2008 (2) TMI 838 - HC - VAT and Sales Tax

Cancellation of its eligibility and exemption certificate under the Rules of 1991 - Held that - It is very much clear that at the time of filing of C.W.P. No. 18390 of 2005 it was to the knowledge of the petitioner that the eligibility certificate granted by the Industries Department has been cancelled and in spite of this fact to his knowledge the petitioner has failed to challenge the said order and therefore, the present writ petition filed by the petitioner on the same cause of action is not maintainable. In view of the above stated facts, we find no merit in the writ petition and do not feel inclined to interfere in the orders annexures P19 and P20 passed by the authorities.

Summary

Issues:
Challenge to orders dated May 19, 2005 and June 15, 2005 as illegal, arbitrary, and violative of constitutional provisions and Rules, 1991.
Validity of eligibility and exemption certificates for sales tax benefits.
Applicability of conditions for tax benefits based on land ownership.
Clean hands doctrine and principle of res judicata in filing writ petition.
Cancellation of eligibility certificate and sales tax exemption.

Analysis:

The petitioner sought a writ challenging the orders dated May 19, 2005 and June 15, 2005, declaring them illegal, arbitrary, and violative of constitutional provisions and Rules, 1991. The petitioner's eligibility for sales tax benefits was based on an agreement to purchase land and subsequent possession, construction, and registration of the land. The petitioner was granted eligibility and exemption certificates for tax benefits, but faced cancellation due to alleged failure to meet conditions. The petitioner contended that the cancellation was arbitrary and without misrepresentation. The State argued that the petitioner's failure to challenge the withdrawal of the eligibility certificate earlier barred the current petition under the principle of res judicata.

The Court noted that the petitioner was not the owner of the land by the specified cut-off date for tax benefits. Despite possession and construction activities, the sale deed was executed after the cut-off date, raising doubts about eligibility fulfillment. Discrepancies between the agreement to sell and the sale deed regarding payment and possession further weakened the petitioner's claim of meeting conditions. The cancellation of the exemption certificate was based on information from the Industries Department, indicating non-compliance with land purchase deadlines.

The Court found that the petitioner was aware of the cancellation of the eligibility certificate but failed to challenge it earlier. This failure, along with discrepancies in documents and non-compliance with land purchase conditions, led to the dismissal of the writ petition. The Court declined to interfere with the orders cancelling the eligibility certificate and sales tax exemption, ultimately dismissing the writ petition.