Nanavati, J. - (1.) The question that arises for consideration in these two appeals is whether 'toffee' is 'sweetmeat' or a commodity of a like nature and therefore the appellant's industrial units making toffees, though newly set up, were not entitled to the benefit of exemption from payment of sales tax under notification dated 27-7-1991, issued by the State of Uttar Pradesh, in exercise of its powers under Section 4A of the Uttar Pradesh Sales Tax Act, 1948 (for short 'the Act').
(2.) With a view to step up economic growth by promoting development of certain industries in the State, the U.P. State Government decided to grant exemption from payment of sales tax to new industrial units and to units undertaking expansion, diversification or modernization. To achieve that object, it issued a notification on 27-7-1991 under Section 4A of the Act. For ready reference, we quote below the relevant part of that notification. "WHEREAS the State Government is of the opinion that for promoting the development of certain industries in the State it is necessary to grant exemption from or reduction in rate of tax to new units and also to units which have undertaken expansion, diversification or modernization: Now, THEREFORE, in exercise of the powers under Section 4-A of the Uttar Pradesh Sales Tax Act, 1948 (U.P. Act No. XV of 1948), hereinafter referred to as the Act the Governor is pleased to declare that:- 1(A) in respect of any goods manufactured in a 'new unit', other than the units of the type mentioned in Annexure II established in the areas mentioned in column 2 of Annexure 1, the 'date of starting production' whereof falls on or after first day of April, 1990 but not later than 31st day of March, 1995, no tax shall be payable, or, as the case may be, the tax shall be payable at the reduced rates, as specified in column 4 of Annexure 1, by the manufacturer thereof on the turnover of sales of such goods, ********** ********** 1(B) in respect of any goods manufactured in a unit other than the units of the type mentioned in Annexure II, which has undertaken expansion, diversification or modernization'.................................. (2) The period of such facility shall be reckoned from the first date of production:- (i) to (ii) ********** 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) ********** (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 or any Government Company or any Corporation owned or controlled by the Central or the State Government; (iii) ********** (iv) that the said unit furnishes to the assessing authority 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 or Additional or Joint Director (Industries) of the concerned Industrial Development Authority, as the case may be. 3 to 6. ............... Annexure I ********** Annexure II List of Industries not entitled to the facility of exemption from or reduction in rate of tax. ********** ********** 18. Units making sweetmeat, namkin, reori, gazak and commodities of like nature and restaurants. **********
(3.) M/s. Pappu Sweets and Biscuits, appellant in CA No. 9282 of 1995, established a new industrial unit for manufacturing 'toffees' in Bareilly district, by investing substantial amount of capital. It commenced production within the specified period and thereafter applied to the Joint Director of Industries, Bareilly, for an eligibility certificate. The Joint Director rejected the application on the ground that toffee is 'sweetmeat' and, therefore, the appellant's new industrial unit being a unit of the type mentioned in Annexure-II to the Notification was not entitled to the exemption. Aggrieved by that rejection, the appellant preferred an appeal to the Trade Tax Tribunal, U.P. It was dismissed as the Tribunal agreed with the view of the Joint Director. The appellant then filed a revision petition in the Allahabad High Court but that was also dismissed. Hence, CA No. 9282 of 1995 by it after obtaining special leave. M/s. Rose Garden Confectionery Pvt. Ltd., appellant in C.A. No. 1692 of 1997 also established a new industrial unit for manufacturing toffees, by making substantial capital investment. It commenced production on 1-4-93. On 17-8-93, it applied to the General Manager, District Industries Centre, Fatehpur, U.P. for an eligibility certificate. The application was referred to the Joint Director who refused to grant it on the ground that toffee is 'sweetmeat' and units manufacturing sweetmeats are specifically excluded by the exemption Notification. The appellant's appeal to the Trade Tax Tribunal and its revision application to the High Court were dismissed. It has, therefore, filed this appeal after obtaining special leave.;