1981 (10) TMI 157 - HC - VAT and Sales Tax

Summary

Issues:
Interpretation of exemption provision under the Orissa Sales Tax Act for purchases of groundnut for manufacturing oil, requirement of declaration in form D, applicability of declaration for transactions between registered dealers, liability for purchase tax on goods bought from growers, and the correct authority to furnish declaration for claiming exemption.

Detailed Analysis:

1. The State applied under section 24(2)(b) of the Orissa Sales Tax Act for a case to be stated regarding the correctness of allowing tax relief to the assessee for purchases of groundnut for manufacturing oil worth Rs. 1,25,173.81. The assessee claimed exemption under serial No. 56 on the turnover by producing a declaration in form D, which was rejected by the assessing officer but accepted by the Additional Sales Tax Tribunal. The main issue is whether the declaration in form D is valid for claiming exemption in this case.

2. The provision under serial No. 56 allows exemption for goods used as raw materials for manufacturing finished products and requires a declaration in form D. The contention was raised that the declaration should only be between two registered dealers and not for purchases from growers. However, the court held that the exemption provision aims to assist new industries, and the declaration is meant for the department to claim exemption. Different types of declarations are contemplated under the Act, and for purchases subject to purchase tax, the declaration must be furnished along with the return, not necessarily to the selling dealer.

3. The court emphasized that the intention behind the exemption provision is to support new industries by allowing tax relief on raw materials used for manufacturing. In this case, since the declaration in form D was furnished for the entire amount of groundnut purchased, and the purchases were not from registered dealers, the assessee was still eligible for tax relief. Therefore, the court held that the Additional Sales Tax Tribunal was correct in allowing tax relief to the assessee based on the facts and circumstances of the case.

4. The judgment was delivered by the Chief Justice, with agreement from Justice Behera. The court answered the reference in favor of the assessee, directing that the tax relief was correctly allowed, and the assessee should be awarded costs with a specified hearing fee. The decision clarifies the interpretation of exemption provisions under the Orissa Sales Tax Act and the requirement of declarations for claiming tax relief on purchases for manufacturing purposes.