TaxTMI 
TaxTMI 
2018 (1) TMI 1253
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....ly registered on 5th October, 2000 with effect from 20th December, 1999. It also applied for registration with the trade tax department on 8.8.2001. The unit was made operational and actual production commenced on 28th June, 2001. 3. Exemption from payment of trade tax was sought by the revisionist under Section 4-A of the U.P. Trade Tax Act. Reliance was placed upon a notification issued on 15th January, 2000. A subsequent notification dated 24.8.2000 was also relied upon for the purpose. The first notification dated 15.1.2000 is reproduced:- "KA.NI.-2-111/XI-9(116)/94-U.P.Act-15-48-Order-2000 Dated: Lucknow : 15 January, 2000 In exercise of the powers under section 4-A of the Uttar Pradesh Trade Tax Act, 1948 (U.P. Act No.15 of 1948), read with section 21 of the Uttar Pradesh General Clauses Act, 1904 (U.P. Act No.1 of 1904), and in partial modification of all previous notifications issued in this behalf, under the said section 4-A, the Governor is pleased to direct that, no exemption from, or reduction in the rate of tax on sale of goods shall be admissible to units starting production on or after January 17, 2000 except the units which fulfill the ....
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.... that claim of the applicant was considered and rejected by a Divisional Level Committee at Agra on 24.4.2002. This order was challenged before the Tribunal in Appeal No.61 of 2002, which came to be allowed by the Tribunal on 16.1.2003. A direction was issued to the Committee to re-examine the claim with reference to the two notifications relied upon. 6. Pursuant to such direction of the Tribunal, the claim of assessee has again been considered and rejected by the Committee. The rejection has been affirmed by the Tribunal vide order under challenge. The only reason assigned to non-suit the revisionist is that the condition in the notification that unit is allotted land for the factory is not fulfilled. 7. Before proceeding further it would be appropriate to note that in respect of the period in question, yet another notification was issued by the State on 22nd December, 2001 in which the condition of allotment of land was substituted with the condition that unit has obtained land from any source. Benefit of this notification, however, has not been extended apparently for the reason that the applicant had not claimed its benefit, nor had intimated in writing to the assessing a....
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....n of goods of a nature different from those manufactured earlier by such units falls on or before March 31, 2000, no tax shall be payable, or as the case may be, the tax shall be payable at the reduced rate by the manufacturer thereof on the turnover of sales of goods, which are of a nature different from those, manufactured by the unit earlier: Provided that the unit intending to claim tax relief under this notification shall intimate in writing accordingly to the assessing authority within 20 days from the date of this notification. CONDITIONS (a) the unit is registered/licensed under Industry Department or unit has obtained letter of intent or letter of will from Government of India; (b) the unit has obtained land from any source; (c) the unit has applied for a term loan from any regular Financial Institution. By order (T. George Joseph) Pramukh Sachiv" 8. Sri Shubham Agrawal, learned counsel appearing for the revisionist contends that the exemption notification has to be read in the context of the object of Section 4-A of the Act, which is to secure increase in the production of any goods or for promotin....
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....ade tax in certain cases--(1) Notwithstanding anything contained in this Act, where the State Government is of the opinion that it is necessary so to do for increasing the production of any goods or for promoting the development of any industry in the State generally or in any district or parts of district in particular, it may on application or otherwise, in any particular cases or generally, by notification, declare that the turnover of sales in respect of such goods by the manufacturer thereof shall, during such period not exceeding fifteen years from such date on or after the date of starting production as may be specified by the State Government in such notification, which may be the date of the notification or a date prior or subsequent to the date of such notification, and where no date is so specified from the date of first sale by such manufacturer, if such sale takes place within six months from the date of starting production, and in any other case from the date following the expiration of six months from the date of starting production, and subject to such conditions as may be specified, be exempt from trade tax on sale of goods whether wholly or partly or be liable to ....
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....t has not claimed benefit of this notification before the authorities and it would ipso facto not apply, but it can be relied upon to ascertain the nature of condition itself i.e. whether it is substantive or procedural. 13. A Constitution Bench of the Apex Court in Commissioner of Central Excise, New Delhi Vs. Hari Chand Shri Gopal and others, reported in 2011 (1) SCC 236, has dealt with issue relating to construction of exemption clause. Paras 29 to 31 of the judgment is relevant and is reproduced:- "29. The law is well settled that a person who claims exemption or concession has to establish that he is entitled to that exemption or concession. A provision providing for an exemption, concession or exception, as the case may be, has to be construed strictly with certain exceptions depending upon the settings on which the provision has been placed in the Statute and the object and purpose to be achieved. If exemption is available on complying with certain conditions, the conditions have to be complied with. The mandatory requirements of those conditions must be obeyed or fulfilled exactly, though at times, some latitude can be shown, if there is a failure to comply with....
