STATE LEVEL COMMITTEE AND ANR. versus M/S. MORGARDSHAMMAR INDIA LTD.

Citation: [1995] SUPP. 5 S.C.R. 63 · Decided: 10-11-1995 · Supreme Court of India · Bench: B.P. JEEVAN REDDY, S.B. MAJMUDAR · Disposal: Appeal(s) allowed

cites 2 · see the full citation network in Lexace

Judgment (excerpt)

STATE LEVEL COMMITTEE AND ANR. 
v. 
M/S. MORGARDSHAMMAR INDIA LTD. 
NOVEMBER 10, 1995 
[B.P. JEEVAN REDDY AND S.B. MAJMUDAR, JJ.] 
U.P. Sales Tax Act-Section 4A Explanation (i)-Exemption from sales 
tax of goods manufactured by a new unit-Definition of 'new unit' in E>.plana-
tion (i)-Disqualification if machinery used in th~ factory or workshop is 
acquired for use in any other factory-No requirement to enquire whether that 
machinery were actually used in any other f act01y in India. 
The respondent unit applied for issuance of an eligibility certificate 
A 
B 
c 
U/s. 4-A of the U.P. Sales Tax Act on the ground that it had set up a new 
unit. The appropriate authorities denied them the certificate holding that D 
part of the machinery used in setting up the respondent unit was 'acquired 
for use in any other factory or workshop in India' and, therefore, the 
respondent unit did not qualify as a 'new unit'. The writ petition filed by 
the respondent was allowed by the High Court holding that unless the 
machinery acquired for use in any other factory or workshop in India is 
actually used in that other factory or workshop in India, the disqualifica-
tion provided by clause (a) in the Explanation is not attracted. The High 
Court remitted the matter to the State Level Committee with a direction 
to re-examine the material on record and to record a categorical finding 
as to whether or not the machinery purchased by the petitioner from other 
factory was actually used in that other factory. This appeal had been filed 
against the judgment of the High Court. 
The respondent submitted that Section 4-A was devised to encourage 
new industries, disqualification of an unit on the mere ground that part 
E 
F 
of the machinery installed in the unit was acquired by another person for G 
setting up a unit, which in fact he never used, would not be consistent with 
the object underlying the proYision, and therefore, Section 4-A must be 
literally construed to further the object underlying it and in case of 
ambiguity, the construction favouring the assessee should be adopted; that 
the words 'acquired for use in any other factory or workshop in India' must 
be read and understood as 'acquired for use in any other existing factory H 
63 
64 
SUPREME COURT REPORTS [1995) SUPP. 5 S.C.R. 
A 
or workshop in India' and that the respondent unit had substantially 
complied with· the requirement of that clause in the definition inasmuch 
as the value of the machinery acquired from other unit was only about Rs. 
4.5 lakhs as against the value of the entire machinery at Rs. 25 lakhs. 
B 
Allowing the appeal, this Court 
HELD: 1.L Under section 4-A of the U.P. Sales Tax Act, for claiming 
exemption from sales tax, it is a disqualification if the new factory or 
workshop uses machinery/accessories/components already used in any 
other factory or workshop in India. It is equally a disqualification if it uses 
C machinery/accessories/components which were acquired for use in any 
other factory or workshop in India. When the clause uses both the said 
expressions simultaneously, it would not be reasonable or proper to con-
strue the words "acquired for use" as meaning the same thing as "already 
used". Such a construction would make the words "acquired for use" super-
D 
E 
fluous and a surplusage. No such interpretation ought to be adopted by a 
Court. The words "acquired for use" must be understood in their plain and 
ordinary meaning. It is enough that the machinery/accessories/components 
which are used in the factory or workshop (claiming the benefit of section 
4-A) are acquired for use in any other factory or workshop in India. It is 
not necessary to go further and enquire whether that machinery/acces-
sories/components were actually used in any other factory or workshop in 
India. All the words used in the clause have to be given their due meaning. 
None of them can be treated as a surplusage. It is not also possible to ignore 
the words expressly employed in the said clause or to explain them away on 
notions of one's own reasonableness. (69-B-E; 70-B] 
F 
1.2. No unit has a right to claim exemption from tax as a matter of 
right. His right is only insofar as it is provided by section 4-A. While 
providing for exemption, the Legislature has hedged it with certain condi-
tions. It is not open to the Court to ignore those conditions and extend the 
exemption. When the clause uses both the expressions "already used" and 
G "acquired fo

Excerpt shown. Read the full judgment & AI analysis in Lexace.