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TMI Blog2016 (9) TMI 354X X X X Extracts X X X X X X X X Extracts X X X X ..... 9) of Rule 28A of the Rules provides for cancellation of exemption/ entitlement certificate under certain specified conditions and one of them being discontinuance of its business by the unit for a period exceeding six months or closing down its business during the period of exemption/ deferment. The facts of the case are that the period of eligibility of the appellant was from 20.3.1993 to 19.3.2002. The unit had stopped production in July, 2000. Out of the total amount of Rs. 72,11,700/-, the benefit to the extent of Rs. 27,95,959/- was availed upto 30.6.2000. There was violation of Rule 28A(9)(i) of the Rules as the unit discontinued its business for a period exceeding six months during the period of exemption. Hence, the exemption certificate was liable to be 'cancelled' for violation of the conditions of Rule 28A(11)(a). Order of Assessment - time barred – Held that: - a perusal of the order shows that in fact, it is not an assessment order, rather an order passed for demand of tax and interest on account of violation of conditions laid down in Rule 28A(11)(a)(i) of the Rules, which specifically provides that in case after availing the benefits, the unit does not remai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arn. It came into production on 20.3.1993. Being an eligible industrial unit in terms of the provisions of Haryana General Sales Tax Act, 1973 (for short, 'the Act'), the appellant applied for issuance of eligibility certificate claiming the benefit of exemption from payment of tax. The eligibility certificate was issued to the appellant with validity from 20.3.1993 to 19.3.2002. After receipt of eligibility certificate, the appellant applied for issuance of exemption certificate, which was issued on 28.10.1993 entitling the appellant to claim benefit of exemption from payment of tax to the extent of Rs. 72,11,700/-. The appellant continued availing the benefit till the validity of the eligibility certificate as well as the exemption certificate expired. Vide order dated 7.11.2002, passed under Rule 28A(11)(b) of the Haryana General Sales Tax Rules, 1975 (for short, 'the Rules'), the Deputy Excise Taxation Commissioner, withdrew the entire benefit availed by the appellant on the ground that the appellant unit was required to continue its production for next five years after availing the benefit at the average level of last five years. The appellant was directed t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oresaid order, which is impugned before this Court raising the aforesaid substantial questions of law. 6. Learned counsel for the appellant submitted that Section 13B of the Act gives power to Government to grant exemption from payment of tax to certain class of industries. In exercise of powers conferred under Section 13B of the Act, Rule 28A was inserted in the Rules. Rule 28A(2)(j) defines eligibility certificate, whereas sub-rule (k) thereof defines exemption certificate. Rule 28A(5) of the Rules provides for the procedure for issuance of eligibility certificate, whereas sub-rule (6) thereof provides the procedure for issuance of exemption certificate. The validity of exemption certificate is for one year. Sub-rule (7) of Rule 28A of the Rules provides that exemption certificate is to be renewed from year to year, for which application is required to be made on statutory form. Sub-rule (8) of Rule 28A of the Rules provides for the conditions under which eligibility certificate granted to an industrial unit can be withdrawn. If it is so, the exemption certificate is automatically withdrawn and entire amount of tax benefit availed of by the industrial unit is recoverable along ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vs M/s Stella Industries (P) Ltd. filed against the aforesaid judgment was dismissed on 13.12.2007. Reference was also made to judgment of this Court in M/s Sai Beverages (P) Limited, New Delhi vs State of Haryana (2001) 17 PHT 197, in which earlier judgment of this Court in A. S. Fuels (P) Limited's case (supra) was followed. Special Leave to Appeal (Civil) No. 19347 of 2001 State of Haryana vs M/s Sai Beverages (P) Limited filed against the aforesaid judgment was also dismissed on 26.11.2001. 10. Further it was submitted that the Deputy Excise Taxation Commissioner while cancelling the exemption certificate granted to the appellant ordered that the same is cancelled with effect from 1.7.2000. The department was not aggrieved against that order as no further proceedings were taken. Even if the order was wrong, it is final between the parties and is binding on them. In support, reliance was placed upon judgments of Hon'ble the Supreme Court in Gorie Gouri Naidu (Minor) and another vs Thandrothu Bodemma and others (1997) 2 Supreme Court Cases 552 and Kalinga Mining Corporation vs Union of India and others (2013) 5 Supreme Court Cases 252. 11. Another conte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lity period, whereas in terms of Sub-rule 11 of Rule 28A of the Rules, a unit is required to remain in production even for next five years, after availing the exemption. The Rules cannot be interpreted in the manner sought to be suggested by the appellant. The exemption certificate issued to the appellant was cancelled and as a consequence the demand of tax was raised. There is no illegality in the action of the respondents. 