1988 (10) TMI 263 - HC - VAT and Sales Tax

Summary

Issues:
- Eligibility criteria for deferral of tax payment by industrial units under rule 17A of the Haryana General Sales Tax Rules, 1975.
- Interpretation of the definition of an eligible industrial unit under rule 17B.
- Lack of opportunity for petitioners to present their case before the State Level Committee.
- Validity of the decision of the State Level Committee in rejecting the petitioners' claims.

Analysis:
The judgment pertains to seven petitions concerning the deferral of tax payment by industrial units under rule 17A of the Haryana General Sales Tax Rules, 1975. The eligibility for such deferral is defined in rule 17B, which specifies that an eligible industrial unit must have made an investment of Rs. 5 lakhs or more in plant and machinery or employ not less than 10 persons. The petitioners claimed to meet these criteria and applied for eligibility certificates to defer tax payments. However, the State Level Committee rejected their claims without providing reasons initially, leading the petitioners to approach the Court for relief.

Upon review, the Court found that the State Level Committee had misinterpreted the eligibility criteria under rule 17B. The Committee erroneously believed that both investment and employment conditions had to be satisfied simultaneously, whereas the rule allows for either condition to be met independently. The Court also noted that the Committee's decision-making process lacked fairness, as the petitioners were not given an opportunity to present their case or provide explanations, which could undermine the purpose of rule 17A.

In light of these findings, the Court declared the State Level Committee's report invalid and directed it to reconsider the petitioners' cases in accordance with the law. The Committee was instructed to seek explanations from the petitioners where necessary and allow them to be heard during the reconsideration process. The Court emphasized the importance of a fair and transparent decision-making process by the Committee to uphold the intent of rule 17A.

As a result, the writ petitions were allowed, and the State Level Committee was ordered to expedite the reconsideration of the petitioners' cases. Until a decision on the eligibility certificates was reached, the recovery of tax from the petitioners was to remain deferred from the date of their application. The Court warned against any delays caused by the petitioners, allowing the respondents to seek alterations or vacation of the stay order in case of undue prolongation. The judgment concluded by granting no costs to either party.