Posted On by &filed under High Court, Punjab-Haryana High Court.


Punjab-Haryana High Court
Perfect Pen Pvt. Ltd. vs State Of Haryana And Ors. on 26 August, 2000
Equivalent citations: 2001 122 STC 533 P H
Author: G Singhvi
Bench: G Singhvi, N Singh


JUDGMENT

G.S. Singhvi, J.

1. This is a petition for quashing of the decision of the Higher Level Screening Committee (for short, “the HLSC”) to grant eligibility certificate to the petitioner for deferment of the payment of tax instead of exemption. The other prayer made in the petition is for issuance of a direction to the respondents to issue certificate entitling the petitioner to claim sales tax exemption.

2. The facts of the case lie in a narrow compass. The application dated December 22, 1994 submitted by the petitioner in form S.T.-70 prescribed under Rule 28A(5) of the Haryana General Sales Tax Rules, 1975 (for short, “the Rules”) for grant of eligibility certificate for tax exemption for a period of 7 years from October 6, 1994 to October 5, 2001 was considered in the meeting of the HLSC held on November 11, 1997, but instead of granting certificate for exemption, the committee directed the issuance of eligibility certificate for deferment of the payment of tax and on the basis of that decision, certificate, annexure P3, was issued by the Additional Director of Industries, Haryana. On receipt of the certificate, the director of the petitioner submitted representation dated February 4, 1998 to the Chairman, HLSC for correction of the certificate by pointing out that the application was for grant of eligibility certificate for sales tax exemption and not for deferment. This request was reiterated in the reminder dated November 6, 1998 sent to the Chairman, HLSC. In reply to the reminder, the Director of Industries, Haryana informed the petitioner, vide memo, annexure P5, dated December 16, 1998 that its representative had opted for deferment of the sales tax before the HLSC and, therefore, the eligibility certificate issued to it was in order. Thereafter, the petitioner sent another representation (annexure P8) to the Chairman, HLSC stating therein that its advocate Shri Y.P.S. Rana did not opt for deferment in the payment of tax. Along with the representation the affidavit of Shri Y.P.S. Rana, Advocate (annexure P9) was also sent to the Chairman, HLSC. The petitioner’s representation was rejected in the meeting of the HLSC held on March 10, 1999. This was conveyed by the Director of Industries, Haryana vide letter, annexure P10.

3. In the meanwhile, the petitioner applied for grant of exemption in respect of the expansion carried out in the unit and on the basis of the decision taken in the meeting of the HLSC held on August 19, 1998, eligibility certificate, annexure P7, was issued entitling it to claim exemption from payment of sales tax in respect of the expanded part of the unit.

4. The petitioner has challenged the eligibility certificate, annexure P3 mainly on the ground that the HLSC did not have the authority to change the option exercised by it for exemption. In the writ petition, it has been averred that the application filed on behalf of the petitioner was for exemption and not for deferment and, therefore, the HLSC could not have granted certificate for deferment.

5. In the written statement filed on behalf of the respondents, it has been averred that the petitioner has applied for sales tax exemption in lieu of fixed capital investment of Rs. 163 lacs, but on the basis of the revised option given by its Advocate–Shri Y.P.S. Rana before the HLSC, the eligibility certificate was issued for deferment of the payment of sales tax, In paragraph 6 of the written statement, it has been averred that the letter of change of option from exemption to deferment given by the petitioner’s advocate is not traceable in the office. According to the respondents, the decision taken in the meeting of the HLSC held on August 19, 1998 to give benefit of exemption to the tune of Rs. 122.97 lacs representing the additional fixed capital investment has no bearing on the decision taken in the meeting held on November 11, 1997 and the petitioner cannot take advantage of the latter decision.

