The main legal point established in the judgment is the interpretation of Section 3-H of the U. P. Trade Tax Act, 1948, and its interaction with the eligibility certificate issued under Section 4-A, as well as the clarification that the State Development Tax is an independent tax to which the composition scheme under Section 7-D of the Act would not apply.

ORDER :

SLP(C) No. 21275/2014 and SLP(C) No. 26967/2015

1. Delay condoned.

2. Leave granted.

3. Heard the learned counsel for the parties at some length.

4. As the issue raised in this appeal relates to interpretation of Section 3-H of the U. P. Trade Tax Act, 1948, inserted w.e.f. 01.05.2005, we deem it appropriate to reproduce Sub-Sections (1) and (3) of Section 3-H, which read:

“3-H. State Development Tax- (1) There shall be levied a State Development Tax at the rate not exceeding one per cent of the taxable turnover as the State Government may by notification specify on the dealers whose aggregate turnover as referred to in subsection (2) of Section 3, exceeds fifty lakh rupees. The State Development Tax shall be realised in addition to the tax payable under any other provision of this Act. This tax shall cease to be levied after a period of five years from the date of publication of the notification issued by the State Government under this section.

(2) xxxxxxxxxxxxxxxxxxxxxxxxx

(3) The State Development Tax shall be adjustable in the monetary limit specified in the eligibility certificate issued under Section 4-A.

(4) xxxxxxxxxxxxxxxxxxxxxxxxx”

5. Section 3-H applicable from 01.05.2005 levies a new tax, namely the State Development Tax, payable as may be specified by the State Government in a notification at the rate not exceeding one per cent of the taxable turnover by the dealers whose aggregate turnover exceeds Rs. 50 lakhs. The State Development Tax is in addition to the tax payable under any other provision of the said Act. The tax imposed would cease to apply after five years from the date of publication of the notification issued by the State Government under Section 3-H. Sub-section (3) of Section 3-H states that the assessee is entitled to adjustment of the State Development Tax within the monetary limits specified in the exemption certificate issued under Section 4-A of the 1948 Act. We would, therefore, like to reproduce the relevant portion of sub-section (1) to Section 4- A of the U.P. Trade Tax Act, 1948, which reads:

“Section 4-A. Exemption from trade tax in certain cases. - (1) Notwithstanding anything contained in any other provisions except the provisions of Section 3-H of 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:

Provided that in respect of goods manufactured in a new unit having a fixed capital investment of five crore rupees or more 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.”

XX XX XX

6. The words “Notwithstand