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....minor or inconsequent aspects which cannot be described as the "essence" or the "substance" of the requirements. Like the concept of "reasonableness", the acceptance or otherwise of a plea of "substantial compliance" depends upon the facts and circumstances of each case and the purpose and object to be achieved and the context of the prerequisites which are essential to achieve the object and purpose of the rule or the regulation. Such a defence cannot be pleaded if a clear statutory prerequisite which effectuates the object and the purpose of the statute has not been met. Certainly, it means that the Court should determine whether the statute has been followed sufficiently so as to carry out the intent for which the statute was enacted and not a mirror image type of strict compliance. Substantial compliance means "actual compliance in respect to the substance essential to every reasonable objective of the statute" and the court should determine whether the statute has been followed sufficiently so as to carry out the intent of the statute and accomplish the reasonable objectives for which it was passed. 33. A fiscal statute generally seeks to preserve the need to comply s....
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....stantive condition of the provision and the condition in the proviso was held to be of substance embodying considerations of policy. Shri Narasimha Murthy would say the position in the present case was no different. He says that the notification of 11th August, 1975 was statutory in character and the condition as to 'prior-permission' for adjustment stipulated therein must also be held to be statutory. Such a condition must, says counsel, be equated with the requirement of production of the declaration form in Kedarnath's case and thus understood the same consequences should ensue for the non-compliance. Shri Narasimhamurthy says that there was no way out of this situation and no adjustment was permissible, whatever be the other remedies of the appellant. There is a fallacy in the emphasis of this argument. The consequence which Shri Narasimha Murthy suggests should flow from the non-compliance would, indeed, be the result if the condition was a substantive one and one fundamental to the policy underlying the exemption. Its stringency and mandatory nature must be justified by the purpose intended to be served. The mere fact that it is statutory does not matter one way o....
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....the conditions are satisfied. The words are that he "will grant". There is no dispute that appellant had satisfied these conditions. Yet the permission was withheld--not for any valid and substantial reason but owing to certain extraneous things concerning some inter-departmental issues. Appellant had nothing to do with those issues. Appellant is now told "we are sorry. We should have given you the permission. But now that the period is over, nothing can be done". The answer to this is in the words of Lord Denning: "Now I know that a public authority can not be estopped from doing its public duty, but I do think it can be estopped from relying on a technicality and this is a technicality" (See Wells v. Minister of Housing and Local Government, [1967] 1 WLR 1000 at 1007). Francis Bennion in his "Statutory Interpretation", 1984 edition, says at page 683: "Unnecessary technicality: Modern courts seek to cut down technicalities attendant upon a statutory procedure where these cannot be shown to be necessary to the fulfilment of the purposes of the legislation."" 15. In Commissioner of Sales Tax (supra), following observations are made in paras 6, 11 and 12 and are ....
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....tal investment exceeding Rs. 3 lakhs are fulfilled. In the absence of such express provision there is no warrant for the stand taken by the appellant that after 23.7.1986 the unit was not entitled to the benefit of exemption as its capital investment exceeded Rs. 3 lakhs from such date. 11. In Commissioner of Income-tax, Amritsar v. Straw Board Manufacturing Co. Ltd., [1989] Supp. 2 S.C.C. 523, this Court held that in taxing statutes, provision for concessional rate of tax should be liberally construed. So also in Bajaj Tempo Ltd. Bombay v. Commissioner of Income-tax, Bombay City-Ill, Bombay, [1992] 3 S.C.C. 78, it was held that provision granting incentive for promoting economic growth and development in taxing statutes should be liberally construed and restriction placed on it by way of exception should be construed in a reasonable and purposive manner so as to advance the objective of the provision. 12. We find that the object of granting exemption from payment of sales tax has always been for encouraging capital investment and establishment of industrial units for the purpose of increasing production of goods and promoting the development of industry in the St....
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....seek. Whereas in the case of the former, a registered deed of lease is required to be executed if it is for a period of more than one year, in the latter it is not. 34. An exception has been made as regards allotment of land by the State or a statutory corporation. The exemption is being granted by the State. Eligibility certificate is also to be granted by the Industries Department. Each department is supposed to be in touch with the other department of the State or the statutory corporation. The authorities would be in a position to verify the particulars of the letter of allotment furnished by the applicant from the concerned department or statutory corporation. It was not necessary for the authorities of the Industries Department of the Government of Uttar Pradesh to obtain any additional information. When an additional information is required to be sought for, it must be done when the information furnished by the applicant is not complete or otherwise required. It is not in dispute that the attested copies of the letters of allotment had been furnished. If the same subserved the statutory requirements, we do not see any reason as to why the appellant should not be hel....
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....n the case before us, there is neither any ambiguity in the language nor does the clause in question present a real difficulty in ascertaining its meaning." 18. It is in light of the law laid down that it has to be examined as to whether condition of allotment of land for the unit is a mandatory condition or is it directory. The object underlying Section 4-A of the Act and the exemption notification is to promote development of any industry in the State generally or in any district or part of it. The idea is to encourage setting up of new units for the purpose in the specified areas. So far as establishment of new unit is concerned, it would have to be shown that the unit has land available with it for the purpose. Possessing of land is thus a mandatory or substantive condition in the exemption notification. The manner and mode of such acquisition has been specified from time to time. A notification dated 31st March, 1995 has been brought on record, issued for similar purposes, which was to apply in respect of production starting between the period 1.4.1995 and 31.3.2000. The condition relating to availability of land was dealt with under Clause 4(ii), which reads as under:- ....