1987 (9) TMI 392 - HC - VAT and Sales Tax

Summary

Issues: Assessment made in respect of two different assessment years, violation of declaration given by the petitioner, application of second proviso to section 5(2)(A)(a)(ii) of the Act, quashing of impugned assessment, fresh assessment directed.

Analysis:
The judgment by the Orissa High Court pertains to two writ applications concerning assessments made for different assessment years. The petitioner, a registered dealer, purchased scrap iron and engaged in manufacturing operations, producing various steel products for sale. The Sales Tax Officer, upon examining the petitioner's account books, found that the petitioner had utilized raw materials in manufacturing during the assessment years. The assessing officer concluded that the petitioner's actions constituted a violation of the declaration made in form No. XXXIV, leading to the addition of the value of purchased scrap iron to the taxable turnover. However, the petitioner contended that there was no breach of the declaration as the iron and steel purchased were sold as per the prescribed rates of sales tax under the Act.

The High Court referred to a previous decision where it was held that utilizing scrap iron for manufacturing steel products did not breach the declaration given by the dealer. Consequently, the court concluded that the assessing officer erred in applying the second proviso to section 5(2)(A)(a)(ii) of the Act and adding the value of scrap iron to the taxable turnover. The court ordered the quashing of the impugned assessments and directed the assessing officer to conduct fresh assessments in line with the court's observations in the judgment. Both writ applications were allowed by the court, with agreement from the presiding judge.

In summary, the judgment addressed the issue of the assessing officer's incorrect application of the Act's provisions regarding the utilization of scrap iron by the petitioner. The court clarified that such utilization did not violate the declaration given by the petitioner, as per the prescribed rates of sales tax. The decision emphasized the importance of correctly interpreting the statutory provisions and directed a fresh assessment in accordance with the court's findings.