Strict eligibility for industrial tax exemption required firm orders for substantial plant and machinery, and prior certificates were not conclusive.

In a withdrawn fiscal exemption scheme preserved only for exceptional cases, eligibility had to be proved strictly in terms of the notification, and the exemption authority could independently verify whether the prescribed conditions were met. The eligibility certificate issued by the Director of Industries and Commerce was not conclusive and did not bind the Deputy Commissioner. The expression "necessary plant and machinery" did not require firm orders for every item, but it did require firm orders for a substantial portion of the machinery needed for the unit; that threshold was not met, so the exemption claim failed. The prior proceedings did not finally determine this issue, and res judicata and constructive res judicata were rejected.

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Issues: (i) Whether the Deputy Commissioner could independently examine entitlement to exemption despite the eligibility certificate issued by the Director of Industries and Commerce. (ii) Whether the expression "necessary plant and machinery" in the exemption notification required firm orders for the entire plant and machinery of the unit or only a substantial portion of it. (iii) Whether the earlier proceedings barred reconsideration of the exemption claim on principles of res judicata or constructive res judicata.

Issue (i): Whether the Deputy Commissioner could independently examine entitlement to exemption despite the eligibility certificate issued by the Director of Industries and Commerce.

Analysis: The notification contemplated two stages: issuance of an eligibility certificate and issuance of the exemption order. The eligibility certificate was not conclusive of entitlement, and the authority issuing the exemption order was empowered to test whether the statutory conditions were in fact satisfied. The certificate itself indicated that the sanctioning authority had to decide eligibility under the relevant notification.

Conclusion: The Deputy Commissioner could independently decide entitlement to exemption, and the eligibility certificate did not bind that authority.

Issue (ii): Whether the expression "necessary plant and machinery" in the exemption notification required firm orders for the entire plant and machinery of the unit or only a substantial portion of it.

Analysis: The notification was treated as an exception to a withdrawn exemption regime and had to be construed strictly at the stage of eligibility, though the policy behind it was to protect genuine units that had taken effective steps before the cut-off date. The words "necessary plant and machinery" were held not to mean every item of machinery, but they also did not permit satisfaction by a trivial or token order. The court rejected both extremes and held that the scheme required firm orders for a substantial portion of the machinery necessary for the unit.

Conclusion: The phrase did not require orders for every item, but the appellant had not shown firm orders for a substantial portion of the necessary plant and machinery, so the exemption claim failed.

Issue (iii): Whether the earlier proceedings barred reconsideration of the exemption claim on principles of res judicata or constructive res judicata.

Analysis: The earlier round dealt with the Director's independent decision-making and the relevance of advance payments, but it did not conclusively determine the present issue regarding the meaning of "necessary plant and machinery" or the appellant's present entitlement under the notification. The prior judgment expressly contemplated fresh consideration on the documents and did not finally foreclose the present controversy.

Conclusion: The plea of res judicata and constructive res judicata was rejected.

Final Conclusion: The exemption was correctly declined because the appellant did not satisfy the notification's eligibility requirement on firm orders for the necessary plant and machinery, and the writ appeal failed.

Ratio Decidendi: In a fiscal exemption scheme withdrawn by a later notification but preserved for exceptional cases, eligibility must be proved strictly in terms of the notification, and the authority granting exemption may independently verify whether the claimant has satisfied the prescribed conditions.

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