Holding

When land is allotted by the State or a statutory corporation, only the allotment letter satisfies the documentary requirement for the eligibility certificate; the lease deed is not mandatory, and the exemption must be granted from the date of first sale.

Summary

G.P. Ceramics Pvt. Ltd. set up a new industrial unit on land allotted by the Uttar Pradesh State Industrial Development Corporation and began production with its first sale on 24‑Oct‑1992. It applied for trade‑tax exemption under Section 4‑A of the U.P. Trade Tax Act within six months, but the authorities required a copy of the lease deed, which was furnished only on 16‑Apr‑1994. Consequently, the eligibility certificate was granted for the period 16‑Apr‑1994 to 23‑Oct‑2002, reducing the exemption from ten to eight years. The appellant argued that, because the land was allotted by a statutory corporation, the lease deed was not a condition for eligibility and the exemption should commence from the first sale date. The Supreme Court held that the notification and Rule 25 require only the allotment letter when land is allotted by the State or a statutory corporation; the lease deed is not a prerequisite. Accordingly, the exemption was to be granted for the full ten‑year period from 24‑Oct‑1992, and the authorities’ order was set aside.

Issues considered

The requirement of furnishing a copy of the lease deed for eligibility under the trade‑tax exemption notification.
Whether the exemption period should commence from the date of first sale (24‑Oct‑1992) or from the date the lease deed was filed (16‑Apr‑1994).
Interpretation of Section 4‑A of the U.P. Trade Tax Act and Rule 25 of the U.P. Trade Tax Rules in the context of land allotted by a statutory corporation.

Legislation cited

U.P. Trade Tax Act, 1948s. 4A

Subjects

trade taxexemptioneligibility certificateSection 4-ARule 25lease deedland allotmentliberal constructionindustrial unitUttar Pradesh

Judgment

[2008] 16 S.c.R.·315

M/S. G.P. CERAMICS PVT. LTD. A
II.
COMMISSIONER, TRADE TAX, UP.
(Civil Appeal No. 6709 of 2008)

NOVEMBER 19, 2008 8
[S.B. SINHA AND CYRIAC JOSEPH, JJ.]
t
U.P. Trade Tax Act, 1948; Ss. 4A and Exemption
Notification:
c
Trade Tax - Exemption from payment to new Unit -
Effective date - Held: In terms of provisions under s.4A of
the Act, exemption from payment of tax has to be granted in
favour of new unit on the basis of eligibility certificates - In
. _ case, the Unit fails to furnish additional information within D
the prescribed time, the date on which such application
"-.
completed/additional information furnished shall be treated
as date of application of such Unit in terms of r.25(1)(c) of
the Rules - The said Rule has to be read with s.4-a of the
Act - Execution' of a Deed of Lease may be a condition for E
grant of allotment but the grant is not subject to the date of
lease or period specified therein - Since the assessee had
fulfilled the eligibility criteria for grant of exemption on
24.10.1992, it had acquired a right to grant exemption from
the same date - Under the circumstances, the assessee F
+.- should not have been deprived from availing the benefit of

the Notification.

U.P. Trade Tax Rules; r.25 - Grant of eligibility certificate.

The question which arose for determination in this G
Civil Appeal was as to whether an industrial Unit set up
~
on the plot of land allotted by the State Industrial
Development Corporation was entitled to get exemption
from payment of trade tax from the date of sale of the
315 H
316 SUPREME COURT REPORTS [2008) 16 S.C.R.
~

A finished product manufactured by it as held by the
f-
authority or from the date of grant of eligibility certificate
by the authorities concerned as claimed by the assessee.

