Sales tax exemption denial based on post-period inspections was quashed as irrelevant to the exemption period.

Denial of sales tax exemption under section 4-A of the U.P. Sales Tax Act could not stand where the original ground was not pursued in review after a circular clarified the position, and the remaining objection depended on inspections conducted after the exemption period had ended. The Court treated those post-period inspections as irrelevant to the operative exemption period and declined to resolve the disputed factual question about the generator. The refusal was quashed, and the authority was directed to issue the eligibility certificate.

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Issues: Whether denial of exemption under section 4-A of the U.P. Sales Tax Act, 1948 could be sustained when the refusal was founded on a ground not reiterated in review and the inspections relied upon by the revenue were made after the expiry of the exemption period.

Analysis: The exemption was initially refused on the ground that the land and electric connection stood in the name of one partner, but that basis was not pressed in review after a circular clarified that exemption could still be claimed in such a situation. The remaining basis for rejection was the alleged use of an old generator to run the unit. The material relied upon by the revenue showed that the inspections were conducted after 1 October 1986, which was stated to be the terminal date of the exemption period. On those facts, the refusal was founded on irrelevant considerations and the Court did not examine the disputed factual question whether the generator was old or new.

Conclusion: The order denying exemption was unsustainable and was quashed, and the authority was directed to issue the eligibility certificate.

Ratio Decidendi: An administrative order refusing sales tax exemption cannot be sustained when it rests on considerations irrelevant to the operative exemption period, especially where the factual basis for rejection was examined only after the period had ended.

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