AMIT PLASTIC INDUSTRY Vs. DIVISIONAL LEVEL COMMITTEE

JUDGEMENT

(1.) This writ petition has been filed with a prayer for a writ of certiorari to quash the orders dated May 20, 1988 and January 19, 1989 (annexure Nos. 2 and 4 to the writ petition) and for a mandamus directing the respondents to issue eligibility certificate to the petitioner under section 4-A of the U. P. Sales Tax Act, 1948 and for a direction restraining the respondents from passing assessment orders for the period covered by the eligibility certificate. We have heard the learned counsel for the parties and have perused the record. The facts of the case are that the petitioner is a proprietorship concern carrying on the business of manufacturing and sale of P. V. C. pipes and pipe fittings. It established its new unit with the help of new machinery purchased by the petitioner from Golden Industries for a sum of Rs. 3,58,000 vide annexure No. 1 to the writ petition. Apart from the above machinery the petitioner also purchased a weighing machine for a sum of Rs. 48,000 from M/s. Angad Enterprises. In order to get exemption under section 4-A of the U. P. Sales Tax Act the petitioner applied for this purpose to the General Manager, District Industries Centre, Ghaziabad and the matter was put up before the Divisional Level Committee which, however, rejected the petitioner's application. A photo copy of the letter dated May 20, 1988, communicating the order rejecting the petitioner's application under section 4-A of the U. P. Sales Tax Act is annexure No. 2 to the writ petition. In this letter dated May 20, 1988, it is stated that an enquiry was conducted and it was found that the firm M/s. Angad Enterprises does not exist and hence it has to be inferred that the weighing machine was an old machinery. Thereafter the petitioner filed a review application on June 13, 1988, true copy of which is annexure No. 3 to the writ petition. In this application it was contended that in fact the said weighing machine was a new machinery purchased from M/s. Angad Enterprises against a regular bill from the term loan granted by New Bank of India Ltd. and the payment has been made by the petitioner by a bank draft to the said firm. However, this review application was rejected by the Joint Director of Industries, Meerut, on January 19, 1989, true copy of which is annexure No. 4 to the writ petition. Aggrieved, the petitioner has filed this writ petition. A perusal of annexure No. 4 to the writ petition shows that the Divisional Level Committee has held that the weighing machine was used for weighing raw material used in the petitioner's industrial unit. In the counter-affidavit it has been alleged in para 3 that the petitioner's application was rejected on the ground that the petitioner allegedly purchased the said weighing machine from M/s. Angad Enterprises for a sum of Rs. 48,400, but on enquiry it was found that the said firm M/s. Angad Enterprises was not in existence and hence the said weighing machine was treated to be old. It was also contended in para 6 of the counter-affidavit that the weighing machine was necessary for the manufacturing process. In our opinion it is not necessary to go into the question whether the weighing machine was old or new since even assuming that it was old, we are of the opinion that the petitioner could not be denied the eligibility certificate. In this connection reference may be made to the Explanation under section 4-A of the U. P. Sales Tax Act which was introduced by the U. P. Act No. 28 of 1991 retrospectively from October 12, 1983. " Explanation.- For the purposes of this section : (1) 'new unit' during the period ending with March 31, 1990 means an industrial undertaking set up by a dealer on or after October 1, 1982 but not later than March 31, 1990, - (a) which is licensed or in respect whereof a letter of intent has been issued or which is registered, permanently or otherwise by the appropriate authority in accordance with any law for the time being in force relating to licensing or registration of industrial undertakings; (b) (i) which is registered under the Factories Act, 1948; or (ii) an application for registration in respect whereof has been made under that Act; or (iii) after making an application for a term loan from any financial corporation or company owned or controlled by the Central or the State Government or any bank whether such term loan is sanctioned and disbursed before or after the undertaking is set up where the capital investment in the undertaking does not exceed three lakh rupees; (c) on land or building or both owned or taken on lease for a period of not less than seven years by such dealer or allotted to such dealer by any Government company or any corporation owned or controlled by the Central or the State Government; (d) using machinery, accessories or components not already used, or acquired for use, in any other factory or workshop in India; (e) fulfilling all the conditions specified in this Act or rules or notifications