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2015 (4) TMI 285 - PUNJAB & HARYANA HIGH COURT

2015 (4) TMI 285 - PUNJAB & HARYANA HIGH COURT - [2015] 81 VST 129 (P&H) - Exemption from payment of tax under Section 13-B of the Haryana Sales Tax Act read with Rule 28-A of the Haryana General Sales Tax Rules, 1975 - Held that:- The exemption is to be sought by and in respect of a unit, inter alia, of a company and is granted to the unit. The distinction between the juristic entity, namely, the company and a unit thereof has been drawn throughout the Rules. The Rules we quoted earlier are onl .....

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t would be irrelevant while determining whether the unit in respect of which exemption is granted has achieved the production figures and has met the other requirements. - Decided against assessee. - VATAP-47-2014 (O&M), VATAP-48-2014 (O&M) - Dated:- 24-3-2015 - S.J. Vazifdar, Acting CJ And G. S. Sandhawalia,JJ. For the Petitioner : Mr. Piyush Kant Jain, Advocate, and Mr. Suresh Kumar Yadav, Advocate For the Respondent : Ms. Mamta Singla Talwar, AAG, Haryana ORDER S.J. Vazifdar, A.C.J. The above .....

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ree assessment years 1995-1996, 1996-1997 and 1997-1998 as there were separate assessments under the Central Sales Tax Act and the Haryana General Sales Tax Act. For the assessment year 1998-1999, the assessment was only under the Haryana General Sales Tax Act and there is, therefore, only one appeal in respect thereof. 3. The appellant had set up an industrial unit at Gurgaon in the State of Haryana. The appellant is a registered dealer under the Haryana General Sales Tax Act, 1973 and the Cent .....

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tion from payment of tax in relation to the expansion unit. The appellant contends that it had obtained the separate registration in respect of the expanded unit bearing Registration Certificate No. 18200737 only for the limited purpose of becoming eligible to avail the exemption and started filing separate returns for its two units referred to as Unit No. 1 and Unit No. 2. On taking instructions, Mr. Piyush Kant Jain, learned counsel appearing on behalf of the appellant states that the second u .....

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ntends that upon rejection of the application for exemption with respect to the Unit No. 2/expansion unit, both the units formed but a single entity and the tax returns filed for the expansion unit could only be assessed jointly with the returns of the original unit and the production capacity and the actual production of both the units ought to be considered while determining whether the requirements of Rule 28-A and in particular sub Rule (11) thereof were complied with or not. 6. The appellan .....

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. The appellant thereafter filed a further appeal before the Haryana Tax Tribunal which was rejected by the impugned order dated 22.10.2013. 7. The appellant contends that this appeal raises the following substantial questions of law:- (i) Whether the dealer is bound to be assessed to tax separately after the rejection of claim for further exemption qua expansion of the existing unit for which a separate registration was taken for limited purpose of becoming eligible for applying for further exe .....

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ustries from the payment of tax, for such period either prospectively or retrospectively and subject to such conditions as may be prescribed. 9. Rule 28A of the Haryana General Sales Tax Rules, 1975 reads as under:- 28A (2) For the purpose of this Chapter, unless the context otherwise requires. (c) New Industrial Unit means a unit which is or has been set up in the State of Haryana and comes or has come into commercial production for the result of purpose or transfer of old machinery except when .....

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manufacture of the same product/products as of the existing unit (expansion) or different products (diversification) at the same or new location, and (i) in which the additional fixed capital investment made during the operative period exceeds 25% of the fixed capital investment of the existing unit, and (ii) which results into increase in annual production by 25% of the installed capacity of the existing unit in case of expansion. X X X X X X (f) 'eligible industrial unit' means :- (i) .....

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he 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. XXXXXX (11)(a) The benefit of tax-exemption/deferment under this rule shall be subject to the condition that the beneficiary/industrial unit after having availed of the benefit:- (i) shall continue its production at least for the next five years not below the level of average production for the preceding five years; and .....

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into 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. 10. As we mentioned earlier, on 07.11.1996, the appellant had applied for exemption under Rule 28-A. In accordance with Rule 28-A, the appellant made an applicati .....

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iginal unit having been suspended and the appellant having been unable to meet the requirements of Rule 28-A the application for exemption of Unit No. 2/expansion unit was rejected by a communication dated 05.08.1999. The Joint Director in the said communication noted that the Higher Level Screening Committee had observed that the appellant had not appeared before the Committee; that the report of the DETC noted that the unit had not yet completed the documents; that the unit was lying closed an .....

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challenge the same. The appellant had only succeeded in getting the exemption of the original unit/Unit No. 1 restored. Admittedly, the appellant had not filed any return for Unit No. 2 on the basis that it was a separate unit and instead sought to take the benefit of exemption granted to the first unit. Mr. Jain, the learned counsel appearing on behalf of the appellant, contended that on account of the rejection of the exemption in respect of the Unit No. 2/expansion unit, it remained a part of .....

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other unit as an expansion unit which had come into commercial production with effect from 27.03.1998 and for the purpose of determining the level of production after 12.12.1998 the production figures of the expansion unit were also required to be taken into account. The Supreme Court held as under:- 16. The said decision in R.K. Mittal Mills case, as we perceive, was rendered in a totally different context. In the present case, we are not concerned with the withdrawal of eligibility certificate .....

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e matter is whether production of two different units can be combined together to meet the requirement of the postulate enshrined under the Rule. The production of the beneficiary unit had failed to fulfil the stipulation incorporated in sub-rule (11)(a)(i) of Rule 28-A of the Rules. It is also the undisputed position that the production of the expanded unit has been computed and clubbed with the first unit to reflect the meeting of the criterion. The competent authority has come to a definite c .....

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has laid immense emphasis on the term expansion of the existing unit. The term expansion has been defined in clause (d) of sub-rule (2) of Rule 28-A which reads thus:- 28-A. (2)(d) expansion/diversification of industrial unit means a capacity set up or installed during the operative period which creates additional productions/manufacturing facilities for manufacture of the same product/products as of the existing unit (expansion) or different products (diversification) at the same or new locati .....

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ause (f)(i)(I), it is manifest that it is incumbent on the unit to obtain certificate of registration under the Act. The submission of Mr. Jain is that the second unit has obtained the registration certificate under the Act and, hence, the production of the said unit, being eligible, is permitted to be included. Needless to say, obtainment of registration certificate is a condition precedent to become eligible but that does not mean that the production of the said unit will be taken into account .....

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axes post the exemption period. The concept of exemption is required to be tested on a different anvil, for it grants freedom from liability. In the case at hand, as we understand, it is unit specific. The term unit has not been defined. The grant of exemption unit wise can be best understood by way of example. An entrepreneur can get an exemption of a unit and thereafter establish number of units and try to club together the production of all of them to get the benefit for all. It would be well .....

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