M/S SHAKTI PLASTICS AGRA V. THE COMMISSIONER COMMERCIAL TAX U.P. LUCKNOW

STRE/768/2010

AI Insights

The case involves M/S Shakti Plastics Agra, which sought exemption under Section 4A of the U.P. Trade Tax Act for establishing a new unit for manufacturing PVC pipes and fittings. The exemption was initially denied by the Divisional Level Committee and upheld by the Commercial Tax Tribunal, based on the ground that the land was not allotted by government agencies as required by the notification dated 15.01.2000. The revisionist argued that subsequent notifications relaxed this requirement and that the condition was procedural, not mandatory. The court, referencing previous judgments, concluded that the mode of land acquisition is procedural and not mandatory, thus the revisionist was entitled to the exemption.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 742552 (HC-ALLAHABAD)
• Appeal Type: Others
• Pronouncement Date: 26-05-2025
• Assessment Year: misc
• Other Referred Cases: Atul Gases Vs. CCT & Another, G.P. Ceramic Private Limited Vs. CTT, State Level Committee & Another Vs. M/s Morgardshammar India Limited
• Laws Referred To: U.P. Trade Tax Act, Section 4-A of the Act
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: B K PANDEY
• Assessee Lawyers: RAKESH AGRAWAL; SUYASH AGARWAL
• Keywords: Eligibility Certificate; Industrial Development; Land Acquisition; Trade Tax Exemption
• Section: 4A

Judgement Text

"1 Neutral Citation No. - 2025:AHC:88696 Reserved On:12.05.2025 Delivered On:26.05.2025 Court No. - 10 Case :- SALES/TRADE TAX REVISION No. - 768 of 2010 Revisionist :- M/S Shakti Plastics Agra Opposite Party :- The Commissioner Commercial Tax U.P. Lucknow Counsel for Revisionist :- Rakesh Ranjan Agrawal,Suyash Agarwal Counsel for Opposite Party :- C.S.C. HON'BLE PIYUSH AGRAWAL,J. 1. Heard Shri Rakesh Ranjan Agarwal, learned Senior Advocate, assisted by Shri Suyash Agarwal, learned counsel for the revisionist and Shri B.K. Pandey, learned ACSC for the opposite party. 2. The instant revision has been filed against the impugned order dated 04.08.2010 passed by the Full Bench of the Commercial Tax Tribunal, Lucknow in Appeal No. 23/2010 as well as the order dated 17.02.2010/16.03.2010 passed by the Divisional Level Committee, Trade Tax Exemption, Agra. 3. The aforesaid revision was filed on the following questions of law:- (a) Whether the applicant having acquired land by registered lease deed for 27 years from private person, the Tribunal was correct to hold that clause (d) of 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 2 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 the new unit, the order of the tribunal is sustainable. 4. Since the revision is of the year 2010 and has not been admitted, therefore, same is decided at the stage of admission itself with the consent of the parties. 5. Learned senior counsel for the revisionist submits that the revisionist is the new Unit under section 4-A of the U.P. Trade Tax Act for manufacture and sale of PVC pipes and fittings. The revisionist claimed exemption as new Unit in pursuance of notification nos. 780 & 781 dated 31.03.1995. He further submits that the total investment made in the Unit was Rs. 22,57,661/- in land building, plant & machinery and the Unit was established in Taj Trapezium area and as such, it claimed exemption to the extent of 200% of the capital investment. 6. He further submits that the Unit started its production on 29.03.2000. He further submits that vide notification dated 15.01.2000, the State Government imposed condition no. (d), which required that for grant of eligibility certificate, the land must be allotted by the Government agencies. On 22.12.2001, another notification was issued by the State Government; wherein, four conditions mentioned in the notification dated 15.01.2000, was reduced to three conditions and condition no. (c) was relaxed to the effect that Unit holder obtaining the land from any source would be entitled for exemption. He further submits that a corrigendum notification was issued on 29.12.2001, partially amending the notification dated 22.12.2001 to the effect that the 3 concerned Unit shall fulfill on March 31, 2000 be read in place of fulfillment on March 31, 2000 by the concerned Unit. 7. He further submits that thereafter, the Commissioner issued a circular dated 14.01.2002 explaining the corrigendum dated 29.12.2001; wherein, the date of 17.01.2000 mentioned in the notification dated 15.01.2000 was substituted by “31.03.2000”. The Divisional Level Committee, Trade Tax Exemption, Agra, vide order dated 17.02.2010, rejected the exemption application of the revisionist on the ground that the revisionist has not fulfilled the condition no. (d) of notification dated 15.01.2000 regarding the land utilized for production as it was not allotted to the revisionist; rather, the same was taken on lease by private person. Aggrieved by the said order, the revisionist preferred second appeal, which has been dismissed vide impugned 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 4 position that the condition ought to have been fulfilled on 31.03.2000. He further submits that the circulars are binding on the authorities and the condition was fulfilled as on 31.03.2000 as the lease was taken for a period of 27 years on 03.02.2000 and the production was started on 29.03.2000. He further submits that fulfillment of condition has to be looked into as per the circular, i.e., on 31.03.2000. In support of his submissions, he has placed reliance on the judgement of this Court in Atul Gases Vs. CCT & Another [2018 NTN (Vol. 66) 164] and the judgement of the Apex Court in G.P. Ceramic Private Limited Vs. CTT [(2009) 2 SCC 90]. 