2015 (9) TMI 209 - HC - VAT and Sales Tax

Eligibility for exemption Scheme under Rule 28A Fulfilment of rule Higher Level Screening Committee (HLSC) reopened order of secretary and held that appellant s industrial unit is eligible for sales tax exemption only on fixed capital investment and appellant to avail exemption to that extent alone, as appellants company did not fulfil requirements in view of HGST Rules, 1975 Tribunal vide order rejected application for review Held that - as per scheme under Rule 28A, order of Secretary had attained finality and that it was not open to HLSC to ignore order and to hear matter afresh on ground that HLSC had failed to consider particular aspect of matter In order to be considered an eligible industrial unit, enterprise must be new industrial unit, the unit must be one which has been set up in State of Haryana and has not been or is not formed as result of purchase or transfer of old machinery except when purchased in course of import into territory of India or when cost of old machinery does not exceed 25% of total cost of machinery, etc Admittedly machinery was new and not old so, this finding has attained finality It was never contended by department that unit had not been set up in State of Haryana Order of Secretary expressly records that it was not disputed that appellant had purchased part of machinery and that appellant had shifted this machinery to Chennai, which implied therein finding that machinery had been set up in Haryana. Under scheme of Rule 28A, there is clear hierarchy Orders of LLSC are appealable to HLSC and orders of HLSC are appealable to Secretary Order of HLSC in appeal shall be final and in second case order in appeal of Secretary shall be final Orders appealed against merge into orders of appellate authorities It is not open then for HLSC to reopen order of Secretary which had attained finality on another ground HLSC, had no power or jurisdiction to review, modify or set aside order of Secretary Tribunal wrongly held that merely because issue had not been considered in appeal, it was open to HLSC to suo motu reopen case Impugned order of Tribunal and of HLSC set aside Decided in favour of Appellant.

Summary

Issues Involved:
1. Whether the Higher Level Screening Committee (HLSC) is entitled to reopen a case on its own where its earlier decision had been overruled by the appellate authority-Secretary under Rule 28A(5)(g) of the Haryana General Sales Tax Rules, 1975.
2. Whether the HLSC is entitled to ignore the order of the appellate authority-Secretary passed under Rule 28A(5)(h) and refuse to comply with the order on the basis that it was doing so on a ground that had not been considered by the appellate authority.

Issue-wise Detailed Analysis:

1. Reopening of Case by HLSC:
The court examined whether the HLSC had the authority to reopen a case on its own after its earlier decision was overruled by the appellate authority-Secretary. The court concluded that under Rule 28A(5)(g) of the Haryana General Sales Tax Rules, 1975, the decision of the Secretary Industries is final. The HLSC does not have the jurisdiction to reopen the case once the Secretary has made a final decision. The court emphasized that the HLSC's order had merged into the Secretary's order, and any attempt by the HLSC to revisit the matter would be beyond its jurisdiction. The court stated, "The HLSC, in any event, had no power or jurisdiction to review, modify or set aside the order of the Secretary."

2. Ignoring Order of Appellate Authority:
The court addressed whether the HLSC could ignore the Secretary's order and refuse to comply with it on a new ground not considered by the appellate authority. The court held that once the Secretary's order had attained finality, the HLSC could not ignore it or refuse to comply based on a new ground. The court noted, "It is not open then for the HLSC to reopen the order of the Secretary which had attained finality on another ground." The court further elaborated that allowing the HLSC to do so would lead to an absurdity, permitting the HLSC to indefinitely refuse compliance with the Secretary's orders, thereby undermining the finality of appellate decisions.

Background and Relevant Findings:
The appellant, engaged in manufacturing onload changeover switches and related accessories, had its application for an eligibility certificate for sales tax exemption initially rejected by the HLSC on the basis that the majority of its fixed capital investment was in old machinery, which disqualified it from being considered a new industrial unit under Rule 28A of the Haryana General Sales Tax Rules, 1975. The appellant's subsequent appeals and legal challenges led to a final decision by the Secretary Industries, who directed the HLSC to issue the eligibility certificate, finding that the machinery was new. Despite this, the HLSC attempted to revisit the matter on the ground that the machinery had never been installed in Haryana, a point not previously contested.

Conclusion:
The court ruled in favor of the appellant, setting aside the orders of the Tribunal and the HLSC. The respondents were directed to comply with the Secretary's order dated 09.05.2003. The court reiterated that the HLSC could not reopen the case on new grounds once the Secretary's decision had attained finality, emphasizing the hierarchical structure and finality of appellate decisions under Rule 28A.

Final Judgment:
The court answered the substantial questions of law in favor of the appellant, stating, "The questions are, therefore, answered in favour of the appellant and against the respondents." Consequently, the impugned orders of the Tribunal and the HLSC were set aside, and the respondents were ordered to comply with the Secretary's directive to issue the eligibility certificate to the appellant.