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TMI Blog2014 (3) TMI 822X X X X Extracts X X X X X X X X Extracts X X X X ..... he State for next five years by way of transfer or consignment of goods manufactured by it - Since the assessee did not dispute the specific contravention by the assessing authority after cancelling the exemption certificate issued has quantified the tax liability and the interest - The order so passed is in consonance with the scheme of exemption notified by the State Government and also in accordance with the rules prescribed under Section 13B. Validity of High Court Order - Held that:- High Court while allowing the petition has proceeded on a wrong assumption, that, the AO has levied tax on inter-state sales and on consignment transfer and accordingly has quashed the assessment order - Judgment and order of the High Court cannot be sustained, impugned order set aside – appeal allowed – Though assessing authority has completed the assessments in the light of the judgment and order passed by the High Court - Since the judgment and order of the High Court is set aside, the assessing authority is directed to pass fresh assessment order for the periods in dispute after affording opportunity of hearing to the assessee - Decided in favour of Revenue. - Civil Appeal No. 705 of 2013 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ause notice dated 30.12.1996, inter alia, directing the respondent to show cause why the Eligibility Certificate granted earlier should not be cancelled and the tax for the assessment years 1991-92, 1992-93, 1993-94, 1994-95 and 1995-96 (upto 7.9.1995) should not be demanded and collected with interest and penalty. In the show cause notice so issued, the Assessing Authority had specifically noticed that the respondent industry has contravened Rule 28A(11)(a)(ii) of the Rules. 7. After receipt of the reply to the show cause notice issued, the Assessing Authority has passed the order dated 31.1.1997 by confirming the show cause notice issued earlier. In the order passed, the Assessing Authority has stated that the respondent industry has availed tax exemption from 20.04.1991 to 07.09.1995 for ₹ 2,21,87,594/- but made sales outside the State of Haryana by way of transfer of goods manufactured by it and therefore, the industry has contravened the provisions of Rule 28A(11)(a) (ii) of the Rules. 8. Being aggrieved by the order so passed, the assessee had filed Writ Petition before the High Court, numbered as Writ Petition No. 2545 of 1997. In the petition so filed, the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the purchase or sale of any goods subject to certain conditions as may be specified in the notification. For the purpose of Section 13B and Section 25A of the Act, the State Government has framed Rule 28A of the Rules, which provides for computation of the quantum of tax incentive available to a dealer in view of eligibility certificate issued by the department. In order to regulate the exemption scheme the concept of Notional Sales Tax Liability is incorporated vide Clause (n) of Rule 28-A (2)(n) of the Rules. The said clause reads: (i) amount of tax payable on the sales of finished products of the eligible industrial unit under the local sales tax law but for an exemption computed at the maximum rates specified under the local sales tax law as applicable from time to time; and Explanation- The sales made on consignment basis within the State of Haryana or branch transfer within the State of Haryana shall also be deemed to be sales made within the State and liable to tax; (ii) amount of tax payable under the Central Sales Tax Act, 1956, on the sales of finished products of the eligible industrial unit made in the course of inter- State trade or commerce computed at the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thout having been given reasonable opportunity of being heard. 13. If there is a violation of any one of the conditions stipulated in Sub Rule 11(i) and (ii), the Sales Tax Authorities are at liberty to cancel the Exemption Certificate issued under the scheme and call upon the assessee to make payment of the exemption availed with interest thereon. 14. Having noticed the relevant rules, we will revert back to the facts in the present case. The assessee-company had availed benefit of the sales tax exemption under the Exemption Scheme issued by the State Government. The Eligibility Certificate for sales tax exemption provides for certain conditions which requires to be complied by the assessee-company to take benefit of exemption under the Scheme. The Condition No. 7 of the Eligibility Certificate provides that the certificate can be cancelled if there is contravention of any condition mentioned in the certificate or Rule 28-A, after affording an opportunity to the party of being heard. In the show cause notice it is specifically alleged that the assessee had dispatched goods on consignment basis during the assessment period 1995-1996, 1996- 1997 and 1997-1998 and therefore th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the business of manufacturing re-claimed rubber. The company has its manufacturing plant in the specified place as notified by the State of Haryana. 5. Under Section 13B of Haryana General Sales Tax Act, 1973, ( the Act for short) the Government is empowered to exempt certain class of industries from payment of taxes under the Act for a specified period. Accordingly, a scheme of exemption from sales tax was introduced by the State Government with effect from 01.04.1998, in the interest of industrial development in the State. The scheme of exemption as notified is subject to such conditions as may be prescribed under Rule-28A of Haryana General Sales Tax Rules, 1975 ( Rules, 1975 for short). The Rule deals in detail with the matters relating to the Grant of exemption to industries established in the notified area. 6. Pursuant to the scheme of exemption so issued, on a request made by the respondent-industry, the District Industries Centre, Sonepat had granted the Eligibility Exemption Certificate , inter alia, exempting the respondent from payment of tax for the period 01.04.1992 to 31.03.1997, subject to the conditions prescribed under Rule 28-A of the Rules, 1975. The qu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ertificate in form C on the basis that the sales are eligible to tax under the said Act. Explanation- The branch transfers or consignment sales outside the State of Haryana shall be deemed to the sale in the course of inter-State trade or commerce. Note The expression and terms, if any appearing in this rule not defined above shall unless the context otherwise requires carry the same meaning as assigned to them under the Act and the rules mad thereunder. 10. Rule 28-A(2)(n) includes within its ambit the sales which were otherwise exigible to sales tax, namely, local sales and inter-State sales and secondly, the Rule also includes branch transfers or consignment sales outside the State and sales made on consignment basis or branch transfers within the State by treating them as deemed sales, which two transactions were otherwise not exigible to sales tax for any other unit not availing exemption. Alternatively, it can be stated that Notional Sales Tax Liability as defined in Rule 28(A)(2)(n), as a condition for grant of exemption. 11. The benefit of tax exemption/ deferment under Rule 28A of the Rules, 1975 shall be subject to condition prescribed under Sub-rule 11(a) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ular Sub-rule 11(a)(ii) of the Rules, 1975, which prescribes that the benefit of tax exemption shall be subject to the condition that the assessee having availed the benefit of tax exemption shall not make sales outside the State for next five years by way of transfer or consignment of goods manufactured by it. Since the assessee did not dispute the specific contravention pointed out by the assessing authority after cancelling the exemption certificate issued has quantified the tax liability and the interest payable thereon. The order so passed, in our view, is in consonance with the scheme of exemption notified by the State Government and also in accordance with the rules prescribed under Section 13B of the Act. 14. The High Court while allowing the petition filed by the assessee has proceeded on a wrong assumption, that, the assessing authority has levied tax on inter-state sales and on consignment transfer and accordingly has quashed the assessment order passed by the assessing authority. In view of our conclusion stated earlier, we cannot sustain the judgment and order passed by the High Court. Accordingly, we allow this appeal and set aside the impugned order. 15. We are ..... X X X X Extracts X X X X X X X X Extracts X X X X
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