Heard learned counsel for the parties and also the learned Standing Counsel. In view of exchange of affidavits, the present writ petition is being disposed of finally at the stage of admission in accordance with the rules of the Court.

The petitioner seeks quashing of order dated 29th June, 1988, passed by the Divisional Level Committee, Meerut, respondent No. 2 (annexure 14 to the writ petition) and also quashing of order dated 14th March, 1988 (annexure 11 to the writ petition ). Further a direction to respondent No. 2 to grant the exemption/eligibility certificate under section 4-A of the U. P. Sales Tax Act, 1948, to the petitioners in respect of unit No. 2 manufacturing ampicillin trihydrate and ampicillin anhydrous for a period of five years with effect from 29th October, 1983, has been sought.

The petitioners earlier made an application under section 4-A of the U. P. Sales Tax Act for the grant of exemption in respect of unit No. 2. The said application was rejected for the reason recorded in the impugned order as aforesaid. Aggrieved as against that the petitioners made an application for review of the said order. The Divisional Level Committee, Meerut, after considering the said application, rejected the review application of the petitioners also. Aggrieved as against that, the petitioners have preferred the present writ petition for quashing of the aforesaid two orders.

The petitioners contention is that the second unit set up by the petitioners is entitled to exemption under section 4-A being a new unit. It is not in dispute that the said unit has been established on the adjacent site of the factory of the petitioners, which was unit No. 1 manufacturing paracetamol. According to the petitioners, paracetamol is a non-schedule drug under the Drugs and Cosmetics Act, 1940, while the ampicillin trihydrate and ampicillin anhydrous is a scheduled drug and the manufacturing unit set up by the petitioner-company subsequently for manufacturing the latter machine is entirely a new unit.

The review application was dismissed mainly on two grounds : (1) Neither the land, building, machines, raw materials, electric connection nor registration of the factory is in the name of the alleged new unit; (2) Para 10 of the Commissioners Circular dated 10th March, 1987, annexure 16 to this writ petition is of no help to the petitioners as the petitioners are not using the finished goods of the earlier unit as its raw material. Circular refers that a unit cannot be refused exemption on the ground that the raw material used by the unit is the finished goods of an earlier unit.

Having heard learned counsel for the parties and having considered the material at length we find so far as the first ground is concerned, it is not in dispute that the petitioner is a private limited company. It is under that company the first unit was established for which the registration certificate under the Factories Act was obtained in the name of the said private limited company. The respondent, Divisional Level Committee, Meerut, rejected the claim of the petitioners on the ground that since the land, building, machines, raw materials, electric connection and registration of the factory, etc. , not being in the name of the new unit, it cannot be said that the unit is a new one. The Divisional Level Committee, Meerut, respondent No. 2 committed an error in coming to that conclusion on the facts of this case. The two units have been established, according to the petitioners, by the said private limited company for which the company purchased the land, machinery, etc. The question is to be examined in terms of the definition of the "new unit" given under section 4-A of the Act. The new unit is defined under explanation (i) of section 4-A (2) of the Act which is quoted hereunder :

" (i) new unit means a factory or workshop whether set up by a dealer already having an industrial unit manufacturing the same goods at any other place in the State