CWP No.1154 of 2008 1 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH CM No.2094 of 2008 and CWP No.1154 of 2008 Date of decision: 5.2.2008 M/s The Malt Company (India) Limited ......Petitioner Versus The State of Haryana and others ......Respondents CORAM:- HON'BLE MR.JUSTICE SATISH KUMAR MITTAL HON'BLE MR. JUSTICE RAKESH KUMAR GARG * * * Present: Shri A.K. Chopra, Sr. Advocate with Ms.Rupa Pathania, Advocate for the petitioner. Rakesh Kumar Garg, J . CM No.2094 of 2008 CM is allowed. Accompanying affidavit is taken on record. CWP No.1154 of 2008 1. The petitioner has filed this petition under Articles 226/227 of the Constitution of India for issuance of a writ in the nature of Certiorari quashing the decision of respondent No.3 i.e. Chairman. Higher Level Screening Committee, Haryana, Chandigarh conveyed to him by respondent No.2 i.e The Director of Industries, Haryana, Chandigarh vide letter dated 5.7.2007 (Annexure P-11) whereby the case of the petitioner being considered eligible as 'Unit in Pipeline' for availing tax concessions under Rule 28 (C) of the Haryana General Sales Tax Rules, 1975 (hereinafter referred to as the “Rules”) has been rejected and further for issuance of a writ in the nature of Mandamus directing the respondents to treat the petitioner's unit as 'Unit in Pipeline' and further to proceed to grant tax concession as envisaged under Rule 28 C of the said Rules. 2. The petitioner is a Private Limited Company incorporated CWP No.1154 of 2008 2 under the Companies Act, 1956 having its Registered Office at New Delhi. The petitioner-Company is engaged in the manufacturing of Malt, Malt Extract Powder, Malt Flour and Barley Flour. The petitioner-Company set up an industrial unit in the year 1970 for the production of Barley Malt and Malt Extract at Khandsa Road, Gurgaon. 3. It is the case of the petitioner that the company obtained registration with Secretariat of Industrial Approvals (SIA), Ministry of Industry, Government of India bearing No.SIA/EIR/380(89) dated July 11, 1989. The State of Haryana in order to boost the economy and for growth of industrial sector in the State brought an industrial policy whereby certain tax incentives were being offered to entrepreneurs for either setting up a new industrial unit or expanding or diversifying an existing industrial unit. The petitioner with the intent to avail sales tax benefits sought to expand its existing unit by setting up another unit in village Gadaipur Tehsil Pataudi, District Gurgaon, for manufacturing Malt, Malt Extract, Malt Extract Powder, Malt Flour, Barley Flour. 4. It is the case of the petitioner that the company purchased land for setting up its expanded unit in June and July, 1996 in village Gadaipur, Tehsil Pataudi, District Gurgaon and for the purpose of expansion by setting up another unit sought financial assistance from the Industrial Development bank of India (IDBI). The IDBI issued letters of intent to grant to the company term loan of Rs.845 lakhs and Rs.165 lakhs. It is further the case of the petitioner that respondent No.2 issued a Public Notice dated 5.7.2000 whereby it was declared that the Government of Haryana with the objective of bringing uniformity in tax structure, as per the policy at national level, had decided to discontinue the tax incentives extended to the industry w.e.f. 30.4.2000 as the cut off date and further the Government had decided to prepare a list of industrial unit in pipeline as CWP No.1154 of 2008 3 on or prior to the cut off date mentioned above. The notice also declared the four conditions which such units must meet on or before 30.4.2000 for being considered to be enlisted as 'Units in Pipeline'. The four conditions are being reproduced as under:- “a) the unit is registered with the Department of Industries; b) the unit has been allotted or acquired land for itself; c) the unit has applied for finance from a regular financial institution; and d) the unit shall come into production within 2 years from the cut off date.” 5. The petitioner has further alleged that new industrial units as well as industrial units which had undergone expansion/diversification and were fulfilling the conditions enumerated in the notice were also included within the ambit of the public notice. As per the averments made in the writ petition, the petitioner-Company vide its letter dated 18.9.2000 intimated the General Manager, District Industries Centre, Gurgaon with reference to the notification by the Department