TaxTMI 
TaxTMI 
2025 (5) TMI 2238
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....the Notification No. 111 & 112 dated 15.01.2000 have not fulfilled, as the unit has not allotted land for the factory, the applicants unit is not entitled to exemption under Section 4A of the Act, when it had fulfilled the eligibility criteria of clauses (a), (b) & (c) of the Notification for the grant of exemption. (b) Whether the applicant having fulfilled the eligibility criteria for grant of exemption, the Tribunal was correct to hold that clause (d) of the Notification, is mandatory, ignoring that the possession of the land for establishment of unit may be mandatory but the mode of acquisition of land is directory and non-compliance would not affect the substance of the exemption notification, nullifying the object of Section 4-A of the Act for promoting industrial development in the state by increasing production of any goods. (c) Whether the Notification No. 3867 and 3868 dated 22.12.2001, having eliminated the mode of acquisition of land for grant of exemption, entirely and land could be obtained from any source, making mode of acquisition, as not relevant since Section 4-A of the Act, does not limit exemption, depending upon the mode of acquiring land for....
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....ed order dated 04.08.2010. Hence, this revision. 8. Learned Senior Counsel for the revisionist further submits that section 4-A of the U.P. Trade Tax Act (hereinafter referred to as, 'the Act') was introduced with an intent to promote industrialization in the State of U.P. and incentive was granted to the industries on fulfillment of certain conditions. He further submits that clause 4(ii) of notification dated 31.03.1995 contemplates that new unit is to be established on the land, building or both owned or taken on lease for a period not less than 15 years. The said notification was thereafter partially modified by notification nos. 111 & 112 dated 15.01.2000. Therefore, the benefit will be extended in favour of the units. He further submits that thereafter, notification nos. 3867 & 3868 dated 22.12.2001 was issued further diluting such condition that the land must be allotted or leased by any Government agencies. In other words, the unit obtained land by any source will be entitled for the benefit of exemption. He further submits that the Commissioner vide circular dated 14.01.2002 referred clause (4) clarified the position that the condition ought to have been fulfill....
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....nist. 13. Learned senior counsel for the revisionist has argued that the conditions mentioned in the notification dated 15.01.2000 are not mandatory in view of the subsequent notifications. The argument was raised that in the subsequent notification no. 3867 dated 22.12.2001, the condition was diluted and permitted the Unit to obtain the land from any source. 14. The issue in hand is covered by the judgement of this Court in Atul Gases (supra), the relevant paragraphs of which are quoted below:- "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 promoting industrial development in the State or in any area in particular. It is contended that the conditions contained in exemption notification can be categorized in two parts i.e. conditions which are substantive and conditions that are procedural. Contention is that possession of land with the unit forms part of the substantive condition, whereas mode of its acquisition is procedural and that attaching of importance to mode o....
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....rally, 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 tax at such reduced rate as it may fix: Provided that in respect of goods manufactured in a new unit having a fixed capital investment of five crore rupees or more or in an existing unit which may make fixed capital investment of five crore rupees or more in expansion, diversification, modernisation and backward integration or in any one of them, within such period not exceeding....
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...., 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 some requirements which are directory in nature, the non-compliance of which would not affect the essence or substance of the notification granting exemption. 30. In Novopan Indian Ltd. (supra), this Court held that a person, invoking an exception or exemption provisions, to relieve him of tax liability must establish clearly that he is covered by the said provision....
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....ve 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 strictly with regulatory requirements that are important, especially when a party seeks the benefits of an exemption clause that are important. Substantial compliance of an enactment is insisted, where mandatory and directory requirements are lumped together, for in such a case, if mandatory requirements are complied with, it will be proper to say that the enactment has been s....
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....rein 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 or the other. There are conditions and conditions. Some may be substantive, mandatory and based on considerations of policy and some others may merely belong to the area of procedure. It will be erroneous to attach equal importance to the non-observance of all conditions irrespective of the purposes they were intended to serve. In Kedarnath's case its....
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....rry. 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 reproduced:- "6. Admittedly the provisions for exemption from sales tax have been introduced in the Act for the purpose of increasing the production of goods and for promoting the development of industries in the State. In fact, when the scheme called "Grant of Sales-tax Exemption Scheme 1982 to industrial units under Section 4-A of the Sales....
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....d 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 State. If the test laid down in Bajaj Tempo Ltd. case (supra) is applied, there is no doubt whatever that the exemption granted to the respondent from 9.8.85 when it fulfilled all the prescribed conditions will not cease to operate just because the capital investment exceeded the limit of Rs. 3 lakhs on account of the respondent becoming the owner of lan....
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....lso 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 held to be entitled to grant of exemption for the entire period of ten years beginning from 24.10.1992 to 23.10.2002. 35. It is not a case where the application was incomplete by itself. It was also not a case where having regard to the provisions of the Act, Rules, Notifications as also the information required to be furnished in terms of ....
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....bject 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:- "4. The facility of exemption from or reduction in the rate of tax shall be subject to the following conditions in addition to the conditions referred to in Section 4-A of the Act- (i) ..... (ii) that the new unit is established on land or building or both owned or taken on lease for a period of not less than ....