JUDGMENT : SAUMITRA DAYAL SINGH, J. 1. Heard Sri Vishwjit, learned counsel for the assessee and Sri A.C. Tripathi, learned Standing Counsel for the revenue. 2. Present revision has been filed by the assessee, against the order of the Trade Tax Tribunal, Aligarh Bench, Aligarh, dated 02.01.2008, in Second Appeal No. 445 of 2002 for A.Y. 1997-98 (U.P.) whereby the Tribunal has dismissed the appeal filed by the assessee and thereby upheld the order passed by the first appeal authority, restricting the available limit of exemption under section 4-A of the U.P. Trade Tax Act, 1948 (hereinafter referred to as the ‘Act’) to 5% of the sale price. 3. The revision has been pressed on the following question of law: “Whether the ‘Explanation’ to Notification No. TT-2-779/XI-9 (226)/94 dated 31.03.1995 (Restrictive Notification) was mandatory to be fulfilled, while applying that Notification to proviso (ii) of Clause 2 of Notification No. TT-2-780/XI-9 (226)/94, dated 31.03.1995 (Exemption Notification)?” 4. In brief, the assessee set up a ‘new unit’ as defined under Section 4- A of the Act. Undisputedly, the assessee was granted Eligibility Certificate, creating exemption from tax (under the Act), for a period of 8 years, beginning from the date of the starting production- 04.04.1997 to 03.04.2005. Thus, A.Y. 1997-98 was the first year of business of the assessee. 5. For A.Y. 1997-98, the assessee disclosed sales turnover Rs. 23,01,369.50/-. It claimed full exemption on the same, under the Eligibility Certificate issued to it, read with Notification No. TT-2-780/XI-9 (226)/94 dated 31.03.1995 (hereinafter referred to as the ‘Exemption Notification’). 6. In the first place, under the Exemption Notification, exemption from tax was granted to the assessee, by virtue of it having established a ‘new unit’ at Aligarh. That exemption from tax was available to the extent described under column 4, for the year described in column 3, under Clause 3 of Annexure No. I to the Exemption Notification. It read as below: 3. The districts of Agra (excluding Taj Trapezium area), Aligarh excluding Taj Trapezium Area), Allahabad (exclu- ding the area in south of rivers Jamuna and confluent Ganga but including the area included under Municipal Corporation Allahabad), Bareilly, Bhadohi, Bijnor, Firozabad, excluding Taj Trapezium Area), Ghaziabad (excluding the Greater Noida Industrial Development Area), Gorakhpur, Haridwar, Kanpur (Nagar), Lakhimpur Kheri, Lucknow, Maharajganj, Mirzapur, Meerut, Muzaffarnagar, Saharanpur, Sonbhadra and Varanasi. Eight years 1st Year 100 percent 100 percent 175 percent of the fixed capital investment or, as the case may be, additional fixed capital investment in case of small scale units and 150 percent of the fixed capital investment or additional fixed capital investment in case of other units. 2nd Year 100 percent 100 percent 3rd Year 100 percent 75 percent 4th Year 100 percent 75 percent 5th Year 100 percent 50 percent 6th Year 100 percent 50 percent 7th Year 100 percent 25 percent 8th Year 100 percent 25 percent 7. At the same time, by virtue of Clause 2 of the Exemption Notification, the extent of exemption from tax, was limited to a maximum of 5% of the sale price. For ready reference, Clause 2 of the Exemption Notification read as below: 2. The facility of exemption from or reduction in the rate of tax, including additional tax specified in column 4 of Annexure I to any unit on any transaction of sale shall not exceed 5 percent of the sale price. The tax, including additional tax, in excess of 5 percent shall be payable by such unit according to law: Provided that the provisions of the paragraph shall not apply to any unit: (i) established in the districts of Almora, Chamoli, Dehradun, Nainital, Pauri Garhwal, Pithoragarh, Tehri Garhwal and Uttar Kashi. (ii) which provides employment to the persons belonging to the Scheduled Castes, Scheduled Tribes, other backward classes of citizens and minorities in not less than the following proportions to the total employment being provided such industrial units and subject to the conditions and restrictions specified in the Government Notification No. TT-2-779/XI-9 (226)/94-U.P. Act-15-48-Order-95, dated March 31, 1995. Scheduled Castes/Scheduled Tribes percent 23 Other backward classes of citizen percent 27 Minorities percent 10 8. Thus, first, exemption available under the Exemption Notification was limited to 5% of the sale price. Second, by way of exception to that restriction, that limit was waived to ‘new units’ established in specified districts - Almora, Chamoli, Dehradun, Nainital, Pauri Garhwal, Pithoragarh, Tehri Garhwal and Uttar Kashi (then part of Uttar Pradesh). Also, by way of another exception, it was stipulated, such restrictive condition would not apply to new units that provided employment to persons belonging to Scheduled Castes, Scheduled Tribes, Other Backward Caste and, minorities (hereinafter referred to as ‘specified categories’), in the proportions prescribed thereunder. 