Holding

Exemption under Section 4‑A may be granted for the period after the lease registration date, i.e., 3 years 1 month 4 days from 27 March 1990.

Summary

The Divisional Level Committee and the State of Uttar Pradesh appealed against a High Court order that had upheld Harswarup Drum Udyog's claim to sales‑tax exemption under Section 4‑A of the U.P. Sales Tax Act, 1948. The respondent's application was initially rejected because the lease deed, required to be registered for at least seven years, was registered on 27 March 1990, after the first sale on 19 May 1989. The High Court held that the exemption could commence from the registration date but did not specify the period. The Supreme Court examined whether exemption could be granted for a part of the period when the statutory conditions were satisfied later, and held that Section 4‑A permits partial exemption. Since the lease registration satisfied the condition on 27 March 1990, the exemption was limited to the remaining 3 years 1 month 4 days. The Court dismissed the appeal, confirming the clarified period of exemption.

Issues considered

Whether a manufacturer can claim exemption under Section 4‑A of the U.P. Sales Tax Act for a period after the statutory conditions are fulfilled later than the date of first sale
Whether exemption can be granted for only part of the period contemplated in Section 4‑A

Subjects

sales tax exemptionSection 4-Alease registrationpartial exemptionUttar Pradesh Sales Tax Acttax law

Judgment

A DIVISIONAL LEVEL COMMITTEE AND ANR. .._

v.
~-·
.
I

HARSWARUP DRUM UDYOG

FEBRUARY 2, 1999
[
B [M. SRINIVASAN AND U.C. BANERJEE, JJ.]

U.P. Sales Tax Act, 1948: Section 4A. ,.
•
Sales T~xemption from-Respondent's application dated
c 28.1.1992 for exemption of sales t~ejection--Ground that the registration
of the lease deed was made on 27.3.1990 after the date of the first sale,
namely, 19.5.1989 and, therefore, the lease deed having been registered after
the date of the availability of the facility of exemption, the respondent was not
entitled to claim the benefit of section 4-A-High Court held that the lease
D deed having been registered on 27.3.1990, the respondent was entitled to get
the exemption with effect from the date-However, it did not made clear
whether the respondent would get exemption for a period offour years from
27.3.1990-Appeal before Supreme Court-Held, Sub-section (1) of Section -,..
4-A itself contemplates the grant of exemption whether 'wholly or

E partly'-Therefore, an assessee can get exemption for a part of the period
subject to fulfilment of all the conditions--!n the present case, the relevant
condition is found in sub-cluase (c) of Clause 1 of Explanation to Section
4(1) A-:ln the present case though the lease was taken by respondent much
earlier but the registration was made only on 27.3.1990-The lease being one
for a period of seven years, required registration and will satisfy the require-
F ment of the Section from the date of registration-Hence the High Court was
right i~ holding that all the conditions are fulfilled on 27.3.199()-[n the
present case, sub-section 5 of section 4A governs the situation-The respon-
dent no doubt applied for exemption for the entire period but the conditions
were fulfilled only on 27.3.1990 and the exemption can be granted only for
G the remaining period after that date-:ln other words, the respondent will be
entitled to exemption for a period of 3 years 1 month and 4 days from
27.3.1990.
•
._..,,,,,,,,,.
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 3543 of
H 1996.
336
..(

DIVISIONAL LEVEL COMMITTEE v. HARSWARUP DRUM UDYOG 337

From the Judgment and Order dated 5.12.94 of the Allahabad High A
---.- Court in C.M.W.P. No. 485 of 1992.

Avadh Behari Rohtagi, R.B. Misra, (Sunil Kumar) (NP). Jitendra
Mohan Sharma, Dr. Meera Aggarwal and Ramesh Chandra Mishra for the
appearing parties.
", B
The following Order of the Court was delivered :
...•
The Divisional Level Committee constituted under Section 4-A of
the U.P. Sales Tax Act, 1948 (for short "the Act"), and the State of U.P.

-
are aggrieved by the order of the High Court passed in Civil Misc. Writ
Petition No. 485 of 1992 quashing the order of the Committee rejecting an
c
application filed by the respondent for exemption from payment of sales
tax under Section 4-A of the Act.

2. The order of the Joint Director of Industries rejecting the applica-
tion of the respondent dated 28.1.1992 shows that the rejection was on the D
ground that the registration of the lease deed was made on 27.3.1990 aft:::r
the date of the first sale, namely, 19.5.1989 and, therefore, the lease deed
having been registered after the date of the availability of the facility of
exemption, the respondent was not entitled to claim the benefit of Section
4-A. The High Court has held that the lease deed having been registered
on 27.3.1990, the respondent was entitled to get the exemption with effect
E
from that date. The High Court has not, however, made it clear whether
the respondnet would get exemption for a period of four years from
27.3.1990.

3. Learned counsel for the appellants contends that the respondent F

- not having fulfilled all the conditions prescribed in Section 4-A of the Act
for getting the exemption on the date on which the first sale was effected,
is not entitled at all to get the exemption for any period whatsoever.
According to him, the relevant date for grant of exemption is the that date
of first sale as contemplated by sub-section (1) of Section 4-A of the Act.
According to him, if on that date, all the conditions are not fulfilled and
G

--.
~
they are fulfilled at a later date, the assessee will not be entitled to get the
exemption.

4. We are unable to agree with this contention. Sub-section (1) of
Section 4-A itself contemplates the grant of exemption whether 'wholly or H
338 SUPREMECOURTREPORTS. [1999] 1 S.C.R.
A partly'. That is sufficient to indicate that an assessee can get exemption for
a part of the period subject to fulfilment of all the conditions. In the present
case, the relevant condition is found in sub-clause (c) of clause 1 of
Explanation to the Section. Under that clause, a land or building or both
should be owned or taken on lease for a period not less than seven years
t
B by the dealer concerned. In the present case though the leave was taken
much earlier, the registration was made only on 27.3.1990. The lease being
one for a period of seven years, required registration and will satisfy the
requirement of the Section from the date of registration. Hence the High
Court is right in holding that all the conditions are fulfilled on 27.3.1990.

C 5. Sub-section (5) of Section 4-A reads as follows to the extent
relevant:

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

(b) if he applies for such facility later than the date specified
in clause (a) only for a part of the period notified under sub-section
(1) which shall be computed from the date of application till the
E end of the period of facility;

xxx xxx xxx xxx

In the present case, the said sub-section governs the situation. The
respondent no doubt applied for exemption for the entire period but the
F conditions were fulfilled only on 27.3.1990 and the exemption can be
granted only for the remaining period after that date. In other words, the
respondent will be entitled to exemption for a period of 3 years 1 month
and 4 days from 27.3.1990. In the present case, there is no dispute with
regard to the other conditions set out in the Section having been fulfilled
G by the respondent.

6. Learned counsel for the appellants contends that the matter
should be remitted back to the High Court inasmuch as the respondent did
not apply for exemption for a part of the period and the application was
- ,_
for the entire period of four years. We are unable to accept this contention.
H There is no need for remitting the matter as all the facts are clear. The
DIVISIONAL LEVEL COMMITfEE v. HARSWARUP DRUM UDYOG 339
-+ respondent has no doubt applied for a larger relief but the court is entitled A
to mould the relief and grant a smaller relief than what is prayed for.

7. In the circumstances of the case, the judgment of the High Court
is confumed with the clarification that the, exemption will be for a period
of 3 years 1 month and 4 days from 27.3.1990. The appeal is dismissed with
the above clarification, with costs. B
T.N.A. Appeal dismissed.