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2016 (1) TMI 187 - PUNJAB & HARYANA HIGH COURT

2016 (1) TMI 187 - PUNJAB & HARYANA HIGH COURT - [2016] 87 VST 433 (P&H) - Cancellation of exemption certificate - PGST / PVAT - violation of Rule 2(xia) of the Exemption Rules - appellant submitted that the authorities below misconstrued the definition of 'Export Oriented Unit' given under Rule 2 clause (xi-a) of the Rules, which nowhere provides that the appellant was legally bound to export 25% of its production to claim exemption under Rule 8(1)(vi) of the Rules. - collection of amount in as .....

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m the customers nor mentioned the same in the sale vouchers. Only in some bills "forwarding and postage" was charged which were posted accordingly. These entries of sale prices including the sale tax element were then posted in the accounts of each customer and, thus, the full amount of goods including the sale tax was collected from the customers. However, sale tax collected from the customers was not deposited by the appellant into Government Treasury in violation of the provisions of Sections .....

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of the Rules. - appellant has not been able to show any illegality or perversity in the findings recorded by the authorities below warranting interference by this Court - Decided against assessee. - VATAP No. 66 of 2009 - Dated:- 24-9-2015 - Ajay Kumar Mittal And Ramendra Jain, JJ. For the Appellant : Mr Aman Bansal, Adv For the Respondent : Mr Piyush Kant Jain, Addl AG ORDER Ramendra Jain, J. 1. This order shall dispose of VATAP Nos.66 and 67 of 2009 as according to the learned counsel for the .....

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her in the facts and circumstances of the case, the learned Tribunal is justified in law in upholding the cancellation of exemption certificate dated 20.4.1998 (Annexure A.2)? ii) Whether in the facts and circumstances of the case, the learned Tribunal is justified in sustaining the cancellation of exemption certificate (Annexure A.2) by holding that there had been violation of Rule 2(xia) of the Exemption Rules which is a definition clause? iii) Whether the learned Tribunal could sustain the ca .....

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a) of the Exemption Rules when respondent No.3, the first appellate authority had not recorded any finding on this issue?" 3. A few facts relevant for the decision of the controversy involved as narrated in VATAP No.66 of 2009 may be noticed. The appellant established a unit at village Dhawankha Jagir, Jalandhar Road, Kapurthala to manufacture the Rubber/Leather Nylon Sandwich Beltings and other transmission beltings in the financial year 1989-90 and got it registered as a 'dealer' .....

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e PGST Act as well as CST Act. In the year 2000, on expansion of production capacity, the appellant applied for the grant of incentive of sales tax exemption, whereupon, General Manager, District Kapurthala issued eligibility certificate No. 537 dated 30.01.2001 (Annexure A-1) authorizing it to take incentive of sales tax exemption for a period of ten years or for the maximum amount of ₹ 45,71,000/- with effect from 30.09.2000 to 29.09.2010. Pursuant thereto, the Assistant Excise and Taxat .....

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taken into possession. Accordingly, respondent No.4-Assistant Excise and Taxation Officer-cum-Assessing Authority, Kapurthala, issued notice dated 12.09.2002 under Rule 8 of the Punjab General Sales Tax (Deferment and Exemption) Rules, 1991 (for short, 'the Rules') to explain as to why its exemption certificate should not be cancelled for illegally collecting sales tax of ₹ 4,41,658/- from its customers in the shape of handling charges in violation of the provisions of Sections 10 .....

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(4) read with section 30-A of the PGST Act. It was also held that the appellant failed to export at least 25% of its products in the markets outside India during the aforesaid period 2000-01 and 2001-02 and, therefore, did not fulfil the minimum qualifying requirement of law as "Expert Oriented Unit" defined under Rule 2(xi-a) of the Rules. Aggrieved by the aforesaid order dated 14.11.2002 (Annexure A-3), the appellant filed appeal before the Deputy Excise and Taxation Commissioner (Ap .....

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order dated 30.8.2005 (Annexure A-5), the appellants preferred two separate appeals under Section 20(1)(a) of the PGST Act before respondent No.3, which were dismissed vide order dated 17.10.2006 (Annexure A-6). Being dissatisfied, the appellants approached the Punjab Value Added Tax Tribunal, Chandigarh (hereinafter referred to as 'the Tribunal') by way of filing its appeals, but remained unsuccessful. Hence the instant appeals by the appellant-assessee. 4. We have heard learned counsel .....

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n of the Act or the Rules made thereunder so as to clothe the respondents with jurisdiction to cancel/sustain the cancellation of the exemption certificate. It was further submitted that the authorities below had erred in holding that the appellant under the garb of "handling charges" was un-authorizedly charging "sales tax" from its customers against "C" Form and "STXXII" Form on the sale invoices in violation of PGST Act/Rules. Even otherwise, the Depart .....

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appeals are :- (i)Whether the authorities below erred in cancelling the exemption certificate granted to the petitioner being Export Oriented Unit? (ii) Whether the appellant had charged only handling charges from its customers? 9. Before dealing with the arguments, it is necessary to reproduce the definition of 'Export Oriented Unit' given in Rule 2(xi-a) of the Rules which reads thus:- "Rule 2 (i) to (x) XXX XXX XXX (xi-a) 'Export oriented unit' means an industrial unit e .....

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ets outside India is compulsory. It has been categorically recorded by the assessing authority that in the assessment years 2000-01 and 2001-02, the appellant exported nothing outside India. In the assessment year 2001-02, the appellant exported only 1.68% of its products in the markets outside India. Further, after going through the said sale invoices and agreement, it was noticed by the assessing authority that the appellant had charged sales tax in the sale vouchers and also posted the same i .....

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unts of each customer and, thus, the full amount of goods including the sale tax was collected from the customers. However, sale tax collected from the customers was not deposited by the appellant into Government Treasury in violation of the provisions of Sections 10(4) and 30-A of the PGST Act. To clarify the above fact, the Assessing Authority even mentioned the details of 14 sale vouchers in his order. The abovesaid sale vouchers were never disputed by the appellant. The stand of the appellan .....

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₹ 56.38 Paise were transferred to Trading Account totalling ₹ 4,40,514.79 Paise as on 31.03.2001. The stand of the appellant that the said entries were wrongly made was not found to be genuine as it could not give any satisfactory reply. The appellant was also disbelieved, because of not mentioning of charging of "handling charges" on the sale invoice/bills or in the sale books. Even otherwise the appellant had admitted before the Assessing Authority that the amount receive .....

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period from 30.9.2000 to 29.9.2010 as one of the incentives. But the dealer intentionally by violating the provisions of law planned and decided to charge and collect sales tax under the Act and the Central Act from his customers and retained the same with him for illegal and fraudulent enrichment, with this scheme in mind he did not mention on the sale invoices/bills that his unit was exempt from payment of sales tax so that his customers could never know that their seller (this dealer) was exe .....

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greement is available on record. Similar orders are booked by the other dealer also. The dealer has charged sales tax under the Act and the Central Act in the sale vouchers and posted them in sale book under the respective heads "PST" (Means Punjab sales Tax) and "CST" (Central Sales Tax) as the case may be. In respect of every bill separate entry has been made in the sale book. The dealer neither charged nor recovered any handling charges from the customers and has not menti .....

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Central Act respectively during the year 2001-02 from the customers which has not been paid by the dealer into the Govt. treasury was confronted to the dealer. xx xx xx xx xx xx xx x xx After going through the record carefully i.e. sale vouchers, account books and other relevant record, I find that the dealer has charged tax and pocketed it but he was not authorized to do so. Moreover the requirements mentioned for availing exemption being an EOU have not been fulfilled by him as such he has co .....

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