Exemption certificate renewal delay does not nullify tax relief when the certificate remains uncancelled under a regulatory scheme.

An exemption certificate issued under a sales tax exemption scheme could not be treated as invalid in assessment proceedings merely because the renewal application was filed late, so long as the certificate had not been lawfully cancelled or set aside. The Court treated the renewal-time limit as regulatory rather than jurisdictional: a delay in filing did not nullify an exemption certificate already granted, and the assessing authority had to respect it until displaced in proper proceedings. Rule 12's 30-day renewal period was held directory, not mandatory, because it was meant to regulate exemption administration and not to defeat the exemption once renewal was allowed.

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Issues: (i) Whether an exemption certificate issued under the sales tax exemption notification could be treated as invalid in assessment proceedings merely because the renewal application was filed beyond the prescribed time, when the certificate had not been cancelled or set aside by competent authority. (ii) Whether the period of 30 days prescribed in rule 12 for filing a renewal application was mandatory or directory, and whether delay in filing could justify refusal of exemption for the relevant period once the certificate had been granted.

Issue (i): Whether an exemption certificate issued under the sales tax exemption notification could be treated as invalid in assessment proceedings merely because the renewal application was filed beyond the prescribed time, when the certificate had not been cancelled or set aside by competent authority.

Analysis: The grant of exemption under section 4(2) of the Act operated through the statutory procedure prescribed by the Rules. The Court distinguished between absence of inherent jurisdiction and mere illegality in exercise of jurisdiction. It held that the officer who granted the certificate did not lack jurisdiction to act, because the rules governing exemption and renewal were procedural and regulatory. Even if the application was delayed, the certificate once issued was not a nullity and could not be ignored in collateral assessment proceedings. The proper course for the revenue was to have the certificate cancelled or set aside in proceedings under the Act or Rules.

Conclusion: The assessing authority was not justified in treating the exemption certificate as invalid while it remained uncancelled. The issue was answered against the revenue and in favour of the assessee.

Issue (ii): Whether the period of 30 days prescribed in rule 12 for filing a renewal application was mandatory or directory, and whether delay in filing could justify refusal of exemption for the relevant period once the certificate had been granted.

Analysis: The Court held that the 30-day requirement was intended to regulate the grant and renewal of exemption certificates and was not designed to defeat the exemption where the certificate had in fact been granted. The provision did not involve any public interest that required strict nullification for delay. Later amendments allowing penalty and condonation reinforced the view that the rule was regulatory. Once renewal was granted, the certificate could operate from the commencement of the year, and the assessing authority could not ignore it merely because the application had been made late.

Conclusion: Rule 12 was directory, and the delay in filing the renewal application did not justify taxation of the assessee's exempt turnover for the relevant period. The issue was answered in favour of the assessee.

Final Conclusion: The turnover relating to sales of allopathic medicines during the exempt period could not be subjected to tax, and the assessment made on that basis was unsustainable.

Ratio Decidendi: A renewal certificate issued under a regulatory exemption scheme cannot be disregarded in assessment proceedings merely because the renewal application was delayed, unless the certificate is lawfully cancelled or set aside; a procedural time-limit intended to regulate the grant of exemption is directory where no contrary public interest demands strict invalidation.

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