made thereunder in regard to grant of facility under this section on the date from which such facility may be granted to him. " A perusal of the said Explanation indicates that it is the industrial undertaking which must be new, and not those machines which strictly speaking are not part of the industrial process. A weighing machine is not a necessary part of the industrial process. It is used only for weighing certain items and it is not used in the process of production. There is no denial that the factory of the petitioner is new. Hence, merely because the weighing machine is old that would not disentitle the petitioner from the benefit of section 4-A of the U. P. Sales Tax Act. The matter can be examined from another angle also. Suppose there is a new factory machinery which has been purchased for a sum of rupees one crore, but there is a small component worth, say, Rs. 200 which is old. In our opinion merely because a very small item which is worth very little is an old machine or component this will not disentitle the unit to get the benefit of section 4-A of the U. P. Sales Tax Act. It is only when a substantial part of the factory machinery is old and has been used earlier that the benefit of section 4-A can be denied. In this connection we may refer to the Division Bench decision of this Court in Dhingra Mechanical Works [1972] 29 STC 238; 1971 UPTC 821 where the court has held that the law does not take notice of trifles. This decision was also given under the U. P. Sales Tax Act and in our opinion the ratio of the said decision will be applicable to the present case also. In our opinion under section 4-A of the U. P. Sales Tax Act a liberal and positive approach should be taken and eligibility certificate should not be denied or cancelled on hypertechnical or narrow considerations, as held in Jamania Cold Storage and Ice Plant v. Director of Horticulture 1992 UPTC 1265 and also in Maheshwari Industries (P) Ltd. v. State of U. P. in Writ Petition No. 40 of 1992 decided on February 25, 1993. No doubt Explanation (1) (d) states that the unit which seeks the benefit of section 4-A of the U. P. Sales Tax Act should be "using machinery, accessories or components not already used or acquired for use in any other factory or workshop in India". However, in our opinion this condition in clause (1) (d) should not be interpreted in a narrow or pedantic manner, nor should it be given a literal interpretation. If we construe clause (1) (d) to the Explanation literally it would mean that even where there is a factory having new machinery worth say Rs. 10 crores, it will be denied the benefit of section 4-A of the U. P. Sales Tax Act if it has a small component worth Rs. 200 which was old and had been used earlier. Such a narrow interpretation would militate against the very object of section 4-A which is to increase production of goods and promote the development of industries in the State vide clause (1) of section 4-A. In this connection we may refer to the recent judgment of the Supreme Court in Mangalore Chemicals and Fertilizers Limited v. Deputy Commissioner of Commercial Taxes [1991] 83 STC 234; 1992 UPTC 123 wherein it has been held that all provisions for exemption cannot be interpreted in the same manner. The Supreme Court observed : ". . . . . . The consequence which Shri Narasimhamurthy suggests should flow from the non-compliance would, indeed, be the result if the condition was a substantive one and one fundamental to the policy underlying the exemption. Its stringency and mandatory nature must be justified by the purpose intended to be served. The mere fact that it is statutory does not matter one way or the other. There are conditions and conditions. Some may be substantive, mandatory and based on considerations of policy and some other may merely belong to the area of procedure. It will be erroneous to attach equal importance to the non-observance of all conditions irrespective of the purposes they were intended to serve. " In our opinion clause (1) (d) of the Explanation to section 4-A of the U. P. Sales Tax Act should not be interpreted literally for that would subvert the very intention of section 4-A, viz. , to encourage the industrialisation of the State. In our opinion clause (d) should be interpreted to mean that to get the benefit of exemption a substantial part of the factory machinery should not have already been used in any other factory or workshop. As to what is substantial would depend on the facts on each case. In Sagar Jute Udyog v. State of U. P. 1993 UPTC 898, it was held that the grinder which is not part of the machinery but kept separately need not be new for getting the benefit of section 4-A. The ratio of this decision will clearly apply to the facts of the present case also. In this connection we may also refer to the Gunapradhan axiom of the Mimansa Principles of Interpretation. It is deeply regrettable that in our courts of law lawyers quote Maxwell and Craies but nobody refers to the Mimansa Principles of