9. Also, by way of another exception, it was stipulated, such restrictive condition would not apply to new units that provided employment to persons belonging to Scheduled Castes, Scheduled Tribes, Other Backward Caste and, minorities (hereinafter referred to as ‘specified categories’), in the proportions prescribed thereunder. 9. Then, by way of a further stipulation, the said proviso also made applicable ‘Conditions and Restrictions’ specified under Notification No. TT-2-779/XI-9 (226)/94 dated 31.03.1995 (hereinafter referred to as the ‘Restrictive Notification’). 10. For ready reference, the contents of the Restrictive Notification read as below: “Vitta (Vyapar Kar) Anubhag-2, Notification No. TT-2-779/XI-9 (226)/94-U.P. Act-15-48-Order-95, dated March 31, 1995. In exercise of the powers under Section 4-AA of the Uttar Pradesh Trade Tax Act, 1948 (U.P. Act. No. XV of 1948), the Governor is pleased to grant, with effect from April, 1, 1995, a concession of twenty-five percent in the rate of tax to such industrial units in the private sector as are registered under the Factories Act, 1948 and provide employment to the persons belonging to Scheduled Castes and Scheduled Tribes, other Backward Classes of Citizens and Minorities at the rate respectively of not less than 23 percent, 27 percent and ten percent of the total employment being provided by such industrial unit subject to the following conditions and restrictions: Conditions and restrictions: (1) An industrial unit may be granted concession in the rate of tax only if it files before the concerned assessing authority upto 31st December of the succeeding assessment year a certificate: (a) of the District Magistrate to the effect that the person who has been provided employment belongs to the category of Scheduled Castes or Scheduled Tribes or Other Backward Classes of Citizens or Minorities, as the case may be. (b) of an officer not below the rank of an Assistant Labour Commissioner to the effect that such industrial unit has provided employment to the persons belonging to Scheduled Castes, Scheduled Tribes, Other Backward Classes of Citizens and Minorities in the required proportion to the total employment during whole or part or parts of the assessment year concerned. (2) The industrial unit shall be entitled to the concession in the rate of tax only during the period in which employment in the required proportion to the total employment has been provided to persons belonging to the Scheduled Castes, Scheduled Tribes, Other Backward Classes of Citizens and Minorities. (2) The industrial unit shall be entitled to the concession in the rate of tax only during the period in which employment in the required proportion to the total employment has been provided to persons belonging to the Scheduled Castes, Scheduled Tribes, Other Backward Classes of Citizens and Minorities. Explanation: For the purposes of this notification, the term “total employment” shall include only the persons who contribute to the Fund established under Employees, Provident Fund and Miscellaneous Provisions Act, 1952.” 11. The Tribunal has applied the Restrictive Notification and reached a conclusion - by virtue of Clause 2 of Exemption Notification, the assessee was disabled from claiming exemption more than 5% of the sale value. 12. Having heard learned counsel for the parties and having perused the record, there is no dispute to the fact - the assessee had set up a ‘new unit’ to manufacture cement. It was eligible to exemption granted under Section 4-A of the Act read with the Exemption Notification. Further, it is also not in dispute, the ‘new unit’ established by the assessee had engaged members of specified categories, in the percentage strengths - prescribed under proviso (ii) to Clause 2 of the Exemption Notification. It was granted the Eligibility Certificate. 13. Only this much is in dispute - whether the Restrictive Notification was applicable to the case of the assessee and whether the ‘Explanation’ appended to the Restrictive Notification, ousted the claim of the assessee to exemption - to the full extent, under the Exemption Notification or whether it was restricted to 5% of the sale price, under Clause 2 of the Exemption Notification. 14. Here, in the first place, the language of proviso (ii) Clause 2 of the Exemption Notification leaves no doubt, the legislature adopted the mode - legislation by incorporation. It bodily lifted and incorporated the ‘Conditions and Restrictions’ contained in the Restrictive Notification, to the Exemption Notification, as a further condition to be fulfilled, to avail exemption. 15. Legislation by incorporation is clearly a well-recognized mode of legislation. In that, the legislature only avoids repetition of words, phrases, and even whole provisions. It bodily lifted and incorporated the ‘Conditions and Restrictions’ contained in the Restrictive Notification, to the Exemption Notification, as a further condition to be fulfilled, to avail exemption. 