- (1.) SAHAI, J. brief, facts giving rise to this revision under section 11 of the U. P. Sales Tax Act are that on 22nd September, 1970, the State Government issued a notification under section 4-A of the U. P. Sales Tax Act granting exemption to M/s. U. P. Leather Board Industries, Agra, on manufacture of leather board from 10th January, 1968, to 9th January 1971. The firm consisted of four partners. It was dissolved on 5th October, 1970. The goodwill and assets of the Board were purchased by certain other persons who applied for extension of exemption which was not accepted. The State Government by a letter dated 14th May, 1972 communicated to the reconstituted firm, that as the exemption has already been granted which has to continue till 9th January, 1971, there was no reason for extension. In the assessment proceedings it was held that the firm having been reconstituted it was separate and different entity and not the same industrial unit and, as such, not entitled to concessional rate of tax. The appellate authority did not agree and held that the exemption was granted to industrial unit and the unit having continued, the assessee was entitled to exemption. The appellate authority further held that the State Government having itself accepted that the assessee was entitled to exemption, the order refusing exemption, cannot be maintained. The order was affirmed in revision as well.
(2.) THE primary question that arises on these facts is whether the exemption granted to industrial unit ceased to be operative once the firm was reconstituted. According to the learned standing counsel exemption under section 4-A is contemplated to manufacture (sic ). It is maintained that the words "turnover by the manufacturer" are significant and they can relate only to a dealer. In other words, according to him the dealer who was running this industrial unit, was granted exemption on 10th January, 1968, and that dealer having given up the business and the firm having been reconstituted exemption granted to the earlier dealer could not be continued by virtue of the notification issued on 22nd September, 1970. THE argument is attractive but without substance. It is clear from the language of section 4-A that the power has been conferred on State Government to declare any goods to be exempt from payment of tax. Under Sub-clause (b) of Sub-section (3), the State Government has further been empowered to issue notification is respect of such of those goods only as are manufactured in a new unit. THE word "new unit" or "industrial unit" has not been defined but the exemption granted in the notification issued is not to a dealer but to an industrial unit which started production from 10th January, 1968. If this unit continued till 9th January, 1971, there is no reason to refuse exemption on the ground that the firm has been reconstituted. Section 4-A or the notification does not use the word "dealer". THE exemption is to the goods manufactured by a particular unit. So long as that unit continues in operation the exemption continues. It has not been pointed out by the learned standing counsel that as a result of the reconstitution of the firm the industrial unit itself underwent alteration and a new unit came into being. If by reconstitution of the firm no new industrial unit came into being the conclusion is inescapable that the unit which started production on 10th January, 1968, was entitled to exemption till 9th January, 1971. Moreover as pointed out above, the letter issued by the State Government dated 14th May, 1972, clinches the matter against the Commissioner of Sales Tax. It can be interpreted, although it is not necessary, as a fresh order from the State Government granting exemption to the new unit from 6th October, 1970, to 9th January, 1971. In either case, the submission made by the learned standing counsel cannot succeed. The result is that the revision fails and it is dismissed. The assessee shall be entitled to his costs which is assessed at Rs. 200. .;