Appellant-assessee contended that the High Court
B has 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; and
that the appellant could not file the lease deed within the
c stipulated period as the lease deed was lying with UP
State Industrial Development Corporation which is owned
by the State Gover1.1ment, and, therefore, the authorities
must be held to have acted arbitrarily in reducing the
period of exemption from ten years to eight years.
D
Respondent-authority submitted 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
E for the applicant to supply a copy thereof, failing which
the 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
F thereto.
_.. ,,.,.,
Allowing the appeal, the Court ~
~

HELD: 1.1. The grant of exemption from payment of
trade ta~ for the s·pecified period in favour of owner of a
G new unit was to be granted on the basis of the eligibility
certificate. An eligibility certificate was granted jn favour
of the appellant by the authorities 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
H the appellant only on 16.4.1994. [Para 16] (329-D-E]
G.P. CERAMICS PVT. LTD. v. COMMISSIONER, TRADE 317
TAX, UP.

1.2. The fact that the appellant was entitled to grant A
of exemption is not in dispute. It is also not in dispute
that a statutory corporation has allotted a land in its favo1:.1r
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 B
has been filed on 12.3.1993, i.e., within a period of six
months therefrom. [Para 21] [331-C-D]
>--
1.3. Section 4-A of the U.P. Trade Tax Act does not
provide for any procedure for filing of an application. The
procedures are laid down in the Rules. For the purpose
c
of grant of eligibility certificate, the conditions attached
thereto, inter alia, are that an application must be filed in
the prescribed form. [Para 22] [331-E-F]

1.4. The power of the General Manager to ask for any D
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 Rules 25 of the
Rules assumes importance as the only bone of
contention between the parties is as to whether t~e E
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

- I
,_
the application is completed or the additional information F
is furnished shall be treated as the date of application of
such unit. There cannot, however, be any doubt that the
said Rule has to be read with Section 4-A of the Act,
particularly, clauses (b) and (d) of sub-section (2) thereof.
[Paras 23 and 24] [331-G-H; 332-A-B]
G
""""' 1.5. It is true that an instrument of lease was entered
... into on 18.9.1991 whereby a lease for a term of 90 ye~us
was executed on 28.10.1991. 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 H
318 SUPREME COURT REPORTS [2008] 16 S.C.R. .,

A 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. [Paras 28 and 29) [333-F-G]

2.1. The eligibility criteria are laid down in the
B
notification provide for three contingencies. They are
disjunctive in nature and not conjunctive. 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
c satisfies the same, the exemption notification should be •
construed liberally. [Paras 30 and 32] [333-H; 334-G]

Commissioner, Trade Tax, U.P. v. DSM Group of
Industries (2005) 1 SCC 657; Tata Iron & Steel Co. Ltd. v.
D State of Jharkhand & Ors. (2005) 4 SCC 272; 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 Kera/a & Ors.
E (2007) 2 SCC 725 and Reiz Electrocontrols (P) Ltd. v.
Commissioner of Central Excise, Delhi-I (2006) 6 SCC 213,
relied on.

2.2. The allotment was made for setting up of an
industrial unit for manufacture of fire bricks. 'Some
F 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
G letter of allotment. (Para 31] (334-E-F]
~

2.3. 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
H anomalous. If a plain meaning given to the provision for ~

"
G.P. CERAMICS PVT. LTD. v. COMMISSIONER, TRADE 319
TAX, UP.
the purpose of considering as to whether the applicant A
had fulfilled the eligibility criteria as laid down in the
notification not is found to be clear, purpose and object
the notification seeks to achieve must be given effect to.
[Para 34] [337-E]
8
State Level Committee & Anr. v. Morgardshammar India
Ltd. (1996) 1 SCC 108 and Commissioner, Trade Tax, UP.
>-, v. DSM Group of Industries (2005) 1 SCC 657, referred to.

2.4. Execution of a deed of lease may be a condition
for grant of allotment but the grant is not subject to the c
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 D
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. [Para 35] [338-A-B]
2.5. Each department of the State is supposed to be E
in touch with the other department 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 F
" !-- authorities of the Industries Department of the State
........-
Government 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

.. ...I-
applicant is not complete or otherwise required. It is not G
in dispute that the attested copies of the letters of
allotment had been furnished. If the same subserved the
statutory requirements, this Court does 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 H
320 SUPREME COURT REPORTS [2008] 16 S.C.R.

