Binding industrial certificate limits sales tax exemption assessment; authority cannot revalue certified investment, though defects may be rectified.

The industrial incentive notification treated the amount certified by the Director of Industries and Commerce, or an authorised nominee, as the basis for sales tax exemption, and the assessing authority was not empowered to reappraise that factual certification or substitute its own valuation of eligible investment. Because the scheme entrusted determination of the qualifying investment to the Industries Department, the certified amount bound the assessment process. If the certificate was incomplete or factually defective, however, the assessing authority could seek rectification or a proper certificate after giving the assessee a fair opportunity, rather than independently curtailing the exemption.

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Issues: Whether, for granting sales tax exemption under the industrial incentive notification issued under section 8-A of the Karnataka Sales Tax Act, 1957, the assessing authority is bound by the certificate issued by the Director of Industries and Commerce or his authorised nominee regarding the amount spent on expansion, diversification or modernisation, or whether it can independently reduce or alter that certified amount.

Analysis: The notification and the procedure prescribed under it required the industrial unit to produce a certificate issued by the Director of Industries and Commerce or his authorised nominee, and the notification itself made the certified amount spent on investment the measure of exemption. The expression relating to the amount spent on investment was not separately defined in the notification or the underlying Government Order, and the scheme showed that the factual determination of the eligible investment was entrusted to the Industries Department. The assessing authority, therefore, was not given jurisdiction to sit in appeal over that factual certification or to substitute its own valuation merely because it differed from the certifying authority. At the same time, if the certificate was incomplete or suffered from a factual defect, the assessing authority could require rectification or a proper certificate after giving the assessee a fair opportunity.

Conclusion: The certificate issued by the Director of Industries and Commerce or his authorised nominee is binding on the assessing authority on the factual question of eligible investment, and the assessing authority cannot independently curtail the exemption by making its own reassessment of that certified amount.

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