Interpretation. Today our so-called educated people are largely ignorant about the great intellectual achievements of our ancestors and the intellectual treasury they have bequeathed us. The Mimansa Principles of Interpretation are part of that intellectual treasure, but it is distressing to note that apart from a reference to these principles in the judgment of Sir John Edge, the then Chief Justice of the Allahabad High Court, in Beni Prasad v. Hardai Devi (1892) ILR 14 All. 67 (FB), there has been almost no utilization of these principles even in our own country. It may be mentioned that the Mimansa rules of interpretation were our traditional principles of interpretation laid down by Jaimini whose sutras were explained by Shabar, Kumarila Bhatta, Prabhakar, etc. These Mimansa principles were regularly used by our great jurists like Vignaneshwar (author of Mitakshara), Jimutavahana (author of Dayabhaga), Nanda Pandit, etc. , whenever they found any conflict between the various smritis or any ambiguity or incongruity therein. There is no reason why we cannot use these principles on appropriate occasions. However, it is a matter of deep regret that these principles have rarely been used in our law courts. It is nowhere mentioned in our Constitution or any other law that only Maxwell's principles of interpretations can be used by the court. We can use any system of interpretation which helps us to solve a difficulty. In certain situations Maxwell's principles would be more appropriate, while in other situations the Mimansa Principles may be more suitable. One of the Mimansa Principles is the Gunapradhan axiom, and since we are utilizing it in this judgment we may describe it in some detail. "guna" means subordinate or accessory, while "pradhan" means principal. The Gunapradhan axiom states : "if a word or sentence purporting to express a subordinate idea clashes with the principal idea, the former must be adjusted to the latter or must be disregarded altogether. " (See K. L. Sarikar's "mimansa Rules of Interpretation", page 89 ). This principle is also expressed by the popular maxim known as matsya nyaya, i. e. , "the bigger fish eats the smaller fish". According to Jaimini, Acts are of two kinds, principal and subordinate (see Jaimini, 2 : 1 : 6) In sutra 3 : 3 : 9 Jaimini states : * * * Kumarila Bhatta, in his Tantravartika (see Ganganath Jha's English translation, volume 3, page 1141) explains this sutra as follows : " When the primary and the accessory belong to two different Vedas, the Vedic characteristic of the accessory is determined by the primary, as the accessory is subservient to the purpose of the primary. " It is necessary to explain this sutra in some detail. The peculiar quality of the Rigveda and Samaveda is that the mantras belonging to them are read aloud, whereas the mantras in the Yajurveda are read in a low voice. Now the difficulty arose about certain ceremonies, e. g. , Agnyadhana, which belong to the Yajurveda but in which verses of the Samaveda are to be recited. Are these Samaveda verses to be recited in a low voice or loud voice ? The answer, as given in the above sutra, is that they are to be recited in low voice, for although they are Samavedi verses, yet since they are being recited in a Yajurveda ceremony their attribute must be altered to make it in accordance with the Yajurveda. In the Sabhar Bhashya (translated into English by Dr. Ganganath Jha, and published in the Gaekwad Oriental Series) the sutra is read as follows : " Where there is a conflict between the use and the substance greater regard should be paid to the use. " Commencing on Jaimini 3 : 3 : 9 Kumarila Bhatta says : "the siddhanta laid down by this sutra is that in a case where there is one qualification pertaining to the accessary by itself and another pertaining to it through the primary, the former qualification is always to be taken as set aside by the latter. This is because the proper fulfilment of the primary is the business of the accessory also as the latter operates solely for the sake of the former. Consequently if, in consideration of its own qualification it were to deprive the primary of its natural accomplishment then there would be a disruption of that action (the primary) for the same of which it was meant to operate. Though in such a case the proper fulfilment of the primary with all its accompaniments would mean the deprival of the accessory of its own natural accompaniment, yet, as the fact of the accessory being equipped with all its accompaniments is not so very necessary (as that of the primary), there would be nothing incongruous in the said deprival". (See Ganganath Jha's English translation of the Tantravartika, volume 3, page 1141 ). The Gunapradhan axiom can also be deduced from Jamini 6 : 3 : 9 which states : "when there is a conflict between the purpose and the material, the purpose is to prevail, because in the absence of the prescribed material a substitute can be used, for the material is subordinate to the purpose". To