9. Per contra, learned ACSC supports the impugned orders and submits that admittedly, the revisionist has not fulfilled the conditions as contemplated in notification nos. 111 & 112 dated 15.01.2000. He further submits that once the condition has not been fulfilled, no interference is called for in the impugned order. He further submits that for the purpose of claiming exemption, the condition mentioned in the notification must be complied with. In the event of non-fulfillment of the condition mentioned in the notification, the benefit cannot be accorded to the revisionist. He further submits that the Unit cannot claim exemption from tax as a matter of right. For providing exemption, the Legislature has put certain conditions and on fulfillment of such condition only, the exemption can be extended and in absence of fulfillment of such conditions, the exemption cannot be granted. In support of his submissions, he has relied upon the judgement of the Apex Court in State Level Committee & Another Vs. M/s Morgardshammar India Limited [1996 UPTC 213]. 10. After hearing learned counsel for the parties, the Court has perused the records. 11. It is not in dispute that the revisionist has established a Unit and after completing all formalities, applied for grant of exemption 5 under section 4-A of the Act in pursuance of the notification nos. 780 & 781 dated 31.03.1995 and thereafter, notification nos. 111 & 112 dated 15.01.2000 were issued. Condition (d) of the said notification required that for grant of eligibility certificate, the land must be allotted by the Government agencies. 12. Learned counsel for the revisionist has placed reliance on the judgement in Atul Gases (supra), in which the Court was pleased to interpret the notification and held in favour of the revisionist. 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 of acquiring land is not consistent with the object sought to be achieved by the Act and the notification. It is also contended that if mode of acquisition is given primacy, the very object of the provision contained under Section 4-A of the Act as well as the exemption notification would be frustrated. Learned counsel places reliance upon the decisions of the Apex Court in Mangalore Chemicals & Fertilisers Ltd. Vs. Deputy Commissioner of Commercial Taxes and others, reported in AIR 1992 SC 152; Commissioner of Sales Tax Vs. Industrial Coal Enterprises, reported in 1999 U.P.T.C. 250, and G.P. Ceramics Private Limited Vs. Commissioner, Trade 6 Tax, U.P., reported in 2009(2) SCC 90, in support of its claim for exemption. With reference to the aforesaid decisions an endeavour is made to contend that reasoning assigned to deny benefit of exemption under Section 4-A is wholly arbitrary and perverse. 9. The revision is opposed by the learned Standing Counsel Sri A.C. Tripathi, contending that the exemption notification will have to be strictly interpreted and construed. Submission is that every clause of the exemption notification would have to be assigned its ordinary meeting, and unless the applicant fulfills all conditions mentioned in the notification, the benefit of exemption cannot be granted. Submission is sought to be fortified by placing reliance upon a decision of the Apex Court in State Level Committee and another Vs. Morgardshammar India Ltd., reported in 1996(1) SCC 108. 10. On the basis of respective submissions advanced the question that arises for consideration is as to whether allotment of land is a substantive/mandatory condition in the exemption notification so that its non-compliance would justify denial of exemption? 11. Section 4-A of the U.P. Trade Tax Act, 1948 provides for exemption from trade tax in certain cases. The relevant part of the provision is therefore reproduced:- \"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 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: 7 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 * * * * * (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 ;\" 12. The provision makes it clear that where in the opinion of the State Government, it is necessary for increasing the production of any goods or for promoting the development of any industry in the State, or any district or part of district in particular, it may exempt the turnover of sales in respect of such goods from payment of tax in the manner contemplated. Conditions for grant of such exemption is to be specified in the notification itself. The notification extracted above would go to show that exemption was to be available to units starting production on or after 17th of January, 2000 where the unit is registered under the Act; has applied for a term loan from any finance corporation or company owned or controlled by the Central or the State Government or any Bank; unit would start production upto March 31, 2000; and unit is allotted land for the factory. Similar conditions exist in the other notification also. So far as the third notification dated 22nd December, 2001 is concerned, it also operates in substantially same period but a departure is made in the condition relating to obtaining of land. Condition that unit has been allotted land for the factory has been substituted with the expression that unit has obtained land from any source. Admittedly the revisionist 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. 