Judgment Deepak Gupta, J. 1. The brief facts of the case are that the petitioner is a public limited company duly incorporated under the Indian Companies Act, 1956. It is engaged in the manufacture of cement. The company has been set up at Barmana in District Bilaspur in the State of Himachal Pradesh. The company also has a mining lease to extract lime stone and from this lime stone, it manufactures clinker and cement. 2. This company set up its first unit prior to the year 1984 but the unit was commissioned sometime in the year 1984. In 1984, the installed capacity of plant was 5.6 lakhs ton per annum (LTPA). In 1989, the capacity of the plant was increased from 5.6 to 7.6 LTPA. Thereafter, the company again contemplated an increase in the manufacturing capacity of cement by 10 LTPA but finally instead of increasing the capacity of the old unit, it set up another unit (hereinafter referred to Unit No. II). The company invested more than Rs. 200 crores and gave employment to more than 200 people in the second unit. In earlier litigation in LPA No. 23 of 2004 decided by this Court on April 10, 2008, this Court clearly held that the two units were separate units and were not one unit. This judgment of the Court was upheld by the Apex Court by dismissing Special Leave Petition on 2.8.2010. Therefore, there is no dispute that the two units are separate units. 3. The second unit was set up sometime in the year 1994 and commercial production started on 15.9.1994. The main dispute in this case is that while granting sales tax exemption to the company, the State laid down a condition that this incentive of sales tax exemption to the second unit would be available to the company only if the production of the first unit does not fall below the level of 922692 MT of cement. It is this condition which is the bone of contention and according to the company, the State had no jurisdiction to lay down such a condition. 4. It is this condition which is the bone of contention and according to the company, the State had no jurisdiction to lay down such a condition. 4. It is urged by Shri A.N. Haksar, learned Senior Counsel appearing on behalf of the company that as per the policies/rules regarding grant of incentives to new industries especially cement industries which were treated as pioneer or prestigious units, the benefit was to be given only to unit No. II which was the prestigious unit set up in terms of the incentives policy and therefore, in exercise of the powers vested in the State Government under Section 42 of the H.P. General Sales Tax Act, 1968 (hereinafter referred to as the Act), the State Government could not have incorporated the condition that the unit No. I must maintain the same level of production which it had prior to the setting up of unit No. II. It is further urged that vide the same notification, M/s Gujarat Ambuja Cement was granted full benefits and there is invidious discrimination against the petitioner-Company by restricting the benefits available to the second Unit. 5. On the other hand, on behalf of the State, Shri Vivek Thakur, learned Additional Advocate General, urges that the benefit of sales tax exemption to the company has been given only under Section 42 of the Act and this benefit was not available to the company under the various incentive policies and, therefore, the company cannot take the benefit of some portion of the incentive policies and urge that the benefit to Unit No. II should be granted irrespective of the production level of Unit No. I. It is submitted by Shri Thakur that in case this interpretation is accepted then any company would close down the old unit, establish a new unit and the production would be shown to be that of the new unit only. He submits that the State being alive to such a situation, purposely laid down a condition that the production level of Unit No. I should be maintained at the same level at which it was producing immediately before Unit No. II went into commercial production. He further submits that it is nobody’s case that Unit No. I is not capable of production. He further submits that it is nobody’s case that Unit No. I is not capable of production. His last submission is that both Unit No. I and Unit No. II of the company manufacture cement from the raw material which is extracted from the same mines and the feeding area for both the units is the same. Unit No. I has already taken the benefit of incentives and now that the period of incentives of Unit No. I is over, there is every possibility that the production of Unit No. I is lowered and transferred to Unit No. II only with the purpose of taking tax benefits of Unit No. II and hence the need to impose such a condition. 