A years beginning from 24.10.1992 to 23.10.2002. [Para 36)
[338-C-F]
2.6. 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
B
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 ...'"
c thereof and there exist 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. [Para 37] ]338-G-H; 339-A]

D State of Orissa & Ors. v. TA TA Sponge Iron Ltd. (2007)
(8) sec 189, relied on.
Case Law Reference: .A.

(2005) 1 sec 657 Relied on Para 32
E
(2005) 4 sec 212 Relied on Para 32
(1996) 1 sec 108 Relied on Para 32
(1994) Supp.(3) SCC 606 Relied on Para 32
F (2007) 2 sec 725 Para 32

•
Relied on
,.;
(2006) 6 sec 213 Relied on Para 32
(1996) 1 sec 10s Referred to Para 33

G (2005) 1 sec 657 Referred to Para 33
(2001) (8) sec 189 Relied on Para 37 ....
CIVIL APPELLATE JURISDICTION : Civil Appeal +-
No.6709 of 2008.
H
G.P. CERAMICS PVT. LTD. v. COMMISSIONER, TRADE 321
TAX, UP.

--\ From the final Judgment and Order dated 10.7.2006 of the A
High Court of Judicature at Allahabad in Trade Tax Revision
No. 141 of 1999.

Kavin Gulati, Rashmi Singh, Avinash Pandey and T.
Mahipal for the Appellant. B

..... r Sunil Gupta, Manoj Kumar Dwivedi and Gunnam
Venkateswara Rao for the Respondent.

The Judgment of the Court was delivered by
c
d
5.8. 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
D
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:
1
Appellant is a private limited company registered under the E
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 14.3.1991and11.7.1991
___,,_,,_ ,._ F
_.. allotted plot No.C-28 and C-29, lndustriai 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 0
from 29.9.1992. The first sale of the finished product was made
~ .J;
on 24.10.1992.

It filed an application claiming.exemption from payment of
trade tax on the tu,rn over of manufactured products in Form 46 H
322 SUPREME COURT REPORTS [2008] 16 S.C.R.

A 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
B appellant by the said authority on 4.6.1993 purportedly for the
purpose of removing to remove the said objection.
~ ....
A copy of the deed of lease was furnished to him only on ~
I
or about 16.4.1994.

c 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
D 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
E
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 selJarate appeals against
the aforementioned orders dated 21.8.1995 and 27.7.1996

F
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
G has dismissed the revision application filed by the appellant
herein. "'
~ <'

7. Appellant is, thus, before us.

8. Mr. Kavin Gulati, learned counsel appearing on behalf
H
0
G.P. CERAMICS PVT. LTD. v. COMMISSIONER, TRADE 323
TAX, UP. [S.B. SINHA, J.]

of the appellant, would submit that the High Court as also the A
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 B
deed of lease, as, admittedly, the land in question has been
allotted in favour of the appellant by the PUS IDC, 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 c
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 D
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 E
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.
F
......._
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
G
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 H
324 SUPREME COURT REPORTS [2008] 16 S.C.R. )

A 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 distriet 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
B 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 ·-
c 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
D
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
E 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
F 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
G
from, or reduction in the rate of tax, shall be admissible--

(a) +-- ..
(b) in respect of such of those goods only as are
H manufactured in a new. unit, the date of starting
G.P. CERAMICS PVT. LTD. v. COMMISSIONER, TRADE 325
TAX, UP. [S.B. SINHA, J.]

..... -Ji
production whereof falls on or after the first day of
October, 1982; or
A

xxx xxx xxx
(d) only if the manufacturer furnishes to the assessing
8
~
authority an Eligibility Certificate granted by such
officer, in accordance with such procedure, as may
)< be specified ;

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

(a) if he applies for such facility within six months from
-----.
D
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 SeptefTlber 30, 1992,
whichever expires later, for the entire period notified
under that sub-section; E
(

(b) if he applies for such facility later tha·n 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 F
~ 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 G
(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 notlfied under subsection (1 ), then
subje~t to the provisions of Clause (b), only for part
H
·if
-I
326 SUPREME COURT REPORTS [2008] 16 S.C.R.

