Sales tax exemption cannot be refused by ignoring an amended cut-off date or by relying on a new ground without notice.

An exemption claim under a sales tax notification had to be reconsidered because the rejection ignored an amended cut-off date extending the time for commencement of production. The notification did not expressly exclude a unit that later obtained permanent registration after provisional registration, so the scope of the exemption required fresh examination. The appellate order was also unsustainable because it rejected the claim on a new ground without notice or an opportunity to respond, contrary to natural justice. The refusal of exemption was therefore set aside and the matter remitted for fresh decision, with interim protection against coercive recovery.

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Issues: (i) Whether the rejection of the request to include additional products within the sales tax exemption was sustainable in view of the amended cut-off date under the exemption notification; (ii) Whether the appellate order rejecting the claim on a different ground without notice to the assessee was valid.

Issue (i): Whether the rejection of the request to include additional products within the sales tax exemption was sustainable in view of the amended cut-off date under the exemption notification.

Analysis: The exemption was originally granted under the relevant sales tax exemption notification and the cut-off date for commencement of production was subsequently extended by amendment. The rejection proceeded on the premise that manufacture of the additional products commenced after the earlier cut-off date, without taking account of the amendment extending that date. The notification also did not expressly exclude a unit that had obtained permanent registration after initially holding provisional registration, so the question required fresh consideration on the true scope of the exemption.

Conclusion: The rejection on this ground was unsustainable and the matter had to be reconsidered.

Issue (ii): Whether the appellate order rejecting the claim on a different ground without notice to the assessee was valid.

Analysis: The appellate authority did not test the correctness of the original ground of rejection and instead rejected the appeal on an independent ground not put to the assessee. An adverse decision on a new basis, without prior notice and an opportunity to meet it, offended the principles of natural justice. The material also indicated that similarly situated units had been granted exemption, which reinforced the need for reconsideration.

Conclusion: The appellate order was vitiated and could not stand.

Final Conclusion: The refusal of exemption was set aside, the matter was remitted for fresh decision by the authority, and interim protection was granted against coercive recovery in the meantime.

Ratio Decidendi: An exemption claim cannot be rejected by ignoring a later amendment extending the operative cut-off date, and an appellate authority cannot sustain rejection on a new ground without notice, as that violates natural justice.

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