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M/s HPL Socomec P. Ltd. Versus State of Haryana and others

2015 (9) TMI 209 - PUNJAB AND HARYANA HIGH COURT

Eligibility for exemption – Scheme under Rule 28A – Fulfilment of rule Higher Level Screening Committee (HLSC) reopened order of secretary and held that appellant’s industrial unit is eligible for sales tax exemption only on fixed capital investment and appellant to avail exemption to that extent alone, as appellants’ company did not fulfil requirements in view of HGST Rules, 1975 – Tribunal vide order rejected application for review – Held that:- as per scheme under Rule 28A, order of Secretary .....

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st of old machinery does not exceed 25% of total cost of machinery, etc – Admittedly machinery was new and not old so, this finding has attained finality– It was never contended by department that unit had not been set up in State of Haryana – Order of Secretary expressly records that it was not disputed that appellant had purchased part of machinery and that appellant had shifted this machinery to Chennai, which implied therein finding that machinery had been set up in Haryana.

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ribunal wrongly held that merely because issue had not been considered in appeal, it was open to HLSC to suo motu reopen case – Impugned order of Tribunal and of HLSC set aside – Decided in favour of Appellant. - VATAP No.10 of 2013 (O&M) - Dated:- 14-8-2015 - MR. S.J. VAZIFDAR, A.C.J. AND MR. G.S. SANDHAWALIA, JJ For The Appellant : Present: Mr. Rajiv Agnihotri, Advocate For The Respondent : Ms. Mamta Singla Talawar, AAG, Haryana S.J. VAZIFDAR, ACTING CHIEF JUSTICE: This is an appeal under Se .....

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against the appellant s claim for sales tax exemption of ₹ 54.08 lacs. The appellant has also challenged the order of the Tribunal dated 22.06.2012 rejecting its application for review of the order dated 05.09.2011. 2. In paragraph-27 of the appeal, several questions of law have been raised. We, however, admit the appeal on the following substantial questions of law as framed by us:- i) Whether the Higher Level Screening Committee is entitled to reopen a case on its own where its earlier .....

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vour of the appellant/assessee. 3. The appellant is engaged in the manufacture of onload changeover switches, switch boards and parts and accessories in relation thereto. The appellant s unit commenced commercial production on 24.06.1993. On 26.06.1993, the appellant applied for an eligibility certificate. The application was pending till the year 1998. 4. On 28.11.1996, the Deputy Excise and Taxation Commissioner reported to the HLSC that the appellant was not eligible for exemption as out of t .....

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rtificate. By an order dated 29.01.1998, the HLSC held that the appellant was not entitled to be issued the eligibility certificate and rejected the appellant s application which was made in Form S.T.70. What is recorded in the order is important and as follows. The appellant s claim was enquired into by the field authorities and was also scrutinized by the Deputy Excise and Taxation Commissioner and G.M., DIC, Gurgaon. A joint inspection report was put up before the HLSC. The HLSC ordered anoth .....

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The appellant s application for an adjournment thereafter before the HLSC was rejected with the observation that the appellant was deliberately trying to delay the matter after having availed the maximum exemption. It was held that the investment of ₹ 54.08 lacs had been made in old machinery i.e. dies and tools. They have been shown as having been purchased from Havell s Circuit Breakers Private Limited, Noida. It was held that the machinery had earlier been used by M/s Havell s Circuit .....

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. The appellant filed Civil Writ Petition No.11173 of 1999 in this Court challenging this order. This Court by an order dated 26.5.2000 directed the HLSC to hold a fresh enquiry into the question as to whether the moulds and dies were old or new and directed the company to be associated with the enquiry. 6. The HLSC, by an order dated 17.05.2002, once again concluded that the same were old. 7. This brings us to the most crucial aspect of the matter. The appellant filed an appeal before the Finan .....

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imited at Chennai who was doing job work for the appellant. It was further noted that the final product was assembled in the premises rented by the appellant. These observations are important in view of the contention now raised that the machinery had never been installed in Haryana. It is significant that the order notes that a visit was made to the appellant s premises by the DETC, Gurgaon on 22.06.1995 where he was told that the machinery had been sent to Chennai. At that time, it was not eve .....

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der which is vital for the purposes of this appeal:- I, therefore, quash the impugned order, accept the appeal & direct the HLSC to issue eligibility certificate to the appellant. This order too has attained finality. By the impugned order, the HLSC has sought to reopen the entire matter and to reject the application to a substantial extent now on the ground that the machinery had never been installed in Haryana. It is necessary to examine the consideration of the impugned order by referring .....

