Industrial incentive eligibility cannot be reopened by tax authorities where a valid certificate was issued on full disclosure.

A sales tax incentive scheme must be construed in light of its industrial development purpose, not by importing the excise-law meaning of manufacture. Where the assessee made full disclosure, the competent industrial authority scrutinised eligibility through the prescribed mechanism, and a final eligibility certificate was issued and accepted by the tax department, the sales tax authority could not reopen that determination under revisional powers on a contrary view of manufacture. A later cancellation circular operated prospectively only and did not affect an exemption period already expired. The withdrawal of benefit, show cause notices, and demand order were therefore unsustainable and quashed.

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Issues: Whether the assessee was entitled to sales tax exemption under the Andhra Pradesh industrial incentive scheme for the relevant unit activity, and whether the sales tax authority could ignore the eligibility certificate and withdraw the exemption by treating the activity as not amounting to manufacture.

Analysis: The exemption scheme was framed to promote industrial development and the expression used in the Government Order had to be understood in that setting, not by importing the excise-law notion of manufacture. The assessee had disclosed the full nature of its operations, the Industries Department had scrutinized the matter through the prescribed committee mechanism, and a final eligibility certificate had been issued and accepted by the Commercial Taxes Department. Once the competent industrial authority had determined eligibility and the certificate remained operative, the sales tax authority could not reopen that determination or proceed on a contrary view under its revisional powers. The later cancellation circular operated prospectively and did not affect the exemption period that had already expired.

Conclusion: The assessee was entitled to the exemption, and the withdrawal of benefit, the show cause notices, and the demand order were unsustainable and quashed.

Final Conclusion: The appeal succeeded, the High Court's decision was set aside, and the assessee's exemption from sales tax for the relevant period was upheld.

Ratio Decidendi: Where a statutory incentive scheme vests eligibility determination in the competent industrial authority and an eligibility certificate is issued on a full disclosure of facts, the sales tax authority cannot reopen that determination by applying a different understanding of manufacture unrelated to the scheme's object.

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