for granting sales tax concession under Rule 28C (3) (vi) that the unit at Pataudi was a 'Unit in Pipeline' . The said letter is reproduced hereinafter below:- “18th September, 2000 The General Manager, District Industries Centre, Industrial Estate, Mehrauli Road, Gurgaon Subject: Intimation of Industrial Units in Pipeline. Dear Sir, It is with reference to your notification for granting sales tax concession under rule 28C(3)(vi) CWP No.1154 of 2008 4 Regarding above, we hereby inform to your office that our company is putting up unit No.II at Pataudi (District Gurgaon) which is in pipeline. The following steps have been undertaken before 1.4.2000: 1. Land for Unit II was purchased in the year 1996; 2. Building construction work given in the year 1999; 3. Construction started in year 1999; 4. No objection certificate obtained from Haryana State Pollution Control Board; 5. Loan application was filed with IDBI and loan was sanctioned in the year 1997. Ours is a registered unit and our DGTD Registration No.SIA/EIR 380(89) and the same products shall be manufactured in Unit No.II. However, we have now also obtained new IEM. This is for your information and necessary action, please. Thanking you, Yours faithfully, For THE MALT COMPANY (INDIA) LIMITED” 6. It is the further case of the petitioner-Company that the Company being only an expanded medium scale unit was not required to obtain registration in accordance with the gazette notifications and press notes Annexures P-5 and P-6 issued by the Govt. of India and the petitioner commenced commercial production in time to avail the sales tax concessions and issued its first invoice on 29.4.2002 for a sum of Rs.1,29,979.4 P only. As per the case of the petitioner, it submitted an application dated 26.8.2002 in the prescribed Form No.ST-70B for grant of sales tax concession as a new industrial unit under Rule 28C of the 1975 Rules. CWP No.1154 of 2008 5 7. Respondent No.5 vide its letter dated 4.9.2002, sought certain documents and also sought the status of the unit as on 30.4.2000 i.e. the cut off date. The petitioner vide its letter dated 23.12.2002 (Annexure P- 7) submitted that it being an agro-based medium scale industry is not required to get itself registered with the Department of Industries, Government of Haryana. Through this letter, the petitioner also stated that the notification containing conditions for claiming the benefit of tax concessions under Rule 28 C of the Rules, 1975 was issued on 15.10.2001 and therefore, the legal provisions of the public notice came into force with effect from 15.10.2001. It was also stated that the condition notified under the aforesaid notification for having registration from the Department of Industries are contradictory to the contents and guidelines of the policy for industrial licence issued by the Department of Industries. Government of India and therefore, the condition for registration with the Department of Industries seems to be irrelevant. However, on the insistence of the Department of Industries Govt. of Haryana and to be on the safer side he has obtained Industrial Entrepreneurial Memorandum (IEM) on 17.8.2000 i.e. before the date of issuance of notification dated 15.10.2001 under which the tax benefit has been applied. The petitioner also submitted letters dated 24.6.2004, 8.11.2004 and 3.12.2004 in support of its case. However, the case of the petitioner for grant of tax benefit was rejected vide letter dated 5.7.2007 (Annexure P-11) on the ground that the petitioner-Company does not fulfil the condition No.(i) of sub rule 3 (o) of Rule 28C as unit has obtained IEM after the cut off date i.e. 30.4.2000. 8. Shri Ashwani Kumar Chopra, learned senior counsel, has argued vehemently that the application of the petitioner for availing of sales tax benefit as provided under Rule 28C Clause (O) of the Haryana General Sales Tax Rules, 1975 has been rejected wrongly, illegally, CWP No.1154 of 2008 6 arbitrarily and against the principles of natural justice, equity and fairplay as the company fulfills all the four conditions as specified in Annexure P-3 and it was fully eligible to be termed as a 'Unit in Pipeline' for having the tax concessions under the Rules, 1975. He has further argued that the unit of the petitioner was not required to get registered being a medium scale unit and the registration in respect of the first Unit had been obtained by the Company in the year 1989 and after the exemption being granted to the industrial units and the petitioner being only an expanded unit, the ground that condition No.1 of Annexure P-3 has not been fulfilled by the Company is unwarranted, erroneous and misconceived. 