HINDUSTAN POLYPACKS Vs. STATE OF HARYANA

JUDGEMENT

(1.) THIS petition filed under Article 226 of the Constitution challenges order dated 28.10.1994 (P -10) passed by the Lower Level Screening Committee (for brevity, 'LLSC') rejecting the claim of the petitioner for sales tax exemption on the ground that the petitioner's unit went into production prior to 11.2.1994 and in view of notification issued by the Excise and Taxation Department, Haryana, dated 11.2.1994 (P -9), it does not qualify for the said benefit. It has also been noticed by the LLSC that the petitioner's unit was prior to 11.2.1994 in the negative list of industries as appended to Schedule III of the Haryana General Sales Tax Rules, 1975 (for brevity, 'the Rules'). Challenge has also been made to the order dated 5.8.1998 (P -12) passed by the Higher Level Screening Committee (for brevity, 'HLSC') rejecting the appeal of the petitioner filed against the order dated 28.10.1994.

(2.) BRIEF facts of the case are that in the year 1988 the State of Haryana formulated an industrial policy and certain industries, which were set up after 1.4.1988, were exempted from payment of sales tax on the goods manufactured by them. Since there was no express provision of exemption in the Haryana General Sales Tax Act, 1973 (for brevity, 'the HGST Act'), therefore, with a view to augment industrial development in the respondent State, Section 13 -B was inserted in the HGST Act vide Haryana Act No. 26 of 1988, inter alia, empowering the State of Haryana to exempt any class of industry from payment of sales tax on the goods manufactured by them. On 17.5.1989, the State of Haryana notified Haryana General Sales Tax (Second Amendment) Rules, 1989, amending the Rules. After Chapter IV of the existing Rules, Chapter IV -A was inserted with the heading of "Class of Industries, period and other conditions for exempting/deferring from payment of tax". In the said chapter, Rule 28A has also been incorporated in the Rules. Rule 28A(2) of the Rules defines meaning of various expressions including 'operative period', 'new industrial unit', 'eligible industrial unit', 'screening committee', medium and large scale industry', 'eligibility certificate', 'exemption certificate', 'notional sales tax liability' and 'negative list', which are relevant for the purposes of the issues raised in the instant petition. Rule 28A(4) deals with the benefit of tax exemption or deferment and provides that the same shall be given to an eligible industrial unit, holding exemption or entitlement certificate, as the case may be, to the extent and for the period from year to year basis in various zones. The details of the quantum and period of tax exemption/tax deferment for new industrial units falling under Zone 'A', 'B' and 'C' as also relating to such units which intended to expand/diversification, has also been given in Rule 28A(4). Rule 28A(5) lays down a detailed procedure for availing benefit under this Rule whereas Rule 28A(7) talks about the procedure to be adopted for renewal of an exemption certificate from year to year basis. In Schedule III under Rule 28A(2)(7) clause (o) the details of industries/class of industries have been given, which are on the negative list.

(3.) IN the year 1992, another industrial policy was formulated by the State of Haryana, namely, 'New Industrial Policy of 1992'. A negative list of class of industries under the New Industrial Policy of 1992 was notified on 9.3.1992, which has superseded the earlier negative lists (P -2). On 25.5.1993, the State of Haryana in Industries Department has issued another notification notifying that the industries mentioned therein are placed in the negative list and they would not be entitled to any incentives including sales tax exemption/deferment. It has further been specifically mentioned that the said notification would be effective from the date of issue and the list contained therein would have no application to the industrial units set up under the Rural Industries Scheme (P -3). It has been claimed by the petitioner that the notification dated 25.5.1993 has superseded the negative list which was notified on 9.3.1992. At this stage it is pertinent to mention that the petitioner is a partnership firm engaged in the business of manufacturing of 'HDPE/PP Woven Sacks and Polythene Bags and Sheets'. It has been asserted that the manufacturing unit of the petitioner was excluded from the negative list with effect from 25.5.1993. In other words, the industries like that of the petitioner's, which were manufacturing polythene bags and sheets were made eligible by the State of Haryana w.e.f. 25.5.1993 for grant of incentives including sales tax exemption/deferment under the New Industrial Policy of 1992.