Statutory sales tax exemption cannot be reduced by administrative clarification once eligibility is granted under the notification.

A statutory exemption notification issued under section 49(2) of the Gujarat Sales Tax Act, 1969 had to be applied according to its defined terms, and an administrative clarification could not curtail an exemption already granted. The industrial unit was found to fall outside the prescribed designated area on the relevant criteria, yet the earlier eligibility certificate had already conferred the benefit. The departmental revision reducing the sales tax exemption from 50% to 25% was therefore unlawful, and the revised eligibility certificates were liable to be quashed.

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Issues: Whether the revision of eligibility certificates reducing the sales tax exemption benefit from 50% to 25% was lawful under the statutory notification issued under section 49(2) of the Gujarat Sales Tax Act, 1969.

Analysis: The exemption scheme was held to be a statutory notification issued in exercise of powers under section 49(2) of the Gujarat Sales Tax Act, 1969. The controlling question was whether the industrial unit satisfied the definition of the specified designated area under the notification, and it was found that the relevant unit was situated beyond the prescribed distance. Once eligibility had been granted under the statutory notification, it could not be curtailed on the basis of an executive clarification or a different reading of the scheme. The earlier decision on the identical issue had already concluded that the benefit under the notification belonged to the unit and that the departmental reduction of the exemption was contrary to law.

Conclusion: The reduction of the sales tax exemption from 50% to 25% was unlawful and the revised eligibility certificates were liable to be quashed.

Final Conclusion: The petitions succeeded and the authorities were directed to continue the tax exemption benefit originally granted.

Ratio Decidendi: A statutory exemption notification must be applied according to its defined terms, and an administrative clarification or departmental interpretation cannot curtail a benefit already granted under the notification.

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