Liberal construction of industrial exemption provisions rejects hypertechnical denial where old machinery is only negligible.

Exemption under section 4-A of the U.P. Sales Tax Act was to be construed liberally to promote industrial growth, and denial on a narrow reading of the bar on previously used machinery was unwarranted where the old machinery was only a negligible part of the unit's total investment. A small value of used machinery did not, by itself, justify rejecting the eligibility claim on hypertechnical grounds. The rejection of the exemption claim on the recorded ground could not be sustained, and the eligibility matter required reconsideration by the Divisional Level Committee in accordance with law.

---

---

Issues: Whether exemption under section 4-A of the U.P. Sales Tax Act, 1948 could be denied merely because a negligible part of the machinery used in the unit was old, and whether the eligibility application required reconsideration.

Analysis: Section 4-A was enacted to encourage industrial growth and grant exemption to new units satisfying the statutory conditions. The unit was found to have old machinery only to the extent of a small value compared with the total investment in the machinery installed and used. The provision granting incentives for industrial development was required to be construed liberally, and the condition in the Explanation concerning use of previously used machinery was not to be applied in a narrow or pedantic manner. Denial of exemption on hypertechnical grounds was therefore unwarranted where the old machinery was insignificant in relation to the whole unit.

Conclusion: The rejection of the exemption claim could not be sustained on the ground recorded, and the matter had to be reconsidered by the Divisional Level Committee in accordance with law.

---