Case: State Of Haryana  Vs. Rubber Reclaim Co.Of India (P) Ltd.&amp;Anr

3. The facts in extenso need not be noticed by us. Suffice it to state that the appellants are before us aggrieved by the judgment and order passed by the High Court of Punjab and Haryana at Chandigarh in Civil Writ Petition No.6688 of 1999 (O&M), dated 31.03.2010. By the impugned judgment and order, the High Court has set aside the order of assessment passed by the assessing authority, wherein the assessee was directed to refund the amount which was availed by way of tax exemption/deferment of tax under the exemption scheme.4. The respondent company is a private limited company. It is engaged in the business of manufacturingrubber. The company has its manufacturing plant in the specified place as notified by the State of Haryana.5. Under Section 13B of Haryana General Sales Tax Act, 1973,or short) the Government is empowered to exempt certain class of industries from payment of taxes under the Act for a specified period. Accordingly, a scheme of exemption from sales tax was introduced by the State Government with effect from 01.04.1998, in the interest of industrial development in the State. The scheme of exemption as notified is subject to such conditions as may be prescribed underof Haryana General Sales Tax Rules, 1975or short). The Rule deals in detail with the matters relating to the Grant of exemption to industries established in the notified area.6. Pursuant to the scheme of exemption so issued, on a request made by thethe District Industries Centre, Sonepat had granted theinter alia, exempting the respondent from payment of tax for the period 01.04.1992 to 31.03.1997, subject to the conditions prescribed under Rule28A of the Rules,1975. The quantum of benefit quantified based on notional sales tax liability was at Rs.68,00,000/(Sixty Eight Lakhs Only).7. Since the respondent had contravened the provisions of Rule28A of the Rules,the assessing authority had issued a Show Cause Notice to the respondent, inter alia, directing it to show cause, why the exemption availed by theshould not be asked to be refunded with interest thereon. On receipt of the reply, the assessing authority has completed the assessment. Aggrieved by the orders of assessment, thewas before the High Court, inter alia, questioning the vires of Rule28A of the Rules,1975 and the order of assessment passed by the assessing authority.8. The High Court has disposed of the Writ Petition primarily on the ground that the assessing authority has imposed tax on thesales or the branch transfers and this in the view of Court could not have been done by the assessing authority in view of the prohibition contained both under Constitution and also under the provision of Central Sales Tax Act. Accordingly has set aside the orders passed by the assessing authority. However, the High Court has not gone into the vires of Rule28A of the Rules,

Reasoning:
13. Having noticed the relevant rules, we will revert back to the facts in the present case. Thehad availed benefit of the sales tax exemption under the Exemption Scheme issued by the State Government. The Eligibility Certificate for sales tax exemption provides for certain conditions which requires to be complied by theto take benefit of exemption under the Scheme. The Condition No. 7 of the Eligibility Certificate provides that the certificate can be cancelled if there is contravention of any condition mentioned in the certificate or Ruleafter affording an opportunity to the party of being heard. In the show cause notice it is specifically alleged that the assessee had dispatched good on consignment basis during the assessment period98 and therefore the assessee has breached Rule28A of the Rules,1975 and in particular11(a)(ii) of the Rules, 1975, which prescribes that the benefit of tax exemption shall be subject to the condition that the assessee having availed the benefit of tax exemption shall not make sales outside the State for next five years by way of transfer or consignment of goods manufactured by it. Since the assessee did not dispute the specific contravention pointed out by the assessing authority after cancelling the exemption certificate issued has quantified the tax liability and the interest payable thereon. The order so passed, in our view, is in consonance with the scheme of exemption notified by the State Government and also in accordance with the rules prescribed under Section 13B of the Act.14. The High Court while allowing the petition filed by the assessee has proceeded on a wrong assumption, that, the assessing authority has levied tax onsales and on consignment transfer and accordingly has quashed the assessment order passed by the assessing authority. In view of our conclusion stated earlier, we cannot sustain the judgment and order passed by the High Court.