Fiscal incentive conditions cannot impose pro rata production limits absent express authority under the scheme or statute.

A fiscal incentive linked to acquisition of new fixed assets under the amended 1993 Package Scheme of Incentives could not be restricted by a pro rata production formula absent express authority. The substituted scheme provision omitted the earlier proportionate-use formula and did not permit year-wise limitation of benefits based on production attributable to the new assets. Neither the Bombay Sales Tax Act, 1959 nor the Bombay Sales Tax Rules, 1959 empowered the Deputy Commissioner to impose such a ceiling, and later-inserted section 41BB could not operate without prescribed rules. The entitlement certificate conditions limiting incentives to 59.84% of production were therefore impermissible and liable to be deleted.

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Issues: Whether the sales tax authority was justified in inserting conditions in the entitlement certificate to restrict incentive benefits on a pro rata basis to 59.84% of production, contrary to the 1993 Package Scheme of Incentives.

Analysis: The incentive under the amended 1993 scheme was linked to acquisition of new fixed assets by an existing unit and not to any increase in production capacity. The substituted paragraph 3.8(I)(i)(c) omitted the earlier pro rata formula and did not authorise year-wise proportionate restriction based on production attributable to the newly acquired assets. Neither the scheme nor the Bombay Sales Tax Act, 1959 nor the Bombay Sales Tax Rules, 1959 contained any provision empowering the Deputy Commissioner to impose such a ceiling. Section 41BB, although later inserted, required prescribed ratios by rules, which were not framed, and therefore could not support the impugned conditions.

Conclusion: The conditions in the entitlement certificate requiring pro rata availment of incentives were impermissible and liable to be deleted; the questions were answered in favour of the assessee and against the Revenue.

Ratio Decidendi: Where a fiscal incentive scheme grants benefits on the basis of acquisition of fixed assets and does not prescribe pro rata utilisation, the assessing authority cannot add such a restriction by implication or administrative condition in the absence of enabling statutory or scheme-based authority.

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