Sales tax exemption under an incentive scheme cannot be denied by narrowly construing an eligibility certificate.

A sales tax incentive granted under a governmental scheme could not be denied on a narrow reading of the eligibility certificate, because the certificate was only evidence of entitlement and not the source of the exemption itself. Once the Industries Department clarified and amended the certificate to recognise processing of cashew nut and cashew kernel as eligible activities, the commercial tax authorities could not withdraw the benefit merely because the original certificate did not expressly mention cashew kernel. The revisional orders were therefore unsustainable, and the petitioner remained entitled to exemption on the turnover from cashew kernel processing.

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Issues: Whether the petitioner was entitled to sales tax exemption for the activity of processing cashew kernel, and whether the revisional orders withdrawing the benefit on the basis of the original eligibility certificate were sustainable.

Analysis: The exemption flowed from the governmental incentive scheme and not from the eligibility certificate by itself. The eligibility certificate was only evidentiary of the activities covered by the scheme. Once the Industries Department clarified and later amended the certificate to recognise both processing of cashew-nut and cashew kernel as eligible activities, the benefit could not be denied merely because the original certificate was understood narrowly by the commercial tax authorities. The absence of an express mention of cashew kernel in the original certificate did not justify denial of exemption where the governing scheme itself covered the activity.

Conclusion: The revisional orders were unsustainable and the petitioner was entitled to exemption on the turnover of cashew kernel processed by it.

Final Conclusion: The writ petitions succeeded and the tax authorities' withdrawal of exemption was set aside, leaving the petitioner entitled to the benefit under the incentive scheme.

Ratio Decidendi: Where a sales tax incentive is conferred by a governmental scheme, an eligibility certificate is only evidence of entitlement and cannot override the scheme; if the activity is covered by the scheme, exemption cannot be denied on a narrow or mistaken construction of the certificate.

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