A of the period, notified under sub-section (1 ), which
shall be computed from the date on which all the f.--
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
B 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).
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 person who has interest
in the existing factory or workshop as proprietor or
partner or agent or managing director or promoter
D director or as holding company or subsidiary
company, if the production of the existing factory or
workshop is not less than the gase production:
A.

Provided that if the production of the existing factory
E 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."

F 12. Admittedly, the State of Uttar Pradesh in exercise of
its rule making power under the Act framed Rules known as
A;
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
G under:

"25. Grant of eligibility certificate -
t---
(1) (a) The application for grant of eligibility certificate by
H a new unit or a unit which has undertaken expansion,
G.P. CERAMICS PVT. LTD. v. COMMISSIONER, TRADE 327
TAX, UP. [S.B. SINHA, J.]

_, diversification, backward integration or modernization shall A
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, District Industries Centre of the B
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
c
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 D
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 E
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 :
F

"10. Title of land or building-

(a) Self-owner (Enclose the attested G
copy of title deed).
-f
(b) Taken on lease (Enclose the attested
copy of registered lease
deed).
H
328 SUPREME COURT REPORTS [2008) 16 S.C.R.

A (c) allotted by (Enclose the attested
Government or a copy of such allotment
Or a Corporation letter)"
A Company owned
. _Or controlled by the
B ·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:
c
"28. 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
D 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;
E
(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
F 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
G
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
-un'it under ?ection 4-A of the Act;

H
G.P. CERAMICS PVT. LTD. v. COMMISSIONER, TRADE 329
TAX, UP. [S.B. SINHA, J.]
~
(iv) that the said unit furnishes to the assessing authority A
concerned an eligibility certificate granted in this
behalf by the General Manager, District Industries
Centre, Area Development Officer (Industry) of the
concerned Industrial Development Authority,
Additional or Joint Director of Industries of the range 8
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 c
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.
D
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 E
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 F
/ consideration is as to whether in a case wh.ere land has been
allotted in favour of an industrial undertaking which was followed
by execution of the deed of lease, supply 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. G
-f 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
H
330 SUPREME COURT REPORTS [2008] 16 S.C.R.

A 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
B 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-
c 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-
D
section, or by 30th September, 1992 whichever expires later.
Clause (c) of 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 laler than the date of commencement of the period of
E
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
F manufacturer, who was eligible for such facility under claus~ (c) ~
t-
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 notconcerned with
the Explanations appended thereto.
G
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.
H
G.P. CERAMICS PVT. LTD. v. COMMISSIONER, TRADE 331
I TAX, UP. [S.B. SINHA, J.]
~
the conditions laid down under the Act or Rules made A
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 B
definition.
r
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.
c
21. It is in the aforementioned backdrop, the notification
dated 27. 7.1991 and, in particular, paragraph 28 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 D
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.
E
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
F
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. G
Clause (c) of sub-rule (1) of 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 H
332 SUPREME COURT REPORTS [2008] 16 S.C.R.
'

,... "
A 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.

B 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 in.cidental question which would arise for our
consideration is as to whether if in terms of the Act or the Rules
c framed thereunder, the appellant was not required to supply a
copy of the deed of l~ase, failure on his part to supply a copy
,.
of the deed. of le.ase would attract clause (c) of sub-rule (1) of
Rule 25 or not. :

D 26. The eligibility criteria is contained in the notification.
Sub-clause (ii) of Clause 28 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 ur.it is established on '"'
la'nd or building or both taken on lease for a period of not less
E than 15 years; or (iii) the unit is established on land or building
9r both 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. ..

,,
Indisputably, the plots in question had been allotted by
F PUSIDC, a State Government Corporation on or about
14.3.1991and11.7.1991.

