Binding recognition certificate protects village industry sales tax exemption against revisionary denial on the same facts.

A valid and subsisting certificate of recognition for village industry products under the Karnataka Sales Tax Act binds departmental authorities and supports exemption from tax for goods listed in the Fifth Schedule. Where the Commissioner has granted recognition under the relevant rules and that certificate has not been cancelled, a Deputy Commissioner or audit authority cannot, in revision, recharacterise the product on the same factual basis and withdraw the exemption. The text states that an attempt to deny exemption on the ground that the chappals were mainly made of rubber was an impermissible departure from the Commissioner's recognition, and the revisionary action was invalid.

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Issues: Whether the Deputy Commissioner could invoke revisionary power to withdraw the sales tax exemption granted to the assessee on the basis of a valid and subsisting certificate of recognition issued by the Commissioner under the Karnataka Sales Tax Rules.

Analysis: Under section 8 of the Karnataka Sales Tax Act, products specified in the Fifth Schedule are exempt from tax subject to the conditions therein. Item 28 of the Fifth Schedule, read with rules 25-A and 25-B of the Karnataka Sales Tax Rules, permits exemption for products of village industries upon grant of a certificate of recognition by the Commissioner. The certificate granted to the assessee remained in force and had not been cancelled. In that situation, the Commissioner's recognition was binding on the departmental authorities, and the audit wing or revisional authority could not substitute its own view on the character of the assessee's product so as to deny the exemption. The attempt to revise the assessments on the ground that the chappals were mainly made of rubber amounted to an impermissible departure from the Commissioner's subsisting recognition.

Conclusion: The Deputy Commissioner had no jurisdiction to revise the assessment orders and withdraw the exemption; the action was invalid and the exemption had to be restored in favour of the assessee.

Ratio Decidendi: Where a statute authorises the Commissioner to grant a certificate of recognition for exemption and that certificate remains valid and uncancelled, subordinate departmental authorities cannot, in revision, negate the exemption by taking a contrary view on the same factual basis.

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