Industrial unit exemption survives partnership reconstitution where the original unit continues and no new unit is formed.

Section 4-A exemption under the U.P. Sales Tax Act attached to the goods of a new industrial unit, not to the personal identity of the partners or dealer. Where a partnership firm running the unit was reconstituted during the exemption period, the benefit continued if the original industrial unit remained in existence and there was no proof that a new unit had been formed or the earlier unit had ceased. The provision was construed in light of its industrial development purpose, so reconstitution alone did not break continuity of the exemption. The exemption was therefore available to the reconstituted firm.

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Issues: Whether the exemption granted under section 4-A of the U.P. Sales Tax Act, 1948 to a new industrial unit continued after the partnership firm running the unit was reconstituted during the currency of the exemption period.

Analysis: The exemption under section 4-A is directed to the goods manufactured by a new industrial unit and not to the identity of the individual partners or the dealer as such. The governing notifications showed that the benefit was attached to the industrial unit which had started production within the notified period. Reconstitution of the partnership, without proof that a new industrial unit had come into existence or that the original unit had ceased, did not interrupt the continuity of the unit for purposes of the exemption. The object of section 4-A being industrial development, the provision was to be construed in a manner that furthers that legislative intent.

Conclusion: The exemption continued to be available to the reconstituted firm, and the revision failed.

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