15. Legislation by incorporation is clearly a well-recognized mode of legislation. In that, the legislature only avoids repetition of words, phrases, and even whole provisions. The principle is - the provisions of a former/first enactment are incorporated in a later/second enactment such that they become an absolute part of the later/second enactment, as if they had been bodily transposed into it, to the point - still later/third enactment of repeal of the former/first enactment would not severe its incorporation into the later/second enactment, to the extent of its original incorporation. It would require a repeal of/in the later/second enactment, to cause that legal effect. That principle was recognized and applied in Ram Sarup vs. Munshi and Others, AIR 1963 SC 553 . 16. Here, by virtue of proviso (ii) of Clause 2 of the Exemption Notification, the legislature chose to provide three conditions to be fulfilled to exclude the applicability of Clause 2 of the Exemption Notification. First, it excluded applicability of the restrictive Clause to ‘new units’ established in specified districts. Second, it excluded that restrictive Clause to ‘new units’ providing employment to members of specified categories, in prescribed percentages. Such ‘new units’ would avail full/unrestricted exemption. Third, it was provided, the restrictive Clause 2 would not apply if “Conditions and Restrictions” specified in the Restrictive Notification, were fulfilled. 17. Plainly, if the assessee had fulfilled the requirement of engagement of certain members of the society in the prescribed percentage but did not fulfill ‘Conditions and Restrictions’ contained in the Restrictive Notification, it could not claim full exemption under the Exemption Notification. To that extent, that condition is like an exception to the second condition to proviso (ii) to Clause 2 of the Exemption Notification. Therefore, the effect of ‘Conditions and Restrictions’ prescribed under the Restrictive Notification become a justiciable issue. 18. Then, the first condition prescribed under the Restrictive Notification is of filing of Certificate of the District Magistrate and Assistant Labour Commissioner certifying engagement of persons belonging to specified categories (noted above), in specified percentages. Those certificates were to be filed before the assessing authority, up to a specified date. It is not in dispute between the parties, such condition also been met by the assessee. 19. Those certificates were to be filed before the assessing authority, up to a specified date. It is not in dispute between the parties, such condition also been met by the assessee. 19. By way of a second condition, it was stipulated, the ‘new unit’ would be entitled to concession for the period during which it maintained the employment of members of the specified categories (noted above), at the prescribed percentages. Thus, if the condition of such employment was found fulfilled in one year but violated in the succeeding year, that assessee would expose itself to limited exemption in terms of Clause 2 of the Exemption Notification, in the succeeding year. Again, there is no case set up by the revenue that the condition of employment had been violated by the assessee in any year. 20. Then, the Restrictive Notification is not an addendum or corrigendum to the Exemption Notification. It is an independent notification issued under Section 4-AA of the Act. By its very nature, such notifications were issued by the State Government, at the relevant time, to grant exemption to a unit, based on employment granted - to persons belonging to specified categories. The assessee had not claimed that exemption. 21. What survives for consideration is, whether the ‘Explanation’ to the Restrictive Notification also constitutes part of the ‘Conditions and Restrictions’ contained therein. In essence, the ‘Explanation’ defines the term, ‘total employment’. It has been used in Clause 1(b) and Clause 2 of the ‘Conditions and Restrictions’ under the Restrictive Notification. It provides - for the purposes of considering the ‘total employment’ generated by a ‘new unit’ only such of its employees would be counted, who may have contributed to the fund established under the Employees Provident Funds and Miscellaneous Provisions Act, 1952 (hereinafter referred to as the ‘ Employees Act’). Once that number (of total employment) would be determined, the percentage test - of employment granted to members of specified categories, could be easily applied, to that number determined. 22. It is not the case of the revenue that the number of employees engaged by the assessee who were making contribution to Employees Provident Fund was such that the ‘total employment’ generated by the assessee was much higher or such as would deplete the percentage of members of specified categories, employed by it, below the prescribed percentages. 