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TMI Blog2022 (8) TMI 56X X X X Extracts X X X X X X X X Extracts X X X X ..... Legislation by incorporation is clearly a well-recognized mode of legislation. In that, the legislature only avoids repetition of words, phrases, and even whole provisions - by virtue of proviso (ii) of Clause 2 of the Exemption Notification, the legislature chose to provide three conditions to be fulfilled to exclude the applicability of Clause 2 of the Exemption Notification. First, it excluded applicability of the restrictive Clause to new units established in specified districts. Second, it excluded that restrictive Clause to new units providing employment to members of specified categories, in prescribed percentages. Such new units would avail full/unrestricted exemption. Third, it was provided, the restrictive Clause 2 would not apply if Conditions and Restrictions specified in the Restrictive Notification, were fulfilled. The Restrictive Notification is not an addendum or corrigendum to the Exemption Notification. It is an independent notification issued under Section 4-AA of the Act. By its very nature, such notifications were issued by the State Government, at the relevant time, to grant exemption to a unit, based on employment granted - to persons belonging to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provided under Annexure No. I thereto. The question of law is answered in the negative i.e., in favour of the assessee and against the revenue - Revision allowed. - Sales/Trade Tax Revision No. - 269 of 2008 - - - Dated:- 19-7-2022 - Hon'ble Saumitra Dayal Singh, J. For the Revisionist : N.R. Kumar,Vishwajeet For the Opposite Party : C.S.C. ORDER HON'BLE 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 d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tal investment or additional fixed capital investment in case of other units. 2nd Year 100 percent 100 percent 3rd Year 100 percent 100 percent 4th Year 100 percent 75 percent 5th Year 100 percent 75 percent 6th Year 100 percent 50 percent 7th Year 100 percent 50 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 co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r is pleased to grant, with effect from April, 1, 1995, a concession of twenty-five percent in the rate of tax to such industrial units in the private sector as are registered under the Factories Act, 1948 and provide employment to the persons belonging to Scheduled Castes and Scheduled Tribes, other Backward Classes of Citizens and Minorities at the rate respectively of not less than 23 percent., 27 percent and ten percent of the total employment being provided by such industrial unit subject to the following conditions and restrictions: Conditions and restrictions. -- (1) An industrial unit may be granted concession in the rate of tax only if it files before the concerned assessing authority upto 31st December of the succeeding assessment year a certificate: (a) of the District Magistrate to the effect that the person who has been provided employment belongs to the category of Scheduled Castes or Scheduled Tribes or Other Backward Classes of Citizens or Minorities, as the case may be. (b) of an officer not below the rank of an Assistant Labour Commissioner to the effect that such industrial unit has provided employment to the persons belonging to Scheduled Castes, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y avoids repetition of words, phrases, and even whole provisions. The principle is the provisions of a former/first enactment are incorporated in a later/second enactment such that they become an absolute part of the later/second enactment, as if they had been bodily transposed into it, to the point still later/third enactment of repeal of the former/first enactment would not severe its incorporation into the later/second enactment, to the extent of its original incorporation. It would require a repeal of/in the later/second enactment, to cause that legal effect. That principle was recognized and applied in Ram Sarup Vs. Munshi Ors., AIR 1963 SC 553 . 16. Here, by virtue of proviso (ii) of Clause 2 of the Exemption Notification, the legislature chose to provide three conditions to be fulfilled to exclude the applicability of Clause 2 of the Exemption Notification. First, it excluded applicability of the restrictive Clause to new units established in specified districts. Second, it excluded that restrictive Clause to new units providing employment to members of specified categories, in prescribed percentages. Such new units would avail full/unrestricted exemption. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 39; contained therein. In essence, the 'Explanation' defines the term, 'total employment'. It has been used in Clause 1(b) and Clause 2 of the 'Conditions and Restrictions' under the Restrictive Notification. It provides - for the purposes of considering the 'total employment' generated by a new unit , only such of its employees would be counted, who may have contributed to the fund established under the Employees Provident Funds and Miscellaneous Provisions Act, 1952 (hereinafter referred to as the ' Employees Act'). Once that number (of total employment) would be determined, the percentage test - of employment granted to members of specified categories, could be easily applied, to that number determined. 22. It is not the case of the revenue that the number of employees engaged by the assessee who were making contribution to Employees Provident Fund was such that the 'total employment' generated by the assessee was much higher or such as would deplete the percentage of members of specified categories, employed by it, below the prescribed percentages. In fact, the revenue alleges in the converse, i.e. the employees of the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... if provident fund contribution were being made by only 100 of its workmen, the 'total employment' of that new unit , for the purpose of satisfaction of the 'Conditions and Restrictions', under the Restrictive Notification, would remain confined to 100 i.e., the lesser number and not the larger. Based on that determination, the percentage of employment (to be reserved for members of scheduled castes, scheduled tribes, other backward classes, and minorities), as a condition for grant of full exemption, would have to be determined. 27. Next, it may be noted, the Tribunal has wrongly taken note of Section 16(1)(d) of the Employees Act'. It was omitted by the Parliament by Act no.10 of 1998, with retrospective effect from 22.9.1997. However, it cannot be ignored, the said provision remained operative for part period of A.Y. 1997-98. At the same time, Section 1(1), 1(2) and 1(3) of the Act reads as below: (1) This Act may be called the Employees' Provident Funds and Miscellaneous Provisions Act, 1952. (2) It extends to the whole of India 5***. [(3) Subject to the provisions contained in section 16, it applies- (a) to every establishment w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax 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 [(1992) 3 SCC 78] is applied, there is no doubt whatever that the exemption granted to the respondent from 9-8-1985 when it fulfilled all the prescribed conditions will not cease to operate just 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 were any mala fides on the part of the respondent in obtaining exemption in the first instance as a unit with a capital inv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... factory in section 2(m) of the Factories Act and hence to insist upon such registration would deprive such small-units of the benefit of exemption under section 4-A. The special leave petition against the said decision was dismissed by the Supreme Court. The ratio of the said decision is obviously that the requirement of registration under the Factories Act is only directory and not mandatory. The purpose of requirement of registration is only to ensure that there is a genuine new unit and hence this condition need not be insisted upon when by other materials it can be demonstrated that a genuine new unit has been set up. The requirement of registration under the Factories Act has, hence, to be treated as directory and not mandatory. 33. Again, in the context of the exemption granted under Section 4-A, in M/S Atul Gases Vs. Commissioner of Commercial Taxes, U.P. Lucknow Anr., 2018 UPTC 198 , with respect to requirement of ownership of land, it was found, acquisition of land was not a condition that may be inferred so long as its ownership derived from open market was not doubted. Accordingly, a co-ordinate bench of this Court observed as under: 20. The construction ..... X X X X Extracts X X X X X X X X Extracts X X X X
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