6. Shri Hemant Kumar relied on Rule 28A(3) of the Rules and argued that the HLSC could not have ordered issuance of eligibility certificate for deferment of the payment of tax ignoring the fact that the petitioner had applied for exemption from payment of tax. He further argued that in view of the bar contained in Rule 28A(3) against the change of option, the plea set up by the respondents about the submission of the revised option by the petitioner’s Advocate–Shri Y.P.S, Rana and misplacement thereof should be discarded and the decision of the HLSC be declared illegal. Learned counsel then argued that the language used in the second part of Rule 28A(3) permits change of option from exemption to deferment for the remaining period and balance quantum of benefit and, therefore, even if the petitioner had applied for change of option before the issuance of eligibility certificate, the same was liable to be ignored. He submitted that the bona fides of the stand taken by the petitioner is established from the fact that immediately after receipt of the eligibility certificate, its Director had made representation dated February 14, 1998 and invited the attention of the HLSC to the discrepancy in the eligibility certificate. Learned counsel further submitted that the failure of the HLSC to decide the representation dated February 14, 1998 for more than one year and non-consideration of the affidavit of Shri Y.P.S. Rana, Advocate in which he unequivocally stated that he had never agreed to take sales tax deferment in place of exemption and had not given the revised option should be treated as sufficient to vitiate the decision of the HLSC.

7. Learned Deputy Advocate-General candidly conceded that in the application filed under Rule 28A(5) of the Rules, the petitioner had opted for sales tax exemption and the revised option submitted by its Advocate in the meeting of the HLSC held on November 11, 1997 is not available on the record of the respondents. He also conceded that as per Rule 28A(3) of the Rules, option once exercised for tax exemption or deferment is final and the same cannot be changed except once from exemption to deferment for the remaining period and balance quantum of benefit, but submitted that the decision of the HLSC to grant eligibility certificate for sales tax deferment should not be nullified because the same must have been taken on the basis of some request made by the representative of the petitioner. He argued that reiteration of the previous decision taken in its meeting held on March 10, 1999 is indicative of the correctness of the decision taken by the HLSC on November 11, 1997.

8. We have considered the respective submissions and carefully gone through the record of the case and the file produced by the learned Deputy Advocate-General. Rule 28A(3) of the 1975 Rules which is in the centre of controversy, reads as under :

“Rule 28A. Class of industries, period and other conditions for exemption / deferment from payment of tax.–

(1)………………………………

(2)……………………………….

(3) Option.–An eligible industrial unit may opt either to avail benefit of tax exemption or deferment. Option once exercised shall be final except that it can be changed once from exemption to deferment for the remaining period and balanced quantum of benefit.”

8. An analysis of the above quoted rule shows that the person who applies for grant of eligibility certificate has to indicate his option either to avail the benefit of tax exemption or tax deferment and the option once exercised is final unless one seeks to change it from exemption to deferment for the remaining period and balance quantum of benefit. The object of granting permission to change the option once from exemption to deferment for the remaining period and balance quantum of benefit appears to be to give an opportunity to an industry to decide more beneficial mode of availing tax benefit. However, the very fact that the change of option is restricted to the remaining period and balance quantum of benefit is sufficient to negate the theory that the petitioner could have changed the option from tax exemption to deferment even before the grant of eligibility certificate and its advocate had done so in the meeting of the HLSC held on November 11, 1997. This inference is supported by the fact that the respondents have not given any explanation about the misplacement of the revised option letter allegedly submitted by Shri Y.P.S. Rana, Advocate, before the HLSC and they have also not explained as to why the representation dated February 14, 1998 submitted by the director of the petitioner immediately after receipt of the impugned certificate was not considered and disposed of by the HLSC for more than one year.

9. For the reasons mentioned above, the writ petition is allowed. The impugned certificate is quashed with the direction to the respondents to issue fresh eligibility certificate for tax exemption for a period of seven years from October 6, 1994 to October 5, 2001 to the tune of fixed capital investment of Rs. 152.96 lacs within a period of one months of the submission of a certified copy of this order.


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