Tax exemption claims for new units require verification before Form III-C(2) can be issued or assessments quashed.

The exemption claimed for purchases of raw material by a new unit did not fully exempt the relevant dal purchases from tax; liability depended on purchase from a registered dealer and production of the prescribed certificate of tax payment. On that basis, the assessment order and penalty notice were not liable to be quashed in writ jurisdiction, especially where the ordinary appellate remedy remained available. A writ of mandamus for issuance of Form III-C(2) also could not be granted mechanically, because entitlement had first to be verified by the assessing authority on the facts of tax payment. The petitioner was left to pursue the claim before the authority and through the prescribed appellate process.

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Issues: (i) Whether the assessment order and penalty notice could be quashed on the basis of the claimed exemption for purchases of raw material by a new unit; (ii) Whether a writ of mandamus could be issued directing issuance of Form III-C(2) without verification of tax payment.

Issue (i): Whether the assessment order and penalty notice could be quashed on the basis of the claimed exemption for purchases of raw material by a new unit.

Analysis: The exemption regime for new units was considered in the light of the relevant notification and sections dealing with partial exemption and purchase tax. The claimed benefit did not fully exempt dal units from tax on purchases of arhar, mung and similar raw material. Liability depended on whether the purchases were from a registered dealer and whether the prescribed certificate of tax payment was furnished. The challenge to the assessment order also attracted the ordinary appellate remedy.

Conclusion: The assessment order and the penalty notice were not liable to be quashed in writ jurisdiction.

Issue (ii): Whether a writ of mandamus could be issued directing issuance of Form III-C(2) without verification of tax payment.

Analysis: Issuance of Form III-C(2) was held to depend on the factual verification whether tax had in fact been paid on the relevant purchases. The form could not be granted mechanically or in advance without such verification, and the assessing authority was entitled to examine the claim and give reasons if the form was declined.

Conclusion: No mandamus could be issued for issuance of Form III-C(2) without verification, though the petitioner could pursue the claim before the assessing authority.

Final Conclusion: The writ petition failed on both the challenge to the assessment and penalty proceedings and the request for a mandatory direction for issuance of Form III-C(2), leaving the petitioner to work out the remedy before the assessing authority and in the prescribed appellate process.

Ratio Decidendi: A writ court will not quash tax assessment or penalty proceedings where the statutory exemption claim is disputed and an efficacious remedy exists, and no mandamus can issue for a tax form unless entitlement is first verified on facts by the assessing authority.

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