Case: State Of Haryana Vs. M/S Samtel India Ltd

4. On 23.2.1995, the respondent was granted "eligibility certificate" entitling it to avail of sales tax exemption under rule 28A of 1975 Rules to the extent of Rs. 276.95 lakhs for a period of 7 years commencing from 23.2.1995 to 22.2.2002 for the manufacture of monochrome monitors and black and white TV sets alone. In other words, the said eligibility certificate did not cover colour monitors. At that time, the capital investment of the company was Rs. 55.39 lakhs. On 13.3.1996, the respondent submitted an application claiming tax benefit for an investment of Rs. 26.74 lakhs made for diversification of extending the unit to manufacture "colour monitor". The said application was allowed. Respondent was granted a new eligibility certificate on 15.9.1997 entitling it to avail the benefit of exemption from sales tax to the extent of Rs. 122.85 lakhs for the period commencing from 15.12.1995 to 14.12.2001.On 1.2.1998, however, the respondent submitted an application requesting for insertion of "colour monitor" in the earlier eligibility certificate dated 23.2.1995. By order dated 11.10.1999 the competent authority rejected the application on the ground that there was no provision under rule 28A authorizing such addition in the eligibility certificate already granted.Suffice it to state that the decision of the competent authority dated 11.10.1999 ultimately came to be challenged before Haryana Tax Tribunal. By its order dated 30.11.2005, the Tribunal accepted the appeal inter alia on the ground that a liberal approach needs to be taken while interpreting the said rule 28A and, accordingly, directed the Department (appellant herein) to add "colour monitor" to the eligibility certificate dated 23.2.1995. The decision of the Tribunal has been affirmed by the High Court by impugned judgment dated 9.7.2007 in CWP No. 9764/07.

Reasoning:
10. In this case we find that, while deciding the writ petition filed by the Department, the above rule has not been analysed by the High Court. No reason has been given by the High Court in its impugned judgment as to what weightage should be given to the words used in the above rule, particularly, the expression "for manufacture of the same product". Similarly, the High Court has failed to consider the effect of a cap/ceiling being put on the capital investment which, in the present case, stood at Rs. 276.95 lakhs vide eligibility certificate dated 23.2.1995. Similarly, the High Court has not discussed the scope of(4)(a) which provides for different scales of tax benefit and different duration of exemption period. In this case, the High Court has primarily proceeded to dismiss the Departments writ petition on the ground that it had already issued modified eligibility certificate in terms of the directions given by the Tribunal. Secondly, the High Court has proceeded on the basis of its earlier judgment in the case of State of Haryana v. Bharti Teletech Ltd., Gurgaon in CWP NO. 11884/03.In our view, the High Court had erred in relying upon the fact that modified eligibility certificate stood granted as it was granted pursuant to the impugned judgment of the Tribunal. Similarly, the High Court has relied upon its earlier judgment in Bharti Teletech Ltd. (supra) in which the writ petition filed by the Department stood dismissed on the ground of laches. Therefore, in our view, both the above circumstances were irrelevant. As stated above, High Court should have considered the matter on interpretation of rule 28A of 1975 Rules. It has not considered the said rule. It has not considered the above arguments.