Effective steps for SSI sales tax exemption require holistic, liberal scrutiny of registration, finance, and land-related materials.

Sales tax exemption under the industrial incentive notification turned on whether the unit had taken "effective steps" before the cut-off date. Provisional registration, finance applications, and the District Industries Centre communication recommending shed allotment had to be assessed together, and the concept of effective steps for SSI units required a liberal and pragmatic construction. The rejection orders were unsustainable because the materials were not examined holistically and the authorities treated the claim too narrowly. The orders were set aside and the matter was remitted for reconsideration after a fresh appraisal of all relevant documents and an opportunity of hearing.

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Issues: Whether the petitioner-unit had taken effective steps within the meaning of the exemption notification so as to qualify for sales tax exemption, and whether the rejection orders deserved to be interfered with.

Analysis: The exemption scheme treated a new industrial unit as eligible if it had taken effective steps before the cut-off date, including by obtaining provisional registration, securing land, or making the requisite financial and machinery arrangements. The petitioner had provisional registration, had applied for finance, and relied on the District Industries Centre communication recommending allotment of a shed. The rejection orders proceeded on the view that only provisional registration was established and that the land purchase and loan application conditions were not met, but the materials supporting the claim were not examined in a meaningful manner. The Court held that the authorities were bound to consider the documents holistically and to apply the notification in a fair and pragmatic manner, especially in the light of the Supreme Court's interpretation that the concept of effective steps must receive a liberal construction for SSI units.

Conclusion: The rejection orders were unsustainable and were set aside. The matter was remitted to the State Level Committee for reconsideration after examining all relevant materials and granting an opportunity of hearing.

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