2015 (3) TMI 344 - HC - VAT and Sales Tax

Benefit of exemption under Section 13B of the 1973 Act read with Rule 28A of the Rules - Held that - It was not disputed that to avail benefit of exemption under Section 13B of the 1973 Act read with Rule 28A of the Rules, the assessee was required to ensure that the production continued during the period of exemption and was not stopped for a continuous period exceeding six months. The appellant had discontinued the business since January 1997 and had, thus, disentitled itself to retain the advantage of exemption already availed under the 1973 Act and the Rules. - findings recorded by the Tribunal which were not shown to be perverse or erroneous, no substantial question of law arises in this appeal for consideration. Accordingly, finding no merit in this appeal, the same is hereby dismissed. - Decided against assessee.

Summary

Issues:
1. Appeal under Section 36(2) of the Haryana Value Added Tax Act, 2003 against orders dated 23.5.2006, 25.9.2006, and 20.9.2011.
2. Substantial questions of law regarding the legality of the orders passed by respondents and liability to pay tax exemption despite closure of production due to raw material unavailability.

Analysis:
1. The appellant, a manufacturing firm, was granted tax exemption under Section 13B of the Haryana General Sales Tax Act, 1973. The firm closed production due to a ban on raw material (polythene bags) imposed by the State and Central Government. The assessing authority demanded tax exemption repayment with interest, leading to appeals.

2. The appellant argued that circumstances beyond their control forced production closure, making the tax recovery under Rule 28A unjust. However, the court found no merit in this argument, emphasizing the requirement to ensure continuous production for exemption retention.

3. The Tribunal upheld the cancellation of the exemption certificate, stating that a business discontinuation exceeding six months automatically justifies cancellation under Rule 28A(9)(i). The court highlighted that factors beyond control do not exempt from this rule, ultimately dismissing the appeal.

4. The court concluded that the Tribunal's findings were not erroneous, hence no substantial legal question arose for consideration. The appeal was dismissed, and a delay in filing the appeal was also addressed under the Limitation Act.

In summary, the judgment upheld the cancellation of tax exemption due to the firm's extended production closure, emphasizing the rule's strict application regardless of external factors. The court found no grounds to interfere with the lower authorities' decisions, ultimately dismissing the appeal and addressing the delay in filing as per the Limitation Act.