Year-wise sales tax exemption conditions limit cancellation of eligibility certificates to the breached assessment year only.

Exemption under section 4-A of the U.P. Sales Tax Act was treated as year-specific, so a breach such as discontinuance of production for more than six months affected only the assessment year in which it occurred. A Government order granting the eligibility certificate was not treated as a notification that automatically imported the proviso as a condition for cancelling the certificate for the entire exemption period. The eligibility certificate operated only as a pre-condition for claiming exemption, while the actual exemption had to be allowed separately by the assessing authority for each assessment year. On that basis, cancellation of the certificate for the whole period was unjustified.

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Issues: Whether the Commissioner was justified in cancelling the eligibility certificate granted under section 4-A of the U.P. Sales Tax Act, 1948 on the ground of discontinuance of production for more than six months in one assessment year, and whether such breach could warrant cancellation for the entire exemption period.

Analysis: The eligibility certificate had been issued under an exemption scheme announced by Government order, and the order did not amount to a notification so as to automatically import the statutory proviso as a condition for cancelling the certificate for the whole period. The conditions in the proviso to section 4-A(1) were held to operate year-wise, because exemption under the provision is granted for successive assessment periods and the statutory scheme contemplates denial of exemption only for the particular year in which the conditions are breached. The grant of an eligibility certificate was treated as only a pre-condition for claiming exemption, while the actual allowance of exemption remained with the assessing authority for each assessment year.

Conclusion: The Commissioner was not justified in cancelling the eligibility certificate for the entire period, and the cancellation order could not stand.

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