27. We may, for proper appreciation of the respective
contentions of the parties;· notice the relevant portion of one of
~

-
c
G 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
H site No.2 at Jaloun in the conditions noted below for setting
G.P. CERAMICS PVT. LTD. v. COMMISSIONER, TRADE 333
TAX, UP. [S.B. SINHA, J.]
-~ up an industrial unit to manufacture Fire Brieks. A

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

2. The date of this letter will be treated as the date of
8
allotment of the above plot in your favour.
,
xxx xxx xxx
5. You will utilize minimum 30% area of the plot by c
covering it by roof/permanent shed with the
spec;ified period as contained in the Licence
Agreement/Lease Deed, failing which the allotment
of the plot(s) will be cancelled.
D
6. It will be your sole responsibility to get NOC from
UP/CB (UP Pollution Control Board) and if it is not
i. 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 E
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. F

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
G
r· 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 n~w a
H
334 SUPREME COURT REPORTS [2008] 16 S.C.R.

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
B construction of the provisions of the Rules and consequently the
statutory enactment. 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
c 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
0
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
E 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 allo.tment
becomes effective on and from the date of issuance of the letter
F 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
G applicant satisfies the same, the exemption 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.
H Morgardshammar India Ltd. [(1996) 1 SCC 108]; Novopan
G.P. CERAMICS PVT. LTD. v. COMMISSIONER, TRADE 335
TAX, UP. [S.B. SINHA, J.]
_.. India Ltd., Hyderabad v. Collector of Central Excise & A
Customs, Hyderabad [1994 Supp.(3) SCC 606]; A.P. Steel Re-
Rolling Mill Ltd. V. State of Kera/a & Ors. [(2007) 2 SCC 725];
and Reiz Electrocontrols (P) Ltd. v. Commissioner of Central
Excise, Delhi-I [(2006) 6 SCC 213].
B
33. The learned counsel for the parties, however, have
y drawn our attention to two decisions of this Court construing
r 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 c
sec 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 : D

"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-A. While providing
for exemption, the Legislature has hedged it with certain E
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 F
I'
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 G
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 H
336 "SUPREME COURT REPORTS [2008] 16 S.C.R.

A 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 unit which
is sought to be expanded, modernized or diversified, stating :

·B "25 .... As seen above, the term "unit" has the meaning as
defined in Section 4-A. As we have afready seen, Section
4-A defines the term "u-nit" 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
c can include the plural. A plain reading of the notification
shows that for "expansion, 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,
D 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.
E 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
F
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
G 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
H investment is rupees fifty crores or more, the benefit of the
G.P. CERAMICS PVT. LTD. v. COMMISSIONER, TRADE 337
TAX, UP. [S.B. SINHA, J.]

notification would be available. Such benefit would then be A
------\ 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 B
the fixed capital investment in those units, whereas in
respect of units in Bijnore the benefit would be to the extent
r of 150% of the fixed capital investment in that unit.
rt Similarly, the base production and the starting date of
production could be in respect of those units. However, it c
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." D
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 E
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.
F
-- )-
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 t~e G
... 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 fOL-grant of allotment but the grant is not H
338 SUPREME COURT REPORTS (2008) 16 S.C.R.

A subject to the date of lease or the period sp.ecified 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
B 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. y

·36. An exception has been made as regards allotment of
land by the State or a statutory corporation. The exemption is
c 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
D 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
E 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 h1d 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
F 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
G 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
'y
be obtained or furnished. If the appellant, thus, had fulfilled the
eligibility criteria for grahtof exemption, it had acquired a right
in respect thereof and we see no reason why it should have
H
•'
G.P. CERAMICS PVT. LTD. v. COMMISSIONER, TRADE 339
TAX, UP. [S.B. SINHA, J.]

been deprived therefrom. It is in that sense the exemption A
~ 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 8
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/-.
c
S.K.S . Appeal allowed.

....