Incentive scheme entitlement must be tested under statutory conditions, not denied by re-adjudicating certification or exemption claims.

A taxing authority cannot refuse an authorisation certificate under the Assam Industries (Sales Tax Concessions) Act, 1986 by re-adjudicating entitlement already reserved to the prescribed certifying authority, and the refusal was held unlawful. Sales tax exemption on finished goods under the exemption notification had to be tested against the statutory conditions for a new industrial unit, so the demand raised without that inquiry could not stand. A refund claim for tax paid on raw materials likewise had to be examined under the reimbursement conditions in the Act and could not be rejected merely because concession entitlement had been denied elsewhere. The impugned order was quashed and fresh consideration was directed.

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Issues: (i) Whether the Superintendent of Taxes could refuse an authorisation certificate under the Assam Industries (Sales Tax Concessions) Act, 1986 on the ground that the Commissioner of Taxes had held the unit not entitled to concession; (ii) whether the petitioner was entitled to sales tax exemption on finished goods under the exemption notification; (iii) whether the claim for refund of tax paid on raw materials could be rejected without examining the statutory conditions.

Issue (i): Whether the Superintendent of Taxes could refuse an authorisation certificate under the Assam Industries (Sales Tax Concessions) Act, 1986 on the ground that the Commissioner of Taxes had held the unit not entitled to concession.

Analysis: Section 4 of the Act required the prescribed authority only to see whether the application conformed to the Act and the Rules. Rule 4 of the 1988 Rules required the application to be accompanied by the prescribed eligibility and employment certificates. The authority issuing the eligibility certificate alone was to certify entitlement under the scheme. The Superintendent of Taxes and the Commissioner of Taxes had no jurisdiction to sit in judgment over entitlement under the incentive scheme once the prescribed certificates were furnished.

Conclusion: The refusal of the authorisation certificate on that ground was unlawful and the petitioner succeeded on this issue.

Issue (ii): Whether the petitioner was entitled to sales tax exemption on finished goods under the exemption notification.

Analysis: The notification issued under section 3B of the Assam Finance (Sales Tax) Act, 1956 exempted sales of goods produced in a new industrial unit for five years, subject to specified conditions. The assessing authority had to examine whether those conditions were satisfied before demanding tax. The impugned order rejected the claim without undertaking that inquiry and proceeded only on the footing that the Commissioner of Taxes had denied concession under the incentive scheme.

Conclusion: The demand for sales tax on finished goods could not stand and the petitioner succeeded on this issue.

Issue (iii): Whether the claim for refund of tax paid on raw materials could be rejected without examining the statutory conditions.

Analysis: Section 3 of the Act provided exemption from tax on raw materials sold to a holder of a valid authorisation certificate and also contemplated reimbursement of tax already paid during the transitional period, subject to the prescribed notification and conditions. The impugned order did not decide whether the statutory conditions for reimbursement were met, but rejected the claim solely because the petitioner had been held disentitled to concession. That approach was contrary to the scheme of the Act.

Conclusion: The rejection of the refund claim was unsustainable and the petitioner succeeded on this issue.

Final Conclusion: The impugned order was quashed, fresh consideration was directed in accordance with law, and coercive recovery was restrained until fresh decisions were made on the petitioner's entitlement under the incentive and exemption scheme.

Ratio Decidendi: Where a taxing statute or incentive scheme assigns a limited statutory function to the prescribed authority, that authority cannot deny relief by adjudicating matters reserved to another competent certifying authority, and exemption or refund claims must be tested against the statutory conditions rather than on an extraneous denial of entitlement.

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