Sales tax exemption eligibility turns on capital investment at the admissible date, not later increases in investment.

For sales tax exemption under Section 4-A of the U.P. Sales Tax Act, fixed capital investment is assessed on the date the exemption facility becomes admissible, i.e. from the date production starts or the first sale where relevant. Conditions for the facility must be satisfied on that date, and later increases in investment do not defeat exemption already earned. The text also notes that mere shifting of the unit to another site does not by itself establish addition to or extension of an existing factory. On this basis, the exemption could not be curtailed for a shorter period once eligibility had accrued.

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Issues: Whether, for determining eligibility to sales tax exemption under Section 4-A of the U.P. Sales Tax Act, the capital investment of the unit had to be assessed on the date from which exemption became admissible, and whether subsequent increase in investment due to shifting of the unit could defeat entitlement to exemption for four years.

Analysis: Section 4-A(1) grants exemption from the date of starting production, or from the first sale if within six months, and Explanation (1)(e) to Section 4-A(6) requires all conditions for the facility to be fulfilled on the date from which the facility is granted. On that construction, the relevant date for examining fixed capital investment is the date on which exemption becomes payable. The subsequent increase in investment after that date does not alter eligibility already acquired. The plea that the unit became ineligible because of addition to or extension of an existing factory was not supported by the record, and mere shifting of the unit to another site did not amount to such addition or extension.

Conclusion: The unit was entitled to exemption on the basis of its investment as on the admissible date, and the later increase in investment did not curtail the exemption period. The restriction of exemption to a shorter period was unsustainable.

Final Conclusion: The writ petition succeeded, the impugned order was quashed, and the eligibility certificate was required to be modified to allow exemption for four years from the admissible date.

Ratio Decidendi: For sales tax exemption under Section 4-A of the U.P. Sales Tax Act, the relevant capital investment is to be determined on the date from which the exemption facility becomes admissible, and later investment after that date does not defeat entitlement already earned.

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