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ER CONDITIONS FOR EXEMPTION/DEFERMENT FROM PAYMENT OF TAX. (2) For the purpose of this Chapter, unless the context otherwise requires. (a) & (b) ……… ………. …………. …….. (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 first time during the operative period and has not been or is not formed as a result of purchase or t .....

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) a new Industrial Unit of expansion or diversification of the existing unit, which- (I) to (V) & (ii) ……… ………. …………. …….. (g) fixed capital investment means investment in- (i)& (ii) ……… ………. …………. …….. (iii) new plant and machinery Including generating set), tools and equipment. ……… ……&h .....

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ed within time. An application with incomplete or incorrect particulars including the documents required to be attached therewith shall be deemed as having not been made if the applicant fails to complete it on an opportunity afforded to him in this behalf. b) Applications from small scale units will be considered by the Lower Level Screening Committee and those from Medium/Large scale units by the Higher Level Screening Committee. (c) The General Manager, District Industries Centre shall immedi .....

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ith his report and recommendations alongwith comments, if any of the Deputy Excise and Taxation Commissioner concerned for its decision. (e) The General Manager, District Industries Centre will within 30 days of receipt of the application from the medium/large scale industry, forward his report and recommendations alongwith the comments if any, of the deputy Excise and Taxation Commissioner to the Additional Director of Industries who will place his proposal before the Higher Level Screening Com .....

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n of the decision. The decision of the Secretary Industries shall be final. (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 Gen .....

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der to be considered an eligible industrial unit, the enterprise must be a new industrial unit or an extension or diversification of existing unit which fulfills the conditions in clauses (I) to (V) of rule 28A(2)(f)(i). In order to be considered a new industrial unit within the meaning of Section 28A(2)(c), the unit must be one which has been set up in the State of Haryana and has not been or is not formed as a result of purchase or transfer of old machinery except when purchased in the course .....

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r contended by the department that the unit had not been set up in the State of Haryana. This is despite the fact that site visits were made and during those visits, the authorities were fully aware of the fact that the machinery had been shifted to Chennai to the premises of M/s Devi Polymers Limited who were doing job work for the appellant at the premises rented by the appellant. As noted earlier, the order of the Secretary expressly records that it was not disputed that the appellant had pur .....

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cretary had by the order dated 09.05.2003 directed the HLSC to issue the eligibility certificate to the appellant. The scheme of rule 28A(5) establishes the hierarchy of the authorities and the binding nature of their orders. The appellant is a medium/large scale industry. It made the application for the eligibility certificate in Form S.T.70 as required by sub-rule 5(a) and (c), to the General Manager, District Industries Centre. The appellant being a medium/large scale unit, its application wa .....

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the HLSC. What is important for the present purposes is to note that an appeal against the decision of the Lower Level Screening Committee (LLSC) lies to the HLSC and the decision of the HLSC in such appeal shall be final and an appeal from the original decision of the HLSC lies to the Secretary Industries and the decision of the Secretary Industries shall be final. The appellant had challenged the decision of the HLSC dated 29.01.1998 refusing to grant the eligibility certificate before the Sec .....

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n fact, upon the decision of the Secretary Industries, the HLSC had no jurisdiction to deal with the matter for any purpose and in any respect. The order of the HLSC dated 29.01.1998 had merged into the order of the Secretary dated 09.05.2003. Under clause (h), the Director of Industries or any officer nominated by him not below the rank of Additional Director ought to have issued the eligibility certificate, as the eligibility certificate ordered to be granted by the order of the Secretary date .....

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orded its prima facie finding that the machinery had not been erected at Gurgaon and it was being used in Chennai and that an investment of only ₹ 3.26 lacs could be considered for tax benefits. The HLSC, on the one hand, recorded that nobody had appeared for the appellant at the final meeting and, on the other hand, recorded that it was an undisputed fact that the machinery worth ₹ 54.08 lacs was not erected at the appellant s industrial unit at Gurgaon but was sent to M/s Devi Poly .....

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d by the Secretary was that the dies and moulds were new and that the Secretary had not taken any decision as to whether the same had been set up at the appellant s unit in Haryana. Having come to the finding entirely without jurisdiction, that the machinery had not been set up in Haryana, the HLSC held the appellant to be entitled for tax exemption only to the extent of ₹ 3,26,210/- as against the appellant's claim of ₹ 54.08 lacs. 14. Under the scheme of Rule 28A, there is a cl .....

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e order of the Secretary in appeal had been reviewed, modified or set aside, assuming, of course, that the order could have been reviewed, modified or set aside. The HLSC, in any event, had no power or jurisdiction to review, modify or set aside the order of the Secretary. A view to the contrary would lead to an absurdity. Such a view would entitle the HLSC to refuse to comply with the order of the appellate authority i.e. the Secretary ad infinitum. There would be no end to the proceedings for .....

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