give an example, the prescribed yupa (sacrificial post for tying the sacrificial animal) must be made of khadir wood. However, khadir wood is weak while the animal tied may be restive. Hence, the yupa can be made of khadir wood which is strong. Now this substitution is being made despite the fact that the prescribed wood is khadir, but this prescription is only subordinate or accessory to the performance of the ceremony, which is the main object. Hence if it comes in the way of the ceremony being performed it can be modified or substituted. The Gunapradhan axiom is fully applicable to the interpretation of section 4-A. Since the main aim of section 4-A of the U. P. Sales Tax Act is to encourage setting up of new industries we must interpret all the conditions and clauses in the said provision to make them in accordance with this main object. It may be that in isolation some clause or condition in section 4-A may have another meaning, but when they are read as part of section 4-A they must be given a meaning which subserves the object of section 4-A. The object of section 4-A is the primary, whereas the conditions mentioned in section 4-A are the accessories. The conditions mentioned in the Explanation to section 4-A (registration, etc.) are merely intended to ensure that there is a genuine new unit for which the exemption is claimed, and not a farzi one. These conditions must therefore not be construed strictly or literally, but in a manner which subserves the object of section 4-A. In this connection reference may be made to Bajaj Tempo Ltd. v. Commissioner of Income-tax [1992] 196 ITR 188 (SC); AIR 1992 SC 1622 where it was held that a provision for encouraging new industries should be construed liberally. In this connection we may also refer to the wooden sword maxim (sphadi nyaya), which is a well-known maxim in the Mimansa system. This maxim states "what is prescribed as a means to an action, is to be taken in a sense suited to the performance of the action" (vide Jaimini 3 : 1 : 3, quoted in K. L. Sarkar's Mimansa Rules of Interpretation, page 273 ). The word "spha" in Sankrit means a sword, which is normally a metallic object. However, "spha" in connection with a yadya has to be interpreted as a wooden sword, which is a pushing instrument (as a yadya requires no cutting instrument, but only a pushing instrument ). Jaimini 3 : 1 : 3 states : * * * That is : "the accessory (shesha) is that which serves the purpose of another". In section 4-A the conditions mentioned in Explanation are the accessories, while the object of encouraging setting up of new industries is the primary. The accessory must therefore, serve the primary. Learned Standing Counsel, however, relied on the Full Bench decision of this Court in Commissioner of Sales Tax v. Behari Lal Ram Krishna 1970 UPTC 730, where it was observed "before exemption can be claimed the person claiming exemption must strictly fulfil the conditions underlying the grant of exemption and comply with all these requirements necessary before such grant is made". We are of the opinion that these observations have now to be interpreted in a restricted and modified sense in view of : (1) The decision of the Supreme Court in the Mangalore Chemicals and Fertilizer's case [1991] 83 STC 234; 1992 UPTC 123 where it was held that only substantive conditions have to be complied with and not all conditions. (2) The decision of the Supreme Court in Maneka Gandhi v. Union of India AIR 1978 SC 597, Bachan Singh v. State of Punjab AIR 1982 SC 1325, etc. , and other decisions which have greatly expanded the scope of article 14 and have laid down that all laws must be tested on the anvil of reasonability. Thus, in Maneka Gandhi's case AIR 1978 SC 597 the Supreme Court observed : "the principle of reasonableness which legally as well as philosophically is an essential element of equality or non-arbitrariness pervades article 14 like a brooding omnipresence". Hence we have to hold that the conditions in section 4-A for claiming the exemption must be interpreted in the reasonable manner, and not literally, and thus reasonableness must be judged from the point of view of the object of section 4-A (1 ). The decision of the Supreme Court in Bajaj Tempo Ltd. v. Commissioner of Income-tax [1992] 196 ITR 188; AIR 1992 SC 1622. In view of the above discussion, we are of the opinion that the petitioner is entitled to grant of eligibility certificate under section 4-A of the U. P. Sales Tax Act and we quash the impugned orders communicated by the letters dated May 20, 1988 and January 19, 1989 (annexure Nos. 2 and 4 to the writ petition ). We direct that the respondents shall issue an eligibility certificate to the petitioner under section 4-A of the U. P. Sales Tax Act within two weeks of production of a certified copy of this judgment before the appropriate authority and the assessment and recovery for the relevant years will be rectified accordingly. The writ petition is allowed. No order as to cost. Writ petition allowed. .