9. During the course of arguments on 25.1.2008, learned counsel for the petitioner has also placed strong reliance on the fact that the Company has duly obtained registration certificate from the Secretariat of Industrial Approvals, Ministry of Industry, Government of India vide Registration No.SIA/EIR/380(89) dated 11.7.1989. However, for the reasons best known to the petitioner, no registration certificate of the petitioner-Company from the Department of Industries, Govt. of Haryana has been placed on record of the case. Even the alleged IEM obtained by the petitioner on 17.8.2000 has not been placed on record of the case. 10. After hearing the arguments raised by Shri A.K. Chopra, learned senior counsel and perusing the record, we are of the opinion that the arguments raised by the counsel for the petitioner are without any force and liable to the rejected. A perusal of the Public Notice (Annexure P-3) clearly shows that for getting the benefit under the Sales Tax Rules, 1975, framed by the Government of Haryana under the Haryana General Sales Tax Act, a unit must be registered with the Department of Industries, Haryana. There is no such stipulation that any unit having registration with the Ministry of Industries, Government of India, is exempted from such CWP No.1154 of 2008 7 registration with the Department of Industries, Haryana. The only case put up by the petitioner before the Authorities is that in view of its registration with the Ministry of Industry, Government of India, vide registration No.SIA/EIR/380(89) dated 11.7.1989 the petitioner is not required to obtain registration with the Department of Industries, Government of Haryana and condition No.I of Annexure P-3 is not applicable to it. The contention of the petitioner is misconceived on the facts and circumstances of the case. The petitioner has also challenged the impugned order Annexure P-11 on the ground that the Director of Industries in the impugned order dated 5.7.2007 has wrongly noted that the representative of the petitioner unit did not produce documents in support of the petitioner's case and the petitioner has submitted registration of the petitioner's company with the Department of Industries in the year 1989 with DGTD. It is relevant to mention that the said registration certificate was not placed on record by the petitioner at the time of the filing of the writ petition and was later placed on record vide CM No.2094 of 2008. A perusal of the said document shows vide letter dated 11.7.1989 Ministry of Industry, Government of India has registered the application of the petitioner for registration of Industrial Undertaking exempted from the licensing provisions of the Industries (Development and Regulation) Act, 1951 and this letter clearly stipulates that the registration of such application with the Department of Industrial Development does not necessarily constitute acceptance of recognition by the Government on any of the facts stated therein and further vide Press Note No.22 of 991 series dated 24.12.1991, the Govt. of India has further clarified that the procedure of acknowledgment of registration of the unit for exemption from Industrial licensing is not in the nature of any registration involving scrutiny of memorandum. It is also a matter of fact that even the said so-called CWP No.1154 of 2008 8 registration dated 11.7.1989 pertains to the earlier unit of the petitioner and the petitioner has failed to place on record any kind of registration certificate for their expanded unit for which the tax concessions are being claimed vide Annexure P-3. 11. No other point has been argued. In view of the facts and circumstances of the case, the petitioner has failed to establish on record that the petitioner-Company fulfills condition No.1 of Annexure P-3 to the effect that the unit is registered with the Department of Industries for availing the tax concessions and therefore, its application for grant of sales tax concession under the Rules, 1975 treating the expanded unit of the petitioner as 'unit in pipeline' has been rightly rejected. We find no ground to quash the impugned order Annexure P-11, and thus, the writ petition fails and the same is hereby dismissed in limine. (RAKESH KUMAR GARG) JUDGE February 5, 2008 (SATISH KUMAR MITTAL) ps JUDGE