2003 (5) TMI 489 - HC - VAT and Sales Tax

Summary

Issues:
Challenge to withdrawal of tax exemption under Haryana Value Added Tax Act, 2003.
Constitutionality of section 61(1)(d)(i) and rule 68 of the 2003 Act.
Validity of petitioner's claim for exemption for nine years.
Legislative competence of the State of Haryana.

Analysis:
The petitioner sought relief from the withdrawal of tax exemption under the Haryana Value Added Tax Act, 2003, challenging the constitutionality of section 61(1)(d)(i) and rule 68. The petitioner argued that the withdrawal of exemption violated principles of natural justice and was unjust. The petitioner also requested a writ directing the respondents to treat the exemption certificate valid for nine years, starting from January 1, 1998. The petitioner contended that the area where their unit was set up had been declared an industrially backward area, justifying the extended exemption period.

The petitioner's counsel argued that the impugned enactment, while within the State's legislative competence, should be struck down for depriving the petitioner of its right to continued exemption. The counsel claimed that the petitioner had made significant investments based on the expectation of exemption benefits and that the withdrawal was arbitrary and violated Article 14 of the Constitution. The counsel further requested the court to amend the exemption certificate to allow for a nine-year exemption period, emphasizing the unit's location in a backward area.

The court considered the arguments presented and highlighted that legislation could only be struck down if it exceeded legislative competence or violated constitutional provisions. Since the petitioner did not challenge the legislative competence of the State of Haryana, the court did not delve into this aspect. The court found the challenge regarding discrimination and violation of Article 14 unsubstantiated and lacking merit.

The court emphasized that legislative instruments cannot be invalidated solely on grounds of arbitrariness, requiring a violation of specific constitutional provisions for such a declaration. The court noted that the impugned provision in the 2003 Act actually protected the petitioner's rights by allowing deferment of tax payment rather than abolishing the exemption entirely. Consequently, the court dismissed the petitioner's claim for a nine-year exemption but allowed representation to be made to the competent authority for consideration within three months.

In conclusion, the court disposed of the writ petition in accordance with the arguments presented, emphasizing the protection of the petitioner's rights under the legislative framework.