Brick-making within pottery: recognition should not be withdrawn unless amendment clearly excludes the activity.

Brick-making was treated as falling within "pottery" for recognition under the village-industries provisions of the Karnataka Sales Tax Act and Rules. The later amendment to entry 28 and substitution of rule 25-A did not clearly exclude brick-making from that category, and the amended rule still retained pottery. In the absence of any material change that affirmatively displaced the earlier administrative understanding, cancellation of the recognition certificate was unwarranted. The commentary states that recognition based on a settled interpretation should not be withdrawn unless the amendment clearly excludes the activity from the benefited category.

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Issues: Whether brick-making industry could be treated as falling within "pottery" for the purpose of recognition under entry 28 of the Fifth Schedule to the Karnataka Sales Tax Act, 1957, and whether the earlier recognition certificate could be cancelled on the basis of the later amendment to entry 28 and rule 25-A.

Analysis: The recognition had originally been granted on the footing that the petitioner's brick-making activity was covered by "pottery" in the list of village industries under rule 25-A of the Karnataka Sales Tax Rules, 1957, read with entry 28 of the Fifth Schedule to the Karnataka Sales Tax Act, 1957. The later amendment to entry 28 by section 7 of the Karnataka Sales Tax (Fourth Amendment) Act, 1976 and the substitution of rule 25-A did not introduce any clear exclusion of brick-making from the relevant village-industry category. The amended rule continued to retain pottery, and there was no convincing basis shown for reversing the earlier administrative view that brick-making was covered by that description. In the absence of any material change clearly displacing the earlier recognition, cancellation of the certificate was unwarranted.

Conclusion: The cancellation of the recognition certificate was not justified, and the petitioner succeeded on the challenge to the impugned order.

Final Conclusion: The writ petition was allowed and the order cancelling the recognition certificate was quashed.

Ratio Decidendi: A recognition granted on a settled administrative understanding of a statutory expression cannot be withdrawn merely because the provision is amended, unless the amendment clearly and affirmatively excludes the activity from the benefited category.

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