REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 6709        OF 2008 (Arising out of SLP (C) No.17118 of 2006)

M/s. G.P. Ceramics Pvt. Ltd. … Appellant

Versus

Commissioner, Trade Tax, UP. … Respondent

J U D G M E N T

S.B. Sinha, J.

1. Leave granted.

2. Interpretation and/or application of an exemption notification dated

27.7.1991 is in question in this appeal which arises out of a judgment and

order dated 10.7.2006 passed by the High Court of Judicature at Allahabad

in Trade Tax Revision No.141 of 1999.

3. The admitted fact of the matter is as under:

Appellant  is  a private limited company registered under  the Indian

Companies Act.  It started a new unit on plot Nos.C-28 and C-29, Industrial

Area.   

The  Uttar  Pradesh  State  Industrial  Development  Corporation

(UPSIDC) on or about 14.3.1991 and 11.7.1991 allotted plot No.C-28 and

C-29, Industrial Area, Orai in the district of Jalaun in favour of respondent.

An agreement  for  lease  was  executed  in  its  favour  on  18.9.1992  by the

UPSIDC for setting up a unit for manufacture of fire bricks and B.P. sets.

Appellant commenced production in the said unit on and from 15.9.1992.  It

was registered as a small scale unit with effect from 29.9.1992.  The first

sale of the finished product was made on 24.10.1992.   

It filed an application claiming exemption from payment of trade tax

on the turn over of manufactured products in Form 46 before the Sales Tax

Authorities  on  12.3.1993  said  to  be  within  the  stipulated  period  of  six

months from the date of first sale.

The Sales Tax Authorities, however, asked for a copy of the deed of

lease.   The  application  was  also  returned  to  the  appellant  by  the  said

authority on 4.6.1993 purportedly for the purpose of removing to remove

the said objection.   

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A copy of the deed of lease was furnished to him only on or about

16.4.1994.   

4. The fact that the appellant is entitled to exemption from payment of

trade tax is not in dispute.  However, whereas according to the appellant it

was entitled to such exemption for a period of 10 years from 24.10.1992 to

23.10.2002, the respondents  contend that having regard to the fact that  a

copy of the deed of lease was furnished to him only in 1994, it was entitled

to exemption for the period 16.4.1994 to 23.10.2002.  

5. Aggrieved by an order  dated 21.8.1995 of  the Additional  Director,

Industries, Jhansi Division granting an eligibility certificate in favour of the

appellant  only  in  respect  of  the  period  from 16.4.1994  to  23.10.2002,  a

review application was filed thereagainst, which was rejected by an order

dated  27.7.1996.   Appellant  preferred  two  separate  appeals  against  the

aforementioned  orders  dated  21.8.1995  and  27.7.1996  before  the  Uttar

Pradesh Trade Tax Tribunal, Lucknow which were marked as Appeal No.93

of 1996 and 81 of 1996 respectively.  The said appeals were dismissed by

the Tribunal by an order dated 19.2.1999.   

6. The High Court by reason of the impugned judgment has dismissed

the revision application filed by the appellant herein.

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7. Appellant is, thus, before us.

8. Mr.  Kavin  Gulati,  learned  counsel  appearing  on  behalf  of  the

appellant, would submit that the High Court as also the Tribunal committed

a serious error in so far as they failed to construe the provisions of the UP

Trade Tax Act and the Rules framed thereunder as also the form in which

the  application  for  exemption  is  required  to  be  filed  in  their  proper

perspective as in terms thereof there was no necessity to supply a copy of

the deed of lease, as, admittedly, the land in question has been allotted in

favour of the appellant by the PUSIDC, a Corporation of the State of Uttar

Pradesh.  Alternatively, it was submitted that as the deed of lease was lying

with  UP  State  Industrial  Development  Corporation  which  is  a  Financial

Corporation owned by the Government of Uttar Pradesh, the appellant could

not file the same within the stipulated period and, thus, the authorities must

be held to have acted arbitrarily in reducing the period of exemption from

ten years to eight years.   

