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TMI Blog2009 (2) TMI 446X X X X Extracts X X X X X X X X Extracts X X X X ..... dustrial development of the State, to exempt from payment of tax, or defer the payment of tax, by such class of industries, for such period, subject to such conditions as may be prescribed. Chapter IV-A of the Rules consisting of rule 28A dealt with class of industries, period and other conditions for exemption/deferment from payment of tax. The definitions of "eligibility certificate", "exemption certificate" and "entitlement certificate" in clauses (j), (k) and (l) of sub-rule (2) of rule 28A are extracted below: "(j) 'eligibility certificate' means a certificate granted in form ST-72 by the appropriate Screening Committee to an eligible industrial unit for the purpose of grant of exemption/deferment; (k) 'exemption certificate' means a certificate granted in form ST-73 by the Deputy Excise and Taxation Commissioner of the District to the eligible industrial unit holding eligibility certificate which entitles the unit to avail of exemption from the payment of sales or purchase tax or both, as the case may be; (l) 'entitlement certificate' a certificate granted in form ST-73 by the Deputy Excise and Taxation Commissioner of the District to the eligible industrial unit holding e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e scale units by the Higher Level Screening Committee. ... (5)(h) The eligibility certificate will be issued by the General Manager, District Industries Centre in cases approved by the Lower Level Screening Committee and by the Director of Industries or any officer nominated by him not below the rank of Additional Director in cases approved by the Higher Level Screening Committee normally within a period of 45 days from the date of receipt of the application in the office of the General Manager, District Industries Centre. The certificate shall be valid from the date of commercial production or from the date of issue of entitlement exemption certificate, as the case may be, for a period as laid down under sub-rule (4) unless cancelled or withdrawn. A copy of the eligibility certificate shall also be sent to the Deputy Excise and Taxation Commissioner concerned. ... (8)(a) The eligibility certificate granted to an industrial unit shall be liable to be withdrawn at any time during its currency by the appropriate Screening Committee, in the following circumstances- (i) if it is discovered that it has been obtained by fraud, deceit, mis-representation, misstatement or concealment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such change in land use had to be permitted/certified by the Town and Country Planning Department by issue of a No-objection Certificate/Change of Land Use Certificate ("NOC/CLU certificate ", for short). Civil Appeal No. 1973 of 2006. The first respondent (for short, "respondent"), a small-scale industry, was registered as a dealer under the Act. The respondent made an application dated November 14, 1995 to the General Manager, District Industries Centre, Panipat in the prescribed form (ST-70) for grant of an eligibility certificate and enclosed therewith the following annexures: (1) Application form in prescribed format. (2) Option letter seeking exemption to be given from the date of commercial production. (3) Affidavit duly attested by a first class magistrate. (4) Chartered accountant's certificate regarding fixed assets at site. (5) Certificate from chartered accountant regarding projected sales tax to be exempted for the period of eligibility. (6) Copy of resolution. (7) Memorandum and article of association and list of directors. (8) Copy of permanent SSI registration. (9) Copy of registration certificate under the Act. The respondent did not produce the NOC/CLU ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y, a NOC/CLU certificate was required from the Town Planning Department. The respondent's director admitted that the respondent had not obtained such NOC/CLU certificate. The LLSC therefore took a decision to withdraw the eligibility certificate issued to the respondent for non-production of the NOC/CLU certificate. The General Manager, District Industries Centre, Panipat, by letter dated November 26, 1998 informed the respondent about the decision of the LLSC to withdraw the eligibility certificate. The appeal filed by the respondent against the said decision was rejected by the Higher Level Screening Committee by order dated July 1, 1999. The respondent challenged the said decision in C.W.P. No. 13865 of 2000. The High Court by order dated October 10, 2000 directed the appellate authority to hear the appeal and pass a fresh order. The appeal was heard again and dismissed on February 6, 2001. The appellate authority noted that in spite of several opportunities being granted, the respondent had failed to produce the NOC/CLU certificate. It further held that in view of the non-production of NOC/CLU certificate, the eligibility certificate issued to the respondent was void ab initio. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. On the contentions urged, the following two questions arise for our consideration: (i) Whether an eligibility certificate issued under sub-rule (5) of rule 28A could be withdrawn on a ground other than those specified in clause (a) of sub-rule (8) of rule 28A. (ii) Whether in this case, withdrawal can be said to be on any of the grounds mentioned under clause (a) of sub-rule (8) of rule 28A. Re: Question (i): Sub-rule (8) provided for withdrawal of the eligibility certificate in three specific circumstances mentioned in clause (a) thereof. Clause (b) of sub- rule (8) provided that where the eligibility certificate is withdrawn, the exemption/entitlement certificate shall be deemed to have been withdrawn from the first date of its validity and the unit becomes liable to pay tax, interest and penalty as if no entitlement certificate has ever been granted to it. This penal provision was attracted only when the withdrawal was on any of the grounds mentioned in clause (a) of sub-rule (8). It is not possible to hold that the penal consequences under clause (b) of sub-rule (8) would apply even where the specified circumstances/grounds in clause (a) of sub- rule (8) did not exist o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -rule (8) specifically enumerated three circumstances in which the eligibility certificate is liable to be withdrawn. They were: (i) discovery that the certificate had been obtained by the applicant by fraud, deceit, misrepresentation, misstatement or concealment of material facts; (ii) discontinuance/closing down of the business by the holder of the certificate; and (iii) disposal/transfer of fixed assets by the holder of the certificate, adversely affecting its manufacturing or production capacity. It did not empower the appropriate screening committee to withdraw the eligibility certificate under any other circumstance. Nor did it confer a general power upon the screening committee to withdraw the certificate. It however required that such withdrawal shall be after affording a reasonable opportunity of hearing to the affected unit. Clause (b) of sub- rule (8) prescribed certain penal consequences when the eligibility certificate was withdrawn. Obviously, penal consequences could not be visited upon an assessee on grounds or circumstances which were neither specified in the rules, nor stipulated in the eligibility certificate. The legislative intent as can be gathered from the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ertificate was required to be produced. The respondent did not produce the NOC/CLU certificate. Nor did it disclose in its application that its unit was situated in an agricultural land. It merely gave a list of the documents produced, where NOC/CLU certificate did not find a place. It remained silent about requirement (v). This amounted to suppression and concealment of a material fact or an implied misrepresentation that NOC/CLU certificate was not required to be produced. Where the NOC/CLU certificate was not produced, and the applicant did not state that the land was agricultural land, there was every likelihood of the concerned authority proceeding on the assumptions that the industry was not situated in an agricultural land and therefore the applicant was not required to produce the NOC/CLU certificate. But if the unit was situated in an agricultural land, it was mandatory to either produce the NOC/CLU certificate under requirement (v) or disclose the fact that though the unit was situated in an agricultural land, it did not possess the required certificate. The suppression of the fact that the land was agricultural was a material concealment and misrepresentation which led ..... X X X X Extracts X X X X X X X X Extracts X X X X
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