Strict compliance for small-scale unit tax exemption requires timely registration and separate records to prove exempt sales.

Tax exemption for a newly set up small-scale industrial unit requires strict compliance with the registration condition during the relevant period. A registration certificate is not a mere formality if it does not cover the same period, factory location, and goods manufactured, and a later permanent certificate cannot retrospectively satisfy a materially different earlier provisional certificate. The exemption also depends on maintaining separate accounts and supporting production and stock records so exempt sales can be identified and earlier job-work activity distinguished from later factory production. On that basis, non-compliance with both the registration and record-keeping requirements defeats the claim for the disputed period.

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Issues: (i) whether the applicant satisfied the statutory condition of registration as a small-scale industrial unit during the relevant period for grant of eligibility certificate under the exemption rule; (ii) whether the failure to maintain separate accounts and supporting production and stock records for the exempt sales disentitled the applicant to the benefit.

Issue (i): whether the applicant satisfied the statutory condition of registration as a small-scale industrial unit during the relevant period for grant of eligibility certificate under the exemption rule.

Analysis: The rule was treated as requiring that the unit be duly registered as a small-scale industry during the period for which exemption is claimed. The registration certificate was not accepted as a mere formality divorced from the relevant period or from the factory location and items of manufacture. The later permanent certificate could not be treated as a continuation of the earlier provisional certificate for the disputed period, because the certificates differed in material particulars and did not cover the same factual situation.

Conclusion: The condition of registration during the relevant period was not satisfied, and this ground for of the eligibility certificate was upheld against the applicant.

Issue (ii): whether the failure to maintain separate accounts and supporting production and stock records for the exempt sales disentitled the applicant to the benefit.

Analysis: The exemption depended on sales of goods manufactured in the newly set up unit, which made the date of commencement of manufacture and the segregation of the earlier job-work activity from the later factory production material. Separate stock and production records from the cut-off date were necessary to identify the exempt goods and to show compliance with the rule. The accounts were found not to have been maintained in a manner that effectively separated the two activities during the relevant period.

Conclusion: The applicant failed to comply with the record-keeping requirement, and this ground for rejection was also upheld against the applicant.

Final Conclusion: The challenge to the rejection of the eligibility certificate failed for the relevant period, although the applicant's possible entitlement for a later period was left to be considered separately by the authority.

Ratio Decidendi: A tax exemption intended for a newly set up small-scale industrial unit is available only upon strict compliance with the registration and record-keeping conditions during the relevant period, and a later or materially different registration cannot retrospectively satisfy that requirement.

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