9. Mr. Sunil  Gupta, learned senior counsel appearing on behalf of the

respondent, on the other hand, would contend that from a bare perusal of the

provisions of the Act as also the Rules, it would be evident that when an

allotment is followed by a lease for a period of more than five years, it is

incumbent  for  the  applicant  to  supply  a  copy  thereof,  failing  which  the

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application would be treated to be incomplete, the consequence whereof is

that  eligibility  certificate  could  be  granted  only  from the  date  when  the

application  became  complete  in  all  respects  and  not  from  a  date  prior

thereto.   

10. The State of Uttar Pradesh enacted UP Trade Tax Act, 1948 (the Act)

to provide for the levy of tax on the sales or purchase of goods in Uttar

Pradesh.   

11. Section 4A of the Act provides for exemption from payment of Trade

Tax in certain cases.  We may notice the relevant provisions thereof :

“Section  4-A—Exemption  from  trade  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

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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 five years as may be specified in the notification, the exemption from or reduction in the rate of tax may be granted.

(2) It shall be lawful for the State Government to specify  in  the  notification  under  sub-section  (1) that the exemption from, or reduction in the rate of tax, shall be admissible--

(a) …  

(b) in respect of such of those goods only as are manufactured  in  a  new  unit,  the  date  of starting production whereof falls on or after the first day of October, 1982; or

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(d) only  if  the  manufacturer  furnishes  to  the assessing authority an Eligibility Certificate granted by such officer, in accordance with such procedure, as may be specified ;

XXX XXX XXX

(5) A manufacturer shall be entitled to the facility of exemption from, or reduction in the rate of tax, notified under sub-section (1)—

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(a) if  he  applies  for  such  facility  within  six months  from  the  relevant  date  of commencement  of  the  period  of  facility referred to in that sub-section or within six months from the date of notification issued under that sub-section or by September 30, 1992, whichever expires later, for the entire period notified under that sub-section;

(b) if he applies for such facility later than the date specified in Clause (a) only for part of the  period  notified  under  subsection  (1); which  shall  be computed from the date  of the  application  and  not  from  the  relevant date  of  commencement  of  the  period  of facility referred to in sub-section (1) till the end of the period of facility;

(c) in  relation  to  a  new  unit  referred  to  in Explanation  (1),  where  the  conditions specified  in  Clauses  (a)  to  (d)  of  the  said Explanation (1) are fulfilled on a date later than  the  date  of  commencement  of  the period of facility notified under subsection (1), then subject to the provisions of Clause (b),  only  for  part  of  the  period,  notified under  sub-section  (1),  which  shall  be computed  from the  date  on  which  all  the conditions referred to in the said Clauses (a) to (d), have been fulfilled or July 20, 1992 whichever is later, till the end of the period of  such  facility,  so  however,  that  a manufacturer  who  was  eligible  for  such facility under Clause (c) as it stood prior to July  20,  1992  and  had  applied  for  the facility  prior  to  the  said  date,  shall  be entitled to the facility in accordance with the said Clause (c).

(d) in  relation  to  a  new  unit  manufacturing same goods established on or adjacent to the site of an existing factory or workshop by a

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person  who  has  interest  in  the  existing factory or workshop as proprietor or partner or  agent  or  managing director  or promoter director  or  as  holding  company  or subsidiary company, if the production of the existing factory or workshop is not less than the base production:

Provided  that  if  the  production  of  the existing factory or workshop falls  short  of the base production, the turnover of sale of the  new unit  to  the  extent  of  the  quantity covered  by  such  short  fall  from  base production shall be liable to tax.”

12. Admittedly, the State of Uttar Pradesh in exercise of its rule making

power  under  the  Act  framed  Rules  known  as  Uttar  Pradesh  Trade  Tax

Rules, 1948.   

