Strict construction of tax exemption conditions and retrospective amendment defeat vested-right claims under section 4-A.

Exemption under section 4-A of the U.P. Trade Tax Act is described as subject to strict compliance with mandatory conditions, including a registered lease deed and proof of registration under the Factories Act. The text states that a lease for more than one year requires registration under section 107 of the Transfer of Property Act, and an unregistered instrument cannot satisfy the exemption requirement. It also states that a retrospective amendment to section 4-A operates with full legal effect from the earlier date, so any inconsistent vested-right claim cannot survive against the amended provision. The discussion concludes that exemption claims must be strictly proved and are defeated by retrospective legislative change.

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Issues: (i) whether eligibility for exemption under section 4-A of the U.P. Trade Tax Act required strict compliance with the prescribed conditions, including a registered lease deed and proof of registration under the Factories Act; (ii) whether the petitioner could resist rejection of exemption on the ground of vested rights despite the retrospective amendment to section 4-A.

Issue (i): whether eligibility for exemption under section 4-A of the U.P. Trade Tax Act required strict compliance with the prescribed conditions, including a registered lease deed and proof of registration under the Factories Act.

Analysis: Exemption provisions are in the nature of exceptions and must be construed strictly. Where the Supreme Court has held that two views of an exemption are possible, the view favourable to the Revenue must prevail. A lease of immovable property for more than one year requires registration under section 107 of the Transfer of Property Act, and without registration there is in law no valid lease deed. The conditions for exemption under section 4-A were therefore not directory but mandatory.

Conclusion: The petitioner failed to satisfy the mandatory conditions for exemption and was not entitled to relief.

Issue (ii): whether the petitioner could resist rejection of exemption on the ground of vested rights despite the retrospective amendment to section 4-A.

Analysis: A retrospective amendment operates by legal fiction and must be given full effect, including its necessary consequences. Once the legislature retrospectively amended section 4-A from an earlier date, the amended provision was to be treated as having existed from that date. Any claimed vested right inconsistent with the retrospective amendment could not survive against the amended law. The binding force of the Supreme Court's interpretation under article 141 of the Constitution also required adherence to the strict approach to exemption claims.

Conclusion: The retrospective amendment defeated the plea of vested rights, and the challenge to the exemption rejection failed.

Final Conclusion: The writ petition was liable to fail because the exemption conditions under section 4-A had to be strictly fulfilled and the retrospective amendment governed the controversy from the earlier date.

Ratio Decidendi: Exemption provisions must be strictly construed, and a retrospective statutory amendment operates as a legal fiction that overrides inconsistent vested-right claims.

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