22. It is not the case of the revenue that the number of employees engaged by the assessee who were making contribution to Employees Provident Fund was such that the ‘total employment’ generated by the assessee was much higher or such as would deplete the percentage of members of specified categories, employed by it, below the prescribed percentages. In fact, the revenue alleges in the converse, i.e. the employees of the assessee were not making contribution to the Employees Provident Fund. Yet, it did not allege that the numbers of members of specified categories, engaged by the assessee were below the percentages prescribed, either under the Exemption Notification or the Restrictive Notification. 23. Thus, the revenue has read the ‘Explanation’ to imply - a new restrictive condition on the claim of full exemption made by the assessee - being payment of Employees Provident Fund contribution, by employees of the ‘new unit’. Plainly, there is nothing in the language of the Restrictive Notification read with the Exemption Notification to infer existence of such a condition. The ‘Explanation’ is neither a third condition/restriction contained in the Restrictive Notification nor, it otherwise provides such effect. It is only in the nature of a definition of the phrase “total employment.” 24. It is not difficult to visualise the purpose of restricting ‘total employment’ at a ‘new unit’, to such number of employees who may be making contributions to the Employees Provident Fund. It is not uncommon, in running of industries, engagement is offered for different types/nature of work, to different types of workmen, enjoying different status and terms, whether as a daily wage employees or temporary employees or contract employees etc., along with permanent employees. While provident fund liability exists against certain category of employees, specified by the Employees Act, deduction of provident fund contribution is not mandatory or uniform across the board, as may apply to every category of the workmen, irrespective of his status. 25. For the Exemption Notification, the legislature - in its wisdom, restricted the computation of ‘total employment’ to such employees/workmen only, who may be making contributions to the provident fund. Seen in that light, the ‘Explanation’ is likely to work in favour of the ‘new unit’ claiming exemption, under Section 4-A of the Act. 25. For the Exemption Notification, the legislature - in its wisdom, restricted the computation of ‘total employment’ to such employees/workmen only, who may be making contributions to the provident fund. Seen in that light, the ‘Explanation’ is likely to work in favour of the ‘new unit’ claiming exemption, under Section 4-A of the Act. A ‘new unit’ where provident fund contribution may be made by some employees, only such number of employees would be included in the list of ‘total employment’, who may be making that contribution. The larger body of workmen including those who may not be making such contribution would stand excluded in that computation. 26. Thus, for example, at a ‘new unit’ engaging 200 workmen, if provident fund contribution were being made by only 100 of its workmen, the ‘total employment’ of that ‘new unit’, for the purpose of satisfaction of the ‘Conditions and Restrictions’, under the Restrictive Notification, would remain confined to 100 i.e. the lesser number and not the larger. Based on that determination, the percentage of employment (to be reserved for members of scheduled castes, scheduled tribes, other backward classes, and minorities), as a condition for grant of full exemption, would have to be determined. 27. Next, it may be noted, the Tribunal has wrongly taken note of Section 16(1)(d) of the ‘Employees Act’. It was omitted by the Parliament by Act no. 10 of 1998, with retrospective effect from 22.9.1997. However, it cannot be ignored, the said provision remained operative for part period of A.Y. 1997-98. At the same time, Section 1(1), 1(2) and 1(3) of the Act reads as below: “(1) This Act may be called the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952. (2) It extends to the whole of India 5. *** *** *** (3) Subject to the provisions contained in section 16, it applies: (a) to every establishment which is a factory engaged in any industry specified in Schedule I and in which [twenty] or more persons are employed. (2) It extends to the whole of India 5. *** *** *** (3) Subject to the provisions contained in section 16, it applies: (a) to every establishment which is a factory engaged in any industry specified in Schedule I and in which [twenty] or more persons are employed. (b) to any other establishment employing [twenty] or more persons or class of such establishments which the Central Government may, by notification in the Official Gazette, specify in this behalf: Provided that the Central Government may, after giving not less than two months’ notice of its intention so to do, by notification in the Official Gazette, apply the provisions of this Act to any establishment employing such number of persons less than [twenty] as may be specified in the notification.” 