Valid exemption certificate bars assessment proceedings until lawfully cancelled or modified, and the notice was quashed.

Assessment proceedings against a unit covered by a valid exemption certificate under Section 4-A of the U.P. Sales Tax Act cannot be initiated while the certificate remains operative. The authorities may take lawful steps to cancel or modify the certificate, but until such action is completed, the unit is protected from assessment. Applying that settled principle, the court quashed the assessment notice and restrained the Sales Tax Officer from proceeding with assessment so long as the exemption certificate remained in force.

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Issues: Whether assessment proceedings could be initiated against a unit during the currency of a valid exemption certificate issued under Section 4-A of the U.P. Sales Tax Act, and whether the notice proposing assessment was liable to be quashed.

Analysis: A certificate under Section 4-A had been granted for a fixed period and had neither been cancelled nor modified. The settled view applied by the Court was that while the certificate remains in force, the sales tax authorities cannot proceed with assessment against the covered unit. The authorities are not prevented from taking steps in accordance with law to cancel or modify the certificate, but until such action is taken, assessment proceedings are impermissible.

Conclusion: The assessment notice was quashed, and the Sales Tax Officer was restrained from proceeding with assessment so long as the exemption certificate remained valid.

Ratio Decidendi: During the operative period of a valid exemption certificate granted under Section 4-A, assessment proceedings against the beneficiary unit are barred unless and until the certificate is lawfully cancelled or modified.

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