Chapter V of the said Rules deals with the exemption of dealers under

Section 4.  Rule 25 of the said Rules reads as under :

“25. Grant of eligibility certificate –  

(1) (a) The application for grant of eligibility certificate  by  a  new  unit  or  a  unit  which  has undertaken  expansion,  diversification,  backward integration or modernization shall be submitted in Form No ST-XLVI (in six copies in case of units with fixed capital investment upto rupees five per form lakhs  and in  eight  copies  in  cases  of  units with a fixed capital  investment exceeding rupees five  per  form  lakhs),  to  the  General  manager,

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District Industries Centre of the District, in which the unit is situated and in the case of unit situated in any Industrial  Development Authority Area to the  Area  Development  Officer  (industry)  of  the said Authority.

(b) The  General  Manager,  District  Industries centre or Area Development Officer (Industry) of the  concerned  Industrial  Development  Authority may  require  the  unit  to  furnish  any  additional information within sixty days of the receipt of an intimation in this regard.

(c) If the application is incomplete or does not contain the required information, the unit may be asked to  complete  the  application  or  furnish  the required information within 60 days of the receipt of an intimation in this regard. If the unit fails to complete  the  application  or  furnish  the  required information  mentioned  in  clause  (b)  within  the prescribed time, the date on which the application is completed or the information or the additional information  is  furnished  shall  be  treated  as  the date of application of such unit.”

13. The form prescribed for filing an application for exemption by the

new units is prescribed in Form 46, clause 10 of which reads as under :

“10. Title of land or building-

(a) Self-owner (Enclose the attested   copy of title deed).

(b) Taken on lease (Enclose the attested copy of registered lease deed).

(c) allotted by (Enclose the attested Government or a copy of such allotment

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Or a Corporation letter)” A Company owned Or controlled by the Government.

14. The State of Uttar Pradesh issued a notification on or about 27.7.1991

for grant of exemption, inter alia, from payment of tax to new units set up,

the relevant provisions whereof read as under :

“2B. 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) that  the  ‘new unit’  is  licensed or in  respect  whereof a letter  of intent  has been issued,  or which is registered, permanently or otherwise, by the appropriate authority in accordance  with  any  law  for  the  time  being  in  force relating to licensing or registration of such units;

(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 fifteen years by such unit or allotted to such unit by the State  or  the  Central  Government  or  any  Government Company or any Corporation owned or controlled by the Central or the State Government;

(iii) that  the  exemption  from  tax  or,  as  the  case  may  be, reduction in the rate of tax shall  be admissible only in respect of such goods manufactured by the unit and such by-products and waste products as are mentioned in the eligibility certificate issued to such unit under Section 4- A of the Act;

(iv) that  the  said  unit  furnishes  to  the  assessing  authority concerned an eligibility certificate granted in this behalf by the General Manager, District Industries Centre, Area

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Development  Officer  (Industry)  of  the  concerned Industrial  Development  Authority,  Additional  or  Joint Director of Industries of the range or Additional or Joint Director,  Industries  of  the  concerned  Industrial Development Authority, as the case may be.”

15. Before we advert to the contentions raised by the learned counsel for

the  parties  we  may place  on  record  that  the  contention  of  the  appellant

herein before us is that as the appellant had taken loan from PICUP on the

basis  of  an  equitable  mortgage  created,  the  deed  of  lease  could  not  be

produced prior to 16.4.1994.   

16. Indisputably, the grant of exemption from payment of trade tax for

the specified period in favour of owner of a new unit was to be granted on

the basis of the eligibility certificate.  An eligibility certificate was granted

in  favour  of  the  appellant  by  the  Additional  Director,  Industries  Jhansi

Division, Jhansi for the period 16.4.1994 to 23.10.2002 by an order dated

21.8.1995, inter alia, on the premise that a copy of the deed of lease was

filed by the appellant only on 16.4.1994.

17. The sole question which, thus, arises for our consideration is as to

whether in a case where land has been allotted in favour of an industrial

undertaking which was followed by execution of the deed of lease, supply

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of a copy of the letter of allotment should satisfy only the requirements of

the statutory provisions or a deed of lease was also required to be produced.

