CWP No.8291 of 1994. 1 HIGH COURT OF PUNJAB AND HARYANA CHANDIGARH. *** CWP No.8291 of 1994. Date of decision: September, 2013. *** M/S Nu-Tech Solvex ...Petitioner Vs. State of Haryana and others. ...Respondents *** CORAM: HON'BLE MR. JUSTICE RAJIVE BHALLA HON'BLE MR. JUSTICE DR. BHARAT BHUSHAN PARSOON. *** 1. Whether the Judgment be reported?.
2. Whether the judgment be shown to the reporter.
3. Whether a copy of the judgment be given to the reporter. Present: Shri Rajiv Agnihotri, Advocate, for the petitioner. Shri Rajiv Kwatra, Sr. D.A.G. Haryana, for the Respondents. *** DR. BHARAT BHUSHAN PARSOON, J1 By way of this petition, writ in the nature of certiorari is sought by the petitioner for setting aside order dated 28.4.1994 (Annexure P-7) vide which appeal of the petitioner was dismissed and consequently benefit of sales tax exemption under the provisions of the Haryana General Sales Tax Rules, 1975 (hereinafter to be referred to as “the Rules”.) was denied to the petitioner. CWP No.8291 of 1994. 2 Detail Facts 2. To encourage setting up of new Industries in the State of Haryana, certain incentives were provided as per Chapter IV-A in the Rules of the Haryana General Sales Tax Rules, 1975 (herein after referred to as the Rules) which related to certain exemption/deferment from payment of sales tax to be given to certain class of industries, operative period of which was from 1.4.1988 to 31.3.1997.
3. Getting encouraged from this benevolent orientation of the government of Haryana, pursuant to which incentives were introduced for new industrial units, the petitioner unit was set up with an investment of Rs.113 lacs by way of installation of machinery. It started commercial production on 26.3.1991.Though, the Unit was registered with the competent authority, the application (Annexure P1) filed by the petitioner for exemption/deferment of sales tax was made on 18.5.1991 under Rule 28-A of the Rules but the same was rejected on 13.10.1992, despite clearance from the Financial Manager District Industries Centre, Karnal, on the premise that Section 28(A)(2)(c) provided that old machinery shall not be used. It was claimed that installation of an old Loco Boiler which had been purchased by the petitioner from Delhi prior to 15.11.1991 was not part of new machinery and hence the petitioner was not entitled to any benefit.
4. During pendency of application of the petitioner Government of Haryana vide notification of 15.11.1991 (Annexure P-2) amended Rule 28-A and allowed installation of old machinery in a industrial unit upto 25% of the total costs of the machinery.
5. Appeal against the said order, preferred to the Secretary, CWP No.8291 of 1994. 3 Industries Haryana, on 7.12.1992 (Annexure P-3) resulted in remand of the case to the competent authority. A fresh representation dated 8.4.1993 (Annexure P-4) in terms of amendment brought under Rule 28-A of the Rules of 1975 was made to the competent authority but in vain. Sequelly, appeal (Annexure P-6) preferred by the petitioner was dismissed vide order dated 28.4.1994 (Annexure P-7). The matter was taken up in the 10th meeting of Screening Committee in October, 1991 bringing to their notice that similarly situated other units (names of which had also been disclosed) had been granted sales tax exemption, but it was also of no avail. Stand of the petitioner 6. Contention of counsel for the petitioner is that application for exemption of sales tax was pending consideration, when clarificatory amendment was brought in Rule 28-A, explaining, that a Unit installing old machinery to the extent of 25% of the total costs of the machinery was also included in the definition of “New Industrial Unit”., and thus the petitioner was to be granted exemption of sales tax. It has been claimed that Units similarly situated had also been granted such exemption and hence the petitioner was entitled this benefit. Plea of the respondents 7. Stand of the respondent on the other hand is that the Unit having come into existence earlier to the amendment brought in Rule 28-A and having used old machinery, was not eligible for such exemption. The respondents also contend that as the Rules do not permit use of old machinery in the setting up of a 'new industrial unit', the petitioner having used old machinery, was not entitled for CWP No.8291 of 1994. 4 exemption/deferment of sales tax and thus had rightly been denied this exemption.
8. With regard to amendment in Rule 28-A of the Rules of 1975 permitting 25% of the old machinery in the total set up of a 'new industrial unit', it was claimed that this amendment in the Rules was prospective in its operation and could not be applied to the petitioner Unit which had started production much earlier i.e on 26.3.1991.Thus rejection of the petition was sought. Discussion Follows 9. When rival claims of the parties are evaluated for adjudication, it transpires that the entire case of the petitioner depends upon interpretation of the 'New Industrial Unit' appearing in Rule 28-A (2) as amended on 15.11.1991. This Rule as it exists after its amendment, for ready reference is reproduced as below:- ( c) “New industrial Unit”. means a unit which is or has been set up in the State of Haryana and comes or has come into commercial production for the first time during the operative period and has not been or is not formed as a result of purchase or transfer of old machinery except when purchased in the course of import into the territory of India 'or when, the cost of old machinery does not exceed 25 per cent of the total cost of machinery re-establishment, amalgamation,change of lease, change of ownership, change in constitution, transfer of business, reconstruction or revival of the existing unit.”. 10. It may be noticed that the words “or when the cost of the old machinery does not exceed 25%”. appearing in this Rule had been introduced vide amendment dated 15.11.1991.
11. At this stage, definition of operative period appearing in the said Rules is also reproduced as below:- CWP No.8291 of 1994. 5 “(a) “Operative period”. means the period starting from Ist day of April, 1988 and ending on the date on which new policy for incentive to industry is announced by the Government of Haryana in the Industries Department; 12. It is a conceded fact that the petitioner Unit otherwise was eligible for grant of exemption as it was not under the negative list. Loco Boiler costing only Rs.1,40,400/- purchased from New Delhi Market was used in installation of the machinery, the investment of which was Rs. 113/- lacs. The petitioner contends that a new Loco Boiler was not available in the Indian market and could not have been imported under OLG Policy and thus purchasing it locally (when the same had been remodelled before such purchase), was a necessity. Notwithstanding the fact that clearance regarding exemption from sales tax had been obtained from Financial Manager, District Industries Centre, Karnal (with whom application for such exemption had been filed) the case even then was rejected.
13. If earlier definition of New Industrial Unit as also the one after amendment of 15.11.1991 is read conjointly, it becomes apparent that the amendment is only explanatory in nature and it only explains as to what extent old machinery could be used in the installation of a 'new industrial unit', to be entitled to the status of 'New Industrial Unit' under the Rules so as to be eligible for such benefits under the Act and the Rules.
14. Viewing this matter from another angle, operative period was from 1.4.1988 to 31.3.1997 and benefit of this benevolent scheme for exemption from payment of sales tax on the sale of manufactured CWP No.8291 of 1994. 6 goods could be taken within this period. There is no denial from the respondent that the petitioner's unit had come into existence well within the operative period. It has also not been disputed that the application of the petitioner for exemption was also pending consideration for issuance of eligibility certificate, with the General Manager, Department of Industries, as on 18.5.1991 when notification permitting 25% of old machinery was issued on 15.11.1991. It was much later that the higher level screening committee decided the application against the petitioner on 13.10.1992. In short, the amendment was carried out during pendency of the application of the petitioner as also during the operative period of the scheme. The respondents therefore should have conceded that the amended provision was in force on the date of consideration of the petitioner's application for exemption and thus the petitioner's case was very well covered thereunder.
15. When the matter is viewed from yet another angle, similarly situated units which had used old machinery viz M/S Durga Cotton and Oil Mills, Narwana, M/S Partap Oil and Fats Pvt. Ltd. Nilokheri and M/S Bright Industrial Corporation, Panipat having old boilers prior to 25.11.1991 had already been granted 100% Sales Tax exemption i.e. Eligibility certificate. The version of the petitioner contained in para No.8 of the petition could not be controverted by the respondents. Though it was claimed by the respondents that the cases cited by the petitioner company in para No.8 are distinguishable from that of the petitioner, yet no efforts were made to distinguish the aforesaid units. CWP No.8291 of 1994. 7 16. Thus, it may be noticed that the respondents did not deny the case set up by the petitioner with regard to grant of exemption to the aforesaid other similarly situated units and it remained unexplained as to how and why the other similarly situated units had been granted sales tax exemptions. Sequelly, action of the respondents in rejection of the claim of the petitioner, cannot be sustained. Conclusion 17. For the reasons recorded above and keeping in view the totality of facts and circumstances of the case, the writ petition is allowed and order dated 28.4.1994 (Annexure P-7) is quashed. Consequently, the petitioner shall be entitled to the benefits as eligible unit for Sales Tax exemption under the the provisions of the Haryana General Sales Tax Rules, 1975. (Dr. Bharat Bhushan Parsoon) Judge (Rajive Bhalla) Judge September , 2013. Malik