Exemption notification limits renewal-based benefit, but retrospective withdrawal of already granted entitlement was not permitted.

The exemption notification was construed as limiting refund/exemption to the period and quantity specified in the original eligibility certificate, so renewal of the Khadi authority certificate did not by itself extend the benefit beyond that original term. However, once entitlement certificates had already been granted and acted upon for the extended period, retrospective cancellation and withdrawal of the benefit was held impermissible in the absence of specific authority to cancel for breach or contravention. The construction of the notification was therefore against perpetual extension, but the already granted entitlement for the extended period was protected.

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Issues: (i) Whether the exemption notification dated 27.02.2009 extended the benefit of refund/exemption beyond the original period of the eligibility certificate upon renewal of the certificate. (ii) Whether the authorities could retrospectively cancel the already granted certificate of entitlement and withdraw the exemption benefits for the extended period.

Issue (i): Whether the exemption notification dated 27.02.2009 extended the benefit of refund/exemption beyond the original period of the eligibility certificate upon renewal of the certificate.

Analysis: The notification was issued to give effect to the earlier judgment preserving exemption only for units which had valid eligibility and exemption certificates as on 01.04.2006. Its language, read as a whole, tied the refund to the period specified in the original eligibility certificate and to the approved quantity therein. The scheme did not indicate an intention to continue the benefit indefinitely merely because the Khadi authority later renewed the eligibility certificate.

Conclusion: The notification did not confer a continuing exemption for the extended period, and this issue was decided against the assessee.

Issue (ii): Whether the authorities could retrospectively cancel the already granted certificate of entitlement and withdraw the exemption benefits for the extended period.

Analysis: The notification permitted cancellation only on contravention of its conditions or of the Act or rules. A mistaken grant of entitlement by the department stood on a different footing from cancellation for breach. Once the assessees had been granted and acted upon entitlement certificates for the extended period, retrospective withdrawal was considered impermissible, especially in the context of indirect taxation and the hardship caused by upsetting completed transactions.

Conclusion: Retrospective cancellation and withdrawal of benefits already granted for the extended period was not permissible, and this issue was decided in favour of the assessee.

Final Conclusion: The appeals and writ petitions succeeded only to the extent of protecting the entitlement already granted for the extended period, while the construction of the notification itself was held not to support a perpetual extension of exemption on renewal alone.

Ratio Decidendi: An exemption notification must be construed according to its express terms, and where the scheme limits benefit to the validity of the original eligibility certificate, later renewal does not by itself extend the exemption; however, entitlement already granted cannot be retrospectively withdrawn unless the governing notification or statute specifically authorises such cancellation for breach or contravention.

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