Important Point
Under the Haryana Sales Tax Rules, in case of non-continuance of production for next five years, it shall be deemed as if there was no tax exemption/entitlement available to it.

Judgment

Dr. Arijit Pasayat, J. —

1.Leave granted in SLP (C) No. 26523 of 2004.

2.Challenge in these appeals is to the Order of a Division Bench of the Punjab and Haryana High Court holding that the cancellation of exemption certificate after its validity period was over on 30.6.1997 did not attract the provisions of clause (v) of sub Rule 10 of Rule 28 (A) of the Haryana General Sales Tax Rules, 1975 (hereinafter referred to as the ‘Rules’). According to the High Court, it was clearly not a case of cancellation of exemption certificate because it was done after expiry of the period. In that view of the matter, it was held that the Deputy Excise and Taxation Commissioner (in short the ‘DETC’) was not justified in directing the respondent to deposit an amount of Rs.40,45,324/- in respect of the exemption availed of by it for the period up to 30th June, 1997. The High Court did not think it necessary to examine whether sub rule 10(v) of Rule 28(A) in so far as it empowers the department to withdraw the tax exemption certificate was valid or not. However, liberty was granted to the present appellants, if there was a case for withdrawal of the eligibility certificate under sub-rule (8) of Rule 28A of the Rules, to proceed in accordance with law.

3.The State of Haryana has filed the appeals in respect of Orders of the High Court in writ petition filed by the respondent in each case. The first Judgment was rendered in case of M/s A.S. Fuels Pvt. Ltd. The Judgment in that case was the primary foundation for decision in the other cases.

4.Background facts in Civil Appeal No.5386 of 2002 are essentially as follows :

Under Rule 28A appearing in Chapter IVA certain class of industrial units are entitled to exemption/deferment from payment of tax for a specified period and subject to fulfillment of certain conditions. The benefit of sales tax exemption was granted for the period from 13.12.1994 to 12.12.2003. Necessary eligibility certificate entitling the respondent to avail the sales tax exemption for a period of nine years was granted. On the basis of the eligibility certificate unit was granted exemption certification for the period ending 30th June, 1995, The same was renewed at the first instance till 30.6.1996 and thereafter till 30.6.1997. An application for further renewal of the exemption certificate was filed on 31.7.1997. This was rejected by Order dated 15.12.1997 on the ground that the same was not complete in certain respects and despite grant of opportunities the respondent failed to furnish the necessary documents. While processing the application for renewal, the DETC noticed that the unit of the respondent was out of production since January, 1997 and as such the exemption certificate was also liable to be cancelled under sub rule 9(1) of Rule 28A of the Rules. Therefore, a show cause notice was issued on 5.12.1997 fixing the date for submission of explanation on 15.12.1997. Respondent neither appeared nor furnished any explanation. Therefore, the DETC cancelled the exemption certificate by Order dated 14.1.1998. In appeal the matter was remanded to the Prohibition Excise and Transport Commissioner, Haryana. During assessment proceedings, it was again found that the Industrial unit was non-functional since January, 1997 and almost the entire plant and machinery had been removed from the factory premises and taken to some other places out of Haryana without any information to the Department. Even the factory shed and other structures were found to be dismantled and business was totally closed. By Order dated 30.6.1998 again an application for renewal was rejected and the exemption certificate already granted was cancelled by invoking sub rule 9(i) of Rule 28(A). The respondent was directed to deposit the tax in respect of the exemption as has already been availed and also to pay the interest. Stand of the present respondent in the writ petition was that since the unit had remained closed on account of non-availability of coal