Sales tax exemption and turnover addition must follow the operative eligibility certificate for the assessment year, not a later contrary view.

Sales tax exemption for the relevant assessment year had to be tested against the operative eligibility certificate and the law applicable to that year, not by treating an earlier precedent as conclusively barring relief. M.S. Wires and M.S. Rods were treated as separately identifiable commodities in the governing statutory context, so the exemption available under the industrial certificate could not be denied on that basis. Once exemption was available, the purchase value of M.S. Rods could not be added to gross turnover or taxable turnover for demand purposes. The assessment and appellate orders were therefore set aside, and the tax demand and consequential turnover addition were annulled.

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Issues: (i) Whether M.S. Wires and M.S. Rods were different commercial commodities so as to deny sales tax exemption for the assessment year in question; and (ii) whether the consequential addition of the purchase value of M.S. Rods to gross turnover and taxable turnover was sustainable.

Issue (i): Whether M.S. Wires and M.S. Rods were different commercial commodities so as to deny sales tax exemption for the assessment year in question.

Analysis: The exemption claim had to be examined with reference to the assessment year concerned and the eligibility certificate issued by the industrial authority. The reasoning in the earlier two-Judge decision treating wire rods and wires as one commodity could not prevail over the later three-Judge decision clarifying that different goods may be separately taxable and that the earlier ruling turned on the statutory context of a special entry. The sales tax authority could not disregard the eligibility certificate issued for exemption on the relevant raw material and finished product structure merely by treating the earlier precedent as conclusive against the assessee.

Conclusion: The issue was answered against the revenue and in favour of the assessee.

Issue (ii): Whether the consequential addition of the purchase value of M.S. Rods to gross turnover and taxable turnover was sustainable.

Analysis: Once the assessee was found entitled to exemption under the eligibility certificate for the relevant assessment year, the purchase value of M.S. Rods could not be added to turnover for tax demand purposes. Tax liability must arise from law applicable to that year, and it cannot be imposed merely because of a later stand taken by the assessee or by ignoring the operative certificate. The consequential addition therefore lacked legal foundation.

Conclusion: The issue was answered against the revenue and in favour of the assessee.

Final Conclusion: The assessment and appellate orders were set aside and the reference was decided in favour of the assessee, with the tax demand and consequential turnover addition annulled.

Ratio Decidendi: For the relevant assessment year, sales tax exemption must be determined on the basis of the operative eligibility certificate and the applicable law for that year, and a later or broader tax view cannot override that entitlement; where the goods are treated as separately identifiable commodities in the governing legal context, the corresponding turnover addition cannot stand.

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