2001 (7) TMI 1269 - HC - VAT and Sales Tax

Summary

Issues:
1. Whether the provisions of rule 28A(11)(a)(i) are ultra vires the Constitution?
2. Have the respondents erred in demanding the amount of sales tax found due from the petitioners?

Analysis:

Issue 1:
The court analyzed the provisions of rule 28A(11)(a)(i) in the context of the Haryana General Sales Tax Act, 1973, and the Haryana General Sales Tax Rules, 1975. The rule mandates that a unit must continue production for five years after availing of tax exemption. The court found that this condition is aimed at promoting industrial development and is not arbitrary. The provision includes safeguards allowing relaxation if production loss is beyond the unit's control. The court rejected the argument that the rule unfairly affects units forced to close due to uncontrollable reasons, emphasizing that the petitioner's actions contributed to its situation. The court held that the provision is not violative of article 14 of the Constitution.

Issue 2:
Regarding the demand for sales tax from the petitioners, the court noted that the petitioner did not comply with the exemption conditions, leading to a show cause notice and subsequent order for recovery. The court highlighted the availability of appeal, revision, and review remedies under the Act for the petitioner. The court dismissed the argument that the action violated the Companies Act, stating that the point was not raised before the competent authority and that the Sales Tax Act empowers recovery of dues. The court emphasized the significant amounts involved and the petitioner's avoidance of payment. Ultimately, the court found no grounds to interfere at that stage and dismissed both petitions.

The court concluded that there was no merit in the petitions, and the respondents were awarded costs. The judgment was pronounced immediately after the hearing, with reasons now recorded for the decision.