8 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 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 provisions and, in case of doubt or ambiguity, the benefit of it must go to the State. A Constitution Bench of this Court in Hansraj Gordhandas v. H.H. Dave (1996) 2 SCR 253, held that- \"16. ... such a notification has to be interpreted in the light of the words employed by it and not on any other basis. This was so held in the context of the principle that in a taxing statute, there is no room for any intendment, that regard must be had to the clear meaning of the words and that the matter should be governed wholly by the language of the notification, i.e., by the plain terms of the exemption.\" 31. Of course, some of the provisions of an exemption notification may be directory in nature and some are of mandatory in nature. A distinction between provisions of statute which are of substantive character and were built in with certain specific objectives of policy, on the one hand, and those which are merely procedural and technical in their nature, on the other, must be kept clearly distinguished. In Tata Iron and Steel Co. Ltd. (supra), this Court held that the principles as regard construction of an exemption notification are no longer res integra; whereas the eligibility clause in relation to an exemption notification is given strict meaning wherefor the 9 notification has to be interpreted in terms of its language, once an assessee satisfies the eligibility clause, the exemption clause therein may be construed literally. An eligibility criteria, therefore, deserves a strict construction, although construction of a condition thereof may be given a liberal meaning if the same is directory in nature.\" The doctrine of substantial compliance and intended use has also been pressed into service in following words in Commissioner of Central Excise (supra):- \"32. The doctrine of substantial compliance is a judicial invention, equitable in nature, designed to avoid hardship in cases where a party does all that can reasonably expected of it, but failed or faulted in some 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 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 substantially complied with notwithstanding the non- compliance of directory requirements. In cases where substantial compliance has been found, there has been actual compliance with the statute, albeit procedurally faulty. The doctrine of substantial compliance seeks to preserve the need to comply strictly with the conditions or 10 requirements that are important to invoke a tax or duty exemption and to forgive non-compliance for either unimportant and tangential requirements or requirements that are so confusingly or incorrectly written that an earnest effort at compliance should be accepted. 34. The test for determining the applicability of the substantial compliance doctrine has been the subject of a myriad of cases and quite often, the critical question to be examined is whether the requirements relate to the \"substance\" or \"essence\" of the statute, if so, strict adherence to those requirements is a precondition to give effect to that doctrine. On the other hand, if the requirements are procedural or directory in that they are not of the \"essence\" of the thing to be done but are given with a view to the orderly conduct of business, they may be fulfilled by substantial, if not strict compliance. In other words, a mere attempted compliance may not be sufficient, but actual compliance of those factors which are considered as essential.\" 14. In Mangalore Chemicals & Fertilisers Ltd. (supra), following observations have been made in para 11, which is reproduced:- \"11. We have given our careful consideration to these submissions. We are afraid the stand of the Revenue suffers from certain basic fallacies, besides being wholly technical. In Kedarnath's case, the question for consideration was whether the requirement of the declaration under the proviso to Sec. 5(2)(a)(ii) of the Bengal Finance (Sales-tax) Act, 1941, could be established by evidence aliunde. The court said that the intention of the Legislature was to grant exemption only upon the satisfaction of the substantive 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 11 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 itself this Court pointed out that the stringency of the provisions and the mandatory character imparted to them were matters of important policy. The Court ob- served: \" ..... The object of s. 5(2)(a)(ii) of the Act and the rules made thereunder is self- evident. While they are obviously intended to give exemption to a dealer in respect of sales to registered dealers of specified classes of goods, it seeks also to prevent fraud