6. To appreciate the rival contention of the parties it would be appropriate to refer to certain documents. The first incentive policy referred to by the petitioner is the policy issued initially in the year 1980 and revised in the year 1991. In this policy with regard to sales tax, the incentives given are only of sales tax deferment and not of exemption as is apparent from clause 11.1 of the policy which reads as follows: “11. Sales Tax Incentives: 11.1 Sale Tax Deferment Scheme: (a) Eligibility: Except for industries as notified in Annexure-II or as notified by the State Government from time to time, the following sales tax incentives shall be admissible to a new industrial unit which is register as a dealer under the Himachal Pradesh State General Sales Tax Act, 1968/ Central Sales Tax Act, 1956, and comply with its provisions. However, these shall be available only on the sales of the goods manufactured by the units.” 7. It would also be pertinent to mention that in fact as per this policy cement fell in the negative list in Annexure-III and, therefore, under the policy the cement industry was not entitled to any incentives. 8. The policy was again amended in the year 1992. The amendment of 1992 brought in another category of industries known as prestigious units which were defined as follows: “(rrr) “Prestigious Unit” means any new Industrial unit, which goes into commercial production in the State on or after 1.5.1992 and is registered with the Empowered Committee appointed in para 1 of rule 24 between 1.5.1992 and 31.3.93. Such unit shall have a fixed capital investment of at least Rs. Such unit shall have a fixed capital investment of at least Rs. 50 crores and shall employ at least 200 person on regular basis.” 9. Another amendment was also made in the policy and all prestigious units falling in the negative category except breweries, distilleries etc. were held entitled to the sales tax incentives. Thus, prestigious cement unit would also be entitled for sales tax incentives but that incentive is of deferment of tax and not exemption from payment of tax. 10.The next amendment to the incentive policies was made on 1.12.1994 and clause (rrrr) was introduced which reads as under: “Clause (rrrr) “Prestigious Cement Unit” means any new industrial unit, which goes into commercial production in the State on or after 1.5.92 and is registered with the Empowered Committee appointed in para 1 of rules 24 between 1.5.92 and 31.3.95. Such unit shall have a fixed capital investment of at least Rs. 50 crores and shall employ at least 200 persons on regular basis.” 11. It is not in dispute that the second unit of the petitioner-company would fall in the category of Prestigious Cement Units and would therefore be entitled to sales tax incentives stipulated in clause 27.1 which reads as under: “27. Incentives to Prestigious Cement Units 27.1 Sales Tax Incentives: Prestigious Cement Units including expansion projects as defined in rule 2.1 (rrrr) shall be eligible for sales tax deferment for a period of 12, 9 & 7 years in category A, B & C blocks respectively. The repayment of deferred amount of Sales Tax shall commence from the fourth year and shall be repaid in one installment on the due date.” It is thus apparent that as per the incentive policy, the Prestigious Cement Units were entitled only to sales tax deferment for the various periods reflected in the policy. 12. On 31.12.1994, the State of Himachal Pradesh issued a comprehensive exemption notification in exercise of the powers vested in it under Section 42 (1) of the Act. In fact, this is not one notification but a compendium of various notifications which have been published together. No doubt, certain portions of this notification are carbon copies of the incentive policies referred to above. In fact, this is not one notification but a compendium of various notifications which have been published together. No doubt, certain portions of this notification are carbon copies of the incentive policies referred to above. We are concerned with clause 2 (1-C) of the policy, which reads as follows: “2 (1-C) (1) The Governor of Himachal Pradesh in exercise of the powers conferred by sub-section (1) of section 42 of the Himachal Pradesh General Sales Tax Act, 1968 (Act No. 24 of 1968 is pleased to order exemption from tax, subject to their being eligible as per the terms of this para to the following other industries from the payment of tax leviable on the sale of cement manufactured by such ‘other industries’ as specified in the table given below and subject to the conditions specified below in sub-para (2):- Serial Name of the Industry Category of Total time limit No. Industrial Block within which in which located concession of exemption will be available. 1. M/s Gujarat Ambuja “B” One hundred eight months Cement Ltd., Village Suli, (9 years) P.O. Darlaghat, Tehsil Arki, Distt. Solan, (HP) 2. M/s The Associated Cement “B” One hundred eight months Companies Ltd, P.O. (9 years) Barmana, Distt. Bilaspur (H.P.) (2) The concession of exemption from payment of tax under this Act, shall be admissible to ‘other industries’ only, if- (i) it is a prestigious cement industrial unit; (ii) it has been registered as a dealer under the Himachal Pradesh General Sales Tax Act, 1968, for manufacture of cement for sale in the new cement industrial unit’; (iii) it has obtained a certificate in Form S.T.E.III from the Director of Industries, Himachal Pradesh and has furnished the same to the prescribed Authority for the grant of exemption certificate in Form S.T.E.