Sales tax exemption eligibility turns on proper evidence, while disputed machinery payments require fair inspection of supporting records.

A fact-finding authority's denial of sales tax exemption cannot stand where the record shows prior inspections, installed machinery, separate tenancy and electricity arrangements, and earlier provisional recognition, because those materials did not support the conclusion that the unit was merely an old concern in a new form or that rule 98 was unmet. The adverse findings on eligibility were therefore rejected. On the separate question of payment for plant and machinery said to have been purchased from Ayan Industrial Corporation, the enquiry was incomplete because the relevant third-party records were not fully made available for inspection. That issue was remitted for fresh decision after proper verification.

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Issues: (i) whether the petitioner-unit was a new small-scale industrial unit entitled to an eligibility certificate under the sales tax exemption scheme, and whether the findings that it was only an old unit run in a new form and had not complied with the requirements of rule 98 were sustainable; (ii) whether the finding that payment for the plant and machinery allegedly purchased from Ayan Industrial Corporation had not been proved was sustainable, or whether that issue required fresh enquiry.

Issue (i): whether the petitioner-unit was a new small-scale industrial unit entitled to an eligibility certificate under the sales tax exemption scheme, and whether the findings that it was only an old unit run in a new form and had not complied with the requirements of rule 98 were sustainable.

Analysis: The materials on record showed prior inspections at the site, existence of installed machinery, workers, separate tenancy and electricity arrangements, and earlier grant of provisional certificate and registration. The adverse inference that the unit was merely the old proprietorship concern in another guise was not supported by proper appreciation of evidence. The findings on attendance register, seriality of sale bills, and production capacity were also found to rest on inadequate or irrelevant material. On the evidence, the statutory conditions for treating the unit as ineligible on those grounds were not made out.

Conclusion: The findings rejecting eligibility on the above grounds were unsustainable and were answered in favour of the petitioner.

Issue (ii): whether the finding that payment for the plant and machinery allegedly purchased from Ayan Industrial Corporation had not been proved was sustainable, or whether that issue required fresh enquiry.

Analysis: The dispute turned on the authenticity of the purchase transaction and the supporting books, bank records, sales tax records, and related materials of Ayan Industrial Corporation. The earlier enquiry was found incomplete because the petitioner was not given full inspection of the relevant records, and the direction to call for and examine the documents was not fully carried out. Since the issue depended on verification of third-party records and a fair opportunity to inspect them, the matter could not be finally concluded on the existing material.

Conclusion: The finding on payment for plant and machinery was set aside and the issue was remitted for fresh decision after proper enquiry.

Final Conclusion: The application succeeded in part: the impugned rejection was interfered with to the extent indicated, the adverse findings on the unit's eligibility were rejected, and only the question relating to payment for plant and machinery was sent back for fresh adjudication.

Ratio Decidendi: A fact-finding authority's adverse conclusion denying tax exemption cannot stand when it is based on inadequate or irrelevant evidence, and where a decisive issue depends on verification of third-party records, a fair opportunity of inspection and enquiry must be afforded before a final finding is recorded.

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