and collusion in an attempt to evade tax. In the nature of things, in view of innumerable transactions that may be entered into between dealers, it will wellnigh be impossible for the taxing authorities to ascertain in each case whether a dealer has sold the specified goods to another for the purposes mentioned in the section. Therefore, presumably to achieve the two fold object, namely, prevention of fraud and facilitating administrative efficiency, the exemption given is made subject to a condition that the person claiming the exemption shall furnish a declaration form in the manner prescribed under the section. The liberal construction suggested will facilitate the commission of fraud and introduce administrative inconveniences, both of which the provisions of the said clause seek to avoid.\" (Emphasis Supplied) [ (See: (1965) 3 SCR 626 at p. 630: (AIR 1966 SC 12 at p.14.)] Such is not the scope or intendment of the provisions concerned here. The main exemption is under the 1969 notification. The subsequent notification which contain condition of prior-permission clearly envisages a procedure to give effect to the exemption. A distinction between the provisions of statute which are of substantive character and were built-in with certain specific objectives of policy on the one hand and those which are 12 merely procedural and technical in their nature on the other must be kept clearly distinguished. What we have here is a pure technicality. Clause 3 of the notification leaves no discretion to the Deputy Commissioner to refuse the permission if 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 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-tax Act\" was originally framed, it was expressly stated that the Government granted the facility of exemption in order to encourage the capital investment and establishment of industrial units in the State. The Scheme contained various rules for grant of such exemption. The Section itself has referred to the purpose for which the Government could grant such exemption. Sub-s. (1) of Section 4-A prescribes the maximum period for which the exemption could be granted as 7 years. As per the section, such exemption should commence from the date of first sale by such manufacture 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 starling production. The expression \"date of 13 starting production\" has been defined in the Explanation as the date on which any raw material required for use in the manufacture or packing of the goods is purchased for the first time. The term \"new unit\" used in the Section has also been defined in the Explanation. It is admitted that the respondent fulfilled the relevant conditions at the time when it applied for exemption as its capital investment did not exceed Rs 3 lakhs. Under the Notification extracted earlier, the period of exemption in case of unit with capital investment not exceeding Rs. 3 lakhs was four years. Such period was to be reckoned from the dale of first sale if such sale took place not later than six months from the date starting production and in other cases from the date following the expiration of six months from the date of starting production subject to the condition that the unit had not discontinued production of such goods for a period exceeding six months at a stretch in any assessment year. Neither the Section nor the Notification contains any condition that if the capital investment of the unit exceeds Rs. 3 lakhs after the grant of exemption, such exemption would cease to operate unless and until the conditions prescribed for units having capital 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 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 14 because the capital investment exceeded the limit of Rs. 3 lakhs on account of the respondent becoming the owner of land and building to which the unit was shifted. If the construction sought to be placed by the appellant is accepted, the very purpose and object of the grant of exemption will be defeated. After all, the respondent had only shifted the unit to its own premises which made it much more convenient and easier for the respondent to carry on the production of the goods undisturbed by the vagaries of the lessor and without any necessity to spend a part of its income on rent. It is not the case of the appellant that there was any mala fides on the part of the respondent in obtaining exemption in the first instance as a unit with a capital investment below Rs. 3 lakhs and increasing the capital investment subsequently to an amount exceeding Rs. 3 lakhs with a view to defeat the provisions of any of the relevant statutes. The bona fides of the respondent have never been questioned by the appellant.\" 16. In G.P. Ceramics Private Limited (supra) also, following observations are made in paras 33 to 35 and are reproduced:- \"33. 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 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. 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 15 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 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].