28. It is also undisputed, at the relevant time, there were about 10 employees at the ‘new unit’ established by the assessee. Therefore, the applicability of the ‘Employees Act’ to the assessee, is very doubtful. Yet there is no credible material to reach a firm finding on that issue. 29. In any case, on the facts found by the Tribunal, it must be accepted - no contribution of provident fund was being made by a single employee at the new unit established by the assessee. In view of that, the only conclusion that the revenue authorities may have reached was - the number of ‘total employment’ was an indeterminate figure, or ‘0’. If strictly applied to the Exemption Notification, it would lead to an absurd result - no percentage result of employment granted to persons of specified category would be possible to deduce. That is not the purpose of the Exemption Notification. It must be read to retain its functionality and purpose. In Commissioner of Sales Tax vs. Industrial Coal Enterprises, (1999) 2 SCC 607 , in the context of interpretation of Exemption Notification, it was observed as under: “11. In CIT vs. Straw Board Mfg. Co. Ltd. 1989 Supp. (2) SCC 523 : 1990 SCC (Tax) 158 this Court held that in taxing statutes, provision for concessional rate of tax should be liberally construed. In CIT vs. Straw Board Mfg. Co. Ltd. 1989 Supp. (2) SCC 523 : 1990 SCC (Tax) 158 this Court held that in taxing statutes, provision for concessional rate of tax should be liberally construed. So also in Bajaj Tempo Ltd. vs. CIT, (1992) 3 SCC 78 , 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. 12. 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. If the test laid down in Bajaj Tempo Ltd. case (1992) 3 SCC 78 is applied, there is no doubt whatever that the exemption granted to the respondent from 9-8-1985 when it fulfilled all the prescribed conditions will not cease to operate just because the capital investment exceeded the limit of Rs. 3 lakhs on account of the respondent becoming the owner of land and building to which the unit was shifted. If the construction sought to be placed by the appellant is accepted, the very purpose and object of the grant of exemption will be defeated. After all, the respondent had only shifted the unit to its own premises which made it much more convenient and easier for the respondent to carry on the production of the goods undisturbed by the vagaries of the lessor and without any necessity to spend a part of its income on rent. It is not the case of the appellant that there were any mala-fides on the part of the respondent in obtaining exemption in the first instance as a unit with a capital investment below Rs. 3 lakhs and increasing the capital investment subsequently to an amount exceeding Rs. 3 lakhs with a view to defeat the provisions of any of the relevant statutes. The bona-fides of the respondent have never been questioned by the appellant.” 30. 3 lakhs and increasing the capital investment subsequently to an amount exceeding Rs. 3 lakhs with a view to defeat the provisions of any of the relevant statutes. The bona-fides of the respondent have never been questioned by the appellant.” 30. Also, as discussed above, it is seen, the computation of ‘total employment’ provided under the Restrictive Notification appears to run to the benefit of the assessee, to exclude therefrom such workmen who may have been engaged on casual basis and with respect to whom the requirement to make contributions to provident fund would not apply. Computed on that basis, there is no dispute that the ‘Explanation’ to the Restrictive Notification was satisfied. 31. Here, it must be noted, no consequence has been provided either under the Exemption Notification or under the Restrictive Notification or any other law relied by the revenue as may directly suggest - availability of the exemption would be denied if provident fund contributions were not made by the employees of the new unit. Keeping that in mind, the ‘Explanation’ appended to the Restrictive Notification must be read as directory. In Topline Shoes Ltd. vs. Corporation Bank, (2002) 6 SCC 33 , the Supreme Court interpreted section 13 of the Consumer Protection Act, 1986, that prescribed 30 days’ time limit, to file an objection/written statement to the complaint, was directory. It reasoned - in absence of any consequence prescribed by law, in the event of its non-compliance, inference may not be made, of that provision being mandatory. 