Exemption notification conditions: land possession is mandatory, but a particular allotment source is only directory for tax relief.

Under an exemption notification issued for industrial development, possession of land for establishing the new unit was treated as a mandatory substantive condition because the unit could not come into existence without land and that requirement directly served the statutory object. By contrast, the stipulation that the land had to be allotted by a particular authority was held to be only a directory condition relating to the mode of acquisition, since that source-based requirement had no real nexus with the purpose of exemption. Non-compliance with the allotment condition therefore did not defeat the exemption claim.

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Issues: Whether the condition regarding allotment of land in the exemption notification under Section 4-A of the U.P. Trade Tax Act was a mandatory substantive condition, or only a directory condition relating to the mode of acquisition of land, so that non-compliance could justify denial of exemption.

Analysis: Exemption under Section 4-A is available to promote industrial development and increase production, but the exemption notification must be construed in accordance with its language and the object sought to be achieved. Possession of land for establishing a new unit was held to be essential because the unit could not come into existence without land, and that element had a direct nexus with the statutory purpose. The mode by which land was acquired, however, had no comparable nexus with the object of the provision. The later notification substituting the requirement of allotment with acquisition of land from any source reinforced that the acquisition mode was not of the essence of the scheme. A classification based solely on the source or mode of acquisition would be unrelated to the object of exemption and would be arbitrary.

Conclusion: The requirement of possessing land was mandatory, but the condition that the land must have been allotted by a particular authority was directory. Non-compliance with the allotment condition could not defeat the assessee's claim for exemption.

Final Conclusion: The revision succeeded and the denial of exemption was set aside because the assessee satisfied the substantive requirement of having land for the unit, and failure to meet the particular mode-of-acquisition condition did not invalidate the exemption claim.

Ratio Decidendi: In an exemption notification, conditions that serve the essence of the statutory object must be strictly fulfilled, while requirements that regulate only the mode of compliance and lack nexus with that object are directory and their non-compliance does not defeat exemption.

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