Exemption under U.P. sales tax law cannot be denied for unregistered lease deed, later-filed vouchers, or post-operation closure.

In proceedings on exemption under section 4-A of the U.P. Sales Tax Act, 1948, the Court held that relief could not be denied merely because the lease deed was not registered where production had begun before 6 March 1986, and the 1990 amendment removed that basis of disqualification. It also held that later-produced generator vouchers could not sustain rejection when the generator was purchased after the exemption application and the material was produced in review. Further, a closure of more than six months did not forfeit exemption already earned for the period of actual continuous operation, so the unit remained entitled at least up to 31 March 1986. The impugned orders were quashed.

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Issues: (i) Whether the application for exemption under section 4-A of the U.P. Sales Tax Act, 1948 could be rejected for want of a registered lease deed. (ii) Whether rejection could be sustained on the ground that vouchers relating to the generator were not filed with the original exemption application. (iii) Whether the unit's closure for more than six months disentitled the petitioner to exemption for the entire period or only for the period of actual continuous operation.

Issue (i): Whether the application for exemption under section 4-A of the U.P. Sales Tax Act, 1948 could be rejected for want of a registered lease deed.

Analysis: The requirement of a registered lease deed was held to be inapplicable to units which had started production before 6 March 1986. The explanation substituted by U.P. Ordinance No. 17 of 1990, as applied in earlier decisions, removed the basis for refusing relief solely on the ground that the lease deed was not registered at the commencement of production.

Conclusion: The rejection on the ground of non-registration of the lease deed was unsustainable and was in favour of the assessee.

Issue (ii): Whether rejection could be sustained on the ground that vouchers relating to the generator were not filed with the original exemption application.

Analysis: The generator had been purchased after the exemption application was filed and the vouchers were later produced with the review application. The reasoning that the generator could not be treated as disqualifying machinery, and that later-produced material ought to have been considered, found support in the applicable legal position after the 1990 amendment.

Conclusion: The rejection on the ground of non-filing of generator vouchers was unsustainable and was in favour of the assessee.

Issue (iii): Whether the unit's closure for more than six months disentitled the petitioner to exemption for the entire period or only for the period of actual continuous operation.

Analysis: Since the unit had admittedly run continuously up to 31 March 1986, there was no justification to deny exemption for that completed period merely because of a later closure exceeding six months. The relief could not be refused for the period during which the unit had functioned without interruption.

Conclusion: The petitioner was entitled at least to exemption for the period up to 31 March 1986, and this issue was in favour of the assessee.

Final Conclusion: The impugned orders were quashed and the authority was directed to issue the eligibility certificate in light of the Court's observations, with the assessee succeeding on all material issues.

Ratio Decidendi: For exemption under section 4-A, procedural or documentation defects such as absence of a registered lease deed or later-filed vouchers cannot defeat relief where the governing amendment or clarified legal position removes that disqualification, and a subsequent closure does not forfeit exemption already earned for the period of actual continuous operation.

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