32. In the context of another exemption notification, a similar conclusion was earlier reached by a division bench of this Court, in Sahu Stone Crushing Industries vs. Divisional Level Committee and Another, 1994 UPTC 1 , in the context of requirement of registration under the Factories Act. It was found, registration under the Factories Act, could not be granted to that ‘new unit’ yet would be entitled to claim exemption. To that extent the requirement of registration under the Factories Act, was directory. It was held: “23. It was found, registration under the Factories Act, could not be granted to that ‘new unit’ yet would be entitled to claim exemption. To that extent the requirement of registration under the Factories Act, was directory. It was held: “23. In Kuchchal Industries case 1990 UPTC 481, it was held by a Division Bench of this Court that the requirement of registration under the Factories Act cannot always be complied with because a new unit which has less than 10 employees does not come within the definition of “factory” in section 2(m) of the Factories Act and hence to insist upon such registration would deprive such small-units of the benefit of exemption under section 4-A. The special leave petition against the said decision was dismissed by the Supreme Court. The ratio of the said decision is obviously that the requirement of registration under the Factories Act is only directory and not mandatory. The purpose of requirement of registration is only to ensure that there is a genuine new unit and hence this condition need not be insisted upon when by other materials it can be demonstrated that a genuine new unit has been set up. The requirement of registration under the Factories Act has, hence, to be treated as directory and not mandatory.” 33. Again, in the context of the exemption granted under Section 4-A, in M/s Atul Gases vs. Commissioner of Commercial Taxes, Lucknow and Another, 2018 UPTC 198, with respect to requirement of ownership of land, it was found, acquisition of land was not a condition that may be inferred so long as its ownership derived from open market was not doubted. Accordingly, a co-ordinate bench of this Court observed as under: “20. The construction sought to be culled out finds support from the exemption notification also. The last notification dated 22.12.2000 eliminates the mode of acquisition for the purposes of grant of exemption entirely. This clearly reflects that mode of acquisition was not of relevance, rather, it was possessing of land which alone had relevance for the context. 21. Any other construction, as is suggested by the learned Standing Counsel, may be open to challenge as being arbitrary. If it is allowed, a person who establishes new unit upon land owned by him or upon land purchased from the open market would not be disentitled to exemption, even if all other conditions are met. 21. Any other construction, as is suggested by the learned Standing Counsel, may be open to challenge as being arbitrary. If it is allowed, a person who establishes new unit upon land owned by him or upon land purchased from the open market would not be disentitled to exemption, even if all other conditions are met. Such a classification would be impermissible in law. Mode of acquisition of land is not shown to have any relevance for the object sought to be achieved by promulgating Section 4-A of the Act or the exemption notification. Any distinction drawn based upon mode of acquisition of land would have no nexus with the object sought to be achieved, and thus would be violative of Article 14 of the Constitution of India.” 34. In the present case, it is found - though the ‘Explanation’ appended to the Restrictive Notification would apply to the reading of Clause 2 of the Exemption Notification, at the same time, it would remain a directory provision of law. Where the figure of employment to be computed under the Restrictive Notification remained indeterminate, the same would be read as ‘total employment’ granted otherwise. 35. As noted above, there is no dispute to the fact, considering that figure, the percentage of employment granted by the assessee to the members of Scheduled Castes, Scheduled Tribes and Other Backward Classes and minorities was met, satisfactorily. Thus, substantial compliance of the directory provision had been made by the assessee. 36. Therefore, the proviso (ii) to Clause 2 of the Exemption Notification wholly applied to the assessee’s case. Consequently, the restrictive Clause 2 of the Exemption Notification did not apply to it. Still, consequentially, the assessee was entitled to full exemption under the Exemption Notification, as provided under Annexure No. I thereto. 37. In view of the above, the question of law is answered in the negative i.e. in favour of the assessee and against the revenue. 38. The revision is allowed. No order as to costs. Any amount of tax deposited by the petitioner, may be refunded in accordance with law, subject to exclusion of the rule of unjust enrichment.