Exemption withdrawal and composite notice rules govern cotton seed tax penalty proceedings after the amended notification took effect.

Cotton seed ceased to enjoy exemption from sales tax once the amended notification of 3 April 1975 omitted it from the inclusive definition of cattle fodder under the U.P. Sales Tax Act. The Court treated the earlier exemption as continuing only until expressly or impliedly withdrawn, so penalty proceedings under section 15-A(1)(a) were sustainable for the assessment years after the amendment took effect. It also held that a single notice covering multiple assessment years was not invalid where the facts were common and no statutory bar or prejudice was shown.

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Issues: (i) Whether cotton seed continued to enjoy exemption from levy of tax under the U.P. Sales Tax Act after the amended notification of 3 April 1975, and whether penalty proceedings under section 15-A(1)(a) could validly be initiated for the assessment years 1975-76 to 1977-78; (ii) Whether a single notice covering several assessment years was invalid.

Issue (i): Whether cotton seed continued to enjoy exemption from levy of tax under the U.P. Sales Tax Act after the amended notification of 3 April 1975, and whether penalty proceedings under section 15-A(1)(a) could validly be initiated for the assessment years 1975-76 to 1977-78.

Analysis: Cotton seed had earlier been brought within the exemption for cattle fodder under the notification issued under section 4 of the Act. That position changed when the later notification substituted the relevant entry and omitted cotton seed from the inclusive definition of cattle fodder. The Court drew a distinction between exemption from tax and non-liability to tax, and held that the earlier exemption continued only so long as it was not withdrawn. Once cotton seed was excluded from the exempted class, it ceased to enjoy protection from levy. The initiation of penalty proceedings was therefore sustainable for the assessment years after the amendment took effect.

Conclusion: The exemption stood withdrawn with effect from 5 April 1975, and the proceedings were valid for the assessment years 1975-76, 1976-77 and 1977-78, but not for 1973-74 and 1974-75.

Issue (ii): Whether a single notice covering several assessment years was invalid.

Analysis: The Court found no statutory infirmity in issuing one notice where the relevant facts were common and no prejudice or legal prohibition was shown. Separate assessment years did not by themselves require separate notices in the circumstances of the case.

Conclusion: The composite notice was not invalid merely because it covered multiple assessment years.

Final Conclusion: The petitions succeeded only for the assessment years 1973-74 and 1974-75, for which the notices were quashed, and failed for 1975-76, 1976-77 and 1977-78, for which the penalty proceedings were upheld.

Ratio Decidendi: An exemption notification continues only until it is withdrawn expressly or by necessary implication; once the exempted commodity is removed from the notifying entry, the exemption ceases, and a composite notice covering several common assessment years is not invalid absent a statutory bar or prejudice.

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