2020 (3) TMI 8 - HC - VAT and Sales Tax

Review application - area based exemption - expansion of the unit - application was rejected by the Higher Level Screening Committee (HLSC) on 25.5.2000 holding that the product i.e. desi ghee is covered under negative list of Rule 28B - HELD THAT - The ground for rejection of exemption claim by HLSC could be sustained if the case was made out that any one of the conditions of proviso to Rule 28B(3)(a) of the Rules were not met. It was in that eventuality that application was to be dealt with under Rule 28B and the negative list would have relevance. Merely because by the time the application was submitted on 30.6.1999, Rule 28B of the Rules was inserted will not automatically bring the application for exemption under Rule 28B. If that is so, the proviso to sub-rule (3)(a) to Rule 28B would be rendered otiose. The proviso has extended the applicability of Rule 28A of the Rules. There cannot be any serious objection with regard to fulfilment of the three conditions as the unit had started commercial production on 15.4.1999 i.e. prior to insertion of Rule 28B of the Rules - Appellate Authority rightly allowed the appeal by considering the exemption application under Rule 28A of the Rules. The second contention that no land was purchased or taken on lease or rent is against the record. The diversified unit which started commercial production in 1995 was expanded and its capacity was extended from 10 metric tonnes to 14 metric tonnes. The land was already with the unit. It was not the case either before the HLSC that the land was not purchased or before the Appellate Authority, rather the departmental representative before the Appellate Authority conceded that three conditions of proviso to Rule 28B(3)(a) were fulfilled. Petition dismissed.

Summary

Issues:
Challenge to orders granting exemption under Rule 28A of the Haryana General Sales Tax Rules, 1975 and Central Sales Tax Act, 1956 to an assessee for setting up an industrial unit producing Butter Oil, ghee, Milk Powder, Dairy Whitener, Desi Ghee, and an expanded unit.

Analysis:
The State of Haryana filed a writ petition to quash orders allowing exemption to the assessee under Rule 28A of the Rules. The assessee's units were set up in Kurukshetra, with commercial production starting in 1994. The diversified unit was expanded, and commercial production began in 1999. The Higher Level Screening Committee rejected the exemption claim for the expanded unit, citing desi ghee as a product covered under the negative list of Rule 28B. The Commissioner of Industries allowed the assessee's appeal, leading to the present petition.

The primary challenge in the writ petition was twofold: first, that the product fell under the negative list of Rule 28B at the time of production, and second, that no land was purchased, making the case ineligible under Rule 28A. The definition of 'operative period' under Rule 28A(2)(a) and 28B(3)(a) was crucial in analyzing the case. Rule 28B was inserted in 1999 but made effective from 1997, forming the basis of the petitioner's contention.

The Court found the petitioner's submission unfounded. The definition of 'operative period' under Rule 28B extended the benefit under Rule 28A to units meeting specific criteria related to land acquisition, building plan approval, and machinery booking. The rejection of the exemption claim by HLSC would be valid only if any of these conditions were not met. As the unit had fulfilled these conditions before Rule 28B's insertion, the Appellate Authority rightly considered the application under Rule 28A.

Regarding the second contention on land purchase, the Court noted that the diversified unit's capacity expansion had the necessary land, which was purchased in 1992. The department's representative conceded fulfillment of all conditions under the proviso to Rule 28B(3)(a). A report from the Deputy Excise and Taxation Commissioner further confirmed the land purchase in 1994. Consequently, the Court dismissed the writ petition, finding no grounds for interference in the impugned orders.

In conclusion, the judgment upheld the exemption granted under Rule 28A to the assessee's units, emphasizing compliance with the conditions set forth in the Rules and rejecting challenges to the orders based on the negative list and land acquisition criteria.