TMI Blog1999 (2) TMI 530X X X X Extracts X X X X X X X X Extracts X X X X ..... Dated:- 24-2-1999 - SRINIVASAN M. AND BANERJEE U.C. JJ. Dhruv Aggarwal and Irshad Ahmad, Advocates, for the respondent. Kavin Gulati, R.B. Misra and K. Misra, Advocates, for the appellant. -------------------------------------------------- The judgment of the Court was delivered by M. SRINIVASAN, J.- The decision in this case depends upon the construction of the relevant provisions of the U.P. Sales Tax Act, 1948 (hereinafter referred to as the Act ) and the Government notification issued thereunder granting exemption from sales tax of certain goods for specified period. Section 4-A is the section with which we are concerned and for the purpose of this case the section as it stood at the relevant time reads as follows: 4-A. Exemption from sales tax of certain goods for specified period.- (1) Notwithstanding anything contained in section 3 or section 3-A, where the State Government is of the opinion that it is necessary so to do for increasing the production of any goods or for promoting the development of industry in the State generally or in any district or parts of districts in particular, it may on application or otherwise, by notification, de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orkshop manufacturing any other goods; but does not include,- (i) any factory or workshop manufacturing the same goods established by a person on or adjacent to the site of an existing factory or workshop wherein such person has interest as proprietor or partner or agent or promoter or holding company or subsidiary company, so however that where the date of starting production of such factory or workshop falls before January 19, 1985 this clause shall be construed as if the words or adjacent to , were omitted; or (ii) any addition to or extension of an existing factory or workshop: Provided that- (i) in relation to a new unit whose date of starting production falls before March 24, 1984, in clause (d) for the words in India the words in Uttar Pradesh shall be deemed to have been substituted; (ii) in relation to a new unit whose date of starting production falls before August 27, 1984 and the capital investment wherein is not less than three lakh rupees, the condition of registration or application for registration under the Factories Act, 1948, shall not apply; (iii) in relation to a new unit whose date of starting production falls before March 6, 1986, the con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a period exceeding six months at a stretch in any assessment year. TABLE Period of exemption SI. No. Location of unit In case of unit with capital investment not exceeding 3 lakh rupees In case of units with capital investment exceeding 3 lakh rupees 1 2 3(a) 3(b) 1. The districts of Banda, Jalaun, Hamirpur, Jaunpur, Fatehpur, Pauri Garhwal, Tehri Garhwal, Chamoli, Uttar Kashi, Sultanpur, Kanpur (Rural), Almora, Pithoragarh, Nainital and Dehradun. Five years Seven years 2. The districts of Azamgarh, Bahraich, Ballia, Barabanki, Basti, Budaun, Bulandshahr, Deoria, Etah, Etawah, Faizabad, Farrukhabad, Gahzipur, Gonda, Hardoi, Jhansi, Mainpuri, Mathura, Moradabad, Pilibhit, Pratapgarh, Rai Bareli, Rampur, Shahjahanpur, Sitapur and Unnao. Four years Six years. 3. The districts of Agra, Aligarh, Allahabad, Bareilly, Bijnor, Ghaziabad, Gorakhpur, Kanpur (Urban), Lakhimpur Kheri, Lalitpur, Lucknow, Meerut, Mirzapur, Muzaffarnagar, Sacharanpur and Varanasi. Three years Five years. Explanation .-For the purpose ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing from the rented premises to a new site purchased and owned by it. The unit remained closed from July 23, 1986 to July 31, 1986 for the purpose of shifting machines to the new premises. The production started in the new place from August 1, 1986. 4.. As a result of purchase of new site and construction of own building, the capital investment of the unit increased to Rs. 3,86,299. The unit applied for registration under the Factories Act, 1948 which was granted with effect from August 11, 1989. The application for exemption from sales tax filed by the unit on December 20, 1985 was considered by the Divisional Level Committee, Moradabad on January 30, 1990 and the Joint Director of Industries, Moradabad issued sales tax exemption certificate vide his letter dated April 10, 1990. Such exemption was granted from August 9, 1985 to July 22, 1986 the date till which the capital investment of the unit was below Rs. 3 lakhs. The authorities took the view that the capital investment of the unit having increased to an amount exceeding Rs. 3 lakhs, the registration of the unit under the Factories Act was necessary for the purpose of exemption and as such registration was effective only fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mption could be granted as 7 years. As per the section, such exemption should commence from the date of first sale by such manufacturer if such sale takes place within six months from the date of starting production and in any other case from the date following the expiration of six months from the date of starting production. The expression date of starting production has been defined in the Explanation as the date on which any raw material required for use in the manufacture or packing of the goods is purchased for the first time. The term new unit used in the section has also been defined in the Explanation. It is admitted that the respondent fulfilled the relevant conditions at the time when it applied for exemption, as its capital investment did not exceed Rs. 3 lakhs. Under the notification extracted earlier, the period of exemption in case of unit with capital investment not exceeding Rs. 3 lakhs was four years. Such period was to be reckoned from the date of first sale if such sale took place not later than six months from the date of starting production and in other cases from the date following the expiration of six months from the date of starting production subjec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Divisional Level Committee v. Sahu Stone Crushing Industries [1999] 114 STC 362; [1998] 8 SCC 435. In that case, it is held that the provision in section 4-A(5) requiring registration of the unit under the Factories Act if the capital investment exceeds Rs. 3 lakhs is mandatory. The Bench reversed the judgment of the High Court reported in Sahu Stone Crushing Industries v. Divisional Level Committee, Page No: 373 Jhansi [1995] 98 STC 66 (All.); 1994 UPTC 1 which took the view that the expression shall in the section could be read as may . The ruling has no relevance in the present case as the industrial unit in that case was established in November, 1986 and the date of first sale was December 3, 1986. The court had to consider section 4-A after it was amended with effect from September 13, 1985 under U.P. Act No. 28 of 1991. The said amendment Act inserted sub- section (5). We are in this case concerned with the section as it stood on August 9, 1985 before the said amendment. 10.. Learned counsel for the appellant argues that the subsequent legislation could be taken for the purpose of guidance for interpreting the provisions in the Act as it stood earlier. We are unable to a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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