1997 (2) TMI 498 - HC - VAT and Sales Tax

Summary

Issues:
1. Interpretation of exemption certificate under section 13 of the Haryana General Sales Tax Act, 1973.
2. Retroactive effect of exemption certificate based on the date of genuineness certificate issued by the Khadi and Village Industries Board.

Analysis:

Issue 1: Interpretation of Exemption Certificate
The case involved M/s. Baroda Gur and Khandsari Co-operative Industrial Society Limited, which was engaged in the manufacture and sale of gur and khandsari. The firm had not obtained the registration certificate under section 19 of the Haryana General Sales Tax Act, 1973. During the assessment proceedings, the firm produced a certificate of genuineness from the Haryana Khadi and Village Industries Board for the period from November 1, 1973, to March 31, 1976. However, the firm had not obtained an exemption certificate under section 13 of the Act. The Assessing Authority rejected the plea of the firm due to the absence of the exemption certificate and imposed tax liability and a penalty. The firm appealed the decision, leading to a series of appeals and ultimately a reference to the High Court.

Issue 2: Retroactive Effect of Exemption Certificate
The State of Haryana sought clarification on whether the exemption certificate issued under section 13 of the Act would have a retrospective effect from the date of the genuineness certificate issued by the Khadi and Village Industries Board. The notification issued by the Government of Haryana under section 13 provided exemptions to co-operative societies with genuineness certificates from the Board. The State argued that since no application for exemption was submitted before the assessment, the exemption certificate could not operate retrospectively. However, the Court disagreed, stating that the exemption certificate would be retrospective from the date of the genuineness certificate. The Court emphasized that the exemption certificate operates for the period mentioned in the certificate and covers the assessment period. The Board certifies genuineness for the mentioned period and cannot do so for the future. Therefore, the firm was not liable to pay sales tax and penalty, and the question was answered in the affirmative.

In conclusion, the High Court held that the exemption certificate issued under section 13 of the Act would have a retrospective effect from the date of the genuineness certificate issued by the Board. This decision clarified the interpretation and application of exemption certificates in sales tax matters, providing relief to the assessee-firm in this case.