be applicable in such cases. (11)(a) The benefit of tax-exemption/deferment under this rule shall be subject to the condition that the beneficiary/industrial unit after having availed of the benefit,- (i) shall continue its production at least for the next five years not below the level of average production for the preceding five years; and (ii) shall not make sales outside the State for next five years by way of transfer or consignment of goods manufactured by it. (b) In case the unit violates any of the conditions laid down in clause (a), it shall be liable to make, in addition t....
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....st or penalty under the Act as if no entitlement certificate had been ever granted to it. The only other question which is required to be examined is the benefit of sub-rule (11)(a). A bare reading of the same shows that the benefit of tax exemption/deferment under the rule shall be subject to the condition that the beneficiary/industrial unit after having availed all the benefit shall continue its production for at least next five years not below the average production for the preceding five years. Clause (b) of the sub-rule is of considerable significance; it shows that in case the unit violates any of the conditions laid down in clause (a) it shall be liable to make in addition to the full amount of the benefit availed of by it during the period of exemption/deferment, payment of interest chargeable under the Act as if no tax exemption/deferment was ever available to it. The proviso is also of significance. It provides that the provisions of clause (b) shall not come into play if the loss in production is explained to the satisfaction of the DETC concerned as being due to reasons beyond the control of the unit. Thus there are several conditions which are relevant; firstly the....