JANTA MACHINE TOOLS versus STATE OF U.P. & ORS.

Citation: [1989] 1 S.C.R. 273 · Decided: 19-01-1989 · Supreme Court of India · Bench: K. JAGANNATHA SHETTY · Disposal: Appeal(s) allowed

Judgment (excerpt)

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JANTA MACHINE TOOLS 
A 
v. 
STATE OF U.P. & ORS. 
JANUARY 19, 1989 
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[K. JAGANNATHA SHETTY ANDS. RANGANATHAN, JJ.I 
B 
Uttar Pradesh Sales Tax Act, 1948: Section 4A and Notification 
> 
dated September 30, 1982 issued thereunder-Exemption from sales 
tax-Determination of date of commencement of production-Date of 
purchase of raw. materials, obtaining electricity connection relevant-
Not trial production. 
c 
)I., 
The State Government in pursuance of Section 4A of the Act 
formulated and published a scheme for grant of exemption from Sales 
Tax, to encourage capital investment and establishment of new in-
dustrial units which were established during the period from l.10.1982 
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to 31.3.1985 and producing certain categories of goods. Though the 
scheme referred to units established, it actually referred to the date of 
commencement of production . 
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The appellant, a concern engaged in the business of electric 
motors, pump sets and their parts, applied for the exemption. The 
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appellant claimed that the date of actual commencement of use of 
electricity for production was 4th December, 1982 and that was the 
actual date of commencement of production. The same was endorsed by 
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the General Managers, District Industrial Centres and the Assistant 
Engineer concerned, while recommending the application. But the 
difficulty had arisen on account of a certificate attached to the applica-
lion for exemption. It was given by a firm which had entered into an 
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agreement with the appellant for snpply of machines and installation. 
According to the certificate, trial production commenced on 4.12.1981. 
The Division Level Committee, before which the ap-lication was filed, 
rejected it, saying that the date of trial production was·really the date of 
commencement of production and it fell prior to l.10.1982. The appel-
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!ant preferred a review claiming that trial production could not he 
treated as commencement of actual production. The review application 
was also dismissed and it was held that the unit was established before 
l. I0.1982 and, therefore, was not entitled to the exemption. Thereafter, 
the appellant filed a writ petition before the High Court. It was 
rejected. 
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273 
274 
SUPREME COURT REPORTS 
[1989] I S.C.R. 
A 
Claiming that it is entitled to the exemption, the appellant has 
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preferred this appeal, by special leave. 
Allowing the appeal, 
HELD: 1.1 The appellant is entitled to the exemption, in terms of 
the notification dated 30.9.1982. The rejection of the application for 
exemption proceeds on a total misconception of facts. The conclusion 
that production was commenced on 4.12.1981 is not based. on any 
evidence. It does not affect the appellant's claim even if there was any 
doubt about the trial production having taken place at all. ~hether 
trial was conducted by the other firm or the appellant itself, the fact 
remains that only trial production took place on 4.12.1981. The mere 
fact that the certificate is disbelieved cannot lead to the conclusion that 
the appellant had produced the goods on 4.12.1981. [279A-D) 
J.2 To go by Section 4A of the Act to determine the date of 
commencement of production, the date of purchase of raw material or 
the date on which electricity was brought into use would be relevant. 
The appellant's claim that it had manufactured goods by 30.9.1984 is 
not denied. Production had, therefore, commenced. before 31.3.1985. 
There is no sugestion by the Department or the Committee, and there is 
no material to show that the appellant had purchased raw materials 
sufficient to carry out normal commercial production at any time prior 
to 1.10.1982. It is an admitted fact that the assessee was able to obtain 
electricity for use for commercial production only in November 1982. 
This lends support to the appellant's contention that the production 
could not have been effected by the assessee prior to that date. In fact, 
this is a point on which emphasis is laid. That being so, there is no iota 
of evidence or material on the basis of which the appellant's claim that 
it had started production in December 1982 could have been rejected. 
On the other hand, the recommendation and endorsement of the 
General Manager, District Industries Centre also supports the ap-
pellant's contention that it had started production on 4.12.1982 and this 
report was given after verifying the actual position on the spot. 12790-G l 
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2. As regards the a

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