1995 (1) TMI 316 - HC - VAT and Sales Tax

Summary

Issues:
1. Application for exemption under Haryana General Sales Tax Act rejection without affording opportunity to explain factory closure.
2. Dismissal of appeal by Higher Level Screening Committee on grounds of limitation and factory closure.
3. Dispute regarding communication of decision of Lower Level Screening Committee to the petitioner.
4. Allegations of filing "nil" returns and lack of raw materials in factory premises.
5. Nature of powers exercised by Screening Committees under rule 28A.
6. Quasi-judicial nature of Screening Committees' decisions and right to appeal.

Analysis:
The petitioner, a small-scale industrial unit, applied for exemption under the Haryana General Sales Tax Act, 1973, for manufacturing various electronic products. The Lower Level Screening Committee (LLSC) rejected the application without providing an opportunity to explain the factory closure during inspection. The petitioner then appealed to the Higher Level Screening Committee (HLSC), which dismissed the appeal citing limitation and lack of merit due to factory closure. The petitioner contended that the decisions were not communicated timely, and the appeal could not be dismissed based on limitation alone. The Court acknowledged the quasi-judicial nature of the Screening Committees' powers and emphasized the right to be heard before adverse decisions. It was held that the appeal dismissal on limitation grounds was unfounded as proper communication of the LLSC decision was not established.

The respondents presented evidence of factory visits showing lack of raw materials and locked premises, supporting the adverse reports. The Court noted discrepancies in the communication of decisions to the petitioner and the absence of an opportunity to present evidence of ongoing operations. The petitioner disputed the allegations of filing "nil" returns and highlighted its engagements with government departments for product orders. The Court, considering the importance of fair procedure, set aside the decisions of both Committees and ordered a fresh review by the LLSC, emphasizing the right to be heard and present evidence. The writ petition was allowed, granting relief to the petitioner for a fair reconsideration of the exemption application.