TaxTMI 
TaxTMI 
2000 (7) TMI 959
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....97. The petitioners filed an application for further renewal of the exemption certificate on July 31, 1997. This application was rejected vide order dated December 15, 1997 on the ground that the same was not complete particularly in respect of surety bond and despite sufficient opportunity the peti tioner did not complete the necessary particulars. While processing the application for renewal, the Deputy Excise and Taxation Commis sioner (for short, "the D.E.T.C") discovered that the unit of the petitioner was out of production since January 1997 and as such its exemption certificate was also liable to be cancelled under sub rule (9)(i) of rule 28A of the Rules. He, therefore, issued a show cause notice to this effect on December 5, 1997 requiring the petitioner to submit its explanation on December 15, 1997. The petitioner neither appeared before the D.E.T.C. nor did it furnish any explanation. The D.E.T.C., therefore, cancelled the exemption certificate held by the dealer by his order dated January 14, 1998. The petitioner filed appeals against these orders before the Prohibition Excise and Taxa tion Commissioner, Haryana, who remanded the case to the D.E.T.C. to be heard afresh....
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....tively and the petitioner could not be asked to deposit the amount of Rs. 40,45,324 which was the amount of exemp tion already availed of. This amount pertained to the period when the industrial unit was in production. 3.. On the other hand Sh. M.L. Sarin, learned Advocate General, Haryana, appearing on behalf of the respondents, has sub mitted that as the unit set up by the petitioner in the backward area had not worked since January, 1997, the exemption certificate was liable to be cancelled as provided under subrule (9)(i) of rule 28A of the Rules. It was further argued that the said subrule did not pro vide for any exceptional circumstances under which the consequences provided therein could be waived. Once it is found that a unit had discontinued its business at any time for a period exceeding six months or has closed down its business during the period of exemp tion, the exemption certificate was liable to be cancelled. It was also contended that the eligibility certificate granted under rule 28A requires the dealer to fulfil the conditions provided therein. After the eligibility certificate is granted, the dealer is required to obtain an exemption certificate which is val....
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....issioner of the district to the eligible industrial unit holding eligibility certificate which entitles the unit to avail of exemption from the payment of sales or purchase tax or both, as the case may be; (l) 'entitlement certificate' means a certificate granted in form S.T. 73 by the Deputy Excise and Taxation Commissioner of the district to the eligible industrial unit holding eligibility certificate which entitles it to get deferment of sales tax. (2) to (4)................. (5) (a) Every eligible industrial unit holding eligibility certificate which is desirous of availing benefit under this rule shall make an application in form S.T. 70 in triplicate along with attested copies of the documents mentioned therein to the General Manager, District Industries Centre within 90 days of the date of its going into commercial production or the date of coming into force of this rule whichever is later. No application shall be entertained if not preferred within time. An application with incomplete or incorrect particulars including the documents required to be attached therewith shall be deemed as having not been made if the applicant fails to complete it on an opportunity affo....
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....he 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 entitle ment/exemption certificate, as the case may be, to the 30th June next or when notional 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 guaran tee, 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 successor personally against proper receipt and shall send a certified copy of the same to the Excise and Taxation Commissioner by name who will acknowledge its receipt to both the officers. (7)(a) The exemption certificate or the entitlement certificate as the case may be, shall be re....
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....ner, 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, misstatement 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 eligibility certificate shall be made without affording a reasonable opportunity of being heard to the affected unit. (b) When the eligibility certificate is withdrawn, the exemption/ entitlement certificate shall be deemed to have been withdrawn from the 1st day of its validity....
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....9)(i) of rule 28A of the Rules. A plain reading of this provision shows that discontinuance of business by a unit or closing down of its business for a continuous period of exceeding six months automatically invites the cancellation of the exemption certificate. There are no exceptions provided in this subrule which can save its application. It is, thus, absolutely clear that once it is found that the unit had discontinued its business for a period exceeding six months, the cancellation of the eligibility certificate would be justified. It is not open to a dealer to plead that the discontinuance was on account of factors beyond its control. In this view of the matter, it is not necessary for us to go into the merits of the case of the petitioner that the business had been dis continued due to the failure of the District Industries Centre, Rohtak to restore the supply of coal which was a factor beyond the control of the petitioner. In view of the admitted position that the unit had not worked since January, 1997, for a period of more than six months, the exemption certificate of the petitioner could be rightly cancelled under subrule (9) of rule 28A of the Rules. 7.. The next que....
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.... granted to it. It is not valid in the first instance for the entire period of validity of the eligibility certificate. Subrule (8)(a) provides the circumstances under which the appropriate screening committee can withdraw the eligibility certificate. Subrule (8)(b) contains the consequences that follow the withdrawal of the eligibility certificate. Subrule (9) empowers the D.E.T.C. to cancel the exemption/entitle ment certificate under certain circumstances. However, this subrule does not provide for the consequences of such a cancellation. The nec essary provision has been made in subrule (10)(v) of rule 28A of the Rules which is now required to be interpreted. A comparative reading of subrules (8) and (9) of rule 28A of the Rules shows that if a unit discontinues its business or closes it down for a period exceeding six months, action can be taken under both the provisions. Under sub rule (8) the eligibility certificate can be withdrawn whereas under subrule (9) the Exemption/Entitlement Certificate can be cancelled. In clause (ii) of subrule (8)(a) there are certain exceptions provided which can save the unit from withdrawal of its eligibility certificate. If the unit can....
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....ference is made to subrule (10)(v) which contains the consequences of cancellation of an exemption/entitlement certificate, it is evident that such consequences follow only if the certificate is cancelled before it is due for expiry. Thus, according to us, the power of cancellation by the Deputy Excise and Taxation Commissioner under subrule (9) can only be exercised when an exemption certificate granted by him is in force and has not already expired. This is the only interpretation that can attribute meaning and provide rationale to the provisions of subrules (8) and (9) of rule 28A of the Rules. 9.. It may be mentioned that if after the expiry of an exemp tion/entitlement certificate it is found that a unit had discontinued its business or closed it down for a period exceeding six months, the department is not without a remedy. It can always take action for withdrawal of the eligibility certificate as provided in subrule (8) of rule 28A of the Rules. 10.. Coming to the facts of the present case it is evident that the exemption certificate issued to the petitioner was valid up to June 30, 1995 in the first instance. It was thereafter renewed up to June 30, 1996 ....