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AI Drafter - (New and Powerful) ✕ Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter.
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Issues: Whether, for a new industrial unit employing less than ten workers at the time of commencement of production, registration under the Factories Act could be insisted upon as a mandatory pre-condition for grant of sales tax exemption and whether the exemption period could be curtailed from the later date of registration instead of the date of first sale.
Analysis: The eligibility for exemption under section 4A of the U.P. Trade Tax Act was linked to the existence of a genuine new unit, while the statutory scheme of section 2(m) of the Factories Act, 1948 showed that a premises employing fewer than ten workers was not a factory and therefore was not required to be registered at that stage. The court held that where the statute itself did not require registration, the absence of such registration could not be used to deny or postpone the benefit of exemption. The later registration obtained after the unit crossed the worker threshold could not cut down the exemption period when production and first sale had already commenced earlier.
Conclusion: The requirement of registration under the Factories Act was not mandatory for a unit employing fewer than ten workers at the time of production, and the exemption period had to run from the date of first sale, not from the later date of registration.
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