Earned sales tax exemption continues for the notified period absent an express cessation condition in the incentive scheme.

An industrial unit that had validly satisfied the conditions for sales tax exemption under section 4-A of the U.P. Sales Tax Act retained the benefit for the notified period. The Court construed the incentive provision purposively and held that, because neither the statute nor the notification expressly provided for automatic cessation, the later increase in capital investment caused by purchase of land and construction of a building did not defeat the exemption already earned. Stricter construction arguments and reliance on later amendments were rejected on the facts. The unit therefore remained entitled to exemption despite its capital investment later exceeding the prescribed limit.

---

---

Issues: Whether a unit that initially satisfied the conditions for sales tax exemption under section 4-A of the U.P. Sales Tax Act, 1948 continued to enjoy the exemption for the full notified period after its capital investment later exceeded the prescribed limit because of shifting to owned premises.

Analysis: The exemption scheme was intended to encourage capital investment and industrial development. On the relevant date, the unit satisfied all prescribed conditions and became entitled to exemption. Neither section 4-A nor the notification contained any express condition that exemption would automatically cease if the capital investment later crossed the threshold. The Court applied a liberal and purposive construction to the incentive provision and held that the later increase in investment, caused by purchase of land and construction of a building, did not defeat the exemption already earned. Reliance on stricter construction of exemption clauses and on later amendments was found unhelpful on the facts.

Conclusion: The exemption did not cease when the capital investment later exceeded Rs. 3 lakhs, and the assessee remained entitled to exemption for the notified period.

Ratio Decidendi: Where an industrial unit has validly earned exemption under an incentive provision, the benefit cannot be withdrawn for the remaining notified period in the absence of an express statutory or notification-based condition requiring cessation upon a subsequent increase in capital investment.

---