LexCOMMISSIONER OF TRADE TAX, U.P. versus VARUN BEVERAGES LIMITED
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• [2011] 4 S.C.R. 803 COMMISSIONER OF TRADE TAX, U.P. v. VARUN BEVERAGES LIMITED (Civil Appeal No. 3186 of 2011) APRIL 11, 2011 [DR. MUKUNDAKAM SHARMA AND ANIL R. DAVE, JJ.] . A B Uttar Pradesh Trade Tax Act, 1948: s.4-A(4) - Fixed capital investment - Bottles and crates used by the C respondent in its factory for the manufacture of soft drinks and beverages - Inclusion of value of bottles and crates in the i'ixed capital investment ::... Held: Bottles are essential part of components and equipments necessary for the running of the factory of the respondent and; therefore, its value would form D part of the fixed capital investment and would be entitled to exemption - Crates are used only for the purpose of marketing and their use is necessary only for taking out the bottled beverages out of the factory - Crates having no user so far as running of the factory of the respondent is E concerned, therefore, value of crates cannot be deemed to be investment for the purpose of including it within the meaning of expression "Fixed Capital Investment" as per sub- section (4) of s. 4-A of the Act. The question which arose for consideration in the Instant appeal was whether the bottles and crates used by the respondent in its factory for the manufacture of soft drinks and beverages were to be treated as part of "Fixed Capital Investment" as being essential apparatus F for the manufacture of soft drinks and, therefore, covered G within the meaning of sub-section (4) of Section 4-A of the Uttar Pradesh Trade Tax Act. Partly allowing the appeal, the Court 803 H 804 SUPREME COURT REPORTS [2011) 4 S.C.R. A HELD: 1.1. Section 4A of the U.P. Trade Tax Act which lays down that where the State Government is of the opinion that it is necessary so ~ do for increasing the production of any goods or for promoting the development of any industry in the State, it may on the B application or otherwise declare that the turnover of sales in respect of_ such goods by the manufacturer thereof shall, during such period not exceeding fifteen years is exempted from payment of trade tax provide~ that goods manufactured in the new unit has a fixed capital c investment of five crore rupees or more. The said section further provided in sub-section (4) of Section 4-A of the Act as to what is the meaning of the expression "Fixed Capital Investment". It is provided therein that "Fixed capital investment" means value of land and building and 0 such plants including captive power plant, machinery, equipment, apparatus, components, moulds, dyes, jigs and.fixtures. Sub-clause (b) inserted in the proviso to sub- section (4) of Section 4-A of the Act stated that for the purposes of determining value of plant including captive power plant, machinery, equipment, apparatus, E components, moulds, dyes, jigs and fixtures only investment, whether by means of purchases, hire or lease in such plant, equipment, apparatus, components and machinery, as is necessary for the establishment or running of the factory or workshop shall be taken into F account. The object of the relevant provision in the light of other provisions of the Act, made it crystal clear that the value of investment for equipments, apparatus and components for running the factory and workshop has also to be considered as investment and such value is G required to be included within the ambit of fixed capital investment. [Paras 12, 17] [809-E-F; 810-A-B; 812-G-H] H CST v. Industrial Coal Enterprises (1999) 2 SCC 607 - relied on. • COMMISSIONER OF TRADE TAX, U.P. v. VARUN 805 BEVERAGES LTD. State of Bihar and Others v. Steel City Beverage Limited A and another (1999) 1 sec 10- referred to. 1.2. Considering the wording of the provision itself, it is quite necessary to give full and complete effect to the provision in a purposive manner so as to advance the 8 objective of the provision. The respondents were engaged in the manufacture of soft drink and beverages which were required to be bottled and thereafter sealed, which were essential part of running of the factory and, therefore, the same would have to be included within the C said extended meaning of the word 'investment' as appearing from the words 'fixed capital investment'. In the facts and circumstances, so far bottles are concerned, they are essential part of ·components and equipments necessary for the running of the factory and, therefore, such valu
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