18. Section 4-A provides for grant of exemption.  Such exemption is to

be granted if an application is filed within the period of six months from the

date of first sale.  If the land in question on which the unit is constructed has

been the subject matter of lease, the applicant was required to file a copy

thereof.   If  the  first  sale  takes place within six  months  from the date  of

starting production,  the  benefit  of the exemption shall  be given from the

date of first sale.  Clause (d) of sub-section (2) of Section 4-A, however,

empowers the State Government to specify in the notification issued under

sub-section  (1)  that  the  exemption  from payment  of  trade  tax  would  be

admissible,  inter  alia,  only if  the manufacturer  furnishes  to  the assessing

authority an eligibility certificate granted by such officer in accordance with

such procedure as may be specified.  Clause (a) of sub-section (5) of Section

4-A  stipulates  that  a  manufacturer  shall  be  entitled  to  the  facility  of

exemption for the entire period notified under sub-section (1) only if  the

application  is  filed  within  six  months  from  the  relevant  date  of

commencement  of  the period  of  facility  referred  to  in  sub-section  (1)  or

within  six  months  from  the  date  of  notification  issued  under  that  sub-

section, or by 30th September, 1992 whichever expires later. Clause (c) of

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sub-section  (5)  provides  that  in  relation  to  a  new  unit  referred  to  in

Explanation (1) where the conditions specified in clauses (a) to (d) of the

said  Explanation  (1)  are  fulfilled  on  a  date  later  than  the  date  of

commencement of the period of facility notified under sub-section (1), the

period for grant of exemption shall be computed from the date on which all

the  conditions  referred  to  in  the  said  clauses  (a)  to  (d)  of  the  said

Explanation have been fulfilled or July 20, 1992 whichever is later till the

end of the period of such facility, so however, that a manufacturer, who was

eligible for such facility under clause (c) as it stood prior to July 20, 1992

and had applied for the facility prior to the said date, shall be entitled to the

facility in accordance with the said clause (c).  We are not concerned with

the Explanations appended thereto.

19. We have, however, noticed that Explanation (2) under Section 4-A

defines ‘new unit’ as under :

“‘New Unit’ after March 31, 1990 means a factory or workshop set-up by a dealer after such date and satisfying the conditions laid down under the Act or  Rules  made  therein.   It  would  include  an industrial unit, inter alia, on the site of an existing factory or workshop.”

Certain  conditions  have  been  appended  thereto  which  exclude  the

factory or workshop from the purview of the said definition.

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20. It  is  also  relevant  to  note  that  when  an  application  is  filed,  the

requisite information therefor is to be furnished as provided in clause 10 of

Form 46.

21. It is in the aforementioned backdrop, the notification dated 27.7.1991

and, in particular, paragraph 2B thereof is required to be construed.  The

fact that the appellant was entitled to grant of exemption is not in dispute.  It

is also not in dispute that a statutory corporation has allotted a land in its

favour on which the unit was started.  It is furthermore not in dispute that

the  first  sale  from  the  said  unit  had  taken  place  on  24.10.1992  and

application in the prescribed form has been filed on 12.3.1993, i.e., within a

period of six months therefrom.   

22. Section 4-A of the Act does not provide for any procedure for filing

of  an  application.   The procedures  are  laid  down in  the  Rules.   For  the

purpose  of  grant  of  eligibility  certificate,  the conditions  attached thereto,

inter alia, are that an application must be filed in the prescribed form.  Such

an application is required to be filed in eight copies and indisputably the

said condition has been complied with.   

23. The  power  of  the  General  Manager  to  ask  for  any  additional

information  within  a  period  of  sixty  days  from  the  date  of  receipt  of

intimation in this behalf is also not in dispute.  Clause (c) of sub-rule (1) of

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Rules 25 of the Rules assumes importance as the only bone of contention

between the parties is as to whether the additional information required was

furnished within the time specified.  If the unit in terms of clause (c) fails to

complete the application or fails to furnish the additional information within

the prescribed time, the date on which the application is completed or the

additional information is furnished shall be treated as the date of application

of such unit.   

