PASUPATI HARYANA WOOLEN LTD Vs. STATE OF HARYANA

JUDGEMENT

(1.) Are the provisions of Rule 28A (11)(a)(i) ultra vires the Constitution Have the respondents erred in demanding the amount of sales tax found due from the petitioners These are the two questions that arise for consideration in these two petitions. The counsel have referred to the facts in CWP No. 12108 of 2000. A brief reference thereto shall suffice.

(2.) The petitioner is a public limited company. It was incorporated in the year 1986. On March 3, 1990, the petitioner applied to the State Government for the grant of exemption from payment of sales tax. On June 3, 1992, eligibility and the exemption certificates were issued. Copies of the two certificates have been produced as Annexure P.4 and P.5 with the writ petition.

(3.) The petitioner alleges that is suffered huge losses. It filed a petition under Section 15(1) of the Sick Industrial Companies (Special Provisions) Act, 1985 (in short 'SICA'). On July 21, 1995, the petitioner was declared a sick company. An operating agency to prepare a rehabilitation scheme was appointed. On August 27, 1998, the petitioner was given a notice to show cause as to why the Board should not order the company to be wound-up. On December 15, 1998, orders for its winding up were passed. The petitioner filed an appeal. It was dismissed by the appellate authority vide order dated July 19, 1999. Thereafter, the Deputy Excise and Taxation Commissioner, Rewari called upon the petitioner to show cause as to why the exemption certificate be not cancelled under Rule 28A(9) of the Haryana General Sales Tax Rules, 1975. It was pointed out that a tax exemption of Rs. 6 crores had been given to the petitioner for the period from January 19, 1990 to January 18, 1999. The record showed that it had discontinued its business during the exemption period. It had not been in production for a continuous period exceeding six months. Thus, the provisions of Rule 28A and the exemption certificate had been violated. Still further, it was also pointed out that the benefit of tax exemption was subject to the condition that the unit shall continue its production for atleast five years after availing of the benefit of exemption. Since the petitioner had failed to continue with the production, the exemption certificate was liable to be cancelled.