ORDER

1. Delay condoned. Leave granted.

2. A short point which arises for determination in this civil appeal is: whether the respondent herein was entitled to addition of colour monitors in eligibility certificate dated 23-2-1995 entitling it to sales tax exemption under Rule 2S-A of the Haryana General Sales Tax Rules, 1975 (for short "the 1975 Rules") for the manufacture of monochrome monitors and black and white TV sets? In other words, whether the respondent was entitled to claim addition of a new item (colour monitor) in the eligibility certificate given-to it, which certificate was restricted to the manufacture of monochrome monitors and black and white TV sets?

3. On 23-2-1995, the respondent was granted "eligibility certificate" entitling it to avail of sales tax exemption under Rule 28-A of the 1975 Rules to the extent of Rs.276.95 lakhs for a period of 7 years commencing from 23-2-1995 to 22-2-2002 for the manufacture of monochrome monitors and black and white TV sets alone. In other words, the said eligibility certificate did not cover colour monitors. At that time, the capital investment of the company was Rs. 55.391akhs.

4. On 13-3-1996, the respondent submitted an application claiming tax benefit for an investment of Rs.26.74 lakhs made for diversification of extending the unit to manufacture "colour monitor". The said application was allowed. The respondent was granted new eligibility certificate on 15-9-1997 entitling it to avail the benefit of exemption from sales tax to the extent of Rs.122.85 14-12-200l.

5. On 1-2-1998, however, the respondent submitted an application a requesting for insertion of "colour monitor" in the earlier eligibility certificate dated 23-2-1995. By the order dated 11-10-1999 the competent authority rejected the application on the ground that there was no provision under Rule 28-A authorising such addition in the eligibility certificate already granted.

6. Suffice it to state that the decision of the competent authority dated 11-10-1999 ultimately came to be challenged before the Haryana Tax Tribunal. By its order dated 30-11-2005, the Tribunal accepted the appeal inter alia on the ground that a liberal approach needs to be taken while interpreting the said Rule 28-A and, accordingly, directed the Department (the appellant herein) to add "colour monitor" to the eligibility certificate dated 23-2-1995. The decision of the Tribunal has been affirmed by the High Court by the impugned judgment dated 9-7-2007 in CWP No. 9764 of 2007.

7. At the outset, we quote hereinbelow sub-rule (2)(d) of Rule 28-A of the 1975 Rules, which reads as under:

"28-A. (2)(d) 'expansion/diversification of industrial unit' means a capacity set up or installed during the operative period which creates additional production/manufacturing facilities for manufacture of the same product/products as of the existing unit (expansion) or different products (diversification) at the same or new location; and (i) in which the additional fixed capital investment made during the operative period exceeds 25% of the fixed capital investment of the existing unit; and (ii) which results into increase in annual production by 25% of the installed capacity of the existing unit in case of expansion."

8. In this case, the High Court was concerned with interpretation of the above Rule. It was not concerned with interpretation of a notification. Be that as it may, it is well settled, that, in a matter of exemption the rule/notification is required to be interpreted strictly.

9. The question raised by the Department before the High Court was that the above Rule confines the certificate of eligibility to the manufacture of the same product. Before the High Court inter alia it was contended that expansion/diversification of the industrial unit meant creation of additional manufacturing facility for the manufacture of the same product (monochrome monitors). That, there was no scope for addition of colour monitor in existing eligibility certificate da