24. There cannot, however, be any doubt that the said Rule has to be read

with Section 4-A, particularly, clauses (b) and (d) of sub-section (2) thereof.

25. The incidental question which would arise for our consideration is as

to  whether  if  in  terms  of  the  Act  or  the  Rules  framed  thereunder,  the

appellant was not required to supply a copy of the deed of lease, failure on

his part to supply a copy of the deed of lease would attract clause (c) of sub-

rule (1) of Rule 25 or not.   

26. The eligibility criteria is contained in the notification.  Sub-clause (ii)

of Clause 2B of the notification envisages three contingencies, i.e., (i) the

unit is established on land or building or both owned by the dealer; or (ii)

the unit is established on land or building or both taken on lease for a period

of not less than 15 years; or (iii) the unit is established on land or building

or both allotted to such unit by the State or the Central Government or any

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Government  company  or  any  Corporation  owned  or  controlled  by  the

Central or the State Government.   

Indisputably, the plots in question had been allotted by PUSIDC, a

State Government Corporation on or about 14.3.1991 and 11.7.1991.   

27. We may, for proper appreciation of the respective contentions of the

parties,  notice the relevant  portion of one of the said letters of allotment

which reads as under :

“With  reference  to  your  application  dated 21.2.1991 allotment of land in our industrial area orai at Jaloun we have allotted to you plot No.C- 28 in our industrial Area orai site No.2 at Jaloun in the conditions noted below for setting up an industrial unit to manufacture Fire Brieks.

1. The  area  of  the  plot  is  3875  sq.  mtr.   The precise measurement and the area of the land in  the  plot  is  as  per  site  plan  attached herewith.

2. The date of this letter  will  be treated as the date  of  allotment  of  the  above  plot  in  your favour.

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5. You  will  utilize  minimum 30%  area  of  the  plot  by covering it by roof/permanent shed with the specified period  as  contained  in  the  Licence  Agreement/Lease Deed, failing which the allotment of the plot(s) will be cancelled.

6. It  will  be  your  sole  responsibility  to  get  NOC from UP/CB (UP Pollution Control  Board) and if  it  is  not

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furnished  to  this  Corporation,  you  will  be  liable  for Action.  According to Law and UPSIDC would not be responsible  for  any of  your  act  for  omissions  which may be in contravention in the U.P. Pollution Control Board rules environmental laws.”

28. It is true that an instrument of lease was entered into on 18.9.1991

whereby a lease for a term of 90 years was executed on 28.10.1991.   

29. It  is,  however,  one  thing  to  say  that  the  order  of  allotment  by  a

statutory corporation was followed by execution of a deed of lease but it is

another thing to say that only because an order of allotment is followed by

execution of a deed of lease, the documents in regard to both were required

to be furnished.   

30. The  eligibility  criteria  are  laid  down in  the notification,  which,  as

noticed hereinbefore, provide for three contingencies.  They are disjunctive

in nature and not conjunctive.  It is now a well settled principle of law that a

subordinate  legislation must  be read in  the context  of  the main statutory

enactment.   It  is  also  well  established that  when a form is  prescribed  in

terms of the Rules, in case of doubt or dispute, the requirements laid down

in the form may also be taken into consideration for proper construction of

the  provisions  of  the  Rules  and  consequently  the  statutory  enactment.

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Paragraph 10 of the Form 46 relates  to  the title  of the  land or  building.

Whereas in the case of lease an attested copy of the registered deed of lease

is  required  to  be  enclosed  along  with  the  application,  in  the  case  of

allotment  by  Government  or  a  Corporation  owned  or  controlled  by  the

Government,  only enclosure  of the  attested copy of  such allotment letter

subserves the purpose.  The letter of allotment dated 14.3.1991, inter alia,

provides that the said date was to be treated as the date of allotment of the

plots referred to therein in favour of the appellant.  One of the terms of the

said letter of allotment refers to entering into a licence/agreement or a lease

deed and also to utilize minimum 30% area of the plot by covering it with

the roof or permanent shed.

