Fresh VAT exemption applications must be considered on current policy, and recovery should await fair hearing.

A fresh VAT exemption application under a later Government circular had to be considered on its own terms, because the expiry of an earlier exemption period did not bar reconsideration. The prior Division Bench restraint only protected existing exemption during its subsistence and did not limit the Government's power to frame a new policy or decide later applications. Recovery of tax allegedly availed for the intervening period was also not to proceed without fair hearing, especially where there was no fraud or misrepresentation and the affected assessee had been treated as exempt under the certificate.

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Issues: (i) whether the petitioner was entitled to have its application for VAT exemption under the Government circular considered afresh despite the earlier exemption period having expired, and (ii) whether recovery of tax already availed for the intervening period could be sustained without affording a hearing.

Issue (i): whether the petitioner was entitled to have its application for VAT exemption under the Government circular considered afresh despite the earlier exemption period having expired.

Analysis: The earlier exemption under the Sales Tax regime had continued till its validity period, but that did not bar the petitioner from applying for a fresh exemption when the Government later introduced a new exemption circular. The earlier decision of the Division Bench only restrained withdrawal of existing exemption during its subsistence and did not curtail the Government's power to frame a fresh exemption policy or decide applications under it. The respondents' view that no further exemption could be sought after 31 March 2008 was therefore not accepted.

Conclusion: The petitioner's application for exemption was required to be considered afresh under the prevailing circular and policy.

Issue (ii): whether recovery of tax already availed for the intervening period could be sustained without affording a hearing.

Analysis: The exemption earlier granted was withdrawn unilaterally and without hearing the petitioner. The Court noted that the case did not involve fraud or misrepresentation, the amount involved was limited, and the petitioner had been treated as not liable to pay VAT under the exemption certificate. In these circumstances, immediate recovery of the amount already availed for the relevant period was not justified pending a fresh decision on the exemption application.

Conclusion: Recovery for the specified intervening period was restrained until the Government decided the petitioner's application afresh, and no recovery was permitted for the earlier exempted period.

Final Conclusion: The petition resulted in protection of the petitioner's existing tax relief position pending reconsideration by the Government, with consequential recovery stayed and the exemption claim left for fresh administrative determination.

Ratio Decidendi: An existing exemption may continue for its valid period, but the grant or denial of a fresh exemption under a later policy must be decided on its own terms, and recovery of allegedly wrongly granted tax relief should not be enforced without fair consideration of the affected party's application.

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