LexSTATE OF HARYANA & ORS. versus M/S. AS. FUELS PVT. LTD. & ANR.
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[2008) 12 S.C.R. 370 -:Y A STATE OF HARYANA & ORS. V. MIS. AS. FUELS PVT. LTD. & ANR. (Civil Appeal No. 5386 of 2002) 8 AUGUST 20, 2008 [DR. ARIJIT PASAYAT AND P. SATHASIVAM, JJ.] + Haryana General Sales Tax Rules,. 1975: Rule 28(A)(10)(v) and (11)(a) - Industrial unit holding exemption c or entitlement certificate - Benefit of tax exemptiQn - Entitlement to - Held: Under sub-rule (11)(a) benefit is available if unit continues production for at least next five years not below the average production for preceding five years - Otherwise it would be liable to pay the benefit availed D by it during period of exemption with interest as if no tax exemption was ever availed - However, if it is able to satisfy Deputy Excise and Taxation Commissioner that loss in "· production was due to reasons beyond its control, it would )"· not be liable - On facts, non-renewal of exemption certificate E granted to the unit from 1. 7. 97 for another year and cancellation thereof by DETC as there was no production since January 1997 - Unit directed to deposit tax in respect of exemption availed with interest - Order of High Court that cancellation of exemption certificate on expiry of the period F did not attrac,t Rule 28 (A)(1 O)(v), thus, demand not maintainable, not justified - High Court allowed writ petition without examining the effect of Rule 11 - In any event, it -~ permitted the Authorities to go before Screening Committee to get eligibility certificate cancelled which was done, and appeal against cancellation was dismissed. t G Under Rule 28 A of the Haryana General Sales Tax Rules, 1975 certain industrial units were granted benefit ~ of sales tax exemption from 13.12.1994 to 12.12.2003 subject to fulfillment of certain conditions. Respondent- H 370 STATE OF HARYANA & ORS. v. M/S. A.S. 371 FUELS PVT. LTD. & ANR. ---( unit was granted eligibility certificate to avail sales tax A exemption. On basis thereof, the unit was granted exemption certificate for the period ending on 30.06.1995 which was renewed till 30.06.1996 and thereafter, till 30.06.1997. However, application for further renewal was rejected. While processing the application, the Deputy B -t' Excise and Taxation Commissioner noticed that the unit ~ was out of production since January, 1997, thus, exemption certificate was also liable to be cancelled under sub-rule 9(1) of Rule 28A of the Rules. Respondent was issued show cause notice but it neither appeared c nor furnished explanation. Thereafter, the DETC cancelled the exemption certificate. In appeal, the application for renewal was rejected and the exemption certificate was also cancelled. The respondent was directed to deposit tax in respect of exemption already 0 availed with interest. Aggrieved, respondent filed writ petition. High Court held that the cancellation of ,.. exemption certificate after its validity period was over 1 on 30.6.1997 did not attract provisions of Rule 28 (A) (10) (v); that it was not a case of cancellation of E exemption certificate because it was done after expiry of the period, thus, direction to deposit amount in respect of exemption availed by it was not justified. Hence the present appeals. Dismissing C.A.No. 676 of 2005 and allowing C.A.No. F 5386 of 2002 and C.A.No. 5149 of 2008, the Court HELD: 1.1 In the instant case, the High Court rightly observed that there is scope for automatic cancellation in view of the fact that after January, 1997 there was no production. Sub rule (8) of the Rule 28 (A) of the Haryana G General Sales Tax Rules, 1975 deals with the withdrawal ..._,.\- of the eligibilify certificate. Under sub-rule 8(b) when the eligibility certificate is withdrawn, the exemption/ entitlement certificate is also deemed to have been withdrawn from the first day of its validity and the unit H 372 SUPREME COURT REPORTS [2008] 12 S.C.R. A shall be liable to payment of tax, interest or penalty under the Act as if no entitlement certificate had been ever granted to it. [Para 9] [385, 8-D] 1.2 A bare reading of Rule 11 (a) shows that the benefit of tax exemption/deferment under the Rule shall be 8 subject to the condition that the beneficiary/industrial unit after having availed all the benefit shall continue its production for at least next five years not below the average production for the preceding five years. Clause (b) of the sub rule shows that in case the unit violates
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