31. The  allotment  was  made  for  setting  up  of  an  industrial  unit  for

manufacture  of  fire  bricks.   Some conditions  might  have  been  attached

thereto  but  in  the  event  such  conditions  are  not  fulfilled,  the  order  of

allotment could have been cancelled.  When such conditions are satisfied,

indisputably  the  allotment  becomes  effective  on  and  from  the  date  of

issuance of the letter of allotment.

32. It is now a well established principle of law that whereas eligibility

criteria laid down in an exemption notification are required to be construed

strictly, once it is found that the applicant satisfies the same, the exemption

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notification should be construed liberally. {[See  Commissioner, Trade Tax,

U.P. v. DSM Group of Industries [(2005) 1 SCC 657 para 26];  Tata Iron &

Steel Co. Ltd. V. State of Jharkhand & Ors. [(2005) 4 SCC 272 para 42 to

45]; State Level Committee & Anr. v. Morgardshammar India Ltd. [(1996)

1 SCC 108]; Novopan India Ltd., Hyderabad v. Collector of Central Excise

& Customs, Hyderabad [1994 Supp.(3) SCC 606];  A.P. Steel  Re-Rolling

Mill  Ltd. V.  State  of  Kerala  &  Ors. [(2007)  2  SCC  725];  and  Reiz

Electrocontrols (P) Ltd. v. Commissioner of Central Excise, Delhi-I [(2006)

6 SCC 213].

33. The  learned  counsel  for  the  parties,  however,  have  drawn  our

attention to two decisions of this Court construing Section 4-A of the UP

Sales Tax Act itself.   

We,  therefore,  think  it  proper  to  refer  thereto.   In  State  Level

Committee & Anr. v. Morgardshammar India Ltd. [(1996) 1 SCC 108], the

question which arose for consideration before this Court was construction of

Explanation (i) to Section 4-A(2) using both the expressions ‘already used’

and  ‘acquired  for  use’  simultaneously  to  hold  that  they  should  not  be

considered to be carrying the same meaning, stating :

“It must be remembered that no unit has a right to claim exemption from tax as a matter of right. His right is only insofar as it is provided by Section 4-

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A. While providing for exemption, the Legislature has  hedged  it  with  certain  conditions.  It  is  not open to the Court to ignore those conditions and extend the exemption.

11. It is suggested by the learned counsel for the respondent that Section 4-A must be literally (sic liberally)  construed  to  further  the  object underlying  it.  In  case  of  any  ambiguity,  it  is submitted, the construction favouring the assessee should be adopted. We cannot agree. Section 4-A provides for exemption from tax. It is repeatedly held by this Court that a provision providing for an exemption or an exception, as the case may be, has to be construed strictly.”

However,  in  Commissioner,  Trade  Tax,  U.P. v.  DSM  Group  of

Industries [(2005)  1  SCC 657],  another  Bench of  this  Court  opined that

when  an  application  for  exemption  is  filed  for  an  expansion  or

diversification,  Explanation  5 appended to  Section  4-A(6)  specifying  the

word ‘unit’ must receive a liberal construction to include not only a new

unit  but  also  a  nuit  which  is  sought  to  be  expanded,  modernized  or

diversified, stating :

“25.  …As  seen  above,  the  term  “unit”  has  the meaning as defined in  Section 4-A. As we have already seen, Section 4-A defines the term “unit” to  mean  an  industrial  undertaking,  which  has undertaken  expansion,  modernisation  and diversification.  Even  under  the  General  Clauses Act, where the context so requires the singular can include  the  plural.  A  plain  reading  of  the notification  shows  that  for  “expansion,

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modernisation  and  diversification”  it  is  the industrial  undertaking  which  is  considered  to  be the “unit”. This is also clear from the fact that in the  notification  wherever  the  words  “expansion, modernisation  or  diversification”  are  used,  there are no qualifying words to the effect “in any one unit”.  In  none  of  the  clauses  is  there  any requirement of the investment being in one unit of the industrial undertaking. Words to the effect “in a particular unit” or “in one unit” are missing. To accept Mr Sunil Gupta’s submission would require adding  words  to  a  notification  which  the Government purposely omitted to add.

