Industrial incentive policy cannot be narrowed by subordinate amendment; sales tax exemption cutoff condition was invalidated.

An incentive notification or subordinate amendment cannot narrow a sales tax exemption expressly granted under the underlying industrial policy. Where the policy continued to recognise information technology units as eligible for exemption, a later cutoff condition requiring effective steps by 30 April 2000 was held repugnant to the policy and invalid. The withdrawal of the exemption certificate also could not be sustained because it was based on the invalid cutoff and contradicted the operative policy and existing exemption certificate. The restrictive amendment was struck down, the withdrawal order was quashed, and the exemption entitlement was preserved for the stated policy period.

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Issues: (i) Whether the amended sales tax exemption rule inserting the condition that effective steps must have been taken by 30 April 2000 was valid; (ii) Whether the order withdrawing the petitioner's exemption certificate and the refusal to continue the exemption were sustainable.

Issue (i): Whether the amended sales tax exemption rule inserting the condition that effective steps must have been taken by 30 April 2000 was valid.

Analysis: The original industrial incentive policy for information technology units granted sales tax exemption/deferment for ten years. The subsequent amendment introduced a cutoff date requiring effective steps to have been taken by 30 April 2000, even though the policy itself continued to recognise information technology units as eligible for exemption. A notification or rule framed to implement an incentive policy cannot curtail a benefit already available under that policy. A condition that defeats or narrows the policy benefit is repugnant to the policy and cannot be sustained.

Conclusion: The amended condition fixing 30 April 2000 as the cutoff date was struck down.

Issue (ii): Whether the order withdrawing the petitioner's exemption certificate and the refusal to continue the exemption were sustainable.

Analysis: The petitioner had already been granted exemption on the basis of the industrial policy and the exemption certificate remained operative for the stated period. The withdrawal order rested on the premise that the policy had not been notified for sales tax exemption, but the governing notification itself preserved the benefit for information technology units. Since the added cutoff condition was invalid and the withdrawal was inconsistent with the policy and the earlier exemption certificate, the withdrawal could not stand.

Conclusion: The withdrawal order was quashed and the exemption certificate was revived.

Final Conclusion: The petition succeeded, the restrictive amendment was invalidated, and the petitioner retained entitlement to the sales tax exemption under the industrial incentive policy.

Ratio Decidendi: A subordinate notification or amendment framed to implement an incentive scheme cannot take away or restrict a benefit expressly granted by the underlying industrial policy; any such repugnant condition is liable to be struck down.

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