Incentive tax concession depends on prior permission and valid exclusionary notifications; benefit denied where conditions are unmet.

An incentive scheme permitting retention or adjustment of sales tax was conditional, not unconditional: the 1975 notification required prior permission from the assessing authority before tax could be withheld against the promised refund, and that permission had not been granted despite the petitioner's application. The later 1977 notification also excluded industrial units whose fixed assets exceeded the prescribed threshold, and the petitioner fell within that exclusion. Because the validity of the exclusion was not challenged, the authority was bound to apply it. The earlier Dharmendra Trading Co. decision was distinguished as not addressing the exclusion or the absence of prior permission.

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Issues: Whether the petitioner was entitled to retain or adjust sales tax under the incentive notifications without prior permission from the assessing authority, and whether the demand notices were vitiated by the 1969, 1975 and 1977 notifications governing the concession.

Analysis: The concession under the 1969 notification was not unconditional. The 1975 notification prescribed a procedure requiring prior permission from the assessing authority before tax could be withheld against the promised refund on raw materials. On the facts, the petitioner had applied for permission but no permission was granted, so the statutory and administrative precondition for withholding tax was not fulfilled. The Court also noted that the 1977 notification excluded industrial units having fixed assets above the specified threshold, and the petitioner's assets were far in excess of that limit. Since the validity of that exclusion was not challenged in the petition, the authority was bound to give effect to the notification. The earlier decision in Dharmendra Trading Co. did not assist the petitioner because the relevant exclusion and the absence of prior permission were not before the Court in that case.

Conclusion: The petitioner was not entitled to the concession claimed, and the impugned demands were held to be valid and enforceable, in favour of the Revenue.

Final Conclusion: The writ petition failed on merits because the petitioner did not satisfy the procedural requirement for the incentive and also fell within the later exclusionary notification.

Ratio Decidendi: Where an incentive scheme makes prior permission a condition for withholding tax and a subsequent notification validly excludes certain units, the benefit cannot be claimed unless the precondition is met and the exclusion is successfully challenged.

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