2006 (11) TMI 607 - HC - VAT and Sales Tax

Summary

Issues involved:
The judgment involves the quashing of an order withdrawing an eligibility certificate granted to the petitioner under rule 28A of the Haryana General Sales Tax Rules, 1975, along with subsequent appellate orders and recovery proceedings.

Details of the Judgment:

Eligibility Certificate Withdrawal:
The petitioner had applied for exemption from sales tax under rule 28A and was granted an eligibility certificate subject to certain conditions. The issue arose when it was discovered that the petitioner's unit was not eligible for the exemption due to being in the negative list as an ethyl alcohol-based industry. Despite the petitioner's argument that they were using denatured spirit, the technical expert's report equated ethyl alcohol with rectified spirit, leading to the withdrawal of the eligibility certificate. The court examined the provisions of rule 28A(8) which allow for withdrawal under specific circumstances during the currency of the certificate. It was held that once the benefit had been availed of or the certificate had expired, the power to withdraw the certificate could not be exercised. Therefore, the withdrawal of the eligibility certificate after its currency had ended was deemed beyond the scope of the rules.

Legal Provisions and Procedure:
The judgment highlighted the detailed procedure outlined in rule 28A(5) for filing and processing applications for eligibility certificates. The application process involves scrutiny by different committees based on the scale of the industry, with specific timelines and requirements for comments from relevant authorities. The court emphasized that the grant of an eligibility certificate is not a routine matter and must follow a thorough evaluation process. Additionally, rule 28A(8) specifies conditions under which an eligibility certificate can be withdrawn, including fraud or discontinuance of business, with a mandatory opportunity for the affected unit to be heard before withdrawal.

Conclusion:
In conclusion, the court allowed the writ petition, quashing the orders withdrawing the eligibility certificate and subsequent recovery proceedings. The judgment clarified that the withdrawal of the certificate after its expiry was not permissible under the rules. The decision reaffirmed the importance of following due process and adhering to the specific conditions outlined in the law for granting and withdrawing eligibility certificates.