Sales tax deferment entitlement during validity of final eligibility certificate upheld; State revisions dismissed, cancellation treated prospectively.

Entitlement to sales tax deferment continues while a final eligibility certificate subsists; the certificate was cancelled with prospective effect from 24.11.2003, and there was no finding of default by the dealer for the subsequent period. The dealer had not collected tax during the deferment period. The tribunal's findings, consistent with an earlier unified HC view, were held to be within jurisdiction and not perverse or contrary to evidence; accordingly the State's tax revision petitions were dismissed and the respondent's entitlement sustained. No costs were ordered and pending miscellaneous petitions were closed.

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Issues: Whether the respondent (a dealer/refilling unit) is entitled to the benefit of sales tax deferment for the period prior to cancellation of its final eligibility certificate, notwithstanding a later finding that the unit was not a manufacturing unit.

Analysis: The Sales Tax Appellate Tribunal found, on facts not vitiated by the High Court's earlier ruling, that the respondent held a final eligibility certificate in force until its cancellation effective 24.11.2003 and, during that period, was prohibited from collecting sales tax from consumers. The High Court precedent and the STAT reasoning establish that where the State issued a clear promise by granting a final eligibility certificate and the dealer did not collect tax during the subsistence of that certificate, the liability to pay tax arises only from the date the cancellation becomes operative; further, tax may be recovered only if it is shown that the dealer collected tax during the incentive period.

Conclusion: The respondent is entitled to the benefit of sales tax deferment for the period prior to 24.11.2003 and cannot be compelled to pay tax for that period except to the extent tax was actually collected; the petitioner's revision against the STAT orders is dismissed and the question of law is answered in favour of the respondent.

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