Procedural conditions cannot defeat a substantive exemption where eligibility was already earned and the authority caused the delay.

A procedural notification could not be used to defeat a substantive exemption already earned under an earlier exemption scheme, and the assessee's eligibility under the original notification remained intact. The later notification regulated adjustment of refund, but it did not alter the underlying concession. Prior permission for refund adjustment was also treated as procedural, not substantive; where the assessee applied in time and the authority's own delay prevented timely grant, that inaction could not be relied on to deny the benefit after expiry of the year. The Court directed permission from the dates of application, quashed the demand notices, and upheld the assessee's entitlement to adjustment.

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Issues: (i) Whether the later notification of 11 August 1975 could be relied on to defeat the assessee's entitlement under the original exemption notification of 30 June 1969; (ii) whether prior permission for adjustment of refund, withheld for reasons unrelated to the assessee, could be denied after the relevant year had expired.

Issue (i): Whether the later notification of 11 August 1975 could be relied on to defeat the assessee's entitlement under the original exemption notification of 30 June 1969.

Analysis: The foundational concession was granted by the 1969 notification under the statutory power to give incentives to new industries. The later notification only prescribed a procedure for adjustment of the refund and did not alter the basic eligibility already earned by the assessee. A subsequent procedural arrangement could not be used to undo a substantive concession already conferred under the earlier notification.

Conclusion: The assessee's eligibility under the 1969 notification remained unaffected and the Revenue could not deny the concession on the basis of the later notification.

Issue (ii): Whether prior permission for adjustment of refund, withheld for reasons unrelated to the assessee, could be denied after the relevant year had expired.

Analysis: The requirement of prior permission was held to be procedural rather than substantive. The assessee had satisfied the conditions for grant of permission and had applied in time, but the authority withheld permission because of internal administrative issues unrelated to the assessee. The Court distinguished between mandatory conditions going to the substance of an exemption and technical procedural requirements meant only to regulate its working. A public authority cannot rely on its own unexplained delay to defeat a benefit that ought to have been granted, and the permission could validly be made operative from the date of application.

Conclusion: The assessee was entitled to adjustment of the refund, and the refusal to grant permission after expiry of the year was unsustainable.

Final Conclusion: The appeal succeeded, the High Court's decision was set aside, the permissions for the relevant years were directed to be granted from the dates of application, and the demand notices based on denial of adjustment were quashed.

Ratio Decidendi: A procedural requirement attached to an exemption or refund scheme cannot be used to defeat a substantive concession when the claimant has satisfied the essential eligibility conditions and the authority's own inaction is the sole reason for non-compliance with the procedure.

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