Continuous production for sales tax incentives upheld where committee applied scheme conditions and no arbitrariness was found.

An incentive scheme conditioned sales tax benefits on continuous production during the eligible period and permitted condonation of production breaks only where discontinuation arose beyond management control. The State Level Committee applied the scheme and uniform policy, found the unit did not meet the prescribed conditions for condonation, and therefore denied incentives. The earlier direction for reconsideration required an objective assessment and did not bar reliance on the scheme conditions themselves. On judicial review, no arbitrariness, perversity, or illegality was identified, so constitutional interference under Article 226 was not warranted.

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Issues: (i) Whether the State Level Committee was justified in refusing to condone the break in production and in denying sales tax incentives under the scheme; (ii) Whether the Committee's decision was contrary to the earlier direction requiring reconsideration without being influenced by the unit's then-current closure; (iii) Whether interference was warranted under Article 226 of the Constitution of India.

Issue (i): Whether the State Level Committee was justified in refusing to condone the break in production and in denying sales tax incentives under the scheme.

Analysis: The incentive scheme made continuous production during the eligible period a condition for enjoyment of sales tax benefits, and expressly permitted condonation only where discontinuation was due to reasons beyond the control of the management. The Committee applied a uniform policy while considering such requests and found that the petitioner's case did not satisfy the prescribed parameters, including the requirement that the unit be in production at a workable level and capable of continuing production so that the industrial and employment objectives of the scheme would be preserved.

Conclusion: The refusal to condone the break and the consequential denial of incentives were upheld.

Issue (ii): Whether the Committee's decision was contrary to the earlier direction requiring reconsideration without being influenced by the unit's then-current closure.

Analysis: The earlier direction required objective reconsideration and only forbade reliance on the fact that the unit was not in production at the time of reconsideration. The impugned decision was not based solely on the then-current closure; it was founded on the petitioner's failure to satisfy the scheme conditions and on the overall policy framework governing condonation of breaks. The later closure was not treated as the sole basis of rejection.

Conclusion: The decision was not contrary to the earlier direction.

Issue (iii): Whether interference was warranted under Article 226 of the Constitution of India.

Analysis: The decision was taken by the competent committee under the scheme, on relevant considerations and in accordance with a uniform policy applied to similarly placed units. The Court found no arbitrariness, perversity, or illegality that would justify constitutional interference.

Conclusion: No interference was called for under Article 226.

Final Conclusion: The petitioner failed to establish any legal infirmity in the Committee's refusal to condone the production break or in the denial of benefits under the incentive scheme, and the challenge was therefore rejected.

Ratio Decidendi: Where an incentive scheme makes continuous production a substantive eligibility condition and vests the competent committee with final authority to decide condonation disputes, judicial review will not interfere with a reasoned and uniformly applied policy decision unless it is arbitrary, perverse, or contrary to law.

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