Exemption disqualification requires a prescribed interest nexus in the existing unit; mere adjacency to the same goods unit is insufficient.

Section 4-A exemption under the U.P. Sales Tax Act could not be denied merely because a new unit was adjacent to an existing unit manufacturing the same goods. The disqualification in the Explanation applied only where the new factory or workshop was established by a person having the prescribed proprietary, partnership, agency, promoter, holding company, or subsidiary interest in the existing unit. On the admitted facts, the two units were separately run by husband and wife, and no qualifying interest nexus was shown. The exemption claim therefore remained valid, the eligibility certificate was held to be due, and the rejection of the review application was unsustainable.

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Issues: Whether the petitioner was disentitled to exemption under section 4-A of the U.P. Sales Tax Act, 1948 on the ground that its unit was adjacent to an existing unit manufacturing the same goods and that the petitioner had an interest in that existing unit.

Analysis: The disqualifying part of the Explanation to section 4-A applied only where the new factory or workshop manufacturing the same goods was established by a person who had an interest in the existing factory or workshop as proprietor, partner, agent, promotor, holding company or subsidiary company. On the admitted facts, the petitioner's unit and the existing unit were run separately by husband and wife, the petitioner had no proprietary or partnership interest in the existing unit, and the mere relationship between the persons managing the two units did not attract the disqualification. The finding that the units were adjacent did not by itself defeat the claim in the absence of the statutory interest nexus.

Conclusion: The petitioner was entitled to exemption and eligibility certificate under section 4-A, and the order rejecting the review application was unsustainable.

Final Conclusion: The writ petition succeeded, and the petitioner obtained relief against the refusal to grant eligibility for exemption.

Ratio Decidendi: Disqualification from exemption under section 4-A applies only when the new unit is established by a person having the prescribed interest in the pre-existing unit; adjacency alone, without such interest, is insufficient to deny the benefit.

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