N.K.SODHI, J. - (1.) WHAT is challenged in this petition filed under Article 226 of the Constitution is the order dated December 8, 1993 passed by the Assistant Excise and Taxation Commissioner, Patiala rejecting the application of the petitioner for the grant of exemption from payment of sales tax for the year 1991-92. An appropriate writ or direction is also sought for staying the recovery of sales tax on the basis of demand raised in pursuance of the order of assessment passed by the assessing authority on 15. 2. 1994.
(2.) IN pursuance to its published industrial policy allowing certain incentives like exemption from payment of sales/purchase tax to new units with a view to promote industrial development in the State, the Government of Punjab has framed the Punjab General Sales Tax (Deferment & Exemption) Rules, 1991 (for short, the Rules) which came into force with effect from 1. 4. 1989. The petitioner is a private limited company carrying on its factory in village Bankarpur, Tehsil Rajpura, District Patiala. It is a new unit and went into production for the first time on 5. 5. 1989. Being a new unit, the petitioner applied to the General Manager, District Industries Centre, Patiala for a certificate of eligibility declaring it to be eligible for the grant of incentive of sales tax exemption. The certificate was granted showing the petitioner as eligible for sales tax exemption for a period of seven years from 5. 5. 1989 to 4. 5. 1996. The maximum exemption fixed is at Rs. 23,85,990/ -. The petitioner went in for expansion of its unit in the year 1991 and another certificate of eligibility was issued to it in regard to the expansion unit which went into production on 11. 1. 1992. This certificate shows the petitioner eligible for the grant of sales tax exemption for a period of 7 years from 11. 1. 1992 to 10. 1. 1999 upto a maximum amount of Rs. 23,70,683/ -. Rule 3 of the Rules lays down the conditions for eligibility and the same is reproduced hereunder for facility of reference : "3. Conditions for eligibility :- (1) Deferment of, or exemption from the payment of tax under the Act shall be admissible to a unit: (i) in respect of which an eligibility certificate has been granted by the competent authority of the Industries and which has not been included in the negative list; (ii) for a period not exceeding one hundred and eight months, eighty-four months and sixty months respectively in respect of the units located in A Growth, B Growth and C Growth area and for a period of one hundred and twenty months in respect of F Group of Industries; and (iii) if all the sales of goods have been-made from the premises of the unit situated within the State of Punjab, and the goods have not been transferred outside the State of Punjab either on consignment basis or on branch transfer basis. (2) The deferment of or exemption from, payment of tax shall become admissible only after the issue of the certificate of eligibility in form ST (D and E) III by the prescribed authority in-charge of the district in the Department of Excise and Taxation. " A bare reading of the aforesaid Rule makes it clear that one of the conditions of eligibility is that all sales of goods have to be made from the premises of the unit situated within the State of Punjab and goods cannot be transferred outside the State of Punjab either on consignment basis or on branch transfer basis. It is further clear that exemption from payment of tax becomes admissible only after the issue of certificate of eligibility by the prescribed authority in the Department of Excise and Taxation, which certificate, as per the practice, has to be obtained for each year. It may also be stated that the holder of an eligibility certificate and exemption certificate has to file his assessment return under the Punjab General Sales Tax Act (hereinafter called the Act) in which a regular assessment is made but the amount assessed as tax is exempted from payment.
(3.) IN accordance with the Rules, the petitioner applied for exemption from payment of sales tax for the year 1991-92 along with the eligibility certificate and other documents. It then transpired that during this year the petitioner had, in contravention of the eligibility certificate, conducted branch transfers/consignment sales. As this was in violation of rule 3 (1) (iii) of the Rules (as reproduced above), the application for the grant of exemption certificate was rejected by the Assistant Excise and Taxation Commissioner, Patiala as per his order dated December 8,1993 (Annexure P5 with the writ petition ).;