TaxTMI 
TaxTMI 
2014 (3) TMI 822
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....spondent company is a public limited company engaged in the business of manufacturing electrical motors, fans, etc. The industry was granted Eligibility Certificate on 25.1.1993 and was granted Sales Tax Exemption Certificate in the prescribed form on 28.01.1994. The exemption that was granted was for the period 20.04.1991 to 19.04.1996 and the same was subject to a ceiling of Rs. 2,22,50,000/-. The Eligibility Certificate provides certain conditions which requires to be complied by the respondent company in order to take benefit of the exemption granted. Clause 3 of the Certificate provides that the unit shall remain in production for a period of not less than six years after availing the benefits. Clause 4 of the said Certificate envisages that the Certificate shall cease to be operative with effect from the date the unit reaches the ceiling of deferred/exempted amount of tax prescribed in the Eligibility Certificate. Clause 7 is relevant for the purpose of this case, and therefore it is extracted and reads as under:- "(7) The eligibility certificate can be cancelled on contravention of any condition mentioned herein above or in Rule 28-A after affording an opportunity to the pa....
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....ii) and Rule 28A(2)(ii)(a) and (b) of the Rules. 9. We have heard Shri R. P. Bhatt, learned senior counsel for the Appellant and Shri Praveen Kumar, learned counsel for respondent company. Shri Bhatt would reiterate the submissions that was made before the High Court and would further contend that sales effected by way of branch transfers or consignment sales outside the State of Haryana is taken only for the purpose of quantifying "notional tax liability" and not for any other purpose and further would contend that since the assessee has violated/breached conditions stipulated in the exemption certificate and Rule 28A of the Rules and in particular Rule 28 A (2)(ii)(b) of the Rules, the Assessing Authority has cancelled the Eligibility Certificate granted earlier and has directed the assessee to pay tax with interest for the period in question. In aid of this submission, the learned senior counsel has taken us through the relevant portions of the Eligibility Certificate, Section 13-B of the Act, which authorises the State Government to grant exemption and the relevant Rule, namely Rule 28A of the Rules. 10. Section 6 is the charging provision. Section 13-B of the Act authorises ....
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....atively, it can be stated that Notional Sales Tax Liability as defined in Rule 28(A)(2)(n), as a condition for grant of exemption. 12. The benefit of tax exemption/ deferment under Rule 28A of the Rules shall be subject to condition prescribed under Sub rule 11(a) of the Rules. The said rule reads: "(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 atleast for the next five years not below the level of average production for the preceding five year; and (ii) shall not make sales outside the State for next five years by way of transfer of 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 to the full amount of tax-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; Provided that the provisions of this clause shall not come into play if the loss in production is explained to the satisfaction of the Deputy ....
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....ssment order passed by the assessing authority. In view of our conclusion stated earlier, we cannot sustain the judgment and order passed by the High Court. Accordingly, we allow this appeal and set aside the impugned order. 16. We are informed by learned counsel for the parties that in the light of the judgment and order passed by the High Court, the assessing authority has completed the assessments for the period in question. Since we have set aside the judgment and order of the High Court, we direct the assessing authority to pass fresh assessment order for the periods in dispute after affording opportunity of hearing to the assessee. Ordered accordingly. ORDER C.A.No.708 of 2013 @ SLP (C )No.25465 of 2011 1. Delay condoned. 2. Leave granted. 3. The facts in extenso need not be noticed by us. Suffice it to state that the appellants are before us aggrieved by the judgment and order passed by the High Court of Punjab and Haryana at Chandigarh in Civil Writ Petition No.6688 of 1999 (O&M), dated 31.03.2010. By the impugned judgment and order, the High Court has set aside the order of assessment passed by the assessing authority, wherein the assessee was directed to refund the....
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....nd also under the provision of Central Sales Tax Act. Accordingly has set aside the orders passed by the assessing authority. However, the High Court has not gone into the vires of Rule 28-A of the Rules, 1975. 9. Rule 28-A of the Rules, 1975 is framed under Sections 13B and 25-A of the Act. Rule 28-A deals with computation of the quantum of tax incentive available to a dealer in view of eligibility certificate is issued by the department. In order to regulate the exemption scheme the concept of "Notional Sales Tax Liability" is incorporated vide Clause (n) of Rule 28-A (2)(n) of the Rules,1975. The said clause reads: "(i) amount of tax payable on the sales of finished products of the eligible industrial unit under the local sales tax law but for an exemption computed at the maximum rates specified under the local sales tax law as applicable from time to time; and Explanation- The sales made on consignment basis within the State of Haryana or branch transfer within the State of Haryana shall also be deemed to be sales made within the State and liable to tax; (ii) amount of tax payable under the Central Sales Tax Act, 1956, on the sales of finished products of the eligible indus....
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....that a unit shall not be called upon to pay sum under this clause without having been given reasonable opportunity of being heard." 12. If there is a violation of anyone of the conditions stipulated in Sub Rule 11(i) and (ii), the sales tax authorities are at liberty to cancel the exemption certificate issued under the scheme and call upon the assessee to make payment of the exemption availed with interest thereon. 13. Having noticed the relevant rules, we will revert back to the facts in the present case. The assessee-company had availed benefit of the sales tax exemption under the Exemption Scheme issued by the State Government. The Eligibility Certificate for sales tax exemption provides for certain conditions which requires to be complied by the assessee-company to take benefit of exemption under the Scheme. The Condition No. 7 of the Eligibility Certificate provides that the certificate can be cancelled if there is contravention of any condition mentioned in the certificate or Rule 28-A, after affording an opportunity to the party of being heard. In the show cause notice it is specifically alleged that the assessee had dispatched good on consignment basis during the assessme....