14. Learned counsel for the State further submitted that the orders vide which the demand has been raised against the appellant are merely consequential to the order passed by the Deputy Excise Taxation Commissioner withdrawing the exemption certificate. Those have been upheld in appeal. She further submitted that the facts of the case in hand and before Hon'ble the Supreme Court in A. S. Fuels Pvt. Ltd.'s case (supra) were identical and, in fact, support the case of the department. She further submitted that even on the ground of limitation, the orders of assessment cannot be set aside as the language used in Section 28(5) of the Act is that the Assessing Authority shall proceed to assess and not finally pass the order of assessment. There is no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of exemption from the payment of sales or purchase tax or both, as the case may be; xx xx xx (6) (a) An eligible industrial unit which has been issued with an eligibility certificate (hereinafter referred to as the applicant unit), shall, within sixty days of its receipt make an application for the grant of exemption or entitlement certificate, as the case may be, in Form ST-71 to the Deputy Excise and Taxation Commissioner of the District in which his unit is located. The application shall be accompanied with an attested copy of the eligibility certificate and other documents mentioned in the application. No application shall be entertained if not received within time. An application with incomplete or incorrect particulars including the documents required to be attached therewith shall be deemed as having been not made if the applicant fails to complete it on an opportunity afforded to him in this behalf. On receipt of application, the Deputy Excise and Taxation Commissioner shall ask the applicant unit seeking benefit of,- (i) tax deferment to either execute a mortgage deed in Form ST-74 creating a pari-passu first charge along with financial institutions/banks on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s the case may be, shall be renewed from year to year for which the industrial unit shall make an application to the Deputy Excise and Taxation Commissioner incharge of the district by the 31st May in Form ST-71. The application shall be accompanied with exemption/entitlement certificate, additional security as specified in sub-clauses (i) and (ii) of clause (a) of subrule (6) equal to fifteen per cent of the declared national sales tax liability of the current year and the difference between the actual and the declared notional sales tax liability of the previous year in the case of sales tax exemption and equivalent, to the extent of estimated tax liability of the current year and difference between actual and estimated tax liability of previous year in case of tax deferment, as also other documents mentioned in the application. The Deputy Excise and Taxation Commissioner after making such enquiries as are necessary, and after satisfying himself that the applicant is a bonafide industrial unit and has not misused the exemption/ entitlement certificate, shall renew the exemption/ entitlement certificate within 30 days of the making of the application for renewal failing which t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of its validity and the unit shall be liable to payment of tax, interest or penalty under the Act as if no entitlement certificate had ever been granted to it. (9) The exemption/entitlement certificate granted to an eligible industrial unit shall be liable to be cancelled by the Deputy Excise and Taxation Commissioner concerned in the following circumstances, after affording an opportunity of being heard to the unit - (i) discontinuance of its business by the unit at any time for a period exceeding six months or closing down of its business during the period of exemption/deferment; (ii) disposal by the unit of any of its fixed assets mortgaged with the government in the Excise and Taxation Department; (iii) Failure to furnish adequate security by the unit as required under the rules; (iv) failure of the unit to make payment of the deferred amount on the date of payment, (v) contravention of any of the provisions of the Act and/or the rules or conditions of the eligibility certificate or the exemption/entitlement certificate by the unit; (vi) when the appropriate committee, which sanctions the eligibility certificate recommends that the exemption/ entitlement ce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nto play if the loss in production is explained to the satisfaction of the Deputy Excise and Taxation Commissioner concerned as being due to the reasons beyond the control of the unit : Provided further that a unit shall not be called upon to pay any sum under this clause without having been given reasonable opportunity of being heard. 18. A perusal of the scheme of Rule 28A(5) of the Rules provides for procedure for issuance of eligibility certificate, whereas Sub-Rule (6) thereof provides for issuance of exemption certificate. It further provides that the exemption certificate issued shall be valid unless cancelled or withdrawn from the date of commercial production or from the date of issue of exemption certificate as the case may be to the 30th June next year or when notional sales tax liability first exceeds the permissible limit, whichever is earlier. 19. Sub-rule (7) of Rule 28A of the Rules provides for procedure for renewal of exemption certificate. As per the scheme year to year renewal of exemption certificate is required to keep a track of the annual benefit availed of by the unit as even if the eligibility certificate is still valid, the moment maximum permis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e certificates. It contains conditions which are applicable after the entire benefit has already been availed of. 25. In the case in hand, the facts as noticed above are that the period of eligibility of the appellant was from 20.3.1993 to 19.3.2002. The unit had stopped production in July, 2000. Out of the total amount of Rs. 72,11,700/-, the benefit to the extent of Rs. 27,95,959/- was availed upto 30.6.2000. There was violation of Rule 28A(9)(i) of the Rules as the unit discontinued its business for a period exceeding six months during the period of exemption. Hence, the exemption certificate was liable to be 'cancelled'. In A. S. Fuels Pvt. Ltd.'s case (supra), a Division Bench of this Court opined that the exemption certificate is renewed on year to year basis. It can be cancelled during its currency and as a result the demand of tax only for that year could be raised and not for the earlier period. When the matter went before Hon'ble the Supreme Court, it was opined that this Court had failed to take notice of the provisions of Rule 28A(11)(a) in terms of which a unit even after claiming the benefit will have to remain in production for next five years ..... X X X X Extracts X X X X X X X X Extracts X X X X
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