A.M.KHANWILKAR,J. - (1.) The seminal question involved in both these appeals is about the power of the State to rescind the notification providing for rebate in respect of tax payable under the Uttar Pradesh Trade Tax Act, 1948 (for short, "the 1948 Act") and thus withdrawing the facility even in respect of industrial units, which had commenced production and had complied with the conditions for grant of such rebate in terms of Notification dated 27th February, 1998.
(2.) Briefly stated, the appropriate authority, in exercise of power under Section 5 of the 1948 Act issued notification dated 18 th June, 1997, to declare the goods having fly ash contents of 10% or more by weight to be notified goods for the purpose of Section 5, and to grant a rebate of 25% in respect of the goods having fly ash contents between 10 to 30% by weight and a rebate of 50% in respect of the goods having fly ash contents exceeding 30% by weight on the tax levied under the Act in the districts notified thereunder. In due course, the feedback received by the Government was that neither any new industrial unit was established within the State nor the consumption of the fly ash had increased by the existing units. Resultantly, there was no extra disposal/consumption of fly ash which was being produced by the thermal power stations situated within the State of Uttar Pradesh. In other words, the avowed objective for issuing the notification to extend rebate did not fructify. In light of such feedback, the appropriate authority issued fresh notification dated 27 th February, 1998 bearing No.T.I.F2592/XI9(226)94U.P.Act1548Order98 to rescind the earlier notification and instead to grant a rebate of 25% in respect of the goods having fly ash contents between 10% to 30% by weight and a rebate of 50% in respect of the goods having fly ash contents exceeding 30% by weight on the tax levied under the Act in the districts mentioned thereunder, subject to certain conditions. The said notification reads thus: "[S. No. 1289] Notification No.T.I.F ­ 2592/XI9(226)94U.P. Act 1548Order98, dated 27.02.1998 Whereas, the State Government is satisfied that it is expedient in the public interest so to do: Now, therefore, in exercise of the powers under Section 5 of the Uttar Pradesh Trade Tax Act, 1948 (U.P. Act No. XV of 1948), read with section 21 of the Uttar Pradesh General Clauses Act, 1904 (U.P. Act No.1 of 1904), the Governor, with effect from March 1, 1998 is pleased: (a) to rescind the Notification No.TT21885/XI 9(226)/94UPAct1548 Order97, dated June 18, 1997; (b) to grant a rebate of twenty five percent on goods having flyash contents between ten to thirty percent by weight and a rebate of fifty percent on the goods having flyash contents exceeding thirty percent by weight on the tax levied under the Act in the district mentioned in column2 Annexure given below for the period mentioned in column3 of the said Annexure subject to the following condition: CONDITIONS (i) such goods shall be manufactured in a unit established in the area mentioned in coloumn2 of the Annexure; (ii) such goods shall be manufactured by using fly ash purchased or received from the thermal power stations situated on Uttar Pradesh; (iii) the dealer claiming rebate under this notification shall keep records in which following informations will be shown: (a) date; (b) name of thermal power stations from which flyash is purchased or received; (c) weight of flyash; (d) name of manufactured goods; (e) weight of manufactured goods; (f) weight of flyash used in manufacturing of such goods; (g) weight of other goods used in manufacture of such goods; (iv) the total weight of manufactured goods and percentage of flyash used, should be mentioned on goods of packing of such goods as far as possible. ANNEXURE JUDGEMENT_74_LAWS(SC)11_2019_1.jpg JUDGEMENT_74_LAWS(SC)11_2019_2.jpg Explanation: The verification of percentage of flyash used by flyash based industries shall be made of the basis of Government orders issued in this behalf from time to time."
(3.) This notification came to be issued with intent to promote and encourage the industrial activities in the identified backward and underdeveloped areas. This notification, however, was assailed in two writ petitions filed before the High Court of Judicature at Allahabad (for short, 'the High Court'). The challenge was essentially on the ground that the conditions specified in the notification resulted in causing discriminatory treatment to the producers and suppliers of the sale product imported from neighbouring States as opposed to the goods manufactured and produced in the State of Uttar Pradesh. Such dispensation contravened the constitutional provisions of Articles 301 and 304(a) of the Constitution of India. The High Court vide order dated 29 th January, 2004 upheld the said challenge. The State of Uttar Pradesh carried the matter in appeal against the said decision of the High Court, which eventually culminated with the judgment of this Court, affirming the challenge, in State of Uttar Pradesh & Ors. vs. Jaiprakash Associates Limited, (2014) 4 SCC 720. This Court held that rebate of tax granted by the State Government only to the cement manufacturing units using fly ash as raw material in the units established in the districts of the State of Uttar Pradesh, is violative of the provisions contained in Articles 301 and 304(a) of the Constitution of India. The Court further declared that notification, therefore, would also apply to the cement manufacturing units of the neighbouring States who were using fly ash as raw material.;