2005 INSC 0704
                                    SUPREME COURT OF INDIA

                                             Polycan Industries

                                                      Vs.

                             Commissioner of Trade Tax, U.P., Lucknow

                                           C.A.No.3348 of 2000

                       (Tarun Chatterjee, S. N. Variava and S. H. Kapadia JJ.)

                                                 17.08.2005

                                                JUDGMENT

Tarun Chatterjee, J.

1. This appeal is against the judgment dated 17th May, 1999 passed by the Allahabad High
Court.

2. Briefly stated the facts are as follows:

The appellant, claiming to be a new unit, applied for exemption from sales tax under the
provisions of the Uttar Pradesh Trade Tax Act, 1948 (hereinafter referred to as "the Act").
The Divisional Level Sales Tax Exemption Committee (hereinafter called "the Committee")
rejected the application of the appellant, inter alia, on the following grounds:

        "1. Capital investment is more than 3 lakhs. Permanent registration has not been
        issued under the Factories Act.

        2. Agreement of the land has been completed on Stamp-paper of Rs. 10 which is
        under registration.

        3. Lists of the machines have not been received. Value of the building has not been
        certified from C.A.

        4. On the date of production, the unit has not been registered."

3. The appellant filed an appeal before the Trade Tax Tribunal. The Trade Tax Tribunal held
that there was force in the submission that the committee should have given an opportunity
of hearing to the appellant. However, it refused to interfere on the ground that admittedly the
appellant's unit was on land in respect of which the appellant only had a registered agreement
to sell. The Tribunal held that to avail of the exemption both land and building must be
owned by the unit.

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4. The revision filed before the Allahabad High Court had been dismissed by the impugned
judgment. The High Court has only considered one aspect, i.e., whether both land and
building must be owned by the unit. The relevant provision reads as follows:

        "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."

5. The High Court has held that a strict interpretation must be given to this clause as it deals
with an exemption provision. The High Court has held that on a strict interpretation unless
the land was actually owned by the unit, the exemption would not be available.

6. After this appeal was admitted, a conflict between the decisions of this Court in the case of
State Level Committee v. Morgard-shammar India Ltd. reported in 4 and in the case of
Commissioner of Sales Tax v. Industrial Coal Enterprises reported in was noticed. The
matter was thus referred to a 3-Judge Bench in order to consider whether the above-
mentioned provision should receive a strict or a liberal interpretation. It is, therefore, before
this Bench.

7. Having heard parties and perused the documents, we are of the view that the interpretation
must be in accordance with the wording of the provision. As stated above, the relevant
wordings are "on land or building or both". A plain and simple reading of these words
indicates that to avail of the exemption, even presuming the term "owned" means "actually
owning", the ownership could be either of the land or of the building or of both. Therefore,
the decisions of the Tribunal and the High Court which proceeded only on the basis that the
land was not owned would not be correct. It would also have to be considered whether or not
the building was owned by the appellant.

8. The appellant claims that they own the building. On behalf of the respondent it is stated
that this question has not been looked into and therefore at this stage it is not possible to state
whether or not the building was owned by the appellant. Further the other points on which
exemption had been denied will also require looking into.

9. The Committee has not stated anything on the aspect of building being owned by the
appellant. The Committee had also not given to the appellant an opportunity of being heard.
The Tribunal and the High Court have not looked into the other aspects raised by the
Committee and not considered whether building was owned by the appellant. We, therefore,
feel that the correct course would be to remit the matter back to the Committee for
consideration on merits. We accordingly do so. Amongst other things the Committee will
also consider whether or not the building is owned by the appellant. The Committee will
grant to the appellant an opportunity of being heard.

10. With these directions, the appeal stands disposed of. There will be no order as to costs.

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