Natural justice governs cancellation of tax incentive eligibility certificates; a reasoned hearing is required before withdrawal.

Refusal or retrospective cancellation of an eligibility certificate for sales tax incentive under the industrial incentive scheme must comply with fairness, disclosure of reasons, and an opportunity of hearing. A non-speaking communication that merely refers to a committee decision, without recording reasons, cannot sustain withdrawal of valuable tax concessions. The HC held that the impugned cancellation and rejection were unsustainable because natural justice was not followed, quashed the order, and remitted the matter for a fresh, reasoned decision after hearing the affected unit, with interim protection continued meanwhile.

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Issues: Whether cancellation of the eligibility certificate and rejection of the petitioner's claim for sales tax incentive were sustainable when the authority passed a non-speaking order without recording reasons or granting a hearing.

Analysis: The petition concerned withdrawal of an eligibility certificate granted to a new industrial unit for availing tax concessions under the incentive scheme. The impugned communication merely conveyed rejection based on the District Level Committee's decision, but it did not disclose any reasons. The order was also passed without affording the petitioner an opportunity of hearing. In matters involving refusal or retrospective cancellation of an eligibility certificate, the authority is required to act fairly, disclose reasons, and give the affected party an opportunity to explain its case. A decision affecting valuable tax incentives cannot be sustained when it is unsupported by reasons and made without observance of natural justice.

Conclusion: The cancellation and rejection were unsustainable. The impugned order was quashed and the matter was remitted to the authorities to hear the petitioner and pass a reasoned order afresh, with interim protection continued meanwhile.

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