1999 (5) TMI 588 - HC - VAT and Sales Tax

Summary

Issues:
1. Eligibility for sales tax exemption under rule 28-A of the Haryana General Sales Tax Rules, 1975.
2. Interpretation of the term "commercial production" in the context of the rule.
3. Timeliness of the application for exemption and its impact on eligibility.

Analysis:
1. The petitioner-company, in collaboration with M/s. YTONG International, Germany, established a unit for manufacturing building materials. The unit's total cost was Rs. 40 crores, primarily using flyash from Badarpur Thermal Plant, Delhi. The company applied for sales tax exemption under rule 28-A of the Haryana General Sales Tax Rules, 1975. The application was considered by the Higher Level Screening Committee, which noted that the unit began commercial production on October 10, 1992, but the exemption application was submitted on September 9, 1993, beyond the 90-day limit from the start of commercial production. Consequently, the exemption was denied by the committee and the appellate authority. The court upheld these decisions, emphasizing the mandatory nature of the 90-day application timeline and the lack of provisions for condonation of delay.

2. The court addressed the interpretation of "commercial production" in the context of rule 28-A. While the term was not explicitly defined in the Rules, the court explained that it signifies when a unit starts selling its products in the market. The distinction between trial production and commercial production was highlighted, with the latter being marked by the sale of products. The court clarified that the moment the unit issues its first sale voucher, it enters commercial production. Therefore, the application for exemption must be filed within 90 days from this date to be considered timely. The court rejected the petitioner's argument that exemption could be claimed from the 90 days preceding the application date, emphasizing the importance of adhering to the prescribed timeline.

3. The court emphasized the significance of timely filing the exemption application under rule 28-A. It reiterated that the 90-day limitation period is mandatory, with no provision for extending or waiving the deadline. As the petitioner's application was submitted significantly after the 90-day window following the start of commercial production, the court affirmed the rejection of the exemption request by the authorities. The judgment concluded that the petitioner's delay in filing the application rendered it ineligible for sales tax exemption, leading to the dismissal of the writ petition challenging the denial of exemption.

In summary, the court's decision centered on the strict adherence to the 90-day timeline for filing sales tax exemption applications from the start of commercial production, emphasizing the significance of timely compliance with statutory requirements to avail of benefits under rule 28-A of the Haryana General Sales Tax Rules, 1975.