AMD INDUSTRIES LIMITED (EARLIER KNOWN AS M/S. ASHOKA METAL DECOR PVT. LTD.) versus COMMISSIONER OF TRADE TAX, LUCKNOW & ANR

Citation: [2023] 1 S.C.R. 1035 · Decided: 09-01-2023 · Supreme Court of India · Bench: M.R. SHAH · Disposal: Dismissed

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Judgment (excerpt)

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1035
AMD INDUSTRIES LIMITED (EARLIER KNOWN AS M/S.
ASHOKA METAL DECOR PVT. LTD.)
v.
COMMISSIONER OF TRADE TAX, LUCKNOW & ANR
(Civil Appeal No. 108 of 2013)
JANUARY 09, 2023
[M. R. SHAH AND KRISHNA MURARI, JJ.]
U.P Trade Tax Act – s.4-A(5) – Whether for the goods,
manufactured by use of modern technologies can be said to be
“diversification”, and manufacturing of the goods of a nature
different from the goods manufactured earlier if entitles the appellant
to claim the exemption from trade tax provided u/s.4-A(5) – Held:
In case of “diversification” the goods manufactured by
diversification shall be different from the goods manufactured before
such diversification – In the present case, the earlier product being
manufactured by the appellant was used for sealing glass bottles
and subsequently the additional product produced with the use of
modern technology is also being used for the same purpose namely,
“sealing glass bottles” – Therefore, the same cannot be said to be
manufacturing of goods different from being manufactured before
such diversification – With the passage of time, due to advancement
in technology, if there is a replacement of the old machinery with
the new machinery for improvement in quality and quantity of a
product, at the most, it can be said to be expansion and/or
modernization, but it cannot be said to be “diversification” Words
used in s.4-A are clear and unambiguous – Exemption provisions
are to be read as they are and construed literally – Giving the literal
meaning to s.4-A, it cannot be said that the appellant is entitled to
the exemption as claimed – High Court committed no error in refusing
to grant exemption to the appellant.
Dismissing the appeal, the Court
HELD: 1.1 On a fair reading of Section 4 - A(2)(c), Section
4-A(5)(b)(i) & (ii) and Section 4-A(5)(c), it is clear that in case of
“diversification” the goods manufactured by diversification shall
be different from the goods manufactured before such
diversification [Section 4-A(2)(c)]. In the case of “expansion or
modernization”, the exemption shall be available, if there is an
additional production as a result of such modernization or
   [2023] 1 S.C.R. 1035
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1036
SUPREME COURT REPORTS
[2023] 1 S.C.R.
expansion. The present case is concerned with the case of
“diversification”. Therefore, the goods manufactured after
diversification must be different goods from the goods
manufactured before such diversification. In case of an exemption
notification/exemption provision, the same is required to be
construed literally and the person claiming the exemption must
satisfy all the conditions of exemption provision. [Paras 8.1,
8.2][1043-D-F]
1.2 In the present case, the appellant was manufacturing /
producing “Spun Line Crown Cork” used for sealing the glass
bottles. With the use of modern technologies, now the appellant
is manufacturing “Double Lip Dry Blend Crowns”, which is also
used for sealing the glass bottles. The earlier product being
manufactured by the appellant was used for sealing glass bottles
and subsequently the additional product produced with the use
of modern technology is also being used for the same purpose
namely, “sealing glass bottles”. Therefore, the same cannot be
said to be manufacturing of goods different from being
manufactured before such diversification. With the passage of
time, due to advancement in technology, if there is a replacement
of the old machinery with the new machinery for improvement in
quality and quantity of a product, at the most, it can be said to be
expansion and/or modernization, but it cannot be said to be
“diversification”, which is “manufacturing of goods different from
the goods manufactured before such diversification”. In a case
of “diversification”, the effect has to be that the quality and
quantity of the product should have been improved and/or
increased but if the ultimate use is the same, the product
manufactured on use of modern and/or advanced technology
cannot be said to be manufacturing the different goods for claiming
the exemption from payment of trade tax. The words used in
Section 4-A are very clear and unambiguous. The Statute and
more particularly, the exemption provisions are to be read as
they are and to be construed literally and should be given a literal
meaning. Giving the literal meaning to the exemption provision
namely, Section 4-A, it cannot be said that the appellant is entitled
to the exemption as claimed. Considering the afor

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