Sales tax exemption withdrawal fails where production stayed above the five-year average and no statutory breach was shown.

Rule 28A(11)(a)(i) permits withdrawal of sales tax exemption only where, after availing the benefit, the industrial unit fails to continue production for the next five years at not below the average level of the preceding five years. On the recorded figures, the unit's post-benefit production exceeded its earlier average, and that factual position was not disputed. The sole statutory ground for withdrawal therefore did not exist. Additional reasons relating to expansion and turnover changes could not justify withdrawal because they were not a breach of the rule and were outside the specified grounds in Rule 28A(11)(a).

---

---

Issues: Whether the withdrawal of sales tax exemption granted under rule 28A was sustainable when the unit's production during the relevant period was not below the average production of the preceding five years.

Analysis: Rule 28A(11)(a)(i) permits withdrawal of exemption only if, after availing the benefit, the industrial unit fails to continue production for the next five years at not below the level of average production of the preceding five years. The recorded figures showed that the petitioner's average production of EPBT during the preceding five years was 3.79 lakhs, whereas the average production during the subsequent years was 9.32 lakhs. This factual position was not controverted. The sole ground for withdrawal therefore did not exist. The additional reasoning adopted by the authorities below, based on alleged expansion and turnover changes, could not sustain withdrawal because it was neither supported by a statutory breach nor within the grounds specified in rule 28A(11)(a).

Conclusion: The withdrawal of exemption was unlawful and unsustainable; the impugned orders were liable to be set aside in favour of the assessee.

---