2019 (4) TMI 717 - HC - VAT and Sales Tax

Developer and codeveloper of an SEZ - exemption from payment of tax - individual industrial unit - Section 7(6) of HVAT Act, 2003 and 11(1)(i) read with Section 19(i) of HSEZ Act, 2005 - time limitation - Held that - The issue is covered by the decision in the case of Excise and Taxation Commissioner, Haryana Versus M/s Anant Raj Ltd. Rewari and another 2019 (4) TMI 637 - PUNJAB AND HARYANA HIGH COURT , where it was held that a developer and co-developer of an SEZ are entitled for exemption from payment of tax under the Act by virtue of Section 11(1)(i) of the HSEZ Act. The present appeal is also dismissed on merits as well as being time barred.

Summary

Issues:
1. Interpretation of Section 7(6) of the Haryana Value Added Tax Act, 2003 regarding VAT exemption.
2. Application of Section 19(i) of the Haryana Special Economic Zone Act, 2005 in tax exemption cases.
3. Justifiability of the Haryana Tax Tribunal's decision regarding tax exemption for SEZ developers.
4. Revision of assessment order disallowing VAT exemption claim.

Analysis:
1. The appeal was filed by the State challenging the Haryana Tax Tribunal's order granting tax exemption to an individual industrial unit in a Special Economic Zone (SEZ) developed by a developer. The State questioned the legal justification of the Tribunal's decision under Section 36 of the Haryana Value Added Tax Act, 2003. The substantial questions of law raised included the interpretation of Section 7(6) of the Act regarding VAT exemption and whether it applies to developers or only individual units within the SEZ.

2. The case involved a dispute where the Tribunal allowed tax exemption for a developer and co-developer of an SEZ based on Section 11(1)(i) of the Haryana Special Economic Zone Act, 2005. The Revisional Authority revised the assessment order disallowing the VAT exemption claim, citing a clarification issued by the Government. The Tribunal's decision was based on the interpretation of provisions in the HSEZ Act, 2005, particularly Section 19(i), which states that the Act does not affect rights acquired under other laws.

3. The State contended that the Tribunal erred in ignoring the strict interpretation of the exempting provisions in the HVAT Act, 2003, and the HSEZ Act, 2005. The Tribunal's decision to grant tax exemption to developers was challenged, emphasizing that the exemption was intended only for individual industrial units within the SEZ. The State raised concerns about the sustainability and reasonableness of the Tribunal's decision in light of the legal provisions.

4. Upon hearing the State counsel, the Court noted that the matter was previously addressed in a related case where the State's appeals were dismissed on both merit and timeliness grounds. The Court dismissed the present appeal on similar grounds, citing a previous decision where the State's appeals challenging tax exemption for SEZ developers were not upheld. The dismissal was based on the precedent set by the earlier judgment and the appeal being time-barred.

In conclusion, the judgment addressed the interpretation of tax exemption provisions under the HVAT Act, 2003 and the HSEZ Act, 2005, specifically regarding SEZ developers' eligibility for VAT exemption. The Court upheld the Tribunal's decision to grant tax exemption to developers based on relevant legal provisions, dismissing the State's appeal on merit and timeliness grounds.