1992 (1) TMI 324 - HC - VAT and Sales Tax

Summary

Issues:
1. Eligibility for deferment of payment of sales tax under Haryana General Sales Tax Act, 1973.
2. Interpretation of rule 17B of the Haryana General Sales Tax Rules, 1975.
3. Impact of corrigendum on eligibility criteria for deferment of sales tax.

Eligibility for Deferment of Payment of Sales Tax:
The judgment addressed a series of Civil Writ Petitions concerning the eligibility of industrial units for deferment of sales tax under the Haryana General Sales Tax Act, 1973. The petitioner, a rice industry, alleged that despite meeting the conditions for deferment, the State denied eligibility. The Court examined the provisions of the Act, specifically Section 25A, which allows deferment subject to prescribed conditions. The key issue was whether the petitioner fulfilled the criteria for deferment, based on investment in plant machinery or employment of a minimum number of persons.

Interpretation of Rule 17B:
The Court focused on the interpretation of rule 17B of the Haryana General Sales Tax Rules, 1975, which defined an "eligible industrial unit." The dispute revolved around sub-clause (viii) of clause (b), which required an investment of at least Rs. 5 lakhs in plant machinery or employment of a minimum of ten persons. The State contended that both conditions were mandatory for deferment eligibility, while the petitioners argued that meeting either condition should suffice. A previous judgment clarified that satisfaction of either condition warranted eligibility, emphasizing the importance of correct interpretation by the State Level Committee.

Impact of Corrigendum on Eligibility Criteria:
An additional issue arose from a corrigendum issued by the Haryana Government, altering the word "or" to "and" in rule 17B, sub-item (viii). The State relied on this change to justify denying eligibility certificates to the petitioners. However, the Court found this defense unjustified, noting that the petitioners had invested based on the existing law and the State's consistent interpretation. The Court deemed it unfair to alter eligibility criteria retroactively, especially considering the substantial investments made by the petitioners. Ultimately, the Court allowed the writ petitions, quashing the orders denying deferment and affirming the petitioners' entitlement to deferment of sales tax for five years.

In conclusion, the judgment clarified the eligibility criteria for deferment of sales tax under the Haryana General Sales Tax Act, emphasizing the importance of correct interpretation and application of the law by the State authorities. The Court's decision highlighted the need for consistency and fairness in administering tax deferment schemes, protecting the legitimate expectations of industrial units that have invested in reliance on existing laws and interpretations.