1988 (11) TMI 339 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Eligibility for benefit under Section 5C(1) of the Rajasthan Sales Tax Act, 1954.
2. Definition of "manufacture" under Section 2(k) of the Act.
3. Requirement of mentioning raw materials in the registration certificate for concessional tax rate.

Detailed Analysis:

1. Eligibility for Benefit under Section 5C(1) of the Rajasthan Sales Tax Act, 1954:
The primary issue was whether the respondent-assessee, a manufacturer of sized yarn, was entitled to the benefit under Section 5C(1) of the Rajasthan Sales Tax Act, 1954. The assessing authority had issued a notice stating that the process of sizing yarn did not involve manufacturing and thus, the assessee was not entitled to the benefit under Section 5C(1). The Tribunal, however, found that the sizing of yarn involved a processing that falls within the definition of "manufacture" under Section 2(k) of the Act. Consequently, the Tribunal held that the assessee was entitled to the concessional rate of tax under Section 5C(1) and set aside the penalty imposed under the same section.

2. Definition of "Manufacture" under Section 2(k) of the Act:
The definition of "manufacture" under Section 2(k) of the Act includes any process or manner of producing, collecting, extracting, preparing, or making any goods, but excludes processes notified by the State Government. The Tribunal observed that the process of sizing yarn, which involves the use of gum, starch, and cellulose derivatives, qualifies as "manufacture" under this definition. The court also referred to the definition of "process" from Webster's Third New International Dictionary, which supports the inclusion of processing within the broader definition of manufacture.

3. Requirement of Mentioning Raw Materials in the Registration Certificate for Concessional Tax Rate:
The department argued that the Tribunal did not properly examine the registration certificate, which did not list the items used in manufacturing. The respondent contended that Section 5C(1) does not require the items to be listed in the registration certificate to avail the concessional rate. The court examined the provisions of the Act and the prescribed form ST-3, which requires dealers to list the raw materials used in manufacturing. The court noted that while the registration certificate did not explicitly list the raw materials, the nature of the manufacturing process and the use of specific materials like gum, starch, and cellulose were evident from the facts and supported by industry publications. The court concluded that the assessee was entitled to the benefit under Section 5C(1) despite the omission in the registration certificate.

Conclusion:
The court dismissed the revision petitions filed by the State, upholding the Tribunal's decision that the assessee was entitled to the benefit under Section 5C(1) of the Rajasthan Sales Tax Act, 1954. The court emphasized the need for the department to ensure that all relevant details are filled in the registration forms to avoid such disputes in the future. The petitions were dismissed with no order as to costs.