Haryana Vs. M/S. Anil Pesticides Ltd. & ANR.  INSC 436 (6 May 2010)
APPELLATE JURISDICTION CIVIL APPEAL NO. 3685 OF 2003 STATE OF HARYANA ...
appeal, by special leave, is directed against the judgment and order dated 5th
August 2002, passed by the High Court of Punjab & Haryana at Chandigarh in
CWP No.18436 of 2001. By the impugned judgment, the High Court has dismissed
the writ petition filed by the State of Haryana, the appellant herein,
affirming the decision of the Commissioner and Secretary to the Government of
Haryana, Industries Department, holding that `Monocrotophos (Technical)' and
`Dichlorvos (Technical)', being manufactured by the respondent (hereinafter
referred to as the "Dealer") are "chemicals" and not
"pesticides" within the meaning of Entry 43 of the 2 negative list as
contained in Schedule III to the Haryana General Sales Tax Rules, 1975 (for short
of Haryana announced an industrial policy for the period 1st April 1988 to 31st
March 1997, wherein incentive by way of sales tax exemption was to be given for
the industries set up in backward areas of the State. During the year 1994-95,
the Dealer set up an industrial unit at village Badgodam, District Panchkula, a
backward area, for manufacturing, amongst others, `Monocrotophos (Technical)'
and `Dichlorvos (Technical)'.
claimed sales tax exemption in terms of the said industrial policy and applied
for grant of an Eligibility Certificate under Rule 28A of the Rules.
about 3rd January 1996, a notice was given as regards the intention of the
State to amend Rules in respect whereof a draft was circulated for information
of persons likely to be affected thereby so as to enable them to file
objections and suggestions thereto. Ultimately, amendments in terms of the said
draft Rules were notified on 16th December 1996, by the Haryana General Sales
Tax (Fifth Amendment) Rules, 1996 and certain more items were included in
Schedule III. One of the items so 3 included in the list was Item
No.43--"Pesticides manufacturing and Formulations." The said
notification had the following two Notes:- "Note1. The above list shall
not be applicable to the industrial unit set up under the Rural Industries
Scheme except the units covered under any of the entries mentioned at serial
Nos. 1,2,4 and 20.
The Industrial units in which investment has been made upto 25% of the
anticipated cost of the project and which have been included in the above list
for the first time shall be entitled to the sales tax benefit related to the
extent of investment made upto the 3rd of January, 1996. Only those assets will
be included in the fixed capital investment which have been installed or
erected at site and have been paid for.
anticipated cost of the project will be taken on the basis of documents
furnished to a financial institution or banks for drawing a loan and which have
been accepted by the financial institution or bank concerned for sanction of
effect of Note 2, with which we are concerned, was that the industrial units
which had made investment upto 25% of the anticipated cost of the project and
which had been included in the negative list in Schedule III for the first time
by virtue of the said notification would be entitled to the sales tax exemption
related to the extent of investment made upto 3rd January 1996. On 28th May
1997, Note 2 was omitted deeming the same to have always been omitted.
application filed by the Dealer was considered by a High Level Screening
Committee, which was of the opinion that the said items were covered under the
category of "pesticides" falling in Entry 43 of the negative list
and, therefore, in view of notification dated 16th December 1996, issued in
terms of Section 64 of the Haryana General Sales Tax Act, 1973 (for short
"the Act"), the Dealer was not entitled to sales tax exemption. The
application of the Dealer for grant of benefit of sales tax exemption was thus,
aggrieved by this decision, the Dealer preferred an appeal before the
Commissioner and Secretary to the Government of Haryana, Industries Department,
who, by his order dated 25th May, 2001 allowed the appeal and held that the
items manufactured by the Dealer did not fall in the category of
"Pesticides and formulations" as referred to in Entry 43 of the
negative list and, therefore, the Dealer was entitled to claim sales tax
exemption in respect of chemicals manufactured by them. He ordered that the
Eligibility Certificate, as applied for by the Dealer, be issued. The said
decision was challenged by the appellant by preferring writ petition in the
High Court. As stated above, the High Court having dismissed the writ petition,
the appellant is before us in this appeal.
appears that notification dated 16th December 1996 was challenged by some of
the industrial units whose products were included in the negative list for the
first time by virtue of the said notification, before the Punjab & Haryana
High Court. Having failed before the High Court, the Dealers filed appeals
before this Court, inter-alia, contending that the notification deleting Note 2
to Schedule III with retrospective effect and thereby disentitling the Dealers
to the benefit of exemption was illegal because Section 64(2A) of the Act had
come into force in the year 2001. Accepting the said plea of the Haryana &
Ors.1 held that afore-extracted Note 2 could not be given retrospective effect.
It was observed thus:- (Para 44, SCC) "By reason of Note 2, certain rights
were conferred. Although there lies a distinction between vested rights and
accrued rights as by reason of a delegated legislation, a right cannot be taken
away. The amendments carried out in 1996 as also the subsequent amendments made
prior to 2001, could not, thus, have taken away the rights of the appellant
with retrospective effect."
counsel for both the parties submit that they would be satisfied if without
going into the question whether the afore-noted two 1 (2006) 3 SCC 620 6 items
manufactured by the Dealer are "pesticides" or "chemicals",
the appeal is disposed of in terms of the afore-extracted paragraph in the case
of Mahabir Vegetable Oils (supra).
the appeal is partly allowed and the impugned order is modified to the extent
that the case of the Dealer shall be considered afresh by the authorities
concerned in terms of the said decision of this Court. The relief, to which the
Dealer would be entitled to, shall be determined as expeditiously as possible,
preferably within three months from the date of receipt of a copy of this
order. There will be no order as to costs.
......................................J. (D.K. JAIN)
........................................J. (P. SATHASIVAM)