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2022 Supreme(All) 713
IN THE HIGH COURT OF ALLAHABAD
SAUMITRA DAYAL SINGH, J.
M/s Aligarh Cement Factory Private Limited – Appellant
Versus
The Commissioner Trade Tax, Lucknow – Respondent
Sales/Trade Tax Revision No. 269 of 2008
Decided On : 19-07-2022
Advocate Appeared:
For the Appellants : N.R. Kumar, Vishwajeet.
Headnote:
U.P. Trade Tax Act, 1948 - Section 4-A, AA, 1(1), (2) and (3) - Factories Act, 1948 - Section 2(m) - Employees, Provident Fund and Miscellaneous Provisions Act, 1952 - Section 16(1)(d) - Consumer Protection Act, 1986 - Section 13 - Constitution of India, 1950 - Article 14 - Exemption from Tax - Eligibility Certificate - Whether ‘Explanation’ to Notification (Restrictive Notification) was mandatory to be fulfilled, while applying that Notification to proviso (ii) of Clause 2 of Notification (Exemption Notification) - Whether Restrictive Notification was applicable to case of assessee - Whether ‘Explanation’ appended to Restrictive Notification, ousted claim of assessee to exemption - Whether it was restricted to 5% of sale price, under Clause 2 of Exemption Notification – Held, In present case, it is found though ‘Explanation’ appended to Restrictive Notification would apply to reading of Clause 2 of Exemption Notification, at same time, it would remain a directory provision of law - Where figure of employment to be computed under Restrictive Notification remained indeterminate, same would be read as ‘total employment’ granted otherwise - As noted above, there is no dispute to fact, considering that figure, percentage of employment granted by assessee to members of Scheduled Castes, Scheduled Tribes and Other Backward Classes and minorities was met, satisfactorily - Thus, substantial compliance of directory provision had been made by assessee - Therefore, proviso (ii) to Clause 2 of Exemption Notification wholly applied to assessee’s case - Consequently, restrictive Clause 2 of Exemption Notification did not apply to it - Still, consequentially, assessee was entitled to full exemption under Exemption Notification, as provided under Annexure No. I thereto - In view of above, question of law is answered in negative i.e. in favour of assessee and against revenue - Revision allowed.
JUDGMENT :
SAUMITRA DAYAL SINGH, J.
1. Heard Sri Vishwjit, learned counsel for the assessee and Sri A.C. Tripathi, learned Standing Counsel for the revenue.
2. Present revision has been filed by the assessee, against the order of the Trade Tax Tribunal, Aligarh Bench, Aligarh, dated 02.01.2008, in Second Appeal No. 445 of 2002 for A.Y. 1997-98 (U.P.) whereby the Tribunal has dismissed the appeal filed by the assessee and thereby upheld the order passed by the first appeal authority, restricting the available limit of exemption under section 4-A of the U.P. Trade Tax Act, 1948 (hereinafter referred to as the ‘Act’) to 5% of the sale price.
3. The revision has been pressed on the following question of law:
“Whether the ‘Explanation’ to Notification No. TT-2-779/XI-9 (226)/94 dated 31.03.1995 (Restrictive Notification) was mandatory to be fulfilled, while applying that Notification to proviso (ii) of Clause 2 of Notification No. TT-2-780/XI-9 (226)/94, dated 31.03.1995 (Exemption Notification)?”
4. In brief, the assessee set up a ‘new unit’ as defined under Section 4- A of the Act. Undisputedly, the assessee was granted Eligibility Certificate, creating exemption from tax (under the Act), for a period of 8 years, beginning from the date of the starting production- 04.04.1997 to 03.04.2005. Thus, A.Y. 1997-98 was the first year of business of the assessee.
5. For A.Y. 1997-98, the assessee disclosed sales turnover Rs. 23,01,369.50/-. It claimed full exemption on the same, under the Eligibility Certificate issued to it, read with Notification No. TT-2-780/XI-9 (226)/94 dated 31.03.1995 (hereinafter referred to as the ‘Exemption Notification’).
6. In the first place, under the Exemption Notification, exemption from tax was granted to the assessee, by virtue of it having established a ‘new unit’ at Aligarh. That exemption from tax was available to the extent described under column 4, for the year described in column 3, under Clause 3 of Annexure No. I to the Exemption Notification. It read as below:
| 3. | The districts of Agra (excluding Taj Trapezium area), Aligarh excluding Taj Trapezium Area), Allahabad (exclu- ding the area in south of rivers Jamuna and confluent Ganga but including the area included under Municipal Corporation Allahabad), Bareilly, Bhadohi, Bijnor, Firozabad, excluding Taj Trapezium Area), Ghaziabad (excluding the Greater Noida Industrial Development Area), Gorakhpur, Haridwar, Kanpur (Nagar), Lakhimpur Kheri, Lucknow, Maharajganj, Mirzapur, Meerut, Muzaffarnagar, Saharanpur, Sonbhadra and Varanasi. | Eight years | 1st Year | 100 percent | 100 percent | 175 percent of the fixed capital investment or, as the case may be, additional fixed capital investment in case of small scale units and 150 percent of the fixed capital investment or additional fixed capital investment in case of other units. |
| 2nd Year | 100 percent | 100 percent | ||||
| 3rd Year | 100 percent | 75 percent | ||||
| 4th Year | 100 percent | 75 percent | ||||
| 5th Year | 100 percent | 50 percent | ||||
| 6th Year | 100 percent | 50 percent | ||||
| 7th Year | 100 percent | 25 percent | ||||
| 8th Year | 100 percent | 25 percent |
7. At the same time, by virtue of Clause 2 of the Exemption Notification, the extent of exemption from tax, was limited to a maximum of 5% of the sale price. For ready reference, Clause 2 of the Exemption Notification read as below:
2. The facility of exemption from or reduction in the rate of tax, including additional tax specified in column 4 of Annexure I to any unit on any transaction of sale shall not exceed 5 percent of the sale price. The tax, including additional tax, in excess of 5 percent shall be payable by such unit according to law:
Provided that the provisions of the paragraph shall not apply to any unit:
(i) established in the districts of Almora, Chamoli, Dehradun, Nainital, Pauri Garhwal, Pithorag