\" 17. In State Level Committee (supra), whereupon reliance is placed by the revenue, following observations have been made in Para-14 and are reproduced:- \"14. We agree with the above statement of law except insofar as it states that where two view of the exemption notification are possible, it should be construed in favour of the subject since it is contrary to the decisions aforementioned including the three-Judge Bench decision in Novopan India Limited. It may be noted that this decision was referred to in Mangalore Chemical and Fertilizers and yet a slightly different principle enunciated. So far as decision in Hindustan Alumunium Corporation (referred to in Parle Export), rendered by a Bench comprising Tulzapurkar and R.S.Pathak,JJ., is concerned, it only holds that the expression \"mental\" occurring in a notification issued under U.P. Sales tax Act should be understood in its primary sense, i.e., in the form in which it is marketable as primary commodity. The learned Judges held that the subsequent forms evolved from the primary from constituted distinct commodities 16 marketable as such and must be regarded as new commercial commodities and not included within the four corners of the notification. This decision cannot therefor be understood as supporting the proposition enunciated in Parle Export with which we have disagreed. Be that as it may, the occasion for applying the said proposition arises only where there is \"real difficulty, in ascertaining the meaning of a particular enactment\" (statement in Parle Exports). In 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:- \"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 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;\" 19. It was the notification dated 31st March, 1995, which was followed by the notification in question dated 15.1.2000. The condition of allotment of land specified in the notification dated 15.1.2000 has been substituted vide subsequent notification of 22.12.2001, as per which land could be obtained from any source. Possessing of land has a direct nexus with establishment of new unit, inasmuch as the new 17 unit itself cannot come up in its absence. It has a direct nexus with the object sought to be achieved i.e. increase in production or development of industry in State. However, its mode of acquisition neither has any such nexus nor can it be attached the same importance. Section 4-A otherwise does not limit the grant of exemption to a unit depending upon the mode of acquiring land for it. 20. The construction sought to be culled out finds support from the exemption notification also. The last notification dated 22.12.2000 eliminates the mode of acquisition for the purposes of grant of exemption entirely. This clearly reflects that mode of acquisition was not of relevance, rather, it was possessing of land which alone had relevance for the context. 21. Any other construction, as is suggested by the learned Standing Counsel, may be open to challenge as being arbitrary. If it is allowed, a person who establishes new unit upon land owned by him or upon land purchased from the open market would not be disentitled to exemption, even if all other conditions are met. Such a classification would be impermissible in law. Mode of acquisition of land is not shown to have any relevance for the object sought to be achieved by promulgating Section 4-A of the Act or the exemption notification. Any distinction drawn based upon mode of acquisition of land would have no nexus with the object sought to be achieved, and thus would be violative of Article 14 of the Constitution of India. 22. It is otherwise not the object permissible in law, in view of the language employed in the Act, to restrict grant of exemption under Section 4-A only to those units which are established upon land allotted by State or its instrumentality. 23. In view of the law laid down by the Apex Court in Constitution Bench judgment in Commissioner of Central Excise (supra) and in view of the discussions aforesaid, I am of the considered opinion that possessing of land for establishment of new unit although constitutes the mandatory or substantive part of exemption notification but mode of acquisition of land is wholly directory, and its non-compliance would not affect the essence or substance of the notification in question, granting exemption. 24. The question posed for consideration in this revision is therefore answered, accordingly, in favour of the revisionist/assessee. ” 15. From the perusal of the aforesaid judgement, it is evidently clear that acquring the land of the factory is a conditional and procedural in nature and not mandatory. The issue in hand is 18 squarely covered by the aforesaid judgement of this Court in Atul Gases (supra). 16. In view of the aforesaid facts & circumstances of the case as well as the law laid down by this Court, the impugned order dated 04.08.2010 passed by the Full Bench of the Commercial Tax Tribunal, Lucknow in Appeal No. 23/2010 as well as the order dated 17.02.2010/16.03.2010 passed by the Divisional Level Committee, Trade Tax Exemption, Agra cannot be sustained in the eyes of law. The same are hereby set aside. 17. The revision is, accordingly, allowed. 18. The questions of law are accordingly decided in favour of the Revisionist. Order Date :-26/05/2025 Amit Mishra Digitally signed by :- AMIT KUMAR MISHRA High Court of Judicature at Allahabad "