- (1.) Section 4-A of the U. P. Sales Tax Act deals with exemption from sales tax of certain goods for a specified period. It states that where the State government is of the opinion that it is necessary so to do for increasing the production of any goods or of promoting the development of industry in the State or any part thereof, it may by notification declare that the turnover of sales in respect of such goods by the manufacturer thereof shall be exempted from sales tax or be liable to tax at such reduced rate as it may fix. This is subject to certain conditions, inter alia, regarding the period for which the exemption shall operate. Notifications were issued in pursuance of the power given to the State government by Section 4-A. The notifications specified the areas within which the exemption was to operate "in respect of any goods manufactured in an industrial unit" therein and the exemption was "on the turnover of sales of such goods. . ".
(2.) The appellants applied for exemption under the first of these notifications and stated therein the figures of actual production up to the date of inspection of their unit of sugar, molasses, bagasse and pressmud. They were given exemption in respect of the manufacture of sugar, but refused it on the production of molasses, bagasse and pressmud. The appellants filed a writ petition before the High court of Allahabad and, by the order under appeal, the writ petition was dismissed. The tenor of the judgment is that molasses, bagasse and pressmud are not items in the manufacture of which the appellant was principally engaged and that, therefore, the provisions of Section 4-A would not apply.
(3.) As Section 4-A itself makes clear, the exemption thereunder is to be granted when the State government is of the opinion that it is necessary so to do for the production of any goods or the promotion and development of industry in the State. The exemption applies to the turnover of sales "in respect of such goods by the manufacturer thereof". It is evident therefore that the exemption is given to the goods that are the principal object of the manufacture and not to such goods as may be incidental thereto. That molasses, bagasse and pressmud are incidental to the principal manufacture of sugar is, fairly, not disputed. For this reason, we are of the view that the High court was not in error.;