Retrospective deletion of exemption condition invalidated sales tax demands and withdrawal orders based on alleged non-compliance.

A sales tax exemption dispute turned on alleged non-compliance with clause 4(e)(i) of the Sales Tax Exemption Scheme, 1987, which required maintenance of average production. The State later deleted that condition retrospectively from the Scheme's commencement and issued administrative directions authorising write-off of demands raised on that basis. Once the condition was retrospectively removed, the foundation for withdrawal of exemption, demand notices, and related assessment action ceased to exist. Following an earlier cognate decision, the Rajasthan HC treated the proceedings as unsustainable and quashed the demand and connected orders.

---

---

Issues: Whether the withdrawal of sales tax exemption and the consequential demand raised against the petitioner for alleged non-compliance with clause 4(e)(i) of the Sales Tax Exemption Scheme, 1987 could survive after the State Government deleted that condition retrospectively and issued consequential administrative directions.

Analysis: The impugned action rested on the petitioner's alleged failure to maintain average production under clause 4(e)(i) of the Scheme. The subsequent notification deleted that condition with retrospective effect from the commencement of the Scheme, and the corresponding circular authorised write-off of demands raised on that basis. In view of the retrospective deletion and the later administrative instructions, the foundation of the withdrawal order, the demand notices, and the assessment action ceased to exist. The Court followed the earlier decision in a cognate matter and treated the impugned proceedings as no longer sustainable.

Conclusion: The demand and the orders founded on alleged breach of clause 4(e)(i) were held unsustainable and were quashed, in favour of the petitioner.

---