Tax clearance certificate validity must reflect dealer compliance; shorter periods need written reasons and cannot impede legitimate business.

A tax clearance certificate for goods transport should not be curtailed to an unduly short period where the dealer is registered, regularly filing returns, and not shown to be in default. The governing circular allowed issuance for up to four months on a satisfactory record, and the court held that fixing only 10 to 15 days created unnecessary business hardship without prejudice to revenue, since remedies remained available for default or false statements. The certificate was to be issued normally for one month, and any shorter validity required written reasons.

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Issues: Whether the tax clearance certificate for transportation of goods could be restricted to a very short duration despite the governing circular permitting issuance for a longer period when the dealer was not in default.

Analysis: The petitioner was registered under the Assam VAT regime and the Central sales tax law, had been filing monthly returns and paying tax, and was not shown to be in default. The governing circular permitted issuance of the certificate for up to four months where the dealer's past record was satisfactory. The restriction to 10 to 15 days was found to cause unnecessary difficulty in carrying on business, and there was no prejudice to the revenue when statutory remedies remained available in case of default or false statement. Discretion in issuing the certificate had to be exercised for a valid purpose and in a manner that facilitated revenue collection without interfering with legitimate business.

Conclusion: The certificate was to be normally issued for one month, and any shorter period required written reasons.

Final Conclusion: The petition succeeded to the extent of securing a standard one-month validity for the tax clearance certificate, subject to a recorded justification for any lesser period.

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