JUDGMENT Rajes Kumar, J.
1. The present revisions Under Section 11 of U.P. Sales Tax Act (hereinafter referred as the Act) are directed against the order of Tribunal dated 30.5.94 for the assessment year 1987-88 and 1988-89.
2. Brief facts of the case are that the applicant was a partnership firm engaged in the business of manufacture and sale of furniture registered under the U.P. Sales Tax and under Central Sales Tax The applicant established a new unit for manufacture of furniture and applied for exemption on the turnover of manufactured product. The applicant was issued eligibility certificate Under Section 4A of the Act on 9.4.84 and further by the corrigendum dated 16.4.84 Joint Director of Industries Moradabad Division Moradabad granted exemption for the period of six years from 11.1.83 to 10.1.89. It is alleged that the said eligibility certificate was never modified or amended or cancelled. It appears that on 1.4.86 there was a reconstitution of partnership firm. In view of the eligibility certificate dealer claimed exemption on the manufactured turnover. The assessing authority passed the assessment order for the assessment year 1987-88 on 2.6.88 under Rule 41(7) and for the assessment year 1988-89 on 20.11.9land granted exemption on the manufactured product. Thereafter a proceeding Under Section 21 were initiated by the assessing authority on the ground that the applicant has not filed any application Under Section 4A(2-B) of the Act, which was introduced by Act No. 28/91 w.e.f 12.10.83 on account of change in the constitution and therefore, reconstituted firm was not entitled for exemption for the aforesaid period. Applicant filed the reply which was not accepted and order Under Section 21 were passed by the Sales Tax Officer for both the aforesaid years and the exemption on the turnover of manufactured goods was withdrawn and the tax was assessed on the manufactured goods. Applicant filed two appeals before Asstt. Commissioner(J) Sales Tax which were dismissed Applicant further filed appeals before Tribunal, which were also rejected by the impugned order Tribunal held that when the original assessment order was passed for both the assessment year, exemption was granted on the basis of prevailing legal position but on the introduction of Section 4A(2-B) introduced by Act No. 28/91 with retrospective affect, the condition has not been fulfilled and therefore, tax has been rightly assessed Under Section 21 of the Act
3. Heard learned for the parties
4. Learned Counsel for the applicant submitted that Tribunal and authorities below have erred in levying the tax on the turnover of manufactured product in respect of which unit was holding eligibility certificate Under Section 4A of the Act for the period of six years from 11.1.83 to 10.1.89. He submitted that the said eligibility certificate was neither cancelled nor modified and therefore, it was not open to the assessing authority to sit over the eligibility certificate He further submitted that the exemption was granted to the unit and not to any partnership firm; therefore, the exemption could not be withdrawn on account of reconstitution of partnership Firm . In support of its contention he relied upon the decision of this Court in the case of CST v. U.P. Leather Board Agra reported in 1980 UPTC 287, CST v. Goodluck Rubber & Allied Industries, Lucknow reported in 1983 UPTC 909, 1986 UPTC 305 CST v. General Engineering Corporation 1987 UPTC. 1358 Jagat Machinery Manufacturers Pvt.Ltd. v. State of U.P. 2000 UPTC 383 Anil Kumar Ramesh Chandra Glass Works, Firozabad and Anr. v. State of U.P. and Anr. He further stated that Sub-section 4A(2B) has been added for the first time by Act No. 28/91 with retrospective affect from 12.10.83 though the said provision is deemed to be available in the year under consideration on account of its retrospectivity but in view of the fact that the period of exemption has been expired on 10.1.89 before introduction of the provision, the same could not be made applicable. He further submitted that the provision could not be applied in the case where the proceeding has already been concluded. He further submitted that Section 4A(2B) is applicable to the claim of exemption for un-expired period while in the present case when provision was introduced no such claim was required in as much as the period of exemption has already been expired on 10.1.89. In support of its contention he relied upon the decision of this Court in case of Commissioner of Sales Tax v. R.B. Industries reported in 1985 UPTC 925. Learned Standing Counsel submitted that since Sub-section 4A(2 B) has been introduced w.e.f. 12.10.83 the said Sub-section is deemed to be in the statute right from the said date and is applicable to the year under consideration. He submitted that since there was a reconstitution of the firm thus for the claim of exemption reconstituted firm should have filed an application Under Section 4A(2B) of the Act and since the application was not filed the exemption was rightly with drawn and the tax was rightly imposed.
5. I have perused the order of Tribunal and the authorities below.
6. Section 4A(1) and Section 4A(2B) inserted by Act No. 28 of 1991 w.e.f. 12.10.83 reads as follows:
Section 4-A (1) Notwithstanding anything contained in this Act, where the State Government is of the opinion that it is necessary so to do for increasing the production of any goods or for promoting the development of any industry in the State generally or in any districts or parts of districts in particular, it may on application or otherwise, in any particular case of generally, by notification, declare that the turnover of sales in respect of such goods by the manufacturer thereof shall, during such period not exceeding seven years form such date on or after the date of starting production as may be specified by the state Government in such notification which maybe the date of the notification or a date prior to subsequent to the date of such notification and where no date is so specified from the date of first sale by such manufacturer, if such sale takes place within six months from the date of starting production and in any other case from the date following the expiration of six months from the date of starting production, and subject to such conditions as may be specified, be exempt from sales tax whether wholly or partly or be liable to tax at such reduced rate as it may fix.
Section 4A(2-B) If there is discontinuation of business, within the meaning of Sub-section (1) of Section 18, Section 18, of the manufacturer who was eligible for exemption from or reduction in rate of tax under Sub-section (1), whether such exemption from or reduction in the rate of tax was already granted or not, and if he is succeeded by another manufacturer, such successor manufacturer may, subject to the provisions of Sub-section (3), apply to the Office competent to grant eligibility certificate under Clause (d) of Sub-section (2), within sixty days of such succession, for the grant, under this section of exemption from or reduction in the rate of tax for the un expired portion of the period for which exemption from or reduction in the rate of tax was or could be to the former manufacturers:
Provided that the aforesaid officer may, in its discretion and for adequate and sufficient reasons to be recorded in writing, entertain an application moved within six months of the date of the expiration of the period specified in this Sub-section.
7. In the case of Jagat Machinary Manufacturer Pvt. Ltd. v. State of U.P. and Ors. (Supra) the provision of Section 4A came up for consideration before Division Bench of this Court In that case also there was a change in the constitution of firm. This Court held as follows:
15. The object and purpose with which Section 4-A has been enacted rules out the view, strenuously canvassed for by the learned standing Counsel, that the ownership of the unit is the predominant factor for determining the question whether it was a new unit entitled to exemption from tax and that the change in ownership would alter the character of the unit as a 'new unit'. The emphasis clearly is upon the nature of the Unit being a new unit and not upon the ownership of the unit. If the legislature wished to exclude availability of exemption from tad on the ground of ownership of the new unit, it would have specifically said so in some clause of the definition of 'new unit'. The matter would not have been left for speculation.
16. If one looks at Section 3-C of the U.P. Sales Tax Act, one finds it provided in Sub-section (2) that where the ownership of the business of any dealer liable to pay tax is transferred, the transferor and the transferee shall jointly and severally be liable to pay the tax including penalty, if any, payable in respect of such business till the time of such transfer, whether the assessment is made or the penalty is imposed prior to or after such transfer. As a necessary corollary, it must follow that where the goods produced in a 'new unit' the exemption should be available to them irrespective of the fact that the ownership of the unit is transferred during the period for which the exemption has been granted, subject, of course, to the fulfillment of the conditions under which the exemption is to operate.
8. This Court has repeatedly observed that the object of Section 4A was to grant exemption to the manufacturer with the view to promote setting up a new industrial unit irrespective of reconstitution of firm industrial unit run by it was entitled to exemption In case of CST v. U.P. Leather Board Agra reported in 1980 UPTC 287, CST v. Good luck Rubber & Allied Industries. Lucknow reported in 1983 UPTC 909 : 1986 UPTC 305 CST v. General Engineering Corporation, similar view was taken.
9. In the case of CST v. Industrial Coal reported in 114 STC 365 S.C. The Apex Court has considered the provision of Section 4A and held as follows:
In Commissioner of Income tax, Amritsar v. Strawboard Manufacturing Co. Ltd. this Court held that in taxing statutes, provision for concessional rate of tax should be liberally construed. So also in Bajaj Tempo Ltd. v. Commissioner of Income-tax , it was held that provision granting incentive for promoting economic growth and development in taxing statutes should be liberally construed and restriction placed on it by way of exception should be construed in a reasonable and purposive manner so as to advance the objective of the provision.
We find that the object of granting exemption from payment of sales tax has always been for encouraging capital investment and establishment of industrial units for the purpose of increasing production of goods and promoting the development of industry in the State
10. Sub-section (2-B) of Section 4A provides that if there is discontinuation of business within the meaning of Sub-section (1) of Section 18 the manufacturer to whom the exemption was granted if succeeded by another successor manufacturer may apply to the competent officer within 60 days of succession for grant of exemption from or reduction at the rate of tax for un expired portion for the period for which exemption from or reduction in the rate of tax was or could be to the former manufacturers. In my view Sub-section (2B) of Section 4A is not applicable in the present case for the following reasons: (1) period of exemption has been expired on 10.1.89 before the commencement of the provision and there was no un expired period for exemption. Sub-section (2B) applies to the claim of exemption for un expired portion of the period which was not available in the present case when the provision was introduced. (2) Provision contemplates moving of an application within 60 days from the date of succession. In the present case, the reconstitution took place on 1.4.86 and therefore, under the aforesaid provision no application could be moved in as much as the provision was inserted in the year 1991. It is settled law that procedural retrospective amendment cannot be made applicable in a case where the proceedings have been closed and had become final and in as much as procedural requirement cannot be complied with.
11. In the case of Commissioner of Sales Tax v. R.B. Industries Sabun Godam Meerut reported in 1985 UPTC 952 this Court held that amendment though retrospective in nature applies only to pending in future cases and not to cases which were already decided before amending case came into force.
12. In the case of Nani Gopal Mitra v. State of Bihar Apex Court observed as follows:
It is therefore clear that as a general rule the amended law relating to procedure operates retrospectively. But there is another equally important principle, viz. that a statue should not be so construed as to create disabilities or obligations or impose new duties in respect of transactions which were complete at the time the amending Act came into force.
Then the Supreme Court referred to Section 6 of the General Clauses Act and reproduced the same in the order. Having reproduced Section 6, the Supreme Court further observed in paragraph 6 on the same page as follows: -
The effect of the application of this principle is that pending cases, although instituted under the old Act but still pending, are governed by the new procedure under the amended law but what ever procedure was correctly adopted and concluded under the old law cannot be opened again for the purpose of applying the new procedure.
From the authority of the Supreme Court, it is amply clear that pending cases, though instituted under the old Act but still pending will be governed by the new procedure under the amended law. The words but still pending occurring in paragraph 6 of the aforesaid authority are very significant. Following this authority, I hold that the contention of the Revenue that the amended law will apply even to those cases, which were not pending when the amended Act came into force, is incorrect.
4. In the case of K. Eapen Ghako v. The Provident Investment Company (P) Ltd. AIR 1976 Supreme Court 2610, the Supreme Court held towards the end of paragraph 37 on page 2617 as follows.
In other words, if a statute deals merely with the procedure in an action, and does not affect the rights of the parties it will be held to apply prima facie to all actions, pending as well as future.
This authority also clearly refers to the applicability of the retrospective amendment to the pending as well as future cases and no reference has been made regarding applicability of the retrospective provisions to the cases which stood decided, when the amending Act came into force.
12. For the reasons stated above, I am of the view that assessing authority was not justified in initiating the proceeding Under Section 21 with the view to withdraw the exemption already allowed on the manufactured product, for the alleged non-compliance of Sub-section (2B) of Section 4A, which was inserted by Act No. 28 of 91 with retrospective effect from 12.10.83, In my view Sub-section (2B) was applicable only to the pending and future cases from the date of promulgation of the amending Act and not in a case in hand. In the present case, it was wholly impossible to comply the said provision. If said provision is made applicable to the cases which has already reached to finality and the period of exemption has been expired the object of Section 4-A would be frustrated and lead to arbitrary result.
13. In the result, both the revisions are allowed and the order of Tribunal is set aside and assessment orders passed Under Section 21 for the assessment years 1987-88 and 1988-89 are set aside