STATE OF HARYANA & ORS. versus BHARTI TELETECH LTD.

Citation: [2014] 1 S.C.R. 548 · Decided: 20-01-2014 · Supreme Court of India · Bench: H.L. DATTU · Disposal: Appeal(s) allowed

Cited by 1 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

A 
B 
[2014] 1 S.C.R. 548 
STATE OF HARYANA & ORS. 
v. 
BHARTI TELETECH LTD. 
(Civil Appeal No. 6791 of 2004) 
JANUARY 20, 2014. 
[H.L. DATTU, DIPAK MISRA AND S.A. BOBDE JJ.] 
HARYANA GENERAL SALES TAX RULES, 1975: 
c 
r. 28-A (11) (a) (i) and (b) - Sales tax exemption allowed 
subject to assessee maintaining production for next five years 
on the average of preceding five years - Failure on part of 
assessee to comply with the condition - Held: Exemption 
being an exception has to be respected regard being had to 
0 its nature and purpose - Beneficiary unit having failed to fulfil 
the stipulation contained in r.28-A(11 )(a)(i) and (b) is liable 
to pay full amount of tax benefit with interest. 
s.28-A(11)(a)(i)(b) -
Sales tax exemption - Held: 
Concept of exemption is required to be tested on a different 
E anvil, for it grants freedom from liability -
In the case at hand, 
it is 'unif specific -
Clubbing is not permissible -
It amounts 
to violation of the conditions stipulated under sub-r. (11) (a)(i) 
of r. 28A and, therefore, the consequences have to follow. 
F 
The respondent -assessee was allowed sales tax 
exemption under r. 28A of the Haryana General Sales Tax 
Rules, 1975 for the period 13.12.1991 to 12.12.1998, 
subject to the condition that the industrial unit after 
availing of the benefit would continue its production at 
G least for the next five years not below the level of average 
production for the preceding five years. After the expiry 
of the period of exemption, the Deputy Excise and 
Taxation Commissioner noticed that the respondent unit 
was not maintaining the level of production of the 
H 
548 
STATE OF HARYANA & ORS. v. BHARTI TELETECH 549 
LTD. 
preceding five years and, accordingly, initiated 
A 
proceedings against it on the foundation that it had 
violated the condition stipulated under r. 28A (11) (a) (i) 
and was thereby liable to make full payment of tax 
exemption benefit already availed by it along with interest. 
The respondent-assessee stated that production of its 
B 
another unit also required to be clubbed for the purpose 
of determining the level of production after 12.12.1998. 
The adjudicating authority rejected the said stand and 
ruled that the assessee, having failed to meet the 
production level, was liable to make full payment along c 
with interest. The appeals of the assessee-respondent 
before the appellate authority as also the Sales Tax 
Tribunal were dismissed. However, the Division Bench of 
the High Court in the writ petition held in favour of the 
assessee. 
In the appeal filed by the revenue, the question for 
consideration before the Court was: whether production 
of two different units can be combined together to meet 
the requirement of r. 28A(11 ). 
Allowing the appeal, the Court 
D 
E 
HELD: 1.1. The concept of exemption has been 
introduced for development of industrial activity and it is 
granted for a certain purpose to a unit for certain types 
F 
of goods with certain conditions. The concept of 
exemption is required to be tested on a different anvil, for 
it grants freedom from liability. In the case at hand, it is 
'unit' specific. [para 18) [562-H; 563-A-B] 
Hansraj Gordhanadas v. H. H. Dave, Assistant Collector G 
of Central Excise and Customs, Surat and others 1969 SCR 
343 =AIR 1970 SC 755 - referred to. 
1.2. A statutory rule or an exemption notification 
which confers benefit to the assessee on certain 
H 
550 
SUPRFME COURT REPORTS 
[2014] 1 S.C.R. 
A conditions should be liberally construed but the 
beneficiary should fall within the ambit of the rule or 
notification and further if there are conditions and 
violation thereof provided, then the concept of liberal 
construction would not arise. Exemption being an 
B exception has to be respected regard being had to its 
nature and purpose. [Para 22] [564-E-G] 
c 
State of Haryana and others v. A. S. Fuels Private Limited 
and another 2008 (12) SCR 370 = (2008) 9 sec 230 - relied 
on. 
Commissioner of Sales Tax v. Industrial Coal Enterprises 
1999 (1) SCR 871 = (1999) 2 SCC 607, after referring to CIT 
v. Straw Board Mfg. Co. Ltd 1989 (2) SCR 772 = (1989) Supp 
(2) sec 523 and Bajaj Tempo Ltd. v. CIT (1992) 3 sec 78; 
D Tamil Nadu Electricity Board and Another v. Status Spinning 
Mills Limited and another 2008 (9) SCR 870 = (2008) 7 SCC 
353 - referred to. 
1.3. In the instant case, Clause (b) of sub-r. (11) of r. 
E 28A of the Haryana General Sales Tax Rules, 1975 clearly 
stipulates that 

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