Haryana Tubes Private Limited vs State of Haryana and Others

Ashok Bhan, J.—Prayer made in this petition is for issuance of a writ in the nature of certiorari quashing impugned orders, Annexures P-3 and P-5, and a writ of mandamus directing the respondents to issue to the petitioner Elegibility Certificate of Exemption in accordance with section 13-B of the Haryana General Sales Tax Act, 1973 (hereinafter referred to as ''the Act'') read with Rule 28-A of the Haryana General Sales Tax Rules, 1975 (hereinafter referred to as ''the Rules'') and for restraining the respondents from recovering sales tax from the petitioner.

State of Haryana had announced incentives to encourage small scale industries, to promote industrialisation and to create employment in the entire State of Haryana. Under the Scheme, small scale industries can be exempted from payment of sales tax under the provisions of the Act and the Rules. Petitioner set up a plant for manufacturing PVC Pipes in Village Mathana, Tehsil and District Kurukshetra, which is a backward area. As per averments made, petitioner started its commercial production of PVC pipes on 14.3.1994. On 8.4.1994. Directorate of Industries, Haryana issued a certificate to the effect that the date of commencement of commercial production of the petitioner is 14.3.1994. Application for exemption from payment of sales tax could be made within 90 days of the commencement of commercial production. Petitioner made an application on 12.5.1994 to the General Manager, District Industries Centre, Kurukshetra, for exemption from payment of tax. The application was rejected by the Lower Level Screening Committee on 8.12.1994, vide order Annexure P.3, on the ground that it had been filed beyond the period of 90 days of the date of going into commercial production. Claim of the petitioner that it had started production on 14.3.1994 was not accepted. It was found that the petitioner had gone into commercial production prior to 15.12.1993. Against the order of the Lower Level Screening Committee, petitioner filed an appeal before the Higher Level Screening Committee. Appellate authority, on 28.11.95, vide order Annexure P.5, rejected the appeal by passing the following order :-

"Shri Mangesh, MD of the company was present. After hearing his view point and after considering the report of GM, DIC and DETC, Kurukshetra, Committee observed that the application of the party for the claim of sales tax exemption was not received in time as required under Rule 28(a)(5)(a) of HGST Rules, 1975. Hence rejected."

Apart from contesting the findings recorded by the Lower Level Screening Committee and the Higher Level Screening Committee that the petitioner had started its production prior to 15.12.1993, petitioner has challenged the orders, Annexure P-3 and P-5, on the ground that they have been passed in violation of the principles of natural justice and without passing a speaking order. Case of the petitioner is that the Higher Level Screening Committee was acting as a quasi judicial authority and was duty bound to record reasons in support of its decision. For this, reliance has been placed upon a Division bench Judgment of this Court in Banarsi Das Cotton Mills (P) Ltd. Vs. State of Haryana and Another, , where it was observed as under:-

"There can be no manner of doubt that while deciding the appeal the Higher Level Screening Committee acts as a quasi judicial authority and it is duty bound to record reasons in support of its decision. The recording of reasons and communication thereof is imperative for compliance of the principles of natural justice which must inform the proceedings of every quasi judicial body and even in the absence of a statutory provision or administrative instructions requiring recording of reasons in support of the orders, the quasi judicial authority must pass speaking orders so as to stand the test of scrutiny."

After hearing counsel for the parties, we find substance in the submission made by the counsel for the petitioner. Higher Level Screening Committee acts as a quasi judicial authority. A perusal of its order would show that the same is bereft of any reasons in support of its decision. It has been held in innumerable decisions by the Supreme Court of India as well as various High Courts that a quasi judicial authority is required to pass a speaking order, recording its reasons in support thereof. Failure to do so vitiates the order, being against the principles of natural justice. Such orders cannot stand the test of scrutiny in any further proceedings available to the party concerned. Such orders are further required to be communicated to the concerned party. In this case, as observed earlier, Higher Level Screening Committee passed the order, Annexure P-5, without recording its reasons.

In view of the above, we quash the order, Annexure P-5, passed by the Higher Level Screening Committee and remand the case back to it for reconsideration of the appeal filed by the petitioner and pass a fresh order. Fresh order be passed within two months of the receipt, production of a certified copy of this order, by passing a speaking order, after affording adequate opportunity of hearing to the petitioner.

The writ petition stands allowed with no order as to costs.