-II; (iv) it has been granted an exemption certificate in Form S.T.E.II by the prescribed Authority; (v) it (registered dealer) complies with the provisions of (a) the Himachal Pradesh General Sales Tax Act, 1968. (b) the Central Sales Tax, 1956, and (c) the rules, notifications and orders made and is under these Acts; (vi) the exemption certificate continues to remain operative and it has not been withdrawn or cancelled by the prescribed Authority or is not annulled or quashed in any appellate, revisional or other proceedings; Provided that the exemption contained in sub-para (1) to M/s the Associated Cement Companies Limited, Barmana, Distt. Bilaspur (H.P.) shall be granted by the prescribed Authority only if, in addition to the prescribed conditions: (a) the payment of tax under the Himachal Pradesh General Sales Tax Act, 1968 and the Central Sales Tax Act, 1956, in respect of the old components of the M/s The Associated Cement Companies Limited Barmana, District Bilaspur (H.P.) is actually made even during each financial year of the period of exemption in respect of the new components of this unit, established as a result of expansion on the quantity respectively of 551664 metric tons and 3,71,028 metric tons sold during the year 1994-95; and (b) the level of manufacture of 922692 metric tons of cement in the old component of M/s The Associated Companies Limited, Barmana District Bilaspur (H.P.) is also maintained unchanged throughout each financial year during the period of exemption in respect of the new component of this unit established as a result of expansion.” 13.There is no manner of doubt that the second Unit of the petitioner Company fulfils all the requirements mentioned in sub clause (2) of Clause 2(1-C) and is entitled to the exemption which has been granted to it. The petitioner is aggrieved with the proviso added at the end of sub clause (2) whereby an additional condition has been laid down that the old component of the Unit must maintain its level of production at 9226922 MT of cement i.e. the amount of cement produced and sold during the year 1994-95. 14. The main argument made on behalf of the Petitioner Company is that this condition is foreign to the incentive policy and takes away the benefit which has been given by the first part. It has been urged that if the first Unit becomes too old or technically it is not feasible for the old Unit to produce any cement why should the new Unit be deprived of the benefits which are otherwise available to the new Unit. 15. We are not at all impressed by the submissions made on behalf of the petitioner Company. A bare reading of the incentive policies issued by the State of Himachal Pradesh from time to time clearly shows that under the incentive policy of the State Government the only sales tax incentive granted was deferment of payment of tax and there was no exemption from payment of sales tax. A bare reading of the incentive policies issued by the State of Himachal Pradesh from time to time clearly shows that under the incentive policy of the State Government the only sales tax incentive granted was deferment of payment of tax and there was no exemption from payment of sales tax. In fact under the policy of 1991 a cement manufacturing unit being in the negative list was not entitled to any benefit. By the amendment made in 1992 prestigious cement units were entitled to certain benefits. We are concerned mainly with the incentive policy as amended on 1.12.1994 which brought in the category of prestigious cement unit. There is no doubt that the petitioner Company falls in this category. The sales tax incentives which were contemplated were again sales tax deferment schemes and not exemption of sales tax. 16. On the other hand the notification dated 31.12.1994 has been issued by the State exercising its powers under Section 42(1) of the Act which empowers the State to exempt Industries from payment of tax. A bare reading of the relevant portion of the notification, which has been quoted hereinabove, clearly shows that as far as cement Industries were concerned, benefit of this was given only to M/s.Gujrat Ambuja Cement Ltd. and M/s.Associated Cement Companies i.e. the petitioner. They were given total exemption from payment of sales tax for 9 years. Admittedly, the Unit of M/s.Gujrat Ambuja Cement Ltd. was a new Unit and they had no other older Unit. The petitioner Company on the other hand already had one existing Unit which was not entitled to tax exemption under this policy and the policy was applicable only to the second Unit. Therefore, the petitioner and Gujarat Ambuja stood on different footing. It is not the case of any party that there were no other cement industries existing at that time in the State of Himachal Pradesh. All other cement industries except M/s.Gujrat Ambuja Cement and the petitioner Company were not granted the benefit of the sales tax exemption probably because they were old Units. 17. Certain conditions were laid down and admittedly the Petitioner Company fulfils conditions No.1 to 6 and is entitled to the benefit granted under the scheme. The proviso to sub Clause (2) of Clause 2(1-C) lays down an additional condition as far as the petitioner company is concerned. 