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2010 DIGILAW 818 (PNJ)

STATE OF HARYANA v. VIMAL MOULDER INDIA LTD.

2010-02-05

ASHUTOSH MOHUNTA, MEHINDER SINGH SULLAR

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JUDGMENT ASHUTOSH MOHUNTA, J. - The Haryana Sales Tax Tribunal (for short, "the Tribunal") vide order dated June 23, 2008, has referred the following questions of law for adjudication by this court : "Question No. 1 Whether, on true and correct interpretation of clause (i) of proviso to clause (a) of sub-rule (3) of rule 28B of the Haryana General Sales Tax Rules, 1975, the land purchased in 1996, where unit 3 was set up, could legally be held to fulfil the condition contained under the said clause i.e., that the land was purchased for unit 4 also ? Question No. 2 Whether, in the facts and circumstances of the case, the order of the Tribunal, annexure P1, is contrary to the provisions of clause (a) of sub-rule (3) of rule 28B of the Haryana General Sales Tax Rules, 1975." Briefly the facts of the case are that M/s. Vimal Moulders (India) Ltd., Gurgaon, set up a new unit in which commercial production was started on October 13, 1994. An eligibility certificate for availing of sales tax exemption of Rs. 301.18 lacs for the period October 13, 1994 to October 13, 2001, was issued to the manufacturer by the High Level Screening Committee (hereinafter referred to as, "the HLSC"). Vimal Moulders set up its first unit in Plot No. 17-18, Phase IV, Gurgaon and thereafter it carried out further expansions and constructed unit II and thereafter units III and IV. The respondent claimed the incentive of exemption on payment of sales tax which were available to eligible industrial units under the provisions of rule 28B of the Haryana General Sales Tax Rules, 1975 (for short, "the Rules"). It was submitted by the entrepreneur that as it has carried out only expansion plans by constructing units III and IV in the same premises, which was purchased by it earlier, therefore, it is entitled to claim benefit of incentives as it fulfilled all the conditions laid down in the Rules. This request of Vimal Moulders was rejected by the HLSC vide orders dated May 16, 2002 and May 17, 2002. Against the said orders, the appellant filed an appeal which was allowed by the Member, Sales Tax Tribunal vide order dated October 11, 2002. The Revenue challenged the aforementioned order by filing an appeal before the Tribunal which has referred the questions of law mentioned above for adjudication by this court. Against the said orders, the appellant filed an appeal which was allowed by the Member, Sales Tax Tribunal vide order dated October 11, 2002. The Revenue challenged the aforementioned order by filing an appeal before the Tribunal which has referred the questions of law mentioned above for adjudication by this court. A perusal of the case file shows that it is not in dispute that the land was purchased by the appellant and after setting up the first unit, HLSC granted the appellant the benefit of sales tax exemption by taking only that portion of land which was utilized for setting up first unit. Subsequently, on the same piece of land, second unit as well as third and fourth unit have also been set up by the manufacturer. The appellant claims exemption from payment of sales tax as it has satisfied all the three conditions laid down in proviso to sub-rule (3)(a) of rule 28B of the Rules. It has been contended that as the units of expansion have been set up on the same piece of land, hence it would be entitled to claim the benefit of incentives of exemption. It is not in dispute that the appellant is manufacturing the same product in units III and IV, as was being manufactured by it in units I and II. A perusal of rule 28B(d) of the Rules clearly shows that the appellant had expanded its production by constructing units III and IV and the expansion would fall under rule 28B, sub-clause (d) of the Rules. The construction of units III and IV cannot be termed as an independent unit, as same product is being manufactured on the same piece of land in which units I and II existed. Resultantly, Vimal Moulders (India) Ltd. has satisfied all the conditions laid down in sub-rule (3)(a) of rule 28B, hence it is entitled to claim exemption from payment of sales tax. Question No. 1 posed by the Tribunal is accordingly answered in favour of the entrepreneur and against the Revenue. In view of the findings returned on question No. 1, it is held that the order of the Tribunal is not contrary to the provisions of sub-clause (3)(a) of rule 28B of the Rules. Accordingly, the reference is answered against the Revenue and in favour of the entrepreneur.