Eligibility certificate cancellation requires clear proof of statutory breach; mere import activity does not establish misuse of exemption.

An eligibility certificate issued under an exemption scheme cannot be cancelled unless the authority records a clear finding that the specified statutory condition was breached. Here, the cancellation was unsustainable because there was no finding that production had remained discontinued for a continuous period of six months, and no finding that exemption had been claimed on imported television sets. Mere import or trading activity, without proof of misuse of the certificate in relation to such goods, was insufficient. The cancellation order was therefore set aside and the revision succeeded.

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Issues: Whether the cancellation of the eligibility certificate under section 4A(3) of the U.P. Trade Tax Act, 1948 was justified in the absence of a finding that the unit had discontinued production for a continuous period of six months or that exemption had been claimed on imported television sets.

Analysis: The eligibility certificate had been issued under the incentive scheme subject to the condition that production should not remain discontinued for a period exceeding six months at a stretch in any assessment year. The cancellation order did not record any finding that the unit had ceased production for such continuous period. It also did not contain any allegation or finding that the revisionist had availed tax exemption on television sets imported from outside. Mere import or trading activity, without a finding that the exemption was misused in relation to such imported goods, was insufficient to establish misuse of the certificate.

Conclusion: The cancellation of the eligibility certificate was not sustainable and was rightly set aside.

Final Conclusion: The revision succeeded, and the order cancelling the eligibility certificate was quashed for want of a clear finding of statutory breach or misuse.

Ratio Decidendi: An eligibility certificate granted under an exemption scheme cannot be withdrawn unless the authority records a clear finding of the specific statutory or notified condition breached, and mere trading or import activity does not amount to misuse in the absence of a finding that exemption was actually claimed on such goods.

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