https://www.taxtmi.com/css/info/rss_sitemap/rss_feed.css?v=1746094055 https://www.taxtmi.com Business/Tax/Law/GST/India/Taxation/Policies/Legal/Corporate Tax/Personal Tax/Vat Law/Legal Information/Tax Information/Legal Services/Tax Services Tax Management India. Com / MS Knowledge Processing Pvt. Ltd. All rights reserved. One stop solution for Direct Taxes and Indirect Taxes https://www.taxtmi.com/caselaws?id=432638 https://www.taxtmi.com/caselaws?id=432638 Seeking exemption under Section 4-A (5) of the U.P. Trade Tax Act - manufacture of Spun Line Crown Cork in the year 1986, used as one of the packing materials of the glass bottles - manufacture of double Lip Dry Blend Crown under the program of diversification - It was submitted that under the term modernization only those units fall, which by the modern technical produce the same goods and the scheme of modernization do not apply on the units which produce different goods. Whether for the goods, manufactured by use of modern technologies can be said to be diversification , and manufacturing of the goods of a nature different from the goods manufactured earlier entitle the appellant to claim the exemption from trade tax as provided under Section 4-A (5) of the U.P. Trade Tax Act? HELD THAT:- It is clear that in case of diversification the goods manufactured by diversification shall be different from the goods manufactured before such diversification [Section 4-A(2)(c)] - In the case of expansion or modernization , the exemption shall be available, if there is an additional production as a result of such modernization or expansion. In the present case, we are concerned with the case of diversification . Therefore, the goods manufactured after diversification must be different goods from the goods manufactured before such diversification. As per the settled position of law, in case of an exemption notification/exemption provision, the same is required to be construed literally and the person claiming the exemption must satisfy all the conditions of exemption provision. In the present case, the appellant was manufacturing / producing Spun Line Crown Cork used for sealing the glass bottles. With the use of modern technologies, now the appellant is manufacturing Double Lip Dry Blend Crowns , which is also used for sealing the glass bottles. The earlier product being manufactured by the appellant was used for sealing glass bottles and subsequently the additional product produced with the use of modern technology is also being used for the same purpose namely, sealing glass bottles . Therefore, the same cannot be said to be manufacturing of goods different from being manufactured before such diversification. With the passage of time, due to advancement in technology, if there is a replacement of the old machinery with the new machinery for improvement in quality and quantity of a product, at the most, it can be said to be expansion and/or modernization, but it cannot be said to be diversification , which is manufacturing of goods different from the goods manufactured before such diversification - the Statute and more particularly, the exemption provisions are to be read as they are and to be construed literally and should be given a literal meaning. Giving the literal meaning to the exemption provision namely, Section 4-A, it cannot be said that the appellant is entitled to the exemption as claimed. When the provisions of the Act unequivocally provides that the diversification can be considered only in a case where goods of different nature are produced, and only then the exemption shall be available. The goods manufactured on diversification must be a different , distinct and a separate good in nature. In the present case, the goods manufactured on use of advance and/or modern technology, cannot be said to be a different commercial activity at all. The High Court has not committed any error in refusing to grant exemption to the appellant. We are in complete agreement with the view taken by the High Court. Appeal dismissed. Case-Laws VAT and Sales Tax Mon, 09 Jan 2023 00:00:00 +0530