Eligibility certificate controls sales tax exemption when the competent industrial authority grants entitlement and tax officers cannot override it.

Where exemption eligibility has been determined by the competent industrial authority through an eligibility certificate and later clarification, sales tax authorities cannot disregard that determination and deny exemption by substituting their own view on production quantities or raw-material consumption. The document states that assessment re-opened on audit objection, revision under Rule 80, and the consequential appellate action were unsustainable because the District Industries Centre was the proper authority to decide exemption entitlement under the Industrial Policy Resolution. The impugned enhancement, revision, and appellate affirmation were set aside, and the deposited amount was directed to be refunded.

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Issues: Whether the sales tax authorities were justified in disregarding the eligibility certificate and clarification issued by the District Industries Centre and in invoking Rule 80 of the Orissa Sales Tax Rules, 1947 to revise the assessment and deny sales tax exemption.

Analysis: The assessment had originally been completed under Section 12(4) of the Orissa Sales Tax Act on nil taxable turnover and was later reopened under Section 12(8) after audit objection. The controlling question was whether the sales tax department could ignore the certificate issued by the competent industrial authority under the Industrial Policy Resolution and treat the unit as having exceeded the exemption entitlement. The certificate and the subsequent clarification supported the assessee's entitlement to exemption, and the discrepancy in sizes and quantities of finished products did not justify ignoring that determination. The appropriate authority to decide eligibility for exemption was the District Industries Centre, and the sales tax authorities could not substitute their view for that of the competent authority.

Conclusion: The invocation of Rule 80 and the consequential revisional and appellate orders were unsustainable, and the relief was granted in favour of the assessee.

Final Conclusion: The impugned revision, assessment enhancement, and appellate affirmation were set aside, and the amount deposited pursuant to the interim order was directed to be refunded.

Ratio Decidendi: Where exemption eligibility is determined by the competent industrial authority through an eligibility certificate, the sales tax department cannot disregard that certificate or deny exemption merely because it takes a different view of production quantities or raw-material consumption.

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