AMD Industries Ltd Vs Commissioner of Trade Tax, UP & Anr(Supreme Court)
Date-9th January 2023
Sub-What is the meaning of diversification to be eligible to claim exemption under the UP Trade Tax Act?

The Supreme Court of India in this case was considering the meaning of the term diversification when the appellant in this case set up machinery for manufacture of “Double LIP DRY BLEND CROWN CORK” as against “SPUN LINE CROWN CORK” which was being manufactured earlier and contended that it was diversification to be eligible for exemption. As against this the department contended that it amounted to only modernisation and thus the claim was denied. The Supreme Court applied the user test that both the products were being used for sealing the glass bottles and thus could not be said to be diversification within the meaning of the act relying on the principle that it was for the appellant to satisfy the court that it was eligible to be covered within the exemption notification.

This decision will be useful in interpretation of similar disputes in relation to excise, GST laws etc.

Ramesh Patodia
11-01-2023