IRPLAST ADHESIVES INDIA LIMITED Vs. STATE OF HARYANA

JUDGEMENT

(1.) This is a petition for quashing of the order dated April 24, 1998 vide which the Deputy Excise and Taxation Commissioner (East), Gurgaon (respondent No. 2) cancelled the exemption granted to the petitioner on August 19, 1994 under rule 28a of the Haryana General Sales Tax Rules, 1975 (for short, "the Rules" ). The petitioner has also prayed for quashing of the orders dated April 22, 1999 and July 26, 1999 passed by the Excise and Taxation Commissioner (Appeals), Rohtak (respondent No. 5) and the Sales Tax Tribunal, Haryana (respondent No. 6) respectively dismissing the appeals filed against the order dated April 24, 1998.

(2.) The facts necessary for deciding the issues which arise for determination in this case are that on an application submitted by the petitioner under rule 28a (2) of the Rules, respondent No. 2 issued certificate No. 70 dated August 19, 1994 (annexure P1) entitling it to sales tax exemption to the tune of Rs. 855. 77 lakhs for the period from May 30, 1992 to May 29, 2001. Thereafter, the petitioner applied for annual renewal as required by rule 28a (7) (a ). Respondent No. 2 declined to accept the bank guarantee furnished by the petitioner on the premise that it was not in conformity with rule 28a (6) (a) (ii) of the Rules and vide notice, annexure P7, dated June 14, 1996, he called upon the petitioner to furnish bank guarantee valid for the period extending to five years after the expiry of total period of tax exemption. After about 6 months, respondent No. 2 issued notice dated December 18, 1996 informing the petitioner that application for renewal for the period from July 1, 1994 to June 30, 1995 has not been received in his office. In reply to the said notice, the petitioner sent letter, annexure P9, mentioning therein that the application for renewal of exemption certificate for the disputed period had been sent by registered AD post on May 31, 1994 along with necessary documents, such as form S. T. 71, certificate from CA regarding notional sales tax liability and fixed assets, memorandum and articles of association and balance sheet and, therefore, it cannot be accused of non-compliance of rule 28a (7 ). After one year and about 3 months, respondent No. 2 passed order dated March 9, 1998 and gave the following directions to the petitioner : " (a) It should pay tax for the period from July 1, 1994 to June 30, 1995 which the unit has not applied for the renewal of exemption certificate. (b) The date of validity of bank guarantees should be extended till May 20, 2006. (c) The bank guarantees should be in proper formats, i. e. , in form S. T. 50 under the HGST Act and in form III under the CST Act. " The appeal filed by the petitioner against the order dated March 9, 1998 was allowed by the Prohibition, Excise and Taxation Commissioner on February 3, 1999.

(3.) In the meanwhile, respondent No. 2 issued notice dated March 31, 1998 proposing cancellation of the exemption certificate on the ground of non-compliance of rule 28a (6) (a) (ii) and 28a (9) (iii) and vide order dated April 24, 1998, he cancelled the exemption certificate on the ground that the bank guarantee submitted by the petitioner had not been renewed in accordance with the relevant rule. The petitioner challenged that order by filing appeal under rule 55 of the Rules. Simultaneously, it filed C. W. P. No. 8032 of 1998 for quashing of that order. The same was disposed of by a division Bench on December 21, 1998 with the direction that the appeal filed by the petitioner be decided at an early date and till then the bank guarantee furnished by it shall not be encashed. The appeal filed by the petitioner was dismissed by respondent No. 5 on April 22, 1999. The appellate order was challenged by the petitioner in C. W. P. No. 8779 of 1999 which was dismissed on July 6, 1999 on the ground of availability of alternative remedy of appeal. However, the encashment of bank guarantee was again stayed by the High Court. Immediately thereafter the petitioner filed appeal before respondent No. 6. That was also dismissed on July 26, 1999. We have heard learned counsel for the parties and perused the record. The Haryana General Sales Tax Act, 1973 (for short, "the Act") was enacted by the State Legislature to provide for and validate the levy of tax on the sale or purchase of certain goods in the State of Haryana. The literal implementation of the Act created several bottle-necks and hindered the industrial growth of the State. Therefore, with a view to provide relief to the industries and to create ground for accelerated development of the State, the Act was amended and section 13-B was inserted for conferring power upon the State Government to grant exemption to the specified class of industries from payment of tax subject to the fulfilment of the prescribed conditions. For giving effect to the object sought to be achieved by the enactment of section 13-B, the State Government, in exercise of its rule-making power under section 64 of the Act, inserted Chapter IV-A (rule 28a) in the Rules. Extracts of sub-rules (6) and (7) (a) of rule 28a of the Rules, which have bearing on the decision of this case read as under : " Sub-rule (6) of rule 28a of the Rules : (6) (a) An eligible industrial unit which has been issued with an eligibility certificate (hereinafter referred to as the applicant unit), shall, within sixty days of its receipt make an application for the grant of exemption or entitlement certificate, as the case may be, in form S. T. 71 to the Deputy Excise and Taxation Commissioner of the District in which his unit is located. The application shall be accompanied with an attested copy of the eligibility certificate and other documents mentioned in the application.