Eligibility certificate under incentive notification cannot be refused for later-period irregularities or unsupported claims of non-viability.

An eligibility certificate under an incentive notification cannot be refused on the basis of irregularities confined to a later period when the relevant books and transactions for the claimed period show no defect. The authority must assess compliance by reference to the period for which the certificate is sought, and later events cannot justify refusal for an earlier period. A certificate also cannot be denied on a bare finding of non-viability unless there is a specific breach of the notification or an act or omission by the assessee that adversely affected the unit's economic viability. The rejection was therefore unsustainable and the certificate was directed to be granted for the relevant period.

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Issues: (i) Whether rejection of the application for an eligibility certificate could be sustained on the basis of alleged irregularities relating to a period subsequent to the period for which the certificate was sought. (ii) Whether the unit could be denied an eligibility certificate on the ground that it was not economically viable in the absence of a finding that the assessee had done anything to adversely affect such viability.

Issue (i): Whether rejection of the application for an eligibility certificate could be sustained on the basis of alleged irregularities relating to a period subsequent to the period for which the certificate was sought.

Analysis: The certificate had to be considered with reference to compliance with the notification and the relevant transactions during the period in question. Findings founded on later events could not validly be used to refuse relief for an earlier period. The records did not disclose any lacuna in the books of account for the relevant period, and the irregularities relied upon were confined to later transactions.

Conclusion: The rejection on this ground was unsustainable and was set aside.

Issue (ii): Whether the unit could be denied an eligibility certificate on the ground that it was not economically viable in the absence of a finding that the assessee had done anything to adversely affect such viability.

Analysis: The proviso to the incentive notification contemplated refusal or renewal being denied only where the dealer violated a condition or did something that adversely affected the economic viability of the newly set-up industry. Mere closure of the unit at a later point of time, without a finding of any act or omission by the assessee causing such result, was not enough to deny the certificate. The conclusion that the unit was not economically viable was treated as unsupported by the relevant facts and circumstances.

Conclusion: The rejection on this ground was also unsustainable and was set aside.

Final Conclusion: The impugned orders were set aside and the respondents were directed to grant the eligibility certificate for the relevant period.

Ratio Decidendi: An eligibility certificate under an incentive notification cannot be refused on the basis of subsequent-period irregularities or a bare assertion of non-viability unless the authority finds a relevant breach of the notification or an act by the assessee that adversely affected the unit's economic viability.

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