Sales tax exemption depends on notification text; export sales do not defeat eligibility, and installed capacity must be properly assessed.

Sales tax exemption under S.R.O. No. 790/1990 was interpreted as turning on the notification's own text and the Industrial Policy Resolution, not on any implied domestic-sales condition. The benefit could not be denied merely because the manufactured goods were exported, since no such restriction was written into the scheme. On eligibility, the certificate had to reflect installed capacity determined through the prescribed capacity-assessment process; a stated figure unsupported by proper assessment was insufficient. A fresh capacity assessment was therefore required before the eligibility certificate could be validly issued, and the connected tax proceedings were to follow that determination.

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Issues: (i) Whether the sales tax exemption under S.R.O. No. 790/1990 depended on whether the manufactured goods were sold in the domestic market or exported. (ii) Whether the eligibility certificate had to be based on the actual installed capacity determined under the prescribed capacity-assessment guidelines.

Issue (i): Whether the sales tax exemption under S.R.O. No. 790/1990 depended on whether the manufactured goods were sold in the domestic market or exported.

Analysis: The exemption scheme was found to flow from the language of the notification and the Industrial Policy Resolution, not from any imported condition relating to export performance. Article 286 of the Constitution of India was noted as excluding State taxation on export sales, but that limitation did not justify reading an additional restriction into the exemption notification. The deciding factor under the notification was whether the goods were manufactured by the eligible industrial unit within the limits of its entitlement, and there was no stipulation that the benefit was confined only to domestic sales.

Conclusion: The exemption could not be denied on the ground that the goods were exported rather than sold in the domestic market.

Issue (ii): Whether the eligibility certificate had to be based on the actual installed capacity determined under the prescribed capacity-assessment guidelines.

Analysis: The certificate issued by the authority was required to reflect the installed capacity ascertained by proper capacity assessment under the Director of Industries' circulars and guidelines. A figure stated in the certificate could not be treated as installed capacity unless it was founded on such assessment. The Court held that the existing certificate had not truly recorded the installed capacity and that a fresh assessment was necessary before the exemption certificate could properly be issued.

Conclusion: The eligibility certificate had to be corrected and issued only after proper determination of installed capacity.

Final Conclusion: The writ petition succeeded to the extent that the authorities were directed to carry out a fresh capacity assessment and then issue the eligibility certificate accordingly, leaving the connected sales tax proceedings to abide by that determination.

Ratio Decidendi: An exemption notification in a taxing statute must be construed strictly according to its text, and where eligibility is linked to installed capacity, the authority must determine that capacity in the manner prescribed and cannot add extraneous conditions not found in the notification.

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