2019 (5) TMI 2 - HC - VAT and Sales Tax

Exemption from payment of VAT to an individual industrial unit or dealer in the developed SEZ - Section 7(6) of the Haryana Value Added Tax Act, 2003 - HELD THAT - The issue decided 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 - appeal disposed off.

Summary

Issues:
1. Appeal filed by the State under Section 36 of the Haryana Value Added Tax Act, 2003 against the order of the Haryana Tax Tribunal.
2. Interpretation of Section 7(6) of the Haryana Value Added Tax Act, 2003 regarding VAT exemption in a Special Economic Zone (SEZ).
3. Consideration of provisions in Section 19(i) of the Haryana Special Economic Zone Act, 2005 by the Haryana Tax Tribunal.
4. Requirement of strict interpretation of exempting provisions in Section 7(6) of HVAT Act, 2003 and Section 19(i) of HSEZ Act, 2005.

Analysis:

1. The appeal was filed by the State under Section 36 of the Haryana Value Added Tax Act, 2003 against the order of the Haryana Tax Tribunal. The State raised substantial questions of law regarding the legality and sustainability of the Tribunal's order. The Tribunal had allowed the appeal of a developer and co-developer of a Special Economic Zone (SEZ) for exemption from VAT under the Act. The Respondent had sold Ready Mix Concrete (RMC) in the SEZ area, claiming exemption from VAT. The State contended that the developer or co-developer of an SEZ is not entitled to VAT exemption under the Act.

2. The interpretation of Section 7(6) of the Haryana Value Added Tax Act, 2003 was a crucial issue in the case. The State argued that the exemption from VAT applies only to an individual industrial unit or dealer in the developed SEZ, not to a developer or co-developer of an SEZ. The Principal Secretary issued a clarification supporting this interpretation. However, the Tribunal held that developers and co-developers of SEZ are entitled to exemption under Section 11(1)(i) of the Haryana Special Economic Zone Act, 2005.

3. The Tribunal's consideration of provisions in Section 19(i) of the Haryana Special Economic Zone Act, 2005 was another key aspect of the case. The Revisional Authority had relied on this provision, stating that it does not affect any right, privilege, obligation, or liability acquired under any other law. However, the Tribunal seemed to have ignored this provision while allowing the appeal of the respondent.

4. The issue of strict interpretation of the exempting provisions in Section 7(6) of HVAT Act, 2003 and Section 19(i) of HSEZ Act, 2005 was also raised. The State argued that the Tribunal should have strictly interpreted these provisions to provide tax exemption only to an individual industrial unit. However, the Tribunal's decision seemed to extend this exemption to developers and co-developers of SEZ, leading to a dispute between the parties.

In conclusion, the High Court dismissed the appeal filed by the State on the grounds that the issue was already decided in a previous case. The Court upheld the Tribunal's decision regarding the VAT exemption for developers and co-developers of SEZ, based on the interpretation of relevant legal provisions.