1972 (9) TMI 114 - HC - VAT and Sales Tax

Summary

Issues:
- Exemption under section 5(2)(a)(ii) of the Bengal Finance (Sales Tax) Act, 1941 for sales of tube-wells, pumps, accessories, and parts to manufacturing dealers.
- Disallowance of exemption claim for labour charges under section 5(2)(a)(ii).
- Interpretation of whether water is an essential ingredient for manufacturing purposes.
- Application of judicial precedents to determine eligibility for exemption.
- Quashing of order by Commercial Tax Officer and remittance of the matter for decision in accordance with the law.

Analysis:
The case involves a challenge against an assessment order under the Bengal Finance (Sales Tax) Act, 1941, where the petitioner, a registered dealer, claimed exemption under section 5(2)(a)(ii) for sales of tube-wells, pumps, accessories, and parts to manufacturing dealers. The Board of Revenue allowed the exemption for certain quarters but disallowed it for the period ending December 1963, including labour charges in the claimed exemption amount. The petitioner moved the court, arguing that the items sold were essential for manufacturing purposes, thus qualifying for exemption. The respondent contended that water was not an essential ingredient for manufacturing goods other than paper, challenging the exemption claim. The court referred to judicial precedents, including a Supreme Court decision, to determine eligibility for exemption under section 5(2)(a)(ii).

The court considered the interpretation of the expression "for use by him in the manufacture of goods for sale" as per relevant legal precedents. It was highlighted that if the tube-wells and pumps were used by the registered dealer in the manufacturing process, the assessee would be entitled to exemption under section 5(2)(a)(ii). Drawing parallels with a Supreme Court decision involving the sale of gloves to manufacturers, the court emphasized that if the items sold were integral to the manufacturing process, they should be exempted from tax. Based on this reasoning, the court concluded that the tube-wells and pumps supplied to manufacturers should be exempted if used in the manufacturing process.

In the final judgment, the court made the rule absolute, quashing the order of the Commercial Tax Officer and remitting the matter for a decision in accordance with the law. No costs were awarded, and the petitioner was allowed to withdraw the deposited security. The judgment in one civil revision case was stated to govern another related rule, ensuring consistency in decisions.