ANNAPURNA BREADS PRIVATE LTD. Vs. STATE OF HARYANA

JUDGEMENT

(1.) PETITIONER is a private limited company and it set up a new industrial unit at Daultabad, District Gurgaon for the manufacture of bread and bakery foods. With a view to accelerate the growth of industrial activity in the State of Haryana, the State Government introduced Rule 28 -A in Chapter IV -A of the Haryana General Sales Tax Rules, 1975 (for short the Rules) exempting such class of industrial units from the payment of tax and subject to such conditions as mentioned therein. Petitioner being an 'eligible industrial unit' applied for the grant of an Eligibility certificate and the same was issued on 19.2.1990 by the General Manager, District Industries Centre, Gurgaon. The petitioner was held eligible for the grant of tax exemption on the manufacture of bread for a period of seven years from the year 1980 -90 to 1996 -97 subject to a ceiling of Rs. 52,95,245/ -. On the basis of this eligibility certificate, the petitioner was issued an exemption certificate holding that it was entitled to exemption from payment of sales tax in accordance with the provisions of Rule 28 -A of the Rules. This exemption certificate was valid for seven years for the period 1989 -90 to 1996 -97 subject to renewal from year to year. In terms of the exemption certificate the petitioner was granted exemption from payment of sales tax in a sum of Rs. 1,93,000/ - for the first year ending June 30, 1990. The exemption certificate was thereafter renewed for the second year upto June 30, 1991 and the petitioner was granted exemption from the payment of sales tax to the tune of Rs. 2,64,000/ -. The petitioner did not apply for the renewal of the exemption certificate after June, 1991 beacuse it had stopped manufecturing bread at its Unit at Daultabad and the industrial activity had been closed. It is claimed that the manufacturing activity had to be discontinued because it could not stand competition from the reputed Breads like the Modern Bread and Britannia Bread which were in the market. It is pertinent to mention here that at the time when the petitioner set up its industrial unit bread was a taxable item and exemption was sought under Rule 28 -A of the Rules. Later on, by a notification dated 26.3.1991 tax on bread was withdrawn. Since the petitioner had discontinued its business of manufacturing bread the Lower Level Screening Committee withdrew the eligibility certificate in view of the provisions of sub -rule (8)(a)(ii) of Rule 28 -A of the Rules. It may be mentioned that the petitioner had availed the tax exemption on the basis of this certificate upto June, 1991. The effect of the withdrawal was that the exemption certificate granted was deemed to have been withdrawn from the Ist day of its validity and the Unit became liable to payment of tax, interest or penalty under the Act as if no such certificate had ever been granted to it. Feeling aggrieved by the order of the Lower Level Screening Committee, the petitioner filed an appeal before the Higher Level Screening Committee. It was contended before the appellate authority that since sales tax on bread had been withdrawn with effect from 26.3.1991 the petitioner was not liable to pay any tax thereon and it was, therefore, not necessary for it to continue with its exemption certificate. The fact that it had discontinued its business was admitted. The Higher Level Screening Committee in its meeting held on 20.3.1997 considered the case of the petitioner and rejected the appeal on the ground that the petitioner had closed its manufacturing unit. Still not satisfied, the petitioner filed a further appeal to the Secretary to Government of Haryana, Industries Department, Chandigarh which was dismissed as not maintainable. It is against these orders that the present petition has been filed under Article 226 of the Constitution.

(2.) WE have heard counsel for the parties and in our opinion the writ petition deserves to be dismissed. The fact that the petitioner has closed down its manufacturing activity at Gurgaon is not in dispute. The eligibility certificate was issued on 19.2.1990 under Rule 28 -A of the Rules and the same was subject to the condition that the petitioner -concern would submit a report on the working of the Unit including detailed information regarding production and sale of finished products for every year ending March 31. The certificate was valid for a period of seven years during which period the petitioner could avail of the benefit of tax exemption but all this was subject to the condition that it would continue its business and submit reports regarding production and sale of the products to the concerned General Manager, District Industries Centre. The certificate was issued under Rule 28 -A of the Rules and the same was subject to the conditions specified therein. Sub -rule (8)(a)(ii) of this Rule with which we are concerned reads as under : -