26. Even  otherwise,  the  purpose  of  notification being  to  encourage  increased  production  and  to give  benefit  to  industries  which  have  invested rupees fifty crores or more in the State and whose production  has  thus  increased,  an  interpretation must be given which would extend benefit to such industries. There would be no purpose in denying an industry which has invested rupees fifty crores or more and whose production in the State has as a result  increased,  the  benefit  of  the  exemption granted  by  this  notification  merely  because  the whole  of  the  investment  is  not  in  any particular unit. Thus even where the investment is made by the Company in more than one unit, so long as the total investment is rupees fifty crores or more, the benefit  of  the  notification  would  be  available. Such  benefit  would  then  be  distributed  in  the manner  set  out  in  the  schedule  depending  on where a unit in which expansion, diversification or modernisation  has  taken place,  is  situated.  Thus, for  example,  in  respect  of  the  units  situated  in Barabanki and Moradabad, the benefit would be to the extent of 200% of the fixed capital investment in  those  units,  whereas  in  respect  of  units  in Bijnore the benefit would be to the extent of 150% of  the  fixed  capital  investment  in  that  unit. Similarly, the base production and the starting date

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of production could be in  respect  of  those units. However, it  is the Company which has made the investment. It is the Company which is paying the tax. It is the Company which would be getting the benefit of the exemption. The manner in which the Company  gets  the  benefit  would  be  as  set  out hereinabove.”

34. We  do  not  see  any  conflict  in  the  ratio  laid  down  in  the

aforementioned two decisions.  The question of applying the principle of

strict  or  liberal  interpretation  would  arise  only  when  the  plain  meaning

attached thereto is found to be absurd or anomalous.  If a plain meaning

given  to  the  provision  for  the  purpose  of  considering  as  to  whether  the

applicant had fulfilled the eligibility criteria as laid down in the notification

or  not  is  found  to  be clear,  purpose  and  object  the  notification  seeks  to

achieve must be given effect to.

35. The  State  by enacting  Section  4-A of  the  Act  and Rule  25  of  the

Rules intended to encourage setting up of new industries. Such industrial

units, however, were required to be set up either on the land owned by the

applicant or taken on lease for a period of not less than five years or on the

land allotted.  However, so far as the land allotted in favour of the applicant

by  the  State  or  State  owned  Corporation  or  statutory  Corporation  is

concerned, no period is required to be fixed under the law.  What is required

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is an allotment of land by issuance of a letter of allotment.  Execution of a

deed of lease may be a condition for grant of allotment but the grant is not

subject to the date of lease or the period specified therein.  The statutory

rule as also the notification point out a clear distinction between a deed of

lease  which  may  be  obtained  from  a  private  person  and  the  letter  of

allotment granted by the State or statutory Corporation .  The reason for

making such a distinction is not far to 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.  

36. 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

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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.

37. 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

paragraph 10 of Form 46, any other or further information was necessary to

be obtained or furnished.  If the appellant, thus, had fulfilled the eligibility

criteria for grant of exemption, it had acquired a right in respect thereof and

we see no reason why it should have been deprived therefrom.  It is in that

sense the exemption notification was required to be construed liberally in

favour of the appellant.  {See State of Orissa & Ors. V. TATA Sponge Iron

Ltd. [(2007) (8) SCC 189 para 21].

38. For the  reasons  aforementioned,  the impugned judgment  cannot  be

sustained.  It is set aside accordingly.  Respondents are directed to extend

the  benefit  of  exemption  to  the  appellant  for  a  period  of  10  years  from

24.10.1992.  The appeal is allowed with costs.  Counsel’s fee assessed at

Rs.50,000/-.

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……………………………….J. [S.B. Sinha]

..…………………………..…J. [Cyriac Joseph]

New Delhi; November 19, 2008

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