2010 (4) TMI 995 - HC - VAT and Sales Tax

wWhether the Director, Industries has absolutely no jurisdiction to take decision on the representation in the matter of exemption certificate? Held that - The question raised in the writ petition about the constitution of the Full Bench Tribunal or the procedure to be adopted while hearing the reference by the full Bench Tribunal need not be examined in the peculiar facts and circumstances of the case, which we keep open to be decided in an appropriate case. However, in view of the above, we find that the Director, Industries, Haryana had no jurisdiction to take decision and hence, the order passed by the Director, Industries, Haryana, communicated vide October 30, 2000 is quashed. The Director, Industries, Haryana, is directed to place the representation before the High Level Committee and the Committee after hearing the petitioner, shall pass an appropriate order thereon, in accordance with law.

Summary

Issues:
Challenge to orders passed by Haryana Tax Tribunal dated September 15, 2005, September 19, 2005, and April 18, 2006 regarding exemption from sales tax for a manufacturing unit.

Analysis:
The petitioner, a company manufacturing digital switches equipment, applied for an eligibility certificate under the Haryana General Sales Tax Rules, 1975, for exemption from sales tax. The initial certificate granted an exemption of Rs. 46.89 crores for seven years starting from February 1, 1994. Subsequently, after expanding its manufacturing capacity, the petitioner applied for further exemption in October 1996, which was initially rejected but later accepted on appeal with conditions. Disputes arose regarding the period of exemption and a notice was issued asking for segregation of sales data. The petitioner challenged this notice, which was dismissed. A representation was made to change the exemption period, rejected by the Director of Industries, Haryana. An appeal to the Haryana Tax Tribunal was accepted, allowing the petitioner to change the exemption period. However, a review petition was filed against this decision, leading to a difference of opinion within the Tribunal.

The key issue was whether the Director of Industries had the authority to decide on modifications to the exemption certificate. The court held that under Rule 28A of the Haryana General Sales Tax Rules, only the High Level Committee had the jurisdiction to make such decisions. The Director should have referred the representation to the Committee instead of making a decision. The court emphasized that the matter of modifying the exemption period should be decided by the High Level Committee, not by the Director.

While the respondents argued that the petitioner's undertaking following the appellate authority's order should be binding, the court stressed that the High Level Committee must consider any changes to the exemption period. The court concluded that the Director lacked jurisdiction to decide on the representation, and thus, the order passed by the Director was quashed. The Director was directed to refer the representation to the High Level Committee for a lawful decision.

In summary, the court disposed of the writ petition by emphasizing the exclusive authority of the High Level Committee to decide on modifications to exemption certificates, directing the Director to refer the representation to the Committee for a proper decision.