Statutory tax exemption by notification cannot be reduced by administrative letters or clarifications.

A tax exemption granted through statutory notification under the U.P. Sales Tax Act could not be curtailed by later administrative instructions or clarificatory letters. The notifications in force expressly provided a seven-year exemption for eligible units, and that benefit formed part of the statutory instrument once issued under the enabling Act. Administrative directions could explain the scheme, but they could not override, vary, or reduce the exemption period. The principle applied was that exemption or withdrawal of exemption must be effected only in the manner prescribed by statute. The court therefore restored the seven-year exemption and quashed the order reducing it to five years.

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Issues: Whether the period of exemption granted by statutory notifications under the sales tax laws could be reduced or modified by subsequent administrative instructions or clarificatory letters, and whether the assessee remained entitled to the seven-year exemption.

Analysis: The exemption scheme under section 4-A of the U.P. Sales Tax Act operated only through notification, and the corresponding Central Sales Tax exemption was also granted by notification. The notifications in force expressly granted a seven-year exemption for eligible units in Dehradun meeting the stated conditions. Once the State Government exercised its statutory power by issuing notifications, the period of exemption formed part of the statutory instrument and could not be curtailed by executive letters or administrative clarifications. Administrative instructions could explain the position, but they could not override, vary, or reduce a benefit created by a notification issued under the Act. The principle that exemption or withdrawal of exemption must be done only in the manner prescribed by the statute was applied.

Conclusion: The administrative letters could not lawfully reduce the exemption period from seven years to five years, and the assessee was entitled to the seven-year exemption under the statutory notifications.

Final Conclusion: The writ petition succeeded, the impugned order reducing the exemption period was quashed, and the assessee's statutory exemption for seven years was restored.

Ratio Decidendi: A tax exemption granted by a statutory notification can be altered only by another notification issued under the enabling statute and not by executive instructions or clarifications inconsistent with that notification.

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