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M/s Modern Feed Industries Versus The State of Haryana and others

2016 (9) TMI 465 - PUNJAB AND HARYANA HIGH COURT

Issuance of eligibility certificate - manufacture of cattle feed - tax incentives - Section 13-B of the Haryana General Sales Tax Act, 1973 - eligibility certificate - Rule 28-A of the Haryana General Sales Tax Act, 1973 - eligible industrial unit - Rule 28-A(2)(f) of the Rules - notional sales tax liability - Rule 28A (2)(n) of the rules - negative list not entitled to the benefits - benefit of purchasing raw material without payment of tax - tax free goods - Rule 28A(4)(a) of the rules - Held .....

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list. - The quantum of benefit or type of benefit which the industrial unit may avail after issuance of eligibility certificate is a stage subsequent to the issuance thereof. As has already been referred to by the petitioner that in terms of notification issued by the Government, an eligible industrial unit availing exemption from payment of tax may be entitled to purchase goods without payment of tax. In the overall scheme, the object may be to promote industrialisation. This Court is not .....

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legally sustained. - Petition allowed - issuance of eligibility certificate granted - decided in favor of petitioner. - C.W.P. No. 11835 of 2000 (O&M) - Dated:- 23-8-2016 - Mr. Rajesh Bindal and Mr. Harinder Singh Sidhu, JJ. For The Petitioner : Mr. Sandeep Goyal, Advocate For The Respondent : Ms. Mamta Singla Talwar, Deputy Advocate General, Haryana Rajesh Bindal, J. 1. This order will dispose of two petitions bearing CWP Nos. 11835 of 2000 and 3100 of 2002, as identical issue is involved. .....

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duction on 23.5.1996. Section 13-B of the Haryana General Sales Tax Act, 1973 (for short, 'the Act') enables the State Government to provide for tax incentives. In exercise of powers conferred under the aforesaid provisions, Rule 28-A was inserted in the Rules. In terms of the aforesaid provisions, the petitioner applied for issuance of eligibility certificate vide application dated 19.8.1996, which was taken up in the meeting of the Lower Level Screening Committee held on 28.10.1997 and .....

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ch the application of the petitioner for grant of eligibility certificate has been rejected is totally contrary to the provisions of Rules. The Rules contained a negative list specifying the products, the manufacturers of which are not entitled to the benefits under the Rules. The product of the petitioner is not mentioned therein. Even if on the product manufactured by the petitioner, there is no tax leviable on sale thereof, still in terms of the provisions of the Act and the notification issu .....

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e taxable. 6. Learned counsel for the petitioner further referred to a communication dated 1.3.1993 from the Excise and Taxation Commissioner clarifying that the units manufacturing tax free products are entitled to benefit of exemption from tax. He further submitted that the aforesaid communication was superseded vide communication dated 31.7.1997 issued by the Commercial Taxation Commissioner. The Unit of the petitioner had come into production prior thereto. He further submitted that even if .....

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gross turnover and in the case of deferment, it shall extend to tax on the taxable turnover. Gross turnover has been defined in Section 2(gg) of the Act, whereas the taxable turnover has been defined in Section 2(p) of the Act. The assessment is framed as per Section 27 of the Act, which initially starts from gross turnover, which includes even the goods which are tax free. He further submitted that at the stage of issuance of eligibility certificate, none of the provisions of the Rules provide .....

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s that the benefit for the purpose of arriving at the limit of tax exemption/ deferment, the notional tax liability is to be considered, which means amount of tax payable on sale of that product. Once there is no tax payable on the furnished product, there is no use in issuing the eligibility certificate. The idea behind the scheme was to give exemption from payment of tax on sales and not on purchases. As per item 66 in Schedule-B of the Act, the goods manufactured by the petitioner are tax fre .....

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r the State, learned counsel for the petitioner submitted that the communication dated 31.7.1997 was not in response to the clarification sought by the petitioner as the letter written by the petitioner seeking clarification itself was dated 31.7.1997. He further submitted that clarification dated 31.7.1997, as has been referred to by learned counsel for the State was not communicated to the petitioner therein. 10. Heard learned counsel for the parties and perused the paper book. 11. Relevant pr .....

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Rule 28A(2)(f) of the Rules (f) '"eligible industrial unit" means:- (i) a New Industrial unit or expansion or diversification of the existing unit, which - (I) has obtained certificate of registration under the Act; (II) is not a public sector undertaking where the Central Government held 51% or more shares; (III) is not availing the incentive of interest free loan from the Industries Department for investment after the 1st day of April, 1988; (IV) is not included in Schedule III a .....

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m of exemption from the payment of sales tax or purchase tax or both or deferment of tax. xx xx xx Rule 28A (2)(n) of the Rules- (n)- "notional sales tax liability" means - (i) amount of tax payable on the sales of finished products of the eligible industrial unit under the Local Sales Tax Law but for an exemption computed at the maximum rates specified under the Local Sales Tax Law as applicable from time to time; and Explanation: The sales made on consignment basis within the State o .....

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The branch transfers or consignment sales outside the State of Haryana shall be deemed to be the sale in the course of inter-State trade or commerce. Note: The expression and terms, if any appearing in this rule not defined above shall unless the context otherwise requires carry the same meaning as assigned to them under the Act and rules made thereunder. xx xx xx Rule 28A(4)(a) (4)(a) Subject to other provisions of this rule, the benefit of tax exemption or deferment shall be given to an eligi .....

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lanation 1: For the purpose of arriving at the limit of tax exemption/deferment, the national sales tax liability of the unit shall be taken into consideration. Notification dated 30.12.1987 LIST OF GOODS TAXABLE AT FIRST STAGE IN HARYANA (AS ON UPTODATE) Notn. No. S.O. 156/H.A.20/73/S.18/87 Dated 30th Dec. 1987 In exercise of the powers conferred by section 18 of the Haryana General Sales Tax Act, 1973 and all other powers enabling him in this behalf, and in supersession of Haryana Government, .....

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ded upto date) Sr. No. Description of goods Rate of tax (in percentage) 1. 2 . 3 . 1 to 137 xx xx 138. Goods leviable to tax at the stage of first sale when sold to a registered dealer who is availing exemption from tax under the industrial policy of the State Government, for the purpose of use in manufacture or processing of goods by him for sale or for the purpose of use in packing in the goods manufactured or processed by him subject to furnishing a declaration appended to this notification b .....

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furnishing a declaration in form STD-4 appended to this notification, by him. Nil 28. to 80. xx xx SCHEDULE- B (See Sections 6 and 15) Sr. No. Description of goods Conditions and Exceptions 1. 2 . 3 . 1 to 66 xx xx 67. Cattle feed, that is to say, a mixture of rice polish, rice bran deoiled, gram churi, mustard extraction, molasses, barley, sprout, salt, mineral mixture, urea and damaged wheat. 68 to 82. xx xx 12. The case set up by the petitioner is that the unit set up by him for manufacture .....

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certificate. Reference was also made to the communication received from Commercial Taxation Commissioner dated 31.7.1997. The opinion of the Higher Level Screening Committee was also in the same terms. 13. Section 13-B of the Act empowers the State Government to exempt any class of industry from payment of tax in the interest of industrial development of the State. Prior to the amendment in Section 13-B of the Act vide Act 13 of 1989, the words used were 'from payment of sales tax', how .....

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ublic sector undertaking in which Central Government holding is 51% or more share; (iii) is not availing the incentives of interest free loan from the Industries Department for investment after 1.4.1988; (iv) is not included in Schedule III appended to these rules except the tiny units set up in a rural area on or after 1st April, 1992, in which capital investment in plant and machinery including market price of plant and machinery taken on lease or otherwise, does not exceed rupees five lakhs, .....

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nition of eligible industrial unit, any manufacturer of the products as mentioned in Schedule- III is not entitled to the benefits envisaged under Rule 28A of the Rules. The Schedule-III as applicable on the relevant date is extracted below:- Serial No. Industries/class of industries 1. Oil expellers (including units set up under Rural Industries Scheme) 2. Dall Mills and Rice Mills (including units set up under Rural Industries Scheme) 3. Steel and Wooden furniture. 4. Stone Crushers (including .....

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etc. 10. Ethanol (Ethyl Alcohol) based industries except nonmolasses alcohal industries. 11. Khandsari units 12. Bricks made of ordinary earth including mechanized bricks where the ordinary of earth content is more than 50%. 13. Thinners. 14. Induction and ARC Furnance with more than 0.5 MT capacity. 15. AAC/ ACSR conductors. 16. L. P. Gas cylinders 17. Non-graded C.I. Casting. 18. Roller Flour Mills. 19. Re-rolling of mild steel, re-rolling of special steel like EN-42 is not covered under the n .....

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izer (Nitrogen Phosphate). 31. Sugar. 32. Cement. 33 Alluminium (Primary stages). 34. Thermal Power 35. Oil Refinery. 36. Sulphuric acid. 37. Tanneries. 38. Copper Smelter. 39. Zinc Smelter. 40. Iron and Steel (Primary stage) 41. Pulp and paper 42. Dyes and Dye intermediates. 43. Pesticides manufacturing and formulations. Note: -1: The above list shall not be applicable to the industrial units set up under the Rural Industries Scheme except the units covered under any of the entries mentioned at .....

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will be taken on the basis of documents furnished to a financial institution or banks for drawing a loan and which have been accepted by the financial institution or bank concerned for sanction of loan. 17. A perusal of the aforesaid list shows that the neither the product being manufactured by the petitioner, namely, cattle feed, nor the unit engaged in manufacturing of tax free products, is mentioned therein. Meaning thereby there is no bar as such to issue eligibility certificate to a unit en .....

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is exercise in futile to issue him eligibility certificate, is merely to be noticed and rejected, for the reasons that the quantum of benefit or type of benefit which the industrial unit may avail after issuance of eligibility certificate is a stage subsequent to the issuance thereof. As has already been referred to by the petitioner that in terms of notification issued by the Government, an eligible industrial unit availing exemption from payment of tax may be entitled to purchase goods without .....

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