17. Certain conditions were laid down and admittedly the Petitioner Company fulfils conditions No.1 to 6 and is entitled to the benefit granted under the scheme. The proviso to sub Clause (2) of Clause 2(1-C) lays down an additional condition as far as the petitioner company is concerned. The second condition is that the second Unit would not be entitled to benefit of the exemption if the first Unit does not produce 9226922 MT of cement which it was producing when the second Unit came into being. There are valid reasons for laying down such a condition. The benefit has been given under this notification not to the second Unit but to the petitioner Company as a whole. The second Unit may be a separate Unit but the State in its wisdom decided to give benefit to M/s.Associated Cement Companies Ltd. and further laid a condition that the benefit would only be given if the old Unit continued to maintain its production at the last years level. If this condition was not laid down, then as urged by Sh.Vivek Thakur, the Company can stop or reduce production of the Unit which is not entitled to tax benefits and increase the production of the second Unit only with a view to avail the benefit of exemption of payment of sales tax despite the fact that the first Unit has already availed tax exemptions. 18. The purpose of grant of incentive is to encourage industrialization in the State especially in certain backward areas. The reason for encouraging industry is that it will create new sources of employment and help develop the area. If the old Unit stops or reduces production, then the mere setting up of a new Unit does not increase the employment avenues nor does it generate more revenue, more employment etc. Further more, as discussed above, the raw material for both the Units is sourced from the same mining area. Both the Units are part of one Industrial complex. Though they may be separate Units but they are part of one Industry and the benefit of exemption has been given to the Industry and not to a particular unit. The condition laid down is therefore just and reasonable. 19. The incentive policy cannot be read into the notification issued under Section 42 of the Act. Though they may be separate Units but they are part of one Industry and the benefit of exemption has been given to the Industry and not to a particular unit. The condition laid down is therefore just and reasonable. 19. The incentive policy cannot be read into the notification issued under Section 42 of the Act. It may be true that for certain purposes such as definition of various categories of industries the definitions given in the incentives scheme have been referred to and may be read into the notification under Clause 2(1-C) but this does not mean that the incentive of sales tax exemption has been granted under the incentive scheme. The benefit was only given by the notification issued under Section 42 and has no connection with the incentive policy. 20. The judgments of the Apex Court relied upon by the petitioners in State of Bihar and others vs. Suprabhat Steel Ltd. and others, (1999) 2 SCC 31 and Vadilal Chemicals Ltd. vs. State of A.P. and others, (2005) 6 SCC 292 are not at all applicable to the facts of the present case. In the State of Bihar case (supra) the incentive policy itself granted the benefit of sales tax exemption on the purchase of raw material for a period of 7 years from 1.4.1993. Under the notification issued under the Bihar Sales Tax Act certain other conditions were laid down and the Apex Court held that in exercise of such powers it would not be permissible for the State Government to deny any benefit which was otherwise available to an industrial unit under the incentive policy itself. As clearly held by us above, the benefit of exemption from payment of sales tax was not available to the petitioner company under the incentive policy. This benefit was given by the same notification which lays down an additional condition that production in Unit-I should not be lowered and the said condition in our opinion is just and reasonable. 21. As far as Vadilal Chemicals’ case (supra) is concerned, the same also has no application because there also the Government Order of 1993 had granted sales tax holidays but the DCCT gave its own opinion about the definition of the term “manufacture” to reduce the benefit which the Apex Court struck down. Therefore, this judgment is also not at all applicable to the facts of the present case. 22. Therefore, this judgment is also not at all applicable to the facts of the present case. 22. We are of the considered view that the benefit of sales tax exemption was granted only under the notification issued under Section 42 of the H.P. General Sales Tax Act, 1968 and not under the incentive policies issued by the State. The State by the same notification also imposed a condition that the benefit to the petitioner industry would be available only if the old unit maintained production at a certain level. This condition, as held by us above, is reasonable. In view of the above discussion, we find no merit in the petition which is accordingly dismissed. No costs.