Punjab & Haryana High Court Denies Sales Tax Concessions to Industrial Units Failing ‘Pipeline’ Criteria; Holds IEM Registration Must Exist as on Cut-Off Date

Case Name: M/s Hisar Metal Industries Ltd. v. State of Haryana and Others
Date of Judgment: 9 January 2026

Citation: CWP-8802-2004, CWP-4838-2006 and CWP-4839-2006

Bench: Hon’ble Mrs. Justice Lisa Gill and Hon’ble Mr. Justice Parmod Goyal

Held: The Punjab and Haryana High Court dismissed a batch of writ petitions seeking sales tax concessions under Rule 28C of the Haryana General Sales Tax Rules, 1975. The Court held that eligibility for tax concessions as a “unit in pipeline” is strictly governed by statutory conditions, including registration with the Department of Industries and possession of a valid Industrial Entrepreneur’s Memorandum (IEM) as on the cut-off date of 30 April 2000. The Court held that IEMs obtained after the cut-off date cannot relate back to earlier registrations and that failure to satisfy any of the mandatory conditions disentitles the unit from availing tax concessions.

Summary: The writ petitions were filed by three industrial units seeking sales tax concessions under Rule 28C of the HGST Rules on the ground that their expanded or new units were “in pipeline” as on 30 April 2000. The petitioners contended that they had substantially complied with the conditions prescribed under the Industrial Policy and that subsequent IEM registrations should be treated as continuations of earlier acknowledgements. They further argued that registration with the Department of Industries was either unnecessary or a mere procedural formality.

The State opposed the petitions contending that Rule 28C, as amended with retrospective effect, clearly defines “units in pipeline” and mandates fulfillment of four cumulative conditions as on the cut-off date, namely registration with the Department of Industries, acquisition of land or premises, application for finance from a regular financial institution, and commencement of production within two years from the cut-off date.

The High Court examined the statutory framework, notifications, public notices and amendments to Rule 28C, particularly the insertion of clause (o) defining “units in pipeline”. The Court noted that in all three cases, the petitioners had obtained IEM registrations for their expanded or new units after 30 April 2000. Since the concessions sought were only with respect to expanded capacity and not the original units, the Court held that the argument of relation back to earlier IEMs was legally untenable.

The Court further held that tax concession provisions are in the nature of exceptions and must be strictly construed. All prescribed conditions must be satisfied cumulatively, and failure to meet even one condition is fatal to the claim. The Court found no illegality or arbitrariness in the decisions of the High Powered Committee and the Higher Level Screening Committee rejecting the petitioners’ claims.

Decision: All three writ petitions were dismissed. The Court upheld the denial of sales tax concessions under Rule 28C of the HGST Rules and declined to exercise writ jurisdiction under Article 226 of the Constitution.