Sales tax exemption tied to registration relates back to application date when authority delays certificate grant

Where a notified sales tax exemption for a newly set up small-scale industry depended on registration, the Court held that administrative delay in issuing the certificate could not defeat the substantive benefit when the application was duly completed and the notification prescribed no contrary time limit. Applying fairness and Article 14-based reasoning, it treated the exemption as available from the date of application rather than the date of actual grant. The registration by the Industries Department was likewise held to operate from the application date, so the assessee was entitled to exemption from that date.

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Issues: (i) Whether the assessee's entitlement to sales tax exemption under the notification commenced from the date of its application for registration or only from the date on which the registration certificate was actually granted; (ii) whether the registration by the Industries Department was effective from the date of application or from the date of grant of certificate.

Issue (i): Whether the assessee's entitlement to sales tax exemption under the notification commenced from the date of its application for registration or only from the date on which the registration certificate was actually granted.

Analysis: The notification granted exemption to newly set up small-scale industries for a specified period, but it did not prescribe any outer limit for making the application or for grant of registration. In such a situation, the matter was held to be governed by fairness and equity, consistent with the principle that administrative delay should not defeat a substantive benefit where the applicant has done all that was required. The reasoning was supported by the constitutional value of fair play under Article 14 and by prior decisions rejecting constructions that make a person suffer for the laches of public authorities.

Conclusion: The exemption was held to be available from the date of application, and not merely from the date of actual grant of registration, in favour of the assessee.

Issue (ii): Whether the registration by the Industries Department was effective from the date of application or from the date of grant of certificate.

Analysis: The notification required approval and registration by the Industries Department, but was silent as to when that approval had to be granted. The Court held that where the application is complete and nothing contrary is shown in the notification, the applicant should not be made to suffer because of delay on the part of the authority. The registration was therefore treated as relating back to the date when the application was made.

Conclusion: The registration certificate was held to take effect from the date of application, i.e. 2 April 1970, in favour of the assessee.

Final Conclusion: The reference was answered against the department, and the assessee was held entitled to exemption from the date of its application for registration.

Ratio Decidendi: Where a statutory or notified benefit depends on registration, and the applicant has duly completed the application but the authority delays grant of the certificate, the benefit cannot be defeated by administrative inaction unless the governing instrument clearly provides otherwise.

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