- (1.) The petitioner No. 1, a private limited company, set up a new industrial unit for manufacture of coal tar and smokeless coal at village Kharwar, District Rohtak, falling in Zone A which had been declared backward by the State of Haryana. Since the unit was eligible for sales tax exemption under Rule 28A of the Haryana General Sales Tax Rules, 1975 (for short "the Rules"), it was granted the necessary eligibility certificate entitling it to avail of the sales tax exemption for a period of nine years starting from December 13, 1994 up to December 12, 2003. On the basis of the eligibility certificate the unit was granted exemption certificate for the period ending June 30, 1995. The same was renewed in the first instance up to June 30, 1996 and thereafter up to June 30, 1997. The petitioners filed an application for further renewal of the exemption certificate on July 31, 1997. This application was rejected vide order dated December 15, 1997 on the ground that the same was not complete particularly in respect of surety bond and despite sufficient opportunity the petitioner did not complete the necessary particulars. While processing the application for renewal, the Deputy Excise and Taxation Commissioner (for short, "the D.E.T.C") discovered that the unit of the petitioner was out of production since January 1997 and as such its exemption certificate was also liable to be cancelled under Sub-rule (9)(i) of Rule 28A of the Rules. He, therefore, issued a show cause notice to this effect on December 5, 1997 requiring the petitioner to submit its explanation on December 15, 1997. The petitioner neither appeared before the D.E.T.C. nor did it furnish any explanation. The D.E.T.C., therefore, cancelled the exemption certificate held by the dealer by his order dated January 14, 1998. The petitioner filed appeals against these orders before the Prohibition Excise and Taxation Commissioner, Haryana, who remanded the case to the D.E.T.C. to be heard afresh on merits. For this purpose the petitioner was directed to appear before him on May 11, 1998. During the remand proceedings it was again found that the industrial unit had not worked since January, 1997, and that almost the entire plant and machinery had been removed from the factory premises and taken to some other place outside the State of Haryana without any information to the department. Even the factory shed and other structures were found to have been dismantled and the business totally closed. The D.E.T.C. by his order dated June 30, 1998 again rejected the application for renewal of the exemption certificate and also cancelled the exemption certificate already granted by invoking Sub-rule (9)(i) of Rule 28A of the Rules. He directed the petitioner to deposit the tax of Rs. 40,45,324 in respect of which exemption had already been availed of and also to pay interest thereon. The petitioner filed an appeal before the Prohibition Excise and Taxation Commissioner, Haryana, challenging the aforesaid order of the D.E.T.C. which was rejected vide order dated October 29, 1998. It is against these orders that the present writ petition has been filed.
(2.) H.L. Sibal, learned Senior Advocate appearing on behalf of the petitioner, contends that the cancellation of the exemption certificate was not justified as the unit had remained closed since January, 1997, on account of non-availability of coal which was a factor beyond its control. It was pointed out that the unit manufactured smokeless coal for which the coal was the main raw material. The petitioner claims to have made persistent efforts for getting the requisite supply of coal which yielded no results. For this purpose, our attention was invited to the various letters written to the General Manager, District Industries Centre, Rohtak. Thus, it was argued that when the raw material was not made available, the petitioner was compelled by circumstances beyond its control to stop the production. It was also stated that as the unit had been lying closed for more than one year, the machinery had been removed for getting it over-hauled and had not been re-installed as the supply of raw material has not been restored to it. It was then contended that even if the cancellation of the exemption certificate were to be upheld under Sub-rule (9)(i) of Rule 28A of the Rules, the same could not operate retrospectively and the petitioner could not be asked to deposit the amount of Rs. 40,45,324 which was the amount of exemption already availed of. This amount pertained to the period when the industrial unit was in production.
(3.) On the other hand Sh. M.L. Sarin, learned Advocate-General, Haryana, appearing on behalf of the respondents, has submitted that as the unit set up by the petitioner in the backward area had not worked since January, 1997, the exemption certificate was liable to be cancelled as provided under Sub-rule (9)(i) of Rule 28A of the Rules. It was further argued that the said sub-rule did not provide for any exceptional circumstances under which the consequences provided therein could be waived. Once it is found that a unit had discontinued its business at any time for a period exceeding six months or has closed down its business during the period of exemption, the exemption certificate was liable to be cancelled. It was also contended that the eligibility certificate granted under Rule 28A requires the dealer to fulfil the conditions provided therein. After the eligibility certificate is granted, the dealer is required to obtain an exemption certificate which is valid upto the end of the following month of June. Thereafter the exemption certificate is required to be renewed on year to year basis as per the procedure provided in Sub-rule (7) of Rule 28A of the Rules, Attention was also drawn to Sub-rule (9) which provides the circumstances under which the exemption certificate granted was liable to be cancelled. It was argued that once the exemption certificate is so cancelled, it would necessarily follow that the exemption of tax already availed of under such a certificate would become without any authority of law and liable to be recovered. This consequence, according to the learned Advocate-General, is clearly provided in Clause (v) of Sub-rule (10) of Rule 28A of the Rules. It was, therefore, pleaded that the petitioner-company was liable to deposit the amount of Rs. 40,45,324 along